Tuesday 09/08/22

  1. In TECH NEWS, SoftBank has troubles, Baidu does driverless robotaxis, Vertical Aerospace does flying taxis and Intel urges the UK to throw money at chips
  2. In CONSUMER/RETAIL NEWS, London rents rise, spending patterns change, Next is to take a chunk of Joules and The Works gets gloomy about Christmas
  3. In EMPLOYMENT TRENDS NEWS, PageGroup sees signs of a slowdown and Berenberg is to wield the axe
  4. In MISCELLANEOUS NEWS, News Corp benefits from ad sales, Veolia sells waste business, BioNTech puts hopes in a new Covid vaccine jab and Norway decides to cut power exports
  5. AND FINALLY, I bring you a brilliant Tina Turner cover (and no – for once, it’s not Pomplamoose 🤣)…

1

TECH NEWS

So SoftBank has a ‘mare, Baidu does driverless, Vertical does flying taxis and Intel wants some government input…

I mentioned the SoftBank story yesterday as it was breaking but Masayoshi Son ‘ashamed’ of focus on profits after SoftBank logs record $23bn loss (Financial Times, Leo Lewis and Eri Sugiura) shows that massive losses at the company’s flagship Vision Funds will prompt epic cost-cutting. Valuations have suffered from the general global sell-off of tech companies and previous star-performers like ecommerce company Coupang, AI group SenseTime and delivery service DoorDash have tanked. The often-controversial Son said that he is looking to sell Fortress Investment Group, the asset manager it bought in 2017, Lossmaking SoftBank quits its Uber ride (The Times, Tracey Boles) shows that it already reversed out of its remaining stake in Uber at a profit – and there will no doubt be more disposals to come. SoftBank/Son: downhill march proves painful for Grand Old Duke of Tech (Financial Times, Lex) highlights the ups and downs that the company has been through but ultimately, with every asset that has blown up in Son’s face, a little bit of credibility disappears with it. Son is SoftBank, so if he ever leaves it would be a massive deal. We haven’t got there yet, though!

Meanwhile, Baidu to operate fully driverless robotaxis in China (Financial Times, Primrose Riordan and Gloria Li) shows that Baidu has edged ahead of rivals including Pony.ai, WeRide and AutoX in the race to launch driverless taxis. The internet giant (aka “China’s Google”) announced that it would be allowed to operate its Apollo Go cars in Wuhan and Chongqing in a testing phase. * SO WHAT? * This all sounds lovely, but no-one really knows how long it’ll take to become commercial. Everyone is going to be watching this VERY closely for what to do and what NOT to do!

On the subject of taxis, I thought I’d include ‘Flying taxi’ prototype set for take-off in 200mph tests (Daily Telegraph, Howard Mustoe) as a prototype flying taxi designed in Bristol by Vertical Aerospace is about to start flight tests. It is designed to carry four passengers plus a pilot for trips of up to 100 miles and has customers like American Airlines, Virgin and Japan Airlines lined up with over 1,400 orders already on the books. Interestingly, it signed a deal with Babcock to develop an air ambulance version of the VX4 prototype to sell to 999 services and the military. * SO WHAT? * This sounds like a very exciting development, but I’m still sceptical as to the practicality of its application as a “taxi” that you can get on a night out, for instance. I do, however, think it will be good for emergency services and the military 👍.

Then in UK urged to come up with chip strategy (The Times, Katie Prescott) we see that Intel has appealed to the UK government to put some money toward chip production to help diversify the supply away from the Asian region. So far, it is spending €33bn on the Continent on semiconductor research and manufacturing with financial support from the EU and the US is also putting more money into it. At the moment, only 10% of the world’s semiconductors are made in Europe but it is hoped that this will rise to 20% by 2030. At the moment, Britain is reviewing the sector but hasn’t yet got as far as setting out a plan. * SO WHAT? * It sounds like Intel is willing to invest in production facilities in the UK as long as we can pony up a decent slug of cash. It is clearly a compelling option as semiconductors could be “the new oil” but it’ll probably come down to a case of how much financing the UK is willing to put up.

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

CONSUMER/RETAIL NEWS

London rents rise, spending patterns evolve, Next comes to the rescue of Joules and The Works lacks confident…

London tenants facing ‘increasingly unaffordable’ rents (Financial Times, Persis Love and James Pickford) shows that private tenants in London are faced with “increasingly unaffordable” rents, according to the homeless charity Shelter. The shortage of properties in the capital has led to prospective tenants having to compete in bidding processes and others are being asked for a whopping 12 months of rent in advance! Data from Zoopla shows that rental growth in inner London was around the 20% level in Q1 of 2022 and 10% in outer London. * SO WHAT? * A 20% rise sounds chunky but there are reports of much higher demands and, clearly, with the current cost-of-living crisis, this is going to be the source of a lot of stress for consumers. Some estate agents are even charging prospective tenants to VIEW properties! Demand is clearly way ahead of supply at the moment…

UK retail sales growth fails to keep pace with soaring inflation (Financial Times, Chris Giles) cites the latest figures from the BRC and KPMG which show that UK consumer spending actually grew in July versus the same month last year although it lagged the rise in inflation, powered by sales of clothing, picnic treats and electric fans. Squeezed households reduce spending on holidays and dining (Daily Telegraph, Tom Rees and Szu Ping Chan) cites data from Barclaycard which shows that there was a 7.7% increase in spending in July versus July last year, but that was more about rising prices than rising volumes. * SO WHAT? * Although the headline figures don’t look too bad, activity seems to be slowing

down and as prices keep rising, you would have thought that this will eventually flow through to that headline figure. I think that we really need to see what the new PM is going to do and whether measures will be put in place that will help to ease household finances.

