Thursday 01/02/24

  1. In MACRO & CRYPTO NEWS, China slips, the Fed keeps rates unchanged, FTX scraps plans to revive and George Osborne joins Coinbase
  2. In RETAIL, CONSUMER GOODS & RESTAURANT NEWS, Temu takes on Amazon, Walmart plans to open more stores, Morrisons seeks help to “reinvigorate”, H&M’s boss steps down, Boohoo feels the pressure, Adidas beats guidance and McWin buys Sticks’n’Sushi
  3. In PHARMACEUTICAL NEWS, Novo Nordisk share price hits a new high and GSK boosts forecasts
  4. In MISCELLANEOUS NEWS, Musk is rebuffed, Zuck is contrite, Allen Media puts in an offer for Paramount Global and UK house prices rise
  5. AND FINALLY, I show you how to make Italian-style iced coffee!

1

MACRO & CRYPTO NEWS

So China’s sluggish, the Fed keeps rate unchanged, FTX gives up on revival but George Osborne joins Coinbase…

Did you know that there is a podcast to go with Watson’s Daily? In this podcast, I discuss two stories from the day’s edition in a bit more depth with a Watson’s Daily Ambassador, my mate Ralph (on the Weekly podcast) or a special guest. The idea of this is to help to give you more of an idea of what talking about this stuff could sound like 👍 You can find the podcasts on the buttons below:

 

China’s economy continues to underwhelm and Sluggish start to the year puts China’s recovery in question (The Times, Jack Barnett) cites the latest data release from the National Bureau of Statistics which shows that China’s crucial manufacturing sector output has fallen for the fourth consecutive month to a level that was below market expectations. This came thanks to lukewarm overseas demand for Chinese goods and by high interest rates squeezing household incomes. China may never overtake US, warns Citi (Daily Telegraph, Szu Ping Chan and Tim Wallace) extrapolates this further as Citi’s global chief economist reckons that it is not “inevitable” that China’s economy will overtake that of the US. He argues that China’s economy has shrunk relative to the US in the last few years and that many of the factors that have powered China’s rise over the last few decades (e.g. urbanisation, construction) are now losing momentum and being replaced by headwinds in the form of high debt, a tricky property sector, ageing demographics and geopolitical issues. * SO WHAT? * It seems to me that China is just in a bit of a rut at the moment, not helped by the tetchy relationship with the US that has got progressively worse since Trump took office back in 2017. FWIW, I think that China still has way more potential upside to go as it has a population where wealth distribution has a lot more room to improve and it is at the forefront of the automotive and tech industries in particular. America may have the edge on it in AI, for

example, but China has the power and the resources to catch up (and potentially surpass) – just look at what has happened in EVs!

Then in Fed holds interest rates steady and signals an easing of policy (The Times, Mehreen Khan) we see that the Fed kept its interest rates unchanged at its meeting yesterday (the Federal funds rate remains in the 5.25%-5.5% range), in line with market expectations. J-Dog (aka Fed chief Jerome Powell) pushed back against market expectations that rate cuts could start in March after five consecutive months of leaving the rates unchanged 😴.

Meanwhile, in the world of crypto, FTX scraps plan to revive exchange and will repay billions to customers (The Guardian) shows that plans to resuscitate the disgraced crypto platform have been abandoned, so now all assets will be liquidated and funds will be repaid to customers. Basically, no-one wanted to put in enough money to rebuild it! FTX attorney Andy Dietderich summed it up nicely when he said that “FTX was an irresponsible sham created by a convicted felon”. Customers’ deposits have been locked since the company filed for bankruptcy in November 2022. All of them are expected to be paid in full although this will be based on crypto prices from November 2022, when crypto wasn’t doing particularly well (it was at $16,872 in November whereas the current level is over $43,000).

Then in Osborne joins crypto site Coinbase (Daily Telegraph, Matthew Field) we see that former chancellor George Osborne has joined the firm’s global advisory council as part of his current portfolio of jobs including that of being a partner at boutique investment bank Robey Warshaw, chairman of the British Museum and Amazon delivery driver (sorry – I made that last one up. It would be funny though, wouldn’t it??), among other roles. Nice work if you can get it and I would imagine that by hiring someone like Osborne, Coinbase hopes to shore up its credibility. From Osborne’s point of view, if Coinbase goes the way of FTX and Binance, he can distance himself pretty easily saying that it was just one of many roles.

