Tuesday 25/04/23

  1. In MACROECONOMIC NEWS, US plays Pacific wargames, Australia overhauls its defence strategy, across-the-board export sanctions on China are rejected, India’s population overtakes China’s and the ECB looks likely to keep raising rates
  2. In TECH NEWS, Apple wins its Epic Games appeal, we look at AI as a force for the good and online review farms face a reckoning
  3. In RETAIL-RELATED NEWS, LVMH hits a $500m market cap, Adidas focuses on China, Gymshark gets a second wind and Morrisons rations peppers
  4. In INDIVIDUAL COMPANY NEWS, Credit Suisse lays bare its outflows, First Republic joins the living dead, Hambro Perks winds down, Disney makes more cuts and Prezzo shuts restaurants
  5. AND FINALLY, I bring you something I guarantee you’ve never noticed…



So China tensions continue, India’s population grows bigger than China’s and the ECB looks like it’ll keep raising interest rates for now…

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In news on ongoing tensions with China, US war games touch nerve in Philippines as tensions flare with China (Financial Times, Kathrin Hille) shows that now, even the previously reluctant Philippines is OK with the US conducting war games on its islands as Philippine and US troops conducted exercises over the weekend in the biggest joint drill in over 30 years. Interestingly, US forces were granted access to four additional Philippine military bases under the bilateral Enhanced Defense Cooperation Agreement, which didn’t go down well with the Chinese. Australia overhauls defence strategy to respond to China’s build-up (Financial Times, Nic Fildes) highlights the unveiling of Australia’s biggest change in military posture since WW2 in its Defence Spending Review as it adapts to China’s increasingly aggressive stance in the Asia-Pacific region. The change in strategy is expected to cost $12.7bn over the next four years as it makes moves to have a better integrated defence force. On the non-military side of things, Allies resist US plan to ban all G7 exports to Russia (Financial Times, Henry Foy, Kana Inagaki and Demetri Sevastopulo) shows that the EU and Japan torpedoed US proposals for a G7 ban on all exports to China – with some exemptions – by saying that it is basically “not do-able”. Pressure is increasing on states such as Turkey, the UAE and

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other countries in central Asia to stop evading sanctions. * SO WHAT? * Tensions continue to rise against both China and Russia but it will be a difficult road ahead. The thing is that if the West p!sses the Chinese off too much, it may well curtail its “efforts” to be peacemaker with Russia and – which would be even worse – it could prompt further assistance on financing Russia’s war effort (it doesn’t officially support this, but China does buy loads of discounted Russian oil, for instance!).

Elsewhere, India passed China as world’s most populous country in April, UN says (Financial Times, John Reed, Delphine Strauss and Aanu Adeoye) shows that India is thought to have overtaken China as the country with the biggest population, according estimates from the UN Department of Economic and Social Affairs. It is thought that India’s population is “virtually certain” to keep growing in the coming decades while China’s is now in decline. The forecasts also say that Nigeria will surpass the US as the world’s third most populous country by 2050! Governments and companies clearly need to be mindful of things like this in order to position themselves correctly for the future.

Then in ECB to keep raising interest rates unless wage growth slows, says official (Financial Times, Martin Arnold) we see that there are rumblings among European central bankers that until wage growth and core inflation fall, interest rates should keep rising. The next ECB rate-setting meeting is due on May 4th. The tough times look set to continue…

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!



Apple wins its appeal, we look at AI as a force for good and online review farms will be in the firing line…

Apple Wins Appeal in App Store Case Brought by Fortnite Maker Epic Games (Wall Street Journal, Aaron Tilley) shows that Apple has won the latest round of its legal battle with Epic Games at the federal appeals court as the panel of three judges sided with a 2021 ruling that found mainly in favour of Apple’s App Store policies that Epic Games argues is anti-competitive. They found that Apple did not have monopolistic control over mobile game transactions. This is part of the whole discussion about how much control Apple can have over third-party developers in the App Store. * SO WHAT? * I think that the sad practicality of it all means that Apple is highly incentivised to drag things out for as long as possible as I have no doubt that it has much deeper pockets for legal fees than Epic Games! I don’t think that this will be the end of the case…

I thought I’d include AI ‘could help teachers to plan school lessons (Daily Telegraph, Matthew Field) because it is a rare positive piece about AI! Rishi Sunak and the Technology Secretary, Michelle Donelan, have pledged £100m of cash to put towards using AI in the public sector, including education and the NHS. They said that there was scope, in healthcare, to speed up diagnoses, drug discovery and development while there was potential for AI to “transform teachers’ day-to-day work, freeing up time”. Meanwhile, Does AI mean the next celebrity chef will be a robot (Daily Telegraph, Daniel Woolfson) shows that, when put to the test, ChatGPT did a great job creating recipes for high-class dishes!

Major food companies like Nestlé are already using AI to interpret consumer trends and come up with new products while fast food chains like Chipotle and McDonald’s are using it to make ordering and delivery more efficient. * SO WHAT? * A lot of comment on AI concentrates on the negatives of why it will displace humans. It may well do, but I think that before that happens, there will be a very long period where humans and AI can work together to streamline processes and create better outcomes. AI is going to happen, so we may as well get the best out of it IMO! The only problem is that the “boring” procedural aspects of any job can sometimes foster much deeper understanding of how you get to your end product, so taking this out and potentially outsourcing it may lead to a more superficial understanding of how a product or business works. I would also argue that raw creativity (so by that, I mean non-AI-prompted creativity!) may also suffer because we could never again get pushed into a corner and put under pressure to come up with something without AI help.

