Wednesday 03/08/22

  1. In SPENDING TRENDS NEWS, I take a look at what we are spending money on, what we’re going to have to spend money on and what we’re not spending money on
  2. In UK PROPERTY NEWS, UK house prices keep rising but Purplebricks manages to post a loss and equity release is on the up
  3. In TECH NEWS, TSMC faces difficult decisions, AMD does does well but Intel doesn’t and Instagram’s chief comes to London
  4. In MISCELLANEOUS NEWS, Maersk rakes it in, Ferrari motors, Man Group gets dented and nuclear fusion continues to progress
  5. AND FINALLY, I bring you dog vs kitten…



So Pelosi goes on a trip, Hong Kong hits recession again, UK manufacturing suffers, wind turbines get bigger and Saudi Aramco makes an acquisition…

📢 HERE WE GO! I’m going to be doing my monthly roundup of JULY today with Jake Schogger. July has been an incredibly eventful month, so if you want to get the only monthly overview in town, please register HERE to see the Ant and Dec of commercial awareness 😁

In these straitened times, it’s important to know what we’re spending (or not spending!) our money on.


Starbucks hit by higher costs for wages and supplies, but US demand is strong (Wall Street Journal, Heather Haddon) shows that although labour and ingredient costs are rising, US consumers in particular are not foregoing their daily cup (or bucket – have you seen the size of a venti?? What about a trenta???) of joe. Its highly customisable offering is proving to be very popular and its loyalty programme appears to be doing its job.

Record bookings at Airbnb as travel recovers (Daily Telegraph, Giulia Bottaro) shows that we’re spending money on “cheap” stays as the company said it is currently experiencing its “strongest peak-travel season yet”, with July 4th bringing in its best ever revenues! It was very bullish about Q3 revenues and profits and its listings were up by almost 25% in both urban and non-urban destinations. * SO WHAT? * The performance was driven by spending cuts it made over the pandemic and its flexible business model. It also benefited from more listings as the cost-of-living crisis is pushing more people to supplement their income. Although this was all good, the shares dropped by 7% in after-hours trading (they’ve fallen by over a third since the beginning of this year) as investors remain mindful about local authorities around the world cracking down on short-term rentals, particular in popular tourist destination cities.

Uber revenue doubles, sending shares surging (Wall Street Journal, Preetika Rana and Meghan Bobrowsky) highlights Uber’s strong performance over the quarter as the cost-of-living crisis has pushed more people to become Uber drivers. Despite inflation, customers just keep on coming and revenues were boosted in part by high ride prices and investors piled in to boost the share price by a chunky 19% on the news. Uber Eats is also growing, albeit at a slower pace than it had experienced under lockdown – and it is seeing volumes rise as it branches out into grocery and household essentials delivery.


There’s bad news in Travellers face higher fares after BA extends suspension of Heathrow ticket sales (Financial Times, Sylvia Pfeifer and Oliver Barnes) where passengers who are looking to book last minute are likely to suffer as British Airways extended its suspension of short-haul ticket sales from Heathrow, where it is the biggest operator. * SO WHAT? * BA blamed it on Heathrow imposing a limit last month of 100,000 passengers on departures until September 11th in order to keep travel disruption under control. It looks like the current suspension of ticket sales could also be extended further. This may take the edge off travel demand – and for those who do manage to book, it’s yet another expense to contend with…

I’ve been referring to this quite a lot recently but Direct Line drives up prices after double blow on profits (The Times, Ben Martin) shows that the car insurance specialist is pushing up premiums thanks to the rising cost of claims following a very quiet lockdown. Direct Line announced a profit warning last month and cut its outlook for the full year. It’s not the only one to suffer in this area as

claims are rising across the entire industry. * SO WHAT? * Car insurance is just one of those things that you HAVE to have, so I expect that consumers will look more closely at their coverage with a view to switching if the prices aren’t right. If that is a case, then there may be a race to the bottom in terms of pricing in order to win more business – and if that happens, that means margins are getting thinner.

Greggs warns of third price rise in a year as 9pc cost increase bites (Daily Telegraph, Helen Cahill) shows that even the humble sausage roll isn’t immune to global macroeconomic factors as the company warned of price hikes thanks to rising costs. * SO WHAT? * The baked goods chain has already increased prices twice in the last six months but margins are bound to come under pressure at some point in the near future as Greggs remains committed to being one of the cheapest lunch options, with average spend per visit is about £4 on average.


Match splits with Tinder CEO as earnings fall short (Wall Street Journal, Denny Jacob) shows that revenues for Match Group fell well below market expectations and it looks very much like Tinder CEO Renate Nyborg has had to take the fall as part of “new” CEO Bernard Kim’s efforts to turn performance around. * SO WHAT? * Tinder merged with Match in 2017 and the group in general is still not seeing demand back to pre-pandemic levels. Its outlook for the rest of the year wasn’t exactly inspiring either, so it is not surprising that the share price fell by a chunky 22% in after-hours trading yesterday.