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

2

RETAIL, CONSUMER GOODS & RESTAURANT NEWS

Temu takes on Amazon, Walmart makes plans, Morrisons is at a loss, H&M loses its chief, Boohoo has something to cry about, Adidas finds the living is Yeezy and McWin buys a sushi chain…

China’s Temu launches $3bn US online ads blitz in challenge to Amazon (Financial Times, Camilla Hodgson and Eleanor Olcott) shows that Chinese internet marketplace Temu has been going all-out on an internet advertising blitz in the US in a bid to take market share from Amazon’s in its own backyard. PDD Holdings-owned Temu was launched in the US in September 2022 and it spent a pretty chunky $3bn in marketing last year, making it one of the biggest advertisers in America along with the likes of Amazon, Target and Walmart. * SO WHAT? * Clearly throwing cash around gets you so far but the fact remains that concerns about the quality of Temu’s products could put people off becoming repeat customers. There’s also the matter of lead time for Temu to consider as well because, at the moment, it takes Temu between one and three weeks to ship packages from China to the US with “express” delivery taking between four and nine days. Meanwhile, Temu will want to avoid going the same way as Wish, which sold cheap goods made in China to US customers, spending billions on advertising along the way. When Wish listed in 2020 it had a market cap of $14bn, but it is now worth just $107m! Wish’s problem was that although its popularity sky-rocketed because of the advertising, it had problems with maintaining the high levels of spending and customer retention whilst it also took flak for the alleged sale of counterfeit goods. Unfortunately for other advertisers, Temu’s blitz is pushing advertising prices up in the meantime.

Elsewhere, Walmart, in a Reversal, to Open New Stores in the U.S. (The Guardian, Sarah Nassauer) shows that the retail giant will open or expand 150 stores over the next five years, which is an about-face on its most recent strategy to keep store numbers flat! New store openings started to slow down in 2016 but they came to a near-halt by the end of 2019 and it hasn’t opened a new US supercenter for about two years! Back home, Morrisons boss vows to ‘reinvigorate’ grocer (Daily Telegraph, Hannah Boland) shows that the supermarkets’ new chief has promised to pick things up at the supermarket that has lost a lot of ground to the German discounters over the last few years. Aldi overtook the Morrisons back in 2022 to become the UK’s fourth biggest supermarket! The ex-Carrefour man indicated that he was going to do a serious revamp to revive its fortunes but I think he’s got a mountain to climb!

In apparel retailing, H&M boss Helena Helmersson steps down (The Times, Isabella Fish) shows that the chief exec of the world’s second biggest fashion retailer has decided to step down after four years as CEO and over 20 years at the company overall. The company has been under pressure to improve weakening sales and profit margins as rivals Inditex (which owns Zara, among other brands) and Shein continus to turn the screws. It’s a tough market out there! That being said, it could be worse! Lenders squeeze Boohoo finances as online clothes seller’s sales fall (Daily Telegraph, Christopher Williams and Luke Barr) shows that the bid by the troubled online fashion retailer to extend a repayment deadline on £325m of debt has fallen on deaf ears as sales continue to fall. * SO WHAT? * It sounds to me like this company could be heading for the scrapheap. Its share price has plummeted by 90% since its pandemic peak and it continues to suffer from pressures of the cost-of-living crisis and rising supply chain costs. Time for Mike Ashley and Frasers Group to put in a cheeky bid?? Wouldn’t that be hilarious – Boohoo owns (among other brands!) Debenhams, which Mike Ashley tried and failed to buy a few years back.

In consumer goods news, Adidas Earnings Beat Guidance After Decision Not to Write Off Most Yeezy Inventory (Wall Street Journal, Mauro Orru) shows that the sporting goods company announced that its revenues and operating profits from last year came in above previous company guidance thanks to a decent performance in Q4 and its decision not to write off most of its Yeezy inventory. The company reckons that it can sell off the remaining inventory this year for at least the cost price! That is one hell of a result!

Then in restaurant-related news, McWin group picks up Sticks’n’Sushi (The Times, Dominic Walsh) we see that the private equity group behind Gail’s Bakery and Big Mamma Group, McWin Capital Partners, is buying the Danish sushi restaurant chain (27 in total – 12 in Germany, 12 in the UK and 3 in Germany) in a multi-million pound deal. * SO WHAT? * This is the latest in a string of deals in the hospitality sector. City Pub group was bought by Young’s, Fulham Shore (Franco Manca and the Real Greek) was bought by Japan’s Toridoll, The Restaurant Group (Wagamama) was taken over by Apollo and Yo! Sushi’s parent was bought by another Japanese group, Zensho Holdings. There will no doubt be more as the restaurant sector needs financial backing!

