- In MACRO, MARKETS & COMMODITIES NEWS, Iran forces action, US stocks have a wobble, China’s GDP growth jumps, oil stays calm but metals prices rise
- In TECH & MEDIA NEWS, Samsung boosts US chipmaking, we look at AI development, Apple loses its top spot and Trump Media takes a tumble
- In CAR-RELATED NEWS, hybrids trounce EVs, Tesla announces a 10% headcount reduction, Britishvolt’s former site looks like it’s set for a data centre future and Inchcape sells up
- In MISCELLANEOUS NEWS, Goldman does what it does best, CVC goes Dutch and Page Group suffers
- AND FINALLY, I introduce you to the best camping buddy…
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MACRO, MARKETS & COMMODITIES NEWS
So the reaction to Iran/Israel continues, US stocks wobble, China surprises on the upside, oil absorbs the unfolding crisis and metal prices rise…
Don’t miss our next news roundup for April, it’ll be on Monday 29th April at 5pm with Jake Schogger of the Commercial Law Academy. HERE’S THE LINK TO REGISTER! See you there!
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 and Europe seek to dissuade Israel from striking back against Iran (Financial Times, James Shotter and Andrew England) shows that everyone’s getting together to avert World War III as Israel’s military chief is clearly itching to respond to Iran’s attack. As things stand currently, western countries are preparing sanctions on Tehran. Israel-Iran Confrontation Forces Gulf Powers to Choose Sides (Wall Street Journal, Summer Said and Stephen Kalin) shows that the latest actions are dragging in countries in the region and forcing them to commit to a “team”. Oil states have been trying to avoid taking sides in the Ukraine war, Israel/Gaza and China/Taiwan but current events mean that they are going to have to get their hands dirty by allowing the Americans to launch attacks from bases in their countries (or not). You would have thought that they’ll try as long as possible to stay out of it, but there may well be a time (sometime soon) when they have to pick sides. Meanwhile, US Speaker says House will vote on Ukraine and Israel aid this week (Financial Times, Lauren Fedor and Felicia Schwartz) shows that some key decisions are going to have to be made this week that will hopefully end months of congressional limbo (particularly on Ukraine) which continues to cost lives. US voters warm to Joe Biden on economy but remain concerned over inflation (Financial Times, Lauren Fedor and Eva Xiao) shows the latest state of play for the president – that American voters are getting increasingly positive about his handling of the US economy, but they continue to worry about persistent inflation according to a new FT poll. There’s still a long way until the election, but I’m sure that Biden will be glad of any kind of positive!
US stocks drop as traders weigh risks of wider war in Middle East (Financial Times, Myles McCormick, Jamie Smyth and Stephanie Stacey) highlights market reaction to strife in the Middle East – increased volatility due to worries that things could escalate –
while ‘Blowout’ US retail sales shake bond and currency markets (Financial Times, George Steer, Kate Duguid and Harriet Clarfelt) highlights other influences on the markets as the latest retail sales report for March came in above expectations, making it even more difficult to justify imminent interest rate cuts as the implication is that the US economy is still hot! * SO WHAT? * Hopes for imminent interest rate cuts have been powering markets higher of late (the theory is that lower rates encourage more borrowing – and this money is then used to expand businesses and therefore the economy) so any news like this is always going to have a dampening effect on expecations.
Elsewhere, China’s GDP jumps 5.3% in first quarter (Financial Times, Joe Leahy, Thomas Hale and William Sandlund) highlights a stronger-than-expected performance by the world’s second largest economy despite recent disappointing data on weakening inflation and the ongoing problems in the real estate sector. * SO WHAT? * The government set a GDP growth target for the year of 5%, so this is clearly a strong start.
Meanwhile, in commodities news, Oil traders bet Iran will want to keep its exports flowing (Financial Times, Lex) shows that oil markets have actually remained remarkably calm despite recent geopolitical developments in the Middle East and Ukraine – because markets are coming off the boil due to interest rate cut hopes fading (historically, upside for oil prices is limited when markets weaken) and because Iran will want to continue to continue to keep exporting oil to China, its biggest customer. What next for oil prices after Iran’s attack on Israel? (The Guardian, Jasper Jolly) adds that one of the reasons why the oil price hasn’t reacted more is because Iran’s attack was very well telegraphed beforehand – so much so that most of the missiles were actually destroyed – and that it was a “one-off”. * SO WHAT? * Going forward, if Israel dials things up in response to Iran’s actions then oil prices could rise – and if that happens, then this would make it more difficult for central banks to justify any interest rate cuts until the situation calms down because higher oil prices will push inflation up – or at least slow its decline.