In Robinhood lays off 23% of staff as retail investors fade from platform (Wall Street Journal, Caitlin McCabe) we see yet another lockdown-winner-turned-loser as the online brokerage loses flaky retail investors. This is the second round of layoffs so far this year and will mean that 1,000 people will have lost their jobs as a result. This is all a far cry from when the stock was riding high in Q2 last year! * SO WHAT? * Robinhood joins the likes of Deliveroo, Hopin and many others who used lockdown performance to predict future performance – and fell well short. Investors in the IPO will be very p!ssed off as the share price has cratered by a massive 76% from its IPO price last year. Yesterday it was trading at $9.23 versus the IPO price of $38! There’s also a cloud hanging over the company as regulators take a closer look at its operations. I personally think that Robinhood needs to be taken over by a “proper” grown-up company in order to survive long-term otherwise it could just disappear up its own 🍑.

Oatly lowers full-year outlook, posts wider loss (Wall Street Journal, Connor Hart) highlights Oatly’s tricky situation currently as the cost-of-living crisis is making it harder to convert cow milk drinkers into oat milk drinkers, leading to it lowering its sales outlook for the year. This came as the company reported a bigger loss for its Q2 thanks to higher raw material costs and supply chain problems. The company said that demand was still strong, but that momentum is fading.

Then we see that another lockdown trend seems to be slowing down dramatically as End of DIY boom is blow for builders’ merchant (The Times, Robert Lea) highlights a major problem for builders’ merchant Travis Perkins. Its fortunes are normally driven by the long-term performance of the construction industry, but its “hidden gem” Toolstation business that supplies small-time builders and DIY-ers is seeing a major slowdown. * SO WHAT? * It’s interesting to see Travis Perkins confirming what Wickes reported last week – disappointing sales. Travis Perkins’ share price is now about half what it was last September and there is now speculation that it has fallen so far that it is now a takeover target…

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!



House prices keep going up but Purplebricks makes a hash of it and equity release activity increases…

UK house prices rising at 11% a year despite cost of living crisis (The Guardian, Julia Kollewe) cites the latest Nationwide figures which show that the UK housing market is remaining stubbornly buoyant, boosted by a tight jobs market and relative lack of homes on the market. Despite this, Purplebricks swings to loss despite post-lockdown sales surge (Financial Times, George Hammond) shows that it is possible to snatch defeat from the jaws of victory as it has plunged into a loss, with no prospect of emerging from the rut until 2024. * SO WHAT? * Purplebricks is Britain’s biggest online estate agent and launched in 2014. The CEO said that performance had been dented by agents being treated as employees rather than contractors but has also suffered from its limited ability to get a slice of the hot market as it only charges a flat fee at the point of instruction rather than taking a percentage of

the sale price. It also managed to lose market share to rivals. It sounds to me like this CEO needs to be booted out because it is pretty impressive for an estate agent to manage to lose in THIS housing market! This is failure of epic proportions to my mind and will cost the company dearly when the housing market cools down. 

Homeowners tap into record equity release to beat squeeze (Wall Street Journal, Charlotte Gifford) cites findings from the Equity Release Council which show that a record £1.6bn was withdrawn from properties in the last three months as homeowners are using the money to cover day-to-day living. This is 36% more than had been unlocked in the first half of 2021. * SO WHAT? * I guess that this is a sign of the times, although equity release is relatively new and there may be an element here of more people feeling comfortable about being able to do it. It is concerning that, far from original fears that oldies will withdraw money and splurge it on Lamborghinis, they are withdrawing the money just so they don’t have to worry about paying utility bills and the grocery shop.

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!



It’s all go in semiconductors and Insta comes to London…

In the wonderful world of semiconductors, Taiwan/Pelosi: push to pick US or China leaves TSMC in dire straits (Financial Times, Lex) highlights the very tricky decision that Taiwanese semiconductor giant TSMC is going to have to make – will it pledge allegiance to the west or will it stick with China? Given that speaker Nancy Pelosi’s visit has caused Taiwanese, Hong Kong and Chinese stock markets to fall, the Taiwan dollar to hit a two-year low and Chinese warplanes to fly over the Taiwan Strait we can see how geopolitical pressures are developing such that it is going to have to pick a side. This is a cloud hanging over a company that should otherwise be benefiting hugely from the current global chip shortage.

There are contrasting fortunes in Chip maker AMD prospers as rival Intel struggles (Wall Street Journal, Asa Fitch) as AMD reported a major increase in quarterly sales thanks to the strong

performance of its data centre business, something that rival Intel has been struggling with. Despite this decent performance, AMD indicated a rather lacklustre outlook whilst maintaining full year targets in contrast with Intel which cut its full-year projections last week. It seems that semiconductor companies are having to deal with shifts in demand – and some are dealing with it better than others!

Then in Instagram head Adam Mosseri to relocate to London (Financial Times, Madhumita Murgia and Cristina Criddle) we see that the boss of Instagram is being moved over to London as it continues to battle rival TikTok. This will make London Instagram’s base for the next few months as Mosseri builds out its presence here and works hard to retain its community of influencers. Fun fact: did you know that UK engineers are up to three times cheaper to pay than in San Francisco?

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!



Maersk continues to do well, Ferrari races ahead, Man Group suffers and nuclear fusion advances…

In a quick scoot around other interesting stories today, Maersk raises profit forecasts for third time this year as supply chain hit persists (Financial Times, Richard Milne) shows that the world’s second biggest container shipping group has hiked annual profit forecasts for the third time this year due to the ongoing effect of supply chain disruptions, Ferrari reports record profits as supercar sales boom (The Guardian