- In CONSUMER/RETAIL NEWS, we see rising household debts, a hot residential property market into the end of the year and worries about retailers coping with extra demand
- In TECH NEWS, China tech suffers, Alibaba has a stellar Singles Day and TikTok tries another delay
- In PHARMACEUTICAL NEWS, we look at potential vaccine hurdles and Pfizer’s chief exec makes a handy bonus
- In MISCELLANEOUS NEWS, we look at the effects of BoJo’s takeover rules and Flutter’s US success
- AND FINALLY, I bring you one of my favourite ever music videos…
So household debts rise, residential property is hot but retailers worry about meeting demand…
*** It’s THURSDAY today, which means that it’s ZOOM time! This is a Zoom call where I talk about the week’s key business and financial markets news and open it up to questions from YOU where you can ask anything you like. The call for PAYING SUBSCRIBERS starts at 5.30pm and finishes at 6.30pm. In this call, I do the weekly roundup, Q&A and interactive group discussion. Joining details for this call are HERE. If you want to upgrade to be a paying subscriber, please click HERE. Hopefully I will see you later! Don’t be shy – say hello! I had a problem with the call last week, so IF you have any issues please e-mail to tell me on email@example.com and I will set something else up. I think I’ve fixed it, but I just thought I would have a back-up plan just in case!
Prior to this call I will be doing an Instagram Live starting at 5pm on the Watson’s Daily Instagram channel where I will be interviewing Emily, who has been a subscriber to Watson’s Daily for the past three years. She’ll be answering questions about how she has used Watson’s Daily and the benefits it has brought her. If there is time, I will also open things up to a Q&A as usual! ***
Debt crisis warning as UK reports steep rise in emergency borrowing (The Guardian, Phillip Inman) cites research by debt charity Stepchange which shows that household borrowing and arrears have shot up by 66% since May and the number of people who are in severe debt has risen to 1.2m. It warns that inaction by the government could result
in these numbers continuing to rise – something that it should be taking into consideration particularly as unemployment numbers increase.
Having said that, Property market booming but will slow after support ends in new year (The Times, Gurpreet Narwan) cites the Royal Institution of Chartered Surveyors (RICS) as saying that although the number of buyer inquiries, agreed sales and instructions to sell are still on the rise, this rate of growth was unsustainable given that Rishi Sunak’s stamp duty holiday will end in March next year. RICS members said in a survey that they expected that the end of this relief – as well as an uncertain economic backdrop – would herald a cooling off. * SO WHAT? * No 💩, Sherlock. The current residential property boom is being largely powered by Sunak’s stamp duty measure and if he sticks to a hard deadline, I would have thought that the housing market will fall off a cliff. Buying property isn’t a swift process – especially at the moment – and so there is a danger that some buyers will miss the benefits if there are delays in the housing chain. I think that the government needs to come up with more guidance about how it will address this problem and tell people whether it’ll be a hard deadline or whether stamp duty will come back in staggered phases so people can plan now.
Then in Christmas gift warning as retailers face supply chaos (Daily Telegraph, Laura Onita) we see that retailers are expecting chaos in December due to a combination of supply chain issues, movement restrictions, staff absences and nervous customers. Stores are seeing a huge uptick in online demand and are moving stock from shops back to warehouses in order to keep up. The Entertainer’s CEO, Gary Grant, warned that delivery capacity would fall short if the current lockdown period is extended. Tough times. Great if you are a delivery driver, though!
Fear of Beijing curbs wipes billions from value of tech firms (The Guardian, Rupert Neate) follows on from what I was saying yesterday about Chinese authorities cracking down on tech companies as their share prices continued to fall for a second day. Alibaba saw its share price fall by 9.8%, but many others also had a bad day as Tencent fell by 7.4%, JD.com by 9.2%, Xiaomi by 8.2% and Meituan Dianping by 9.7%. This was despite Alibaba sets ‘Singles Day’ sales record (Wall Street Journal, Liza Lin and Xie Yu) being a cause for celebration as the world’s biggest online shopping event went even crazier than usual – it saw $75.1bn in sale in one day but Alibaba: trust issues (Financial Times, Lex) hightlights the fact that Alibaba has a lot to lose under the new rules as it has a whopping 60% market share of Chinese e-commerce market. If you then add in JD.com’s share, then you have almost 75% of the market dominated by two players! * SO WHAT? * The danger here will be what the authorities decide to do about restrictions of the use of customer data from online search
and what they buy. Such data helps to power Alibaba’s ad revenues as it know who to target for the most effective return. If tighter controls are brought in for data usage, Alibaba’s supremacy could dent its lead over rivals. As always, the devil will be in the detail of any regulations, so everyone will be watching with interest when they see the final draft. Are the regulators just trying to scare tech, or will they really clamp down on it??
