Tuesday 10/01/23

  1. In MACRO & ENERGY NEWS, the EU’s recession may be shallower than expected, a Northern Ireland agreement gets closer, the Bank of England warns on inflation, energy support for business gets an unpopular rejig and Lula has problems
  2. In CONSUMER & RETAIL NEWS, higher spending is subsumed by inflation, mortgage payment shock is in the offing, online retailers have a nightmare and Lidl feasts while Waitrose doesn’t
  3. In CAR-RELATED NEWS, Rolls-Royce has a stormer, Tesla faces China indignation, Britishvolt seeks a lifeline and EV service station costs are higher than you’d think
  4. In MISCELLANEOUS NEWS, AstraZeneca buys CinCor, Disney gets people back to the office and commercial property landlords face falling values
  5. AND FINALLY, I bring you one man’s resistance against Graeme extinction and some Cup Noodle shoes…



So the EU may outperform dire expectations, a NI agreement nears, the BoE warns of higher for longer, biz support with energy bills takes a turn, Europe buys in LNG and Lula faces major challenges…

📢 I’ll shortly be publishing my annual P/Review where I roundup the news of the year in 2022 and then outline predictions for themes in 2023. Because it’s such a big report 😱, I will be publishing it in stages. There is nothing like this anywhere else, and it will help your understanding of what’s going on enormously so keep an eye out for it! In the meantime, I’ve recorded a special podcast where Ralph Hebgen and I talk through some key themes to watch out for this year. You can listen to it HERE or watch it HERE.

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:

Shallow economic data points to shallow eurozone recession (Financial Times, Valentina Romei) suggests that the eurozone’s economy may not suffer as much as everyone has been expecting. The latest data shows that eurozone employment is at a record low and output from German factories increased in November – both positive signs. Economists have been upgrading their estimates for growth in the last few months due to the combination of improving data and falling gas prices. Nice.

While we’re on the subject of Europe, UK and EU make breakthrough in ‘constructive’ talks on N Ireland trade (Financial Times, George Parker, Peter Foster, Andy Bounds and Jude Weber) shows that London and Brussels have managed to make real progress in talks about Northern Ireland’s post-Brexit trading

relations, which suggests that a solution may finally be in sight. A joint statement outlined a tentative deal that would give Brussels access to the UK’s IT systems for trade across the Irish Sea. The signs are positive, but a final comprehensive deal is yet to be reached.

Then in Bank of England warns inflation could last longer than expected (The Guardian, Richard Partington) we see that the central bank’s chief economist, Huw Pill, has warned that inflation could remain higher for longer despite the recent weakening wholesale energy prices. I think this is just noise and one way for the Bank to give itself wiggle room to raise interest rates (or at least keep them high) in the future. Clearly, he doesn’t want investors to get ahead of themselves! We’ve come a long way from an interest rate of 0.1% early last year to 3.5% now!

Energy support scheme for UK business set for big cut (Financial Times, Jim Pickard, Daniel Thomas and David Sheppard) identifies something that is bound to be unpopular for many as the British government is going to be cutting the support it gives to companies with their energy bills, but keeping it in place for longer – another year from the original April deadline – according to ministers yesterday. This will come in the form of discounts on energy and gas bills and more help will be given to businesses classed as “energy-intensive users”. * SO WHAT? * Although businesses will be frustrated by the cut, this is actually a significant change to what had been on offer before (Chancellor Jeremy Hunt had said that most business support would be withdrawn by the end of April). I do, however, suspect that this is going to hit smaller businesses way more than larger ones who potentially have the luxury of being able to have a greater ability to pass on higher costs to customers. Critics add that this could create another inflationary spike in April as businesses pass more costs on to customers that could dent the government’s efforts to curb prices spiralling even higher.

Meanwhile, Brazil: riots point to Lula’s challenge in governing a divided country (Financial Times, Lex) suggests that the occurrence of massive Capitol Riots-like demonstrations in Brazil just go to show what the new Brazilian President Lula is up against. Much as Trump-ites did in the US, far-right supporters of Jair Bolsonaro (well his nickname is “Tropical Trump”!) stormed government buildings in Brasilia over the weekend. * SO WHAT? * It was interesting to see that the market didn’t really react very much in response either in terms of stocks on the Bovespa or the real versus the dollar. Bolsonaro’s party still controls both chambers and so Lula’s traditional desire to channel money to poorer people may be nigh on impossible to achieve because such plans are likely to be very difficult to finance.