Then in US and UK ban on Russian metals sends prices soaring (The Times, James Hurley) we see that the ban on Russian metals trading by the US and UK has pushed up prices of aluminium, copper and nickel. Washington and London imposed a ban on metal-trading exchanges (the CME and LME – the world’s two biggest metal exchanges) accepting new aluminium, copper and nickel produced by Russia on Friday in addition to prohibiting their import into the US and UK. * SO WHAT? * Aluminium prices hit a 22-month high yesterday while nickel prices approached a seven-month peak. That being said, it looks like the spikes could be temporary as growing nickel supplies from Indonesia could put a ceiling on price rises while many copper customers have already found alternative suppliers.
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!
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TECH & MEDIA NEWS
Samsung does America, the AI debate continues, Apple loses its top spot and Trump Media tanks…
Samsung boosts Joe Biden’s chipmaking ambitions with Texas plant upgrade (Financial Times, Christian Davies) shows that the tech giant has announced that it’s going to start producing the latest generation of semiconductors in the US two years earlier than rival TSMC at a new fabrication plant (aka “fab”) in Texas. * SO WHAT? * This will be part of a wider $40bn investment made by Samsung which will get a nice little $6.4bn boost in direct funding courtesy of the US Chips and Science Act. The first chips from this new fab will roll off the production line in 2026. The geographical diversification of chip production takes a step forward but there’s still a long way to go to get chip production more evenly spread outside Asia!
The US and Europe need a strategy for the geopolitical contest over AI (Financial Times, Anja Manuel) is a really interesting article that adds to the whole AI debate on how best to move forward. It suggests different potential futures for the direction of AI -starting with the scenario where the growth of US and UK AI companies will eventually hit a limit of computing and electrical power. If this is not addressed quickly, it will mean that important facilities and capabilities will have to be relocated to other countries. Also, the world is likely to be split between a US-UK centric AI ecosystem and a China-centric one. Meanwhile, countries such as the UAE and Saudi Arabia will have substantial influence because they have the money and the electricity-generating capacity to support ongoing AI development. Potentially, AI companies could gravitate towards the UAE and Saudi Arabia where there are less stringent privacy protections and anonymised data of UK, US and other citizens will be transferred over there. Key personnel will also move there and potentially on to China and Russia given the good relations that the UAE and Saudi Arabia have with them. The article suggest that there are two options to avoid the aforementioned scenario –
firstly that the US, UK and Europe could try to keep it all “in house” and train the most advanced AI models “at home” – but that would necessitate a huge co-ordinated effort to expand power generation. Secondly, there could be a values-based ecosystem created around AI which could be more inclusive of other countries such as the UAE and Saudi Arabia and they could sign up to a set of clear, joint values and these signatories could be the only ones to get access to the most advanced computing chips. Governments need to start thinking about this now before they lose control of their data and future AI capabilities.
Elsewhere, Apple loses mantle as world’s biggest phone seller to Samsung as China sales drop (The Guardian, Jasper Jolly) shows that Apple has lost the top spot as the world’s biggest mobile phone seller as its mobile sales dropped, allowing Samsung to gain the spot it lost at the end of 2023. Apple’s weakness has been blamed on difficulties in China as local makers such as Xiaomi and Huawei have intensified competition in their domestic market. * SO WHAT? * The fact that the top spot changes just goes to show how competitive this area is! Samsung’s now #1, Apple’s #2 and Xiaomi is #3. Investors are still holding out hopes for an Apple phone with AI capabilities and the expectation is that we will hear more on that at the company’s developer conference in June.
Then in Trump Media shares tank after company reveals plan to sell more stock (The Guardian, Nick Robbins-Early) we see that shares in The Orange One’s social media company dropped by 12% in trading yesterday, continuing its losing streak, after it announced that it could sell millions of additional shares in the next few months (this is bad news for current shareholders who will see the value of their shares plummet as a result). * SO WHAT? * The company’s share price has already fallen by 60% since its market debut on March 26th and the prospect of Trump himself coming out of his lock-up period in September (i.e. he isn’t allowed to sell any of his shares until September) is going to be playing on the minds of investors given that he is surely going to sell at least a decent chunk to pay all his legal bills!
