Tuesday 21/02/23

  1. In MACRO NEWS, we see contrasting views re Ukraine from the US and China
  2. In RETAIL NEWS, M&S gets sporty, the UK runs short of salad, Morrisons cuts prices again and Tesco announces a pay rise
  3. In TECH NEWS, Kyocera takes focus off China, Ericsson cuts headcount, China uses the courts to nick tech and we look at whether the free-access social media model is dead
  4. In MISCELLANEOUS NEWS, BHP takes a hit but likes India and China, Singapore’s rents get prohibitive and the 4-day week has fans
  5. AND FINALLY, I bring you this year’s biggest pancake “trend”…



So we look at Ukraine from different points of view…

📢 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:

I think that there is a lot of noise going on at the moment about the Ukraine war as world leaders continue to be pressured to commit their loyalties to one side or the other (with the notable reticence of 

Latin American and African leaders). Biden vows ‘unwavering support’ for Ukraine during surprise visit to Kyiv (Financial Times, Felicia Schwartz, Christopher Miller and Roman Olearchyk) highlights Biden’s commitment after his surprise visit to Kyiv yesterday as he announced $500m-worth of new military aid in addition to the $30bn of US lethal assistance already provided. He fell short of offering fighter jets and longer range missiles, but the future provision of those was mooted. This was the first visit of a US president to Ukraine for 15 years! China fears Ukraine war will spin out of control as it criticises US world role (Financial Times, Joe Leahy, Kathrin Hille and William Langley) highlights concern from China about the situation via its foreign minister, as does China’s top diplomat to discuss Ukraine war during Moscow visit (Financial Times, Max Seddon and Joe Leahy), which shows that China’s most senior policy official, Wang Yi, will be discussing the war in Ukraine with his opposite numbers on his Moscow trip this week. China has not condemned the invasion and it sounds like it is keen to bolster ties with Russia. Indeed, it has already helped Russia by boosting the acquisition of Russian oil and gas to offset western sanctions and it now accounts for around 50% of all of Russia’s imports, according to stats from Bruegel, a think-tank. * SO WHAT? * For all the posturing, it seems to me like Russia needs China more than China needs Russia, particularly now that it is cultivating Saudi Arabia as its new BFF so I think that any negotiating will be on China’s terms, not Russia’s. I find it difficult to tell what’s really going on at the moment as it seemed that, at the beginning of the year, that relations between the US and China were improving slightly – and then we had “balloongate” and now this! I really do wonder whether Xi is trying to take the focus off a weaker economy at home to give it time to bounce back after a tricky 2022 with all of this recent stuff. Anyway, we’ll just have to see how this plays out…

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!



M&S gets sporty, there’s a salad problem, Morrisons cuts prices again and Tesco announces a pay rise…

M&S gives website a sporty boost as it ‘goes into battle’ (The Times, Isabella Fish) shows that the high street stalwart is going to take on the world of sportswear via the stake it bought last year in The Sports Edit, an active clothing platform. The acquisition was part of its current strategy to welcome third party brands onto its website (it already sells clothes from Jaeger and Nobody’s Child) and in its stores to spruce up the usually bland offering. M&S will give The Sports Edit its own page on the M&S website where there will be more brands incoming such as Asics, Veja, Hoka and Girlfriend Collective, with more to come later in the year. * SO WHAT? * I think it’s great that M&S is moving in this direction as it will surely make its offering so much more attractive. I mean, if you are already in M&S to buy your undies (a telly documentary last year said that 25% of all British men wear boxers from M&S and a third of all bras made in the UK are from M&S!) why not stay a while and get some sports kit as well?? The company is keen to tap into its M&S Family Matters Index which said that 44% of customers plan to undertake more exercise and take their physical health more seriously in 2023.