Following on from what I was saying yesterday about the imminent arrival of a specialist tech regulator in the UK, Online review farms face ban (Daily Telegraph, Gareth Corfield) shows that fake online review farms which churn out reviews in exchange for money to push consumer goods and services will be banned as part of Britain’s new Digital Markets, Competition and Consumer Bill (DMCC), which will be introduced into the House of Commons today. It’s going to be interesting to see what offences are going to be identified and how it will all affect the digital landscape. This is looooooooooooong overdue!

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!



LVMH becomes reassuringly expensive, Adidas aims at China, Gymshark booms again and Morrisons rations peppers…

LVMH becomes first European company to reach $500bn valuation (The Guardian, Rupert Neate) shows that luxury goods company LVMH has seen its share price rise by 30% this year alone, pushing it to a market value of $500m as rich people continue to buy its wares with abandon! It is the first European company to hit this landmark and it is now in the top ten most valuable companies in the world! Chairman and chief exec Bernard Arnault’s stake in the company he co-founded 35 years ago is now worth a rather healthy $212bn, consolidating his position as the world’s richest person. This makes poor old Elon Musk look like a right pauper on $47bn less. * SO WHAT? * This is just further evidence of how rich people remain immune to the current cost-of-living crisis as there just don’t seem to be any signs of slowdown in the luxury goods sector.

Meanwhile, at the more “athleisure” end of the market, Adidas goes local as it fights to overcome crisis in China (Financial Times, Olaf Storbeck and Eleanor Olcott) shows that Adidas is making renewed efforts in the China market after a tricky few years marred by lockdowns, resistance to western brands who refused to buy Xinjiang cotton which was believed to involve forced labour and the rise in popularity of local brands Anta and Li-Ning. * SO WHAT? * Sorting the China market out is a matter of urgency for the

company as it used to be its biggest growth market, so it is making efforts to design more clothes for the local market, boost domestic production and cut lead times.

Then in Gymshark gets its second wind after sales had faltered (The Times, Richard Tyler) we see that the activewear brand has seen double-digit sales growth on a recovery in consumer spending, something that the company had not been expecting! Growth from 2022 came mainly from overseas, particularly the US, as UK growth slowed down. * SO WHAT? * Gymshark had been facing difficulties with rising input costs and falling consuming spending but decided to continue investing in the business – something that is now paying off as things turn around. At the end of the day, there seems to be no loss of appetite in the athleisure segment and Gymshark has decent product at a reasonable price pushed by its growing army of influencers.

British supermarkets report shortages of peppers as Morrisons rations sales (The Guardian, Joanna Partridge) shows that, not long after the whole British salad crisis, we now have Morrisons rationing peppers! They are being rationed out at two per customer but hope to lift the restriction in the next week or so. Phew. Don’t worry, people! The fajitas are saved! * SO WHAT? * This is just another reminder of what can happen when supply chains go wrong. It’s also a reminder of the effect of high electricity prices that have served to curtail the use of greenhouses (which cost way more to heat) and the manufacture of fertiliser.

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!



Credit Suisse comes clean, First Republic becomes a zombie, Hambro Perks winds down, Disney makes more cuts and Prezzo closes down restaurants…

In a quick scoot around some of today’s other interesting stories, Credit Suisse suffered $69bn in outflows during first-quarter crisis (Financial Times, Owen Walker) shows that the embattled Swiss bank had a shocker of a Q1, showing just how big a job rival UBS has ahead of it having taken it on under duress. Staying on the subject of banking nightmares, First Republic Joins the Living Dead (Wall Street Journal, Aaron Black) contends that although First Republic Bank managed to survive its recent brush with disaster thanks to a massive bailout by fellow banks and the Fed, the nightmare isn’t over just yet! This is because although they’ve now got a load of cash sloshing around, it was borrowed at high rates which means that profitability will be a problem. It will be a priority for First Republic to pay down this expensive debt but there’s no detail on how it will do that or indeed how long this will take. They have survived for now, but will need to come up with a robust plan of how to move forward.

Staying with finance, Hambro Perks Spac to wind down after abrupt departure of boss (Financial Times, Ivan Levingston) shows that the first SPAC to list in London under the government’s new rules is going to wind down and return funds to investors after it just couldn’t find a decent target to buy. It had raised around £150m to go shopping for European tech companies, but this was not to be. * SO WHAT? * This is another nail in the coffin for SPACs. Mind you, it’s in good company as two major players in America did the same thing (Chamath Palihapitiya and Bill Ackman), while Bernard Arnault did the same with his European SPAC. It’ll be interesting if/when we see the rise of SPACs again!

Elsewhere, Disney cuts thousands of jobs in second wave of layoffs (Reuters) shows that Walt Disney announced a second wave of headcount reductions in its ongoing pursuit of cost cuts that will be communicated by this Thursday and Prezzo to shut 46 UK restaurants, putting 810 jobs at risk (The Guardian, Jasper Jolly) highlights ongoing efforts by the struggling restaurant chain to survive as it continues to battle with the effects of inflation and rising costs. To give you an idea, utility bills had more than doubled over the last year while prices of spaghetti, pizza sauce and diced mozzarella had increased by 40%, 28% and 18% respectively. The casual dining sector continues to suffer…

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…

If you know about the Wendy’s fast food chain I bet you haven’t noticed this – and even if you have no idea what Wendy’s is, I would also imagine you won’t notice this either: Wendy’s customers only just realising ‘strange design’ in logo after 45 years (The Mirror, Paige Freshwater). Have a look!

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Some of today’s market, commodity & currency moves (as at 0633hrs 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 **
7,912 (-0.02%)33,875 (+0.2%)4,137 (+0.09%)12,037 (-0.29%)15,864 (-0.11%)7,574 (-0.04%)28,620 (+0.09%)3,265 (-0.32%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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