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!



Inflation bites, mortgage payment danger lurks, online retail suffers, Lidl triumphs but possibly at a cost to Waitrose…

The consumer gloom continues in Spending rise eaten up by inflation (The Times, Arthi Nachiappan) as the latest data from the BRC and KPMG shows that retail sales fell in real terms for the ninth consecutive month in December as the total volume of goods sold dropped “significantly” in the five weeks to December 31st. The conclusion was that this trend is, unfortunately, likely to continue. I mentioned this briefly in yesterday’s Watson’s Daily, but Mortgage payments to triple for 800,000 moving to new deals (Daily Telegraph, Eir Nolsøe) gives a bit more detail as stats from the Office for National Statistics show that an estimated 1.4m homeowners are going to have to remortgage this year and that current rates mean that a large number of these homeowners are going to see their mortgage costs almost triple. To give an idea of scale here, borrowers could have to find an extra £1,000 (or more) per month if they have a 1.5% 25 mortgage on a £500,000 property! Ouch.

In retail news, Customers deliver worst year ever for online retailers (Daily Telegraph, Szu Ping Chan) cites research from business group IMRG which says that UK online sales dropped by 10.5% in 2022 versus the previous year – the biggest fall since

records began in 2000! It is also the first time that sales have fallen on an annual basis over that time period. This is not being made better by many expecting a tough 2023 as well…

Things are altogether more upbeat in Lidl has its busiest day yet as festive shoppers cut costs (Daily Telegraph, Daniel Woolfson) as Lidl had its best day in its 28 years in Britain as sales in the month to December 25th were 24.5% higher than they were a year earlier. An additional 1.3m customers went to their stores in the week before Christmas! Lidl and Aldi continue to grow market share at the expense of the UK’s “Big Four” – Tesco, Sainsbury’s, Asda and Morrisons – and Middle-class favourite Waitrose risks irrelevance (Daily Telegraph, Ben Marlow) highlights another incumbent supermarket player that is looking vulnerable to customer defection as inflation continues to bite. Even more damning, in light of current economic circumstances, are the findings of consumer champion Which? that show a sample basket of 48 everyday items costing a whopping £31 more than at Aldi! * SO WHAT? * Waitrose continues to emphasise “quality”, but this sounds less and less compelling. With households currently under such huge pressure, switching supermarkets is such an easy win for many. Waitrose also faces pressure at the “higher” end from a resurgent M&S. Waitrose needs to come up with a plan – and quickly! Tough times…

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!



Rolls-Royce booms, Tesla has China problems, Britishvolt reaches for a lifeline and EV vs petrol car costs may not be what they seem…

Ultra-rich craze for add-ons fuels Rolls-Royce sales (Daily Telegraph, James Warrington and Chris Price) shows that Rolls-Royce Motor Cars (NB this is not the same company as Rolls-Royce, the engineering company that makes aeroplane engines and is currently trying to build Small Modular Reactors!) had what chief exec Torsten Muller-Otvos described as a “momentous year” in 2022 as sales were enhanced by rich customers plundering the long (and expensive) options lists for their cars. The company has managed to diversify its range and bring the average age of its buyers down to 43. * SO WHAT? * This just serves to reinforce the fact that the ultra-rich continue to be insulated in the current cost-of-living crisis. Mind you, that shouldn’t come as a surprise! Mind you, hearing constant bits of news about how good the rich are having it at the moment may no doubt provide fuel for those who think they need to be taxed more in order for the pain to be shared around more equally.