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

3

RETAIL, CONSUMER GOODS & RESTAURANT NEWS

Novo Nordisk booms on obesity and GSK upgrades forecasts…

Obesity drug boom pushes Novo Nordisk shares to record high (The Guardian, Julia Kollewe) shows that the share price of Novo Nordisk hit a record high after it reported booming sales of its obesity and diabetes drugs Wegovy and Ozempic, pushing its market cap past the $500bn mark and confirming its position as Europe’s most valuable company! This is a MASSIVE market and I think we’re only just beginning…

Then in GSK boosts forecast after blockbuster success of new vaccine (The Times, Alex Ralph) we see that the British pharma giant has decided to upgrade long-term forecasts thanks to a new drug, Arexvy (its vaccine for the respiratory syncytial virus) achieving blockbuster status in a very short period of time! It also announced 12 major product launches from 2025, which would enhance its long-term earnings. It sounds like things are turning around for the company,  pipeline-wise!

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

4

RETAIL, CONSUMER GOODS & RESTAURANT NEWS

Musk takes a hit, Zuck apologises, Allen Media Group makes a cheeky bid and house prices rise…

In a quick scoot around some of today’s other interesting stories, What the $56bn Tesla pay deal setback means for Elon Musk and his empire (Financial Times, Peter Campbell, Tim Bradshaw and Sujeet Indap) highlights the judgment at a Delaware court that Musk has to forfeit $56bn of share awards from a long-term pay package that was agreed back in 2018, when the company was anxious to hang on to him. It is worth noting that Musk does not receive a salary or any other pay from the company. * SO WHAT? * The fact of the matter is, the company drew up targets that Musk had to hit that, at the time, seemed pretty fanciful. However, he confounded everyone by actually beating them and now some fund manager is claiming that shareholders had been short-changed. If this decision stands, Musk’s ability to finance other ventures (like X and his AI initiatives) will be severely curtailed. Court ruling on Elon Musk’s pay questions the worth of star chiefs (Financial Times, Lex) notes that one of the ironies of this case is that Musk is being taken to task by the very shareholders that he has so handsomely benefited!

Sticking with Big Tech and big egos, Meta’s Mark Zuckerberg issues dramatic apology at Senate hearing on child safety (Financial Times, Hannah Murphy) shows that Zuck made a

public apology to the families of those who said that they had been harmed by his social media platform in a congressional hearing over online child safety. The Senate judiciary is currently debating whether social media companies are doing enough to protect younger users from harmful content. Chief execs from X, TikTok, Snap and Discord also faced a grilling. Let’s hope that something concrete and fruitful comes of all this. A public roasting isn’t going to bring back the kids that have committed suicide as a result of online bullying.

Meanwhile, Allen Media Group Makes $14.3 Billion Offer for Paramount Global (Wall Street Journal, Jessica Toonkel and Gareth Vipers) highlights Allen Media’s second attempt in less than a year to buy Paramount Global. The current offer of $14.3bn is less than the $18.5bn he offered back in April. Other companies, including Skydance Media and Warner Bros Discovery have also expressed an interest in buying Paramount. We’ll just have to wait to see how this pans out!

Back home, Lower mortgage dates fuel speed of rising house prices (Daily Telegraph, Chris Price) cites the latest stats from Nationwide which show that house prices increased at their fastest pace in a year thanks to falling mortgage rates. More reasons to believe estate agents’ cautious optimism?!?

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

5

...AND FINALLY...

…in other news…

I’m a fan of iced coffee (when it’s warm outside!). However, I’ve never made it like this before – and it looks very good! I will most certainly be giving this a try!

Watson's Daily is a hard-working start-up striving to help people get a better understanding of the business world. I would really appreciate your involvement in spreading the word and recommending it to your friends, colleagues, relatives etc. by clicking and sharing on the links below. Please help me to help you and I will throw in a small thank-you!

Some of today’s market, commodity & currency moves (as at hrs green is up, red is down). THIS IS INTENDED AS A ROUGH GUIDE ONLY!

FTSE 100 *Dow Jones *S&P 500 *Nasdaq*DAX *CAC-40 *Nikkei **Shanghai **
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

(markets with an * are at yesterday’s close, ** are at today’s close)