Thursday 14/03/24

  1. In BUSINESS & EMPLOYMENT TRENDS, US solar players suffer Chinese competition and Japanese workers get a hefty pay rise
  2. In RETAIL & CONSUMER GOODS NEWS, Dollar Tree shuts stores, Inditex invests and Adidas has its first loss in 30 years
  3. In TECH NEWS, we look at what’s next for TikTok and Arm designs a chip for self-driving cars
  4. In MISCELLANEOUS NEWS, Fisker looks dodgy, UK estate agents perk up, Moody’s decides to leave Canary Wharf, Eli Lilly does a distribution deal with Amazon and Metro Bank increases job cuts
  5. AND FINALLY, I bring you a pretty amazing basketball referee…

1

BUSINESS & EMPLOYMENT TRENDS

So US solar players take a pasting from the Chinese while Japanese workers get a decent pay rise…

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:

 

US solar manufacturers in ‘dire situation’ as imports soar (Financial Times, Amanda Chu and Demetri Sevastopulo) shows that an influx of Chinese-produced solar panels has been decimating prices in the US to the extent that domestic suppliers are now crying out for help. Cheap solar panels are being lapped up by renewable energy developers but this flood is potentially going to rip the domestic supply chain apart. China doubled its production capacity last year so now it churns out almost three times actual global demand 😱, according to the International Energy Agency and Wood MacKenzie. This has obviously had an effect on prices as they have halved over the past year. * SO WHAT? * Given that US power companies are now, understandably, buying up the cheaper Chinese panels as they build new solar generating complexes, North American solar panel manufacturers are now electing to hold back expansion plans despite big incentives available under the Inflation Reduction Act.

Companies like Canada’s Heliene and First Solar, the largest US solar manufacturer, are really pushing back as they can clearly see that their long term survival is under threat. The problem is that the US still imports most of its solar panels from south-east Asia because they are STILL cheaper than domestically-made panels even taking into account for tariffs and IRA subsidies. First Solar and Heliene are calling for stricter enforcement of tariffs and a swift return to the imposition of duties against south-east Asian imports. China produces 75% of the world’s solar panels. I don’t know if it’s all going to be too little, too late for solar panel manufacturers here but you would have thought that lawmakers in the US and Europe in particular need to take this example of what’s happened in the solar panel industry and keep this in mind when they decide what they are going to do about the electric vehicle industry as I can very easily see things going the same way!

Then in Japanese workers secure biggest pay rise in three decades (Financial Times, Kana Inagaki) we see that a number of big Japanese companies have agreed to give their workers the biggest pay rise since 1992. Wage negotiations between companies and unions take place every spring and it looks like workers will get a 4%+ wage increase. * SO WHAT? * This doesn’t sound like a lot but real wages in Japan have stagnated since the late 1990s. This will put even more pressure on the Bank of Japan to raise its interest rates out of negative territory!

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 NEWS

Dollar Tree shut stores, Inditex invests and Adidas has a loss…

Over in the US, Owner of Family Dollar to Close 1,000 Stores (Wall Street Journal, Will Feuer) shows that Dollar Tree, the owner of the Family Dollar chain, is planning on closing almost 1,000 of its 16,700 outlets over the next few years as it continues to integrate Family Dollar (which Dollar Tree bought back in 2015) into the enlarged group and recalibrates its offering taking into account the inflationary environment and store theft. Family Dollar outlets tend to be in more urban areas and sell groceries, cleaning products and other items whereas Dollar Tree outlets tend to be in more suburban areas selling knickknacks to middle-income households. * SO WHAT? * If you think that the economy is going to turn around, you do wonder how long discount stores can continue to do well – and I mean that in the UK as well as in the US. In this sense, the fact that Dollar Tree is now concentrating on opening more Dollar Tree formats and closing more Family Dollar stores would suggest that the company is actually taking this shift in consumer mindset into account…

Meanwhile, in Europe, Zara owner Inditex adds €1.8bn in logistics ‘muscle’ to power sales growth (Financial Times, Barney Jopson) shows that Inditex is going to spend a chunk of change on

distribution centres over the next two years to help it sell more of its wares. It reported a “strong start” to the current quarter and continues to outperform its arch-rival H&M. Its new spring and summer collections have been well-received so far. * SO WHAT? * This is a hefty amount and should help the company to continue to stay ahead of the competition (and make it difficult for the competition to make a dent in this industry). As things stand currently, despite having thousands of stores in over 90 countries, most of its outfits have to go via distribution centres in Spain before they reach shops or are sent out as online orders. Inditex continues to knock it out of the park!

Then in Adidas’s first loss in 30 years after Yeezy crisis (Daily Telegraph, Hannah Boland) we see that the moment came for Adidas to take the hit from abandoning its deal with rapper Kanye West for making anti-Semitic remarks. The abrupt ending of the deal contributed to a €500m fall in sales during 2023 but Adidas said that it expected sales to get better this year. The last time Adidas fell into loss was in 1992 when founding family member Horst Dassler died and his daughters decided to exit the company.