TikTok challenges Trump order ahead of US divestment deadline (Financial Times, Miles Kruppa and James Fontanella-Khan) shows that ByteDance, TikTok’s parent company, has filed a legal challenge against the White House order that will force a sale of TikTok’s US operations. The company is saying that Trump’s divestment order is a violation of the company’s constitutional rights and it is also applying for a 30-day extension for the deadline with the Committee on Foreign Investment in the US (Cfius). * SO WHAT? * ByteDance has got an agreement with Oracle and Walmart to control its US business but there are disagreements over who is actually going to be top dog in the deal. I would imagine that it is in ByteDance’s interest to keep dragging this thing out as long as possible in the hope that Trump will just get bored and that Biden may be less aggressive towards it.
We look at potential vaccine problems and the Pfizer chief sells into strength…
I am as hopeful as the next person that the Pfizer/BioNTech vaccine works wonders BUT I also believe in the saying “Hope for the best but prepare for the worst”. Seven factors that could pop bubble of elation over Pfizer (Daily Telegraph, Hannah Uttley) is an excellent summary of some of the issues that could get in the way of a vaccine and its swift distribution. It says that safety data will have to be of a decent standard to get emergency use authorisation from the FDA (although it could release this data as soon as next week, apparently), that the level of efficacy can fall even in the latter stages of a trial, that manufacturing it fast enough could be problematic, that
logistics could prove to be a sticking point (Pfizer’s vaccine has to be stored at -70ºC and there’s not enough dry ice knocking around to keep it at that temperature) and that the public may not trust something that has been developed so quickly. What is particularly interesting, though, is that the challenges faced by the Pfizer/BioNTech solution (cold transportation) may hand rivals such as AstraZeneca/Oxford University an advantage if their vaccine is as effective but less problematic to transport. Still, that said, fingers crossed for a successful vaccine candidate!
Meanwhile, a lot of newspapers have picked up on Pfizer chief sold $5.6m of shares as promising vaccine was revealed (The Times, Alex Ralph) given that it obviously looks a bit dodgy at first glance. However, he did apply to sell about two-thirds of his shareholding on August 19th at a certain price before he knew the news – and managed to make a tidy $5.6m on it. Not bad!
We see who BoJo’s new rules are aimed at and how Flutter’s American bet is going well so far…
I did talk about these new takeover rules yesterday and who they were really aimed at but UK takes aim at China with revamp of takeover rules (Financial Times, Jim Pickard, Daniel Thomas, Arash Massoudi and Tom Mitchell) goes into more detail about why it is aimed at China and says that yesterday’s move brings the UK into line with other Western allies such as the US, Australia, Canada and New Zealand. * SO WHAT? * When you consider that Jingye owns British Steel and that China Investment Corporation owns stakes in Heathrow, National Grid and Thames Water while other Chinese entities own a stake in Hinkley Point C, you can see why there is an increasing need to at least keep a closer eye on the situation. UK M&A: intervening before elevenses (Financial Times, Lex) suggests that a fine line will have to be trodden
by politicians between protectionism, nurturing home-grown expertise and attracting inward investment. The new rules could also mean that less venture capital funds will be available for UK start-ups who won’t have the prospect of a Chinese buyer to fall back on.
Flutter’s US bet wins as it aims for $1bn in revenues (Daily Telegraph, Oliver Gill) shows that the company behind Sky Bet, Paddy Power and Betfair is close to smashing through the $1bn revenues barrier in the US as firms slug it out to win in gambling as sports betting is legalised across the US. There will continue to be a lot of M&A activity across online gambling as companies seek out scale and expertise but Flutter Entertainment: betting on America (Financial Times, Lex) heralds a note of caution as the UK still accounts for about 40% of revenues and says that it is unclear as to how online gambling growth will continue when lockdown is lifted and how sustainable the current uptick in the US will be. Still, all’s good in the ‘hood for now…
…in other news…
I didn’t find anything particularly exciting in the newspapers today regarding “alternative” stories, so I thought I’d leave you with what I think is probably my favourite ever music video! It’s a few years old now but it is just astounding. There is no CGI and it’s a one-shot video. Just keep watching to the end – it is mind-blowing! Anyway, HERE is “I won’t let you down” by OK Go. If you like this, have a look at their first viral video which is lower tech but just superbly simple. Maybe this is something you could recreate when gyms come out of lockdown 😁…
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 *
|Oil (WTI) p/b
|Oil (Brent) p/b
|Gold Per t/oz
(markets with an * are at yesterday’s close, ** are at today’s close)