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!
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CAR-RELATED NEWS
Hybrids continue to edge EVs, Tesla makes bit cuts, Britishvolt’s site won’t be used for EVs after all and Inchcape sells up…
Hybrids Extend Lead Over EVs in Green Vehicle Race (Wall Street Journal, Nate Rattner and Mike Colias) cites the latest figures from research firm Motor Intelligence which shows that EV sales in the US fell further behind in Q1 as purchases of hybrids remained strong, carrying over a trend that started last year – a trend that we are seeing elsewhere around the world. Meanwhile, Elon Musk says Tesla will cut 10 per cent of workforce (The Times, Robert Lea) serves to underline the cooling of sentiment towards EVs (and the effect of ongoing price wars) as this will involve cutting headcount by 14,000 while Britishvolt ‘gigafactory’ site to be sold for £110m to US private equity firm (The Guardian, Jasper Jolly) shows that Blackstone Group, the US private equity firm, is looking to buy the failed EV start-up’s former site for £110m with a view to building one of Europe’s biggest data
centres on it – a further snub to EVs as this implies that Blackstone reckons it’ll make more money out of it by using the land this way.
Then in Inchcape sells UK car dealerships to American buyer for £346m (The Guardian, Robert Lea) we see that the automotive vehicle distribution group Inchcape is going to quit the UK by selling its 80 motor dealerships for £346m in cash to US car dealership 1 Automotive. * SO WHAT? * This is the latest deal where an American dealership has taken over a British one as we saw the acquisition last year of Pendragon by Lithia Group and Lookers was bought by Global Auto Holdings. Another one of our biggest dealerships, Sytner, is owned by Penske Automotive of the US. The deal makes strategic sense under the leadership of Inchcape’s CEO after a post-pandemic strategic review where low-margin businesses are being cut out. Group 1, for its side, has been building up its UK footprint via smaller acquisitions – so this one will provide a significant boost.
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!
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MISCELLANEOUS NEWS
Goldman Sachs does its thing, CVC goes Dutch and Page Group suffers…
In a quick scoot around some of today’s other interesting stories, Goldman Sachs traders help fuel 28% profit increase (Financial Times, Joshua Franklin) highlights a strong performance by the investment bank everyone loves to hate, drawing a line under a tricky 12 months. Its trading performance was particularly good and its investment banking business had its best quarter in two years! Goldman Sachs knows what fits it best — plenty of deals (Financial Times, Lex) suggests that the bank is back on track after some lean times. The fact that M&A activity is starting to roll is very good news not just for Goldman – but for all the investment banks!
CVC plans Amsterdam float to raise €1.25 billion (The Times, Helen Cahill) shows that the European private equity firm has decided to raise at least €1.25bn in an IPO on the Amsterdam stock exchange while Amsterdam listing for CVC another kick in the teeth for London (The Times, Helen Cahill) highlights the fact that this means that London is losing out AGAIN as a destination to list. CVC should tread carefully in third time lucky IPO (Financial Times, Lex) points out that although CVC has been
great at making deals, it has been noticeably less successful at picking a time for its own flotation as it has had to cancel previous IPO plans twice in two years. Clearly, it wants to join the likes of Blackstone, KKR and EQT but the article suggests that it might be wise for the company to price its flotation competitively so that it sees a nice bump on its debut to keep its employees happy and sentiment on a positive note.
Meanwhile, Page Group counts the cost of recruitment slowdown (The Times, Tom Howard) highlights a muted performance for the recruitment firm as a disappointing end to Q4 last year leached into Q1 this year, particularly in continental Europe. The recruiter observed that candidate and client sentiment remains subdued. * SO WHAT? * This would imply that the tight jobs market that we’ve experienced over the last few years is showing further signs of loosening. This could be good news for the economy because it means that wage growth is likely to slow down which then means that inflation slows down which means that interest rates are likely to come down which could, in turn, stimulate the economy.
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!
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...AND FINALLY...
…in other news…
I like a bit of camping – do you? Well I tell you, if this guy could come along on my next trip I really would be a happy camper (particularly if he takes care of the washing up as well)! Check out the cartoonish knife he uses 👀
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 ** |
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)