Thursday 14/07/22

  1. In MACRO, ENERGY & CRYPTO NEWS, US inflation reaches epic levels, UK economic growth returns, the OBR relaxes, nuclear fusion investment raises hopes, solar panel demand rises and Celsius Network files for bankruptcy protection
  2. In TECH NEWS, Google slows hiring, the Twitter drama continues, Snap looks at NFTs, Hopin has a nightmare and Netflix does a deal with Microsoft
  3. In CONSUMER -RELATED TRENDS, UK residential property interest cools while rents go higher, fuel costs hit home, Wetherspoons suffers, Loungers is sitting pretty and PageGroup is the latest recruiter to do well
  4. In MISCELLANEOUS NEWS, wheat prices may get relief, Arrival axes jobs and edutech evolves
  5. AND FINALLY, I bring you an interview with Gru…

1

MACRO, ENERGY & CRYPTO NEWS

So US inflation goes ballistic, UK growth returns, nuclear fusion gets more money (and progress) and solar panel demand rises while Celsius Network files for bankruptcy protection…

📢 It’s Thursday, so it’s time for the one hour weekly ZOOM call for SILVER and GOLD subscribers! *** THIS CALL WILL RUN FROM 6PM TILL 7PM ***. As usual, during this call, I will do a round-up of the week’s news and then open it up to questions from you. After that, depending on how much time we have, we will also debate the following:

  • Why were SPACs so popular and where have they gone wrong?
  • If the Ukraine war ended tomorrow, which sectors do you think could bounce back first – and why?

You can just listen into the debate if you want to, but I thought I’d give you the heads up on topics for if you would like to engage. You will definitely get more out of this call if you take part in the debate, though 😜!

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US inflation hits 9.1% as pressure grows on Federal Reserve (Financial Times, Colby Smith) highlights the latest rise in consumer prices, which came in above market expectations of 8.8%. This new 40-year high makes it more likely for the Federal Reserve to go full beans and raise interest rates by a full 1% at its next meeting.

Back home, UK economy returns to growth thanks to holiday boom and GP visits (The Guardian, Richard Partington) cites the latest data from the ONS which shows that GDP rose by 0.5% on the month in May after a decline of 0.2% in April – considerably higher than the 0% economists were expecting. This was driven by improved industrial output, decent construction sector performance and more people visiting GPs (I was a bit mystified by this, but maybe this drives up activity as people buy medicines perhaps?). That said, there are still fears of the ongoing impact of the cost of living crisis. It was also interesting to note Next PM will have room to cut taxes, claims OBR (Daily Telegraph, Tim Wallace) particularly because this is the complete opposite of what the same newspaper led with at the end of last weekTax cuts impossible for next PM, warns OBR (Daily Telegraph, Tom Rees)!

Anyway, this week the Telegraph is saying that the incoming PM will be able to cut taxes without stoking inflation because of the wider economic slowdown. Hmmm. This will be music to the ears of Tory leadership candidates who want to cut taxes.

In energy, Investment boom in nuclear fusion lifts breakthrough hopes (Daily Telegraph, Rachel Millard) shows that a quickening in the pace of investment in nuclear fusion could lead to fusion power feeding electricity into power grids by the 2030s, according to new data. $2.8bn has been invested in the sector on a global basis in the last 12 months versus around $2bn over the past 10 years. * SO WHAT? * Nuclear fusion is the Holy Grail of renewable energy and it sounds like we’re getting closer to making it happen! Tokamak Energy and First Light Fusion, based in Oxford, are two companies at the forefront of developments in this area and the UK Atomic Energy Authority is looking at making a prototype fusion power plant in the UK. That said, most of the companies involved in fusion are in the US, which has Avalanche Energy and Commonwealth Fusion Systems.

Meanwhile, Heatwave puts spotlight on demand for solar panels (Daily Telegraph, Rachel Millard and Matt Oliver) shows that farmers are increasingly thinking of covering their fields in solar panels rather than growing crops or rearing animals – as long as they can get the planning permission. Homeowners and businesses alike are all installing rooftop solar panels in an attempt to beat massive energy bills. * SO WHAT? * At the moment, solar only makes up 4.2% of the UK’s electricity generation – versus 20% from wind – but ministers reckon that could quintuple by 2035. Solar panels can cut energy bills by about 50% on average, according to research by the Eco-Experts, which means that they could pay for themselves within 10 years and make profits of about £8,000 over their 25-30 year lifetime – but the payback could be way quicker with businesses that large roofs (about three years!). At the moment, the Regulatory Assistance Project says that only about 3% of homes have solar panels. This all sounds very interesting for solar panel installers and manufacturers!