Things are looking a bit dicey on the grocery front, though: UK runs short of salad crops and citrus fruits after cold spell in Med (The Guardian, Sarah Butler) shows that supermarkets are facing shortages of salad crops including cucumbers, peppers and tomatoes in addition to broccoli (😱😱😱 I am a broccoli obsessive – I LOVE the stuff!) and citrus fruits because of the cold weather in the countries where they are grown, including Spain and Morocco. Some are saying that the availability of produce is now down by 30-40% for some crops and wholesale prices have gone through the roof. Given that Spain produces about 80% of our salad and vegetable crops, we’ll have to wait for a few weeks before our own production kicks in. Fun fact: market prices for tomatoes are currently double or triple normal levels! * SO WHAT? * As things stand currently, it is likely that cafes, hospitals and care homes – along with independents – will suffer more than supermarkets, who

generally take priority. Tricky. Make sure you appreciate that salad when you get it!!! And no, the lettuce in a Big Mac does NOT count as one of your five a day 🤣

Elsewhere, we see Morrisons cuts food prices for second time in weeks (Daily Telegraph, Hannah Boland), which is particularly surprising given what I said just now, but the embattled supermarket (which lost its position as the UK’s fourth biggest supermarket to Aldi recently) has cut its prices for the second time in less than a month to take the fight back to the German discounters. It’s lowering prices on an additional 64 items by almost 20% on average. Previous price cuts have involved over 1,000 products. * SO WHAT? * It seems that everyone is at it! Waitrose lowered prices of some basics last week and the others are constantly harping on about price matching with Aldi. This is good news for consumers (although I think they are still paying more for groceries than they did in the past) but I think the British incumbents can only take this for so long because keeping prices artificially low costs a lot of money. Ultimately, I expect Aldi and Lidl to perform strongly for quite some time to come – even when the economic slowdown ends, because customers will have become so used to it that many will keep going there as it has become a habit!

Then in Tesco hands store staff 7% pay rise (The Guardian, Sarah Butler) we see that Britain’s biggest supermarket has made its third pay rise in a year to a minimum of £11.02 an hour as it fights to retain and attract staff in a tight market. This is a touch more than staff get at Aldi and Sainsbury (they pay £11 an hour, but will be short of Asda when it increases pay to £11.10 in July! Aldi is probably still ahead, though, as it also pays for breaks, a benefit that is worth hundreds of pounds a year). * SO WHAT? * This is great for workers, but as I said above about keeping food prices artificially low, this is going to be hard to maintain. If things get worse, supermarkets will probably have to cut staff numbers because it can be very difficult (if not impossible!) to cut basic salary once it has risen. Let’s hope that the economy recovers enough to avert that scenario!

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!



Kyocera takes the focus off China, Ericsson cuts headcount, China nicks tech and we ponder the future of the social media model…

In China no longer viable as world’s factory, says Kyocera (Financial Times, Eri Sugiura) we see that ongoing US-China tensions have prompted Japanese chip component company Kyocera to shift production outside China, back to Japan. The company unveiled an aggressive investment strategy for the company, which involves the construction of its first domestic factor for almost twenty years! Kyocera makes things like phones, printers and solar panels and has a whopping 70% global market share in ceramic components for chip manufacturing equipment. * SO WHAT? * US export controls have cost Kyocera dear thus far (they were partly the reason why it had to cut its full-year operating profit forecast this month by almost a third!) and so it’s clearly had to take a position. What will be interesting now is whether other companies will follow suit for the same reasons and how China proposes to respond.

The tech jobs cull continues in Ericsson starts global job cuts with 1,400 in Sweden (The Times, Jon Rees) as the Swedish supplier of 5G tech announced it would be reducing domestic headcount by around 10% as it races to cut £720m in costs by the end of 2023. Further job losses are expected after this globally. Ericsson last wielded the axe in 2017 when it was trying to pull itself out of deep losses and its latest cull comes after a slowdown in high-margin markets for 5G equipment sales.