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

TECH NEWS

TikTok’s in trouble and Arm unveils a chip for driverless…

What’s next for TikTok and its US users after House approves ban (Financial Times, Tabby Kinder) takes a look at what might happen now that the US House of Representatives have approved a bill to ban the short-form media platform from app stores unless it’s sold by its Chinese parent company, ByteDance. This wasn’t a close result either – the overwhelming support that it garnered showed that many in Washington agreed that TikTok is a security threat while it is under the ownership of ByteDance. In practical terms, if the bill proceeds and is signed into law by Biden, ByteDance will have to sell TikTok to a non-Chinese company within six months or it will be pulled from app stores. Web access would also be blocked in the US. As far as users are concerned, a ban would mean that existing users won’t be able to update the app or re-download it if they deleted it or wanted to download it onto a new phone – but users could also get around it by using VPNs. The biggest impact for the company would be in its growing ecommerce market as it has now become the biggest player in the world of “social commerce” where products are pushed to users via a very effective algo. * SO WHAT? * It’s a moot point as to whether TikTok really is a security risk, but the fact is that the Chinese government has the power to force companies operating under its jurisdiction to hand over any national security data. Although the company says that it would not hand over data if requested, it has acknowledged that China-based employees at ByteDance COULD have access to some US data from the app. TikTok DOES collect a lot of user information like locations, contact lists, personal details and IP addresses but many privacy researchers say that this is no more than

other major social networks. TikTok could take the American government to court – but such a lawsuit would have to be brought within 165 days of the bill becoming law. The alternative of selling TikTok off to a non-Chinese company looks unlikely, though, as China’s commerce ministry said it would “firmly oppose” a forced sale. I wonder whether Trump could use his new more conciliatory stance on the company, where he opposes a ban, to get younger voters onside and demonstrate his understanding of the younger demographic (!) whilst branding the decision to impose a ban  as evidence of “Sleepy Joe” being out of touch…

Then in Arm unveils first chip design to power self-driving cars (Financial Times, Tim Bradshaw) we see that Arm has made an important step in its efforts to move beyond its heavy reliance on smartphone processors, on which it has built its reputation. It launched its high-powered “Neoverse” chip design family for automotive applications for the first time as well as some new systems aimed at carmakers and their suppliers. Automotive is one of Arm’s key focus areas alongside data centres and the “internet of things” – and although it’s quite small relative to other areas, the company believes that there is a lot of room for growth. * SO WHAT? * It’s great that Arm is diversifying its revenues as the world evolves, but I don’t think driverless is where it’s at right now. TBH, I’m also a bit sceptical about the whole Internet of Things malarkey as people have been talking about it for ages but it doesn’t seem to have developed all that much from what I can see on a day-to-day basis. On the other hand I DO think that data centres are a good area to be in as I can see that there is going to be a lot of growth in this area as AI – and the computing power needed to develop it – continues to grow.

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

MISCELLANEOUS NEWS

Fisker faces bankruptcy, UK estate agents get chirpier while Moody’s quits Canary Wharf, Eli Lilly does a deal with Amazon and Metro Bank increases job cuts…

In a quick scoot around some of today’s other interesting stories, Electric-Vehicle Startup Fisker Prepares for Possible Bankruptcy Filing (Wall Street Journal, Sean McLain and Soma Biswas) shows that Fisker is in danger of going down the toilet as it has now hired restructuring advisers to help it with a potential bankruptcy filing. The company recently warned that it could run out of cash this year and it it issued a “going concern warning” only last month where there was “substantial doubt” about its ability to stay in business. Fisker’s share price cratered by over 46% on news that it had hired the restructuring firms. Nasty.

In real estate-related developments, UK estate agents more optimistic about house price outlook (Financial Times, Valentina Romei) cites the latest RICS survey which shows that UK estate agents are feeling at their most optimistic regarding the near-term growth in house prices since June 2022 but the outlook for commercial property in Canary Wharf took another hit in Fresh blow for Canary Wharf as Moody’s confirms exit (Daily Telegraph, Riya Makwana) as credit rating agency Moody’s said yesterday that it is going to leave the Docklands after 15 years of residency

there. It will, like others before it, be heading to the City and intends to move into a new space in Gresham Street subject to final terms. This came as a result of a review launched last summer. * SO WHAT? * The office vacancy rate in Canary Wharf now stands at 16% – its highest level for years. Businesses including HSBC and Clifford Chance are also planning to leave. Office valuations in the area have taken a hit as a result.

Elsewhere, Eli Lilly teams with Amazon to deliver medicines in America (The Times, Alex Ralph) shows that the world’s biggest pharmaceuticals company has agreed to a deal with Amazon’s online pharmacy business (called “Amazon Pharmacy”) to deliver medicines, including its super-popular Zepbound weight-loss drug, in the US. * SO WHAT? * This sounds like it will be good for both parties – Amazon because it gives it a nice boost for its pharmacy business and Eli Lilly, that will get a decent distribution channel. I would have thought that other drug companies will sign up with Amazon as a result…

Closer to home, Metro Bank increases job cuts to 1,000 and ends seven-day branch model (The Guardian, Kalyeena Makortoff) shows that the bank announced plans to cut 1,000 jobs and scale back its seven-days-a-week opening model. This is part of an extension of the cost savings programme it announced back in October. Tough times require drastic actions…

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 think that I can safely say that you won’t be able to guess what this basketball referee is going to do! This is some serious athleticism!!!

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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 **
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