Then in Crypto crash drags lender Celsius Network into bankruptcy (Wall Street Journal, Alexander Gladstone, Vicky Ge Huang and Soma Biswas) we see that crypto lender Celsius Network filed for bankruptcy protection yesterday, just one month after freezing withdrawals following the crypto sector collapse. What an absolute joke. Last week we saw the same fate for Voyager Digital, this week it was Celsius Network’s turn. Who’s next??

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

TECH NEWS

Google slows hiring, Twitter’s drama continues, Snap thinks NFTs, Hopin has a ‘mare and Netflix does a deal with Microsoft…

In Google slows hiring citing ‘uncertain’ outlook as recession threat rises (Financial Times, Richard Waters) we see that Google said in an internal e-mail on Tuesday that the company would be “slowing the pace of hiring for the rest of the year”. Other tech companies have made similar announcements, with Microsoft and Meta also joining the trend after what seems quite a long time of frenzied recruitment for the sector.

Twitter turns Elon Musk’s own Tweets against him to build case for $44bn deal (Financial Times, Sujeet Indap and Hannah Murphy) highlights the latest development in the whole Twitter/Musk saga as Twitter tries to make Musk eat his words while Hindenburg Research backs Twitter and bets against Elon Musk (Financial Times, Ortenca Aliaj and Hannah Murphy) shows that the notorious short-seller is backing Twitter, saying that “Twitter has a strong case”. Interestingly, the company had been shorting Twitter until May, but now believes that investors should be buying it. The drama continues…

Snap explores plans to let users showcase NFTs as filters (Financial Times, Hannah Murphy) says that the social media platform is looking at ways to enable users to showcase their NFTs on the app as augmented reality filters. A test is being launched at the end of August with a handful of creators. The idea is that developers will be able to mint NFTs via a third-party service and

then use them as Lenses (AR filters for users) on Snap. * SO WHAT? * Interesting, no? This is all part of the general trend for social media platforms to attract creators who can make compelling content and attract/retain users. They are doing this by offering functionality and different ways to monetise content. If this starts to look promising, no doubt Facebook will just rip it off and put it on Instagram 🤣. After all, Meta is all about the metaverse and NFTs look likely to be an import part of it…

Meanwhile, $7bn virtual meeting business start-up cuts staff (Daily Telegraph, Matthew Field) shows that Hopin has just had to lay off 29% of its employees just months after cutting the workforce by 12%. The demand for digital seminars has just fallen off a cliff. According to its library of ongoing and future events, there are only about 200 public meetings between July and August versus the 15,000 per month the company had in November 2020. The COO, CFO and chief business officer will all be included in the 29%. * SO WHAT? * 28-year-old founder Johnny Boufarhat saw the value of his company hit $7.75bn at its peak and it is believed that he has sold $195m in the company since its inception. It remains to be seen what direction this company will take next. Will it be sold or will it die a slow and painful death?

Then in Netflix turns to Microsoft to halt slump with ad-based streaming (The Times, Callum Jones) we see that Netflix has managed to get Microsoft to help it build a new ad-financed new subscription option. The development of this new option cannot come fast enough for Netflix, which is bleeding subscribers currently.

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

CONSUMER -RELATED TRENDS

Consumers continue to face a plethora of challenges and price rises – but find time for Loungers and swapping jobs…

Demand for homes falls for a third month as market cools (The Times, Tom Howard) cites some interesting findings from the Royal Institution of Chartered Surveyors residential property market survey which show that the number of would-be buyers contacting estate agents about moving home fell for the third consecutive month in June. Many respondents said that “the market is starting to cool off” and transaction numbers are starting to fall away. Having said that, Record price surge for Generation Rent as properties dry up as demand soars (The Times, Tom Howard) shows that the rental market is still very strong as figures from Rightmove show that rents across the UK are rising at their fastest rate for at least 16 years due to the relative lack of properties available. On average, rents are now 11.8% more expensive than they were this time last year. Yet another problem for consumers to deal with!

Talking of problems, Record fuel prices force drivers to cut back at pumps (Daily Telegraph, Matt Oliver) shows that record fuel prices have led to users in developed countries cutting back on fuel spending, according to the International Energy Agency. It said that it thought that global supplies will continue to be spread thinly even if OPEC and chums increase production mainly because of the limitations of refining capacity. Pump misery looks set to continue!