China’s Newest Weapon to Nab Western Technology—Its Courts (Wall Street Journal, Stu Woo and Daniel Michaels) is an interesting article as it alleges that Chinese courts and patent

panels to steal foreign IP to help domestic businesses. Officials in the US and EU say that China is focusing particularly on areas such as tech, pharmaceuticals and rare-earth materials and is doing things like invalidating patents and saying that companies have broken antitrust law by not licensing tech to Chinese rivals. * SO WHAT? * China has run roughshod over non-domestic IP for years with fake goods and just barefaced stealing of tech (one notable example is how it stole bullet train technology from Kawasaki Heavy Industry of Japan to make its own very similar train!). When it wants to appeal to the west it tightens rules and when it gets cut out, it just takes what it can get. This is the cost of doing business in China and I think that all companies know it but are prepared to go ahead anyway because they just see the potential size of the market. Given the ongoing tensions between China and the US, I expect this kind of behaviour to continue – if not intensify!

Does paid-for Facebook and Instagram signal end of free-access orthodoxy? (The Guardian, Dan Milmo) is a really interesting article that takes yesterday’s story about Meta introducing paid subscriptions a step further, suggesting that the advertising model that has worked for so well for a number of years may be about to change. * SO WHAT? * I just don’t see it. People have had it free for so long that I just don’t think they will be able to get their head around a subscription. I have to say that I think, as a dabbler in Instagram myself (only for Watson’s Daily – I don’t have a personal account!), I may be inclined to pay to get the extra services and potentially improved visibility, but I think that for the vast majority of people, this will be a huge turn-off. Maybe a mix of different options – which is what streamers are doing – could work, but I’m not sure how well this would work in social media. It’ll be interesting to see how it fares in the markets it’s being tested in at the moment…

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!



BHP takes a hit, Singapore rents rocket and the 4 day week experiment proves to be popular…

In a quick scoot around some of today’s other interesting stories, BHP takes $1bn hit from inflation but optimistic on China and India growth (Financial Times, Leslie Hook and Nic Fildes) shows that the world’s biggest miner saw a big hit to its revenues and cut its dividend thanks to inflation, higher labour costs and weakening commodity prices but it remains confident about its outlook. It has high hopes of strong growth in China and India – to the extent that it has left its full year forecasts unchanged.

Then in Singapore’s soaring rents undermine bid to oust Hong Kong as Asia’s finance hub (Financial Times, Mercedes Ruehl) we see how the lack of housing supply thanks to Covid-led construction delays and the influx of Hong Kongers who wanted to get away from formerly zero-Covid Hong Kong is hitting Singapore’s rental market badly as landlords are asking for massive hikes in rents. * SO WHAT? * This is particularly interesting as Singapore has been touting itself as the Hong Kong alternative financial hub – but if costs run away then its attractions could fade significantly, particularly as China has now relaxed its Covid restrictions.

In what I would think is the most unsurprising headline of the week, Business and workers hail success of UK’s four-day week trial (The Guardian, Heather Stewart) shows that most companies who took part in the world’s biggest test of a four-day week have actually decided to continue with it. 56 out of 61 companies involved in the trial extended it – and this included 18 who had made it permanent. Interestingly, the number of sick days fell by about two-thirds and 57% of staff left the firms versus the same period a year prior. * SO WHAT? * This sounds lovely. However, I think that firms that would sign up to such an initiative were probably more open to the idea in the first place and so were always more likely to continue! Also, if you do a staff survey asking “would you like to do four days instead of five and get paid the same wages” you are obviously going to get an overwhelmingly positive answer! As economic difficulties continue and household budgets get squeezed, I think that more people will return to the office (to put in more “face time” with the boss in an effort to keep their job and keep in the loop with colleagues and projects more efficiently) and work more hours to get more money to pay the bills. It’s great that the possibility is there – but I just don’t think it will be adopted across the board.

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…

Today is pancake day – so here’s something to ponder and perhaps try: ‘I tried this year’s biggest pancake trend – the pasta sauce topping was intriguing’ (The Mirror, Freddie Bennett). His pictures make it look pretty disgusting but it probably tastes OK, although it looks wildly unhealthy 🤣. I’m a banana/Nutella kinda guy myself…

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Some of today’s market, commodity & currency moves (as at 0632hrs 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 **
8,014 (+0.12%)HOLIDAYHOLIDAYHOLIDAY15,478 (-0.03%)7,336 (-0.16%)27,462 (-0.25%)3,307 (+0.49%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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