Meanwhile, Tesla owners in China protest against price cuts (Financial Times, Gloria Li) highlights problems for Tesla in China as its recent decision to reduce prices by up to 13.5% (depending on the model) to better compete with domestic marques has blown up in its face. Tesla owners who bought the cars at the higher prices are furious and picketed Tesla showrooms and delivery centres in Shanghai, Wuhan and Shenzhen over the weekend. * SO WHAT? * This comes at a bad time for Tesla as it is experiencing

slower EV sales in China. Protestors handed Tesla a list of demands to compensate for the price drop and the company promised to give them a response by today.

In battery/charging news, Britishvolt seeks lifeline with sale of majority stake (Financial Times, Peter Campbell and Harry Dempsey) shows that the embattled EV battery maker Britishvolt is looking to sell a majority stake to an investor consortium, led by an international pension fund, for £150m. Shareholders will have until Friday to approve the offer. * SO WHAT? * The money would give Britishvolt more time to fill its order book and make further developments to its prototype batteries. The company managed to avoid falling into administration last year thanks to a cash injection from shareholder Glencore but is still up against it. Here’s hoping things will turn around. Fingers crossed!

EV service station charge costs more than filling a petrol tank (Daily Telegraph, Benedict Smith and Matthew Field) cites research by the RAC which shows that charging an electric car on a long journey is currently more expensive than filling up petrol and diesel equivalents as costs have shot up by almost 60% in eight months! Charging an EV at home, though, is still a lot cheaper than buying a tank of fuel in the old-fashioned way – which is fine if you have off-street parking and can install a charger. * SO WHAT? * FWIW, I think that if EV sales slow because people feel that the costs involved in buying them/running them is too prohibitive in the current economic environment, that might not be a bad thing because it could give the charging network time to catch up. That is, of course, if those installing chargers don’t slow down installation themselves!

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!



AstraZeneca goes shopping, Disney clamps down and landlords faces weakening commercial property values…

In a quick scoot around some of today’s other interesting stories, AstraZeneca to buy US biotech CinCor in $1.8bn deal (Financial Times, Hannah Kuchler and Jamie Smyth) shows that the pharmaceuticals giant has agreed to buy CinCor at a whopping 121% premium to CinCor’s closing price on Friday. AstraZeneca is doing this to help expand its pipeline of heart and kidney drugs and the deal itself was one of many announced at JP Morgan’s healthcare conference in San Francisco, the pharmaceutical industry’s biggest annual gathering. AstraZeneca/CinCor: deal may herald start of biotech buying spree (Financial Times, Lex) says that more deals may be in the pipeline as the whole sector got sold off last year.

Disney requires workers to come to office four days a week, starting in March (Wall Street Journal, Robbie Whelan) highlights another blow for WFH fans as new/returning chief exec Bob Iger gets busy with one of the most comprehensive return-to-office

policies of a big US company since the pandemic. This is unsurprising given that Iger has the excuse that he’s trying to turn things around and all hands will be required on deck. I would expect more companies to go down this road over time as I think many employers prefer to see their employees toiling in front of their eyes!

Then in Landlords hit by £130bn slump in commercial property values (The Times, Tom Howard) we see that CBRE’s monthly index showed that the value of commercial properties in Britain fell by £130bn last year thanks to rising interest rates and the prospect of recession. Commercial property capital values fell by 3% just last month, which means that commercial property values dropped by 13.3% over the course of last year. This contrasts with the previous year which saw a 13.8% rise.  Industrial units did particularly badly, as did warehouses (although I still reckon warehouses are a decent long-term bet!). This all coincides with Goldman Sachs’s predictions that commercial property values will fall by up to 20% by the end of 2024 versus levels reached last summer.

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!



…in other news…

It takes a certain type of person to take up a cause worth fighting for. Do you think that Man called Graeme calls for more baby Graemes to stop the extinction of Graeme (Metro, Joe Roberts) is such a cause? I recall that there is an annual gathering of Nigels who want to celebrate their inherent “Nigel-ness” and seek solidarity for a name that is losing popularity. I wonder where the whole Graeme and Nigel thing stands in relation to all the Keiths out there…then I also thought I mention an idea for you if you are into unusual footwear collabs in Converse teaming up with Cup Noodle for three pairs of shoes inspired by iconic packaging (SoraNews24, Dale Roll). They are sure to be an “instant” success. Badumtish.

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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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