Wetherspoon’s warns of £30m loss as older drinkers stay at home (The Guardian, Sarah Butler) would imply that consumers aren’t drowning their sorrows in alcohol as the cheap-and-cheerful pub chain yesterday warned of bigger-than-expected annual losses due to higher wage costs and a slow recovery in bar trade as older drinkers have tended to stay away.

On the other hand, Loungers is sitting comfortably (The Times, Dominic Walsh) shows that consumer spending and rampant inflation is not holding Loungers back from expanding. The restaurant/bar chain which operates the Lounge and Cosy Club brands said that since its April year-end it has managed to outperform the entire pub and restaurant sector by over 15% in terms of like-for-like sales growth. The chief exec said that the company had benefited from people working and eating local. It’s good to know that it isn’t a complete nightmare for everybody 👍.

Then in Jobs boom helps drive record quarter for PageGroup (The Times, Times Business reporter) we see that the London listed recruiter said it was benefiting from rising wages because it takes a fee based on a percentage of the first year’s salary of whoever they find for their clients to fill their roles. It sounded a note of caution about global political and economic uncertainty, but is generally doing OK at the moment. Interestingly, PageGroup: investors are not swayed by recruiters’ confidence (Financial Times, Lex) says that investor sentiment appears to be cooling on valuations of a company that has benefited hugely from the red-hot recruitment market but that long term, skill shortages are likely to continue, meaning that employers will be needing more help – not less – in finding talent. * SO WHAT? * I am of the opinion that employers may well be tempted to do more recruiting themselves after seeing recruitment agencies raking it in. It’s quite amusing really, because the process of recruitment can be extremely arduous – but it doesn’t look like that from the outside! All companies can see is recruiters making tons of money and getting more demanding about their fees, so I wouldn’t be surprised if I saw them put their HR teams under more pressure to do more recruitment themselves. If recruitment goes in-house, I would expect the likes of LinkedIn to do well as companies upgrade their LinkedIn packages. Maybe they will also try to harness the use of influencers to attract talent (as per the “lawfluencers” we hear a lot about who are used to attract talent to law firms, among other things).

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

Wheat prices may see relief, Arrival announces departures and education tech evolves…

In a quick scoot around other interesting stories today, Wheat: supply crunch remains threat to commodity prices (Financial Times, Lex) points out that wheat prices have calmed down somewhat after a bit of a frenzy in the wake of Russia’s invasion of Ukraine. Although demand is likely to continue to be strong, the winter harvest is due in the US, there’s talk of a good harvest in Australia and Ukraine’s wheat harvest season is going to begin. Wheat prices are likely to stabilise over the next few months.

Elsewhere, Up to 800 jobs at risk as electric vehicle start-up Arrival slashes costs (Financial Times, Peter Campbell) shows that the UK-based electric vehicle company is planning to wield the axe as it tries to cut costs. It suffered big losses in Q1 thanks to supply chain problems, the Covid impact, geopolitical tensions and rising

inflation (like pretty much everyone else). US rival Rivian is expected to announce cuts of 5% of its workforce as it struggles with similar problems. Arrival’s share price has fallen by a massive 80% this year. * SO WHAT? * It’s not just the tiddlers like Arrival that are getting hit – Tesla is also cutting staff. I can’t see conditions improving for a while yet…

Then in Targeted by Beijing, one Chinese tutoring company reinvents itself with live streams selling groceries (Wall Street Journal, Shen Lu) we see that New Oriental Education & Technology Group continues to evolve after the Chinese government came down hard on education technology companies for making money from teaching the national curriculum. It did this because it believes that such services give unfair advantages to children whose parents can afford the extra expense. You may recall that I referred recently to New Oriental pivoting its offering – well this article continues the story, saying that the company is turning into quite a successful livestream retailer! How amazing!

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…

OK, I know this is a bit old, but I only just discovered it! It’s a “live-action” interview with Gru from quite a few years ago. He is just brilliant 🤣! Gotta love Steve Carell 👍

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Some of today’s market, commodity & currency moves (as at 0631hrs 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 **
7,156 (-0.74%)30,722.79 (-0.67%)3,801.78 (-0.45%)11,247.58 (-0.15%)12,756 (-1.16%)6,000 (-0.73%)26,643 (+0.62%)3,282 (-0.08%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿
96.4799.851,726.801.185631.00237138.3471.1828420175.9

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