Watson’s Weekly 30-05-2021

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

IN BIG PICTURE NEWS...

  • In COMMODITIES, prices were hit after China’s National Development and Reform Commission (NDRC) pulled in leaders of some of the world’s top metals producers over the weekend and said they’d come down very hard on excessive commodity speculation and the spreading of fake news (Monday). Pressure has been building for the last few weeks. There was an interesting development in oil as a court in The Hague ordered Royal Dutch Shell to cut emissions by 45% by 2030 (Thursday). Although there was a lot of fist pumping and virtuous gloating afterwards, the fact is that it ain’t over yet because Shell is appealing the judgment. It will only be “ground-breaking” if the judgment actually sticks!!!
  • In VACCINES, pharmaceuticals companies are continuing their fight against Joe Biden’s proposed coronavirus vaccine patent waiver (Thursday). This proposal is not a done deal as the World Trade Organization’s 164 members have to agree on it and the next meeting is scheduled for November.
  • In IPO news, SPACs are going a bit lukewarm these days (Monday). Companies are watching the share prices of many SPAC-backed companies that have IPO’d absolutely tank – and they don’t like it. This will no doubt be music to the ears of private equity firms and the like as it means that they’ll face less competition from other investors. Still, I think that sentiment on SPACs is always going to be flaky – both on the upside and downside! For instance, a lot of them have been doing badly recently, but if a few of them start doing well positive sentiment could well return.
  • On the subject of global corporation tax, lots of countries have already signed up to Biden’s “deal” (Monday), but the UK decided to hold out for more concessions from Biden regarding Big Tech (Tuesday). By the end of the week, it was looking increasingly likely that the US would compromise (Friday) in order to get this done.

THERE WERE SOME IMPORTANT TECH DEVELOPMENTS THIS WEEK...

  • Amazon had an eventful week! It bought MGM for $8.45bn (Thursday), which will be a great boost to its content. It also announced plans to screen live recorded theatre productions from the National Theatre (Wednesday) – but then, on the downside, it got taken to court amid accusations of displaying anti-competitive behaviour (Wednesday) by forcing sellers not to sell lower on any other website.
  • The embattled Huawei announced the release of its new proprietary operating system, Harmony OS (Wednesday). It had to accelerate the development of this system following very strict sanctions imposed on it by the US and other suppliers. I would imagine it’ll be pretty buggy for the moment but if it gets, say, other Chinese handset makers to sign up to it I would have thought it could be a threat in the coming years to the established players.
  • A decision on the Epic Games vs Apple lawsuit (Wednesday) will be under consideration for the next few weeks, but the outcome seems finely balanced despite Apple probably having the upper hand in the earlier stages. I would have thought that, at the very least, the overall commission rate will come down to the 15% commission rate currently being charged to smaller players.

MEANWHILE, BITCOIN'S ROLLERCOASTER CONTINUES..

  • HSBC said it had no plans to form a cryptocurrency trading desk (Tuesday) as the CEO questioned its suitability as a payments vehicle.
  • After a period of weakness, Bitcoin bounced overnight (Tuesday) because Elon Musk said he’d talked to Bitcoin miners about making their energy consumption “greener”.
  • Iran banned Bitcoin mining (Thursday) for four months because it has been suffering increasingly from blackouts. President Rouhani said that energy consumption has increased by 20% over the last year. It didn’t say how much Bitcoin contributed to it, but that’s what he’s blaming!

...WHILE CONSUMER/RETAIL MOMENTUM CONTINUES TO GATHER PACE...

  • Consumers are spending on pubs and restaurants (Tuesdayto the extent that the hospitality industry is now facing a labour shortage (Monday). Cinemas also did well (Tuesdayon the first weekend of opening up and we are still spending on homes (Wednesday) as Zoopla says that we are now in the hottest housing market since August 2007! We’re also spending more on gyms, which is something that is benefiting ClassPass (Monday), which saw a 600% week-on-week rise in the number of new members and the Gym Group also saw growing memberships (Thursday). Pets at Home is also doing well from people buying pets under lockdown (Friday).
  • Meanwhile, among retailers, Tesco is trialling rapid delivery (Thursday) where you can get your shopping within an hour and Marks & Spencer announced it was shutting more stores and focusing on food (Thursday).

...AND AMONG THE OTHER MAJOR STORIES THIS WEEK...

  • There’s some interesting car-related news this week! UK car production is on the rise thanks to electric and hybrid vehicles (Thursday) and second hand car prices are rising (Monday) due to the chip shortage affecting the sale of new cars and ongoing demand from people who don’t want to commute by public transport any more (or at least for the near future). Talking of chip shortages, Tesla is looking to pay in advance for chips and/or make its own (Friday) in order to avoid any future supply disruptions. Nissan is pondering a new gigafactory in the UK (Thursday), which could be great news for jobs and the continuation of car production overall in the UK. There’s also good news for EV owners and would-be EV owners as Ofgem, Britain’s energy market regulator, announced that it will triple the number of “ultra rapid” EV charging points at motorway service stations and on key trunk roads over the next two years (Tuesday) as part of an effort to boost EV take-up.
  • In property, the UK housing market continues to boom (Monday), according to Knight Frank but building materials prices are going up (Monday) due to rising demand as well as supply bottlenecks. It’s also really interesting to see that some town centres are changing (Monday) as retail space gives way to retirement residences.

AND IN UPDATES FOR WATSON'S YEARLY...

  • Watson’s Yearly updates: These will be left until the next edition of Watson’s Yearly that will be published shortly