Among the retailers themselves, Next in talks to take £15m stake in struggling chain Joules (The Guardian, Mark Sweney) shows that the apparel retailer is close to taking a £15m stake in the preppy retailer (about 25% of the company). * SO WHAT? * Given that Joules share price has fallen by almost 90% over the last year and that the deal is being done “at no less than Joule’s current market price”, this move should at least put a floor under the shares. The deal will be subject to the approval of Joules’ shareholders. The troubled retailer is also in talks to use Next’s online platform to run its digital operations. It’s good to see that Joules is at least making positive moves. From Next’s point of view, this looks like just another name to add to its platform that it will have picked up very cheaply.

Then in The Works sounds early warning over Christmas sales period (The Guardian, Sarah Butler) we see that the discount crafts, books and toys retailer is reining in its full year outlook as it voices uncertainty over this year’s Christmas season. * SO WHAT? * I’m actually quite surprised by this because I think that The Works looks like it could be really well-placed to take advantage of families wanting to have a “cheap and cheerful” Christmas as the shops are quite a lot of fun to go into and are crammed with stuff. I guess we’ll just have to wait and see how things go.

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

EMPLOYMENT TRENDS NEWS

PageGroup sees signs of slowdown and Berenberg is to wield the axe…

Page Group reports slowdown in hiring as recession fears mount (Daily Telegraph, Simon Foy) shows that one of the UK’s biggest recruiters is seeing early signs of a slowdown in the recruitment market although it has done well so far and reckons its full-year profits will be in line with expectations. The company noticed that decision making from clients has been taking longer recently – and this has been interpreted as being an early sign that the overall market could slow down. * SO WHAT? * It still seems to me that the overall market is pretty tight at the moment but I do wonder whether employers are trying to bring recruitment more in-house as they want to avoid the fat fees recruiters charge in an effort to cut

costs. This could delay decisions and reduce volumes from the recruiters’ point of view IMO.

Then in Berenberg to cut staff as chill sweeps City (Daily Telegraph, Simon Foy) we see that the German investment bank is planning on cutting staff numbers by over 5% as deal-making is getting thinner on the ground. This follows their June headcount reduction in the New York office, where the bank cited difficult market conditions. * SO WHAT? * In terms of absolute numbers, it’s not that big, but given that it’s the lack of dealflow that was cited as the reason behind the cuts, you’d think that other investment banks will follow suit. It won’t just be investment banks that will be affected either IMO (that includes other advisers on deals, e.g. lawyers etc)…

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

News Corp does well from ads, Veolia makes a sale, BioNTech puts hope in a new jab and Norway decides to cut energy exports…

In a quick scoot around other interesting stories today, Ad sales and data demand boost profits at Murdoch’s News Corp (Daily Telegraph, Ben Woods and Giulia Bottaro) shows that record profits at Rupert Murdoch’s media empire were powered by strong demand for online advertising sales and demand for its data business. It goes against the trend that some tech companies are finding of falling ad revenues.

Veolia to sell Suez’s UK waste business for €2.4bn (Financial Times, Leke Oso Alabi) shows that France’s Veolia will sell the British waste business of recycling group Suez to Macquarie Asset Management for €2.4bn following pressure to do so by the UK’s Competition and Markets Authority as part of efforts to ease Veolia’s takeover of Suez. Macquarie has a load of experience in owning UK infrastructure assets.

Elsewhere, BioNTech backs Omicron jab to bolster slowing sales (Daily Telegraph, Hannah Boland) shows that the company made famous by its Covid jabs is putting more hopes into its new Covid vaccine that should give better protection against Omicron. It reckons it could start to issue the new jab in October, when booster rollouts are due. Sales fell by 40% in the latest quarter, so clearly it could do with a booster itself!

Then Norway’s power curbs threaten UK winter plan (Daily Telegraph, Matt Oliver) shows that the country is indicating that it will ration electricity exports top make sure it has enough to power itself. * SO WHAT? * This is bad news for the UK and Europe as everyone scrambles to ensure power supplies ahead of winter. This is likely to push prices even higher as the National Grid will have to use coal-fired plans as back-up. Usually, Norway gets loads of electricity from its hydroelectric plants, but the hot weather has led to lower-than-normal levels and it will take months to be replenished by rain and melting snow.

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 saw this pop up on my YouTube feed the other day and thought it was great. It’s a brilliant cover of a Tina Turner classic – and for once, it’s not Pomplamoose doing it! Watch it HERE. It sort of reminds me a bit of something that Jimmy Fallon used to do in his show! HERE‘s a clip of Jimmy Fallon and Adele.

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Some of today’s market, commodity & currency moves (as at 0635hrs 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 **
7,482 (+0.57%)32,832.54 (+0.09%)4,140.06 (-0.12%)12,644.46 (-0.1%)13,688 (+0.84%)6,524 (+0.80%)27,971 (-0.96%)3,247 (+0.32%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿
$90.949$96.496$1,786.761.208691.01948134.9221.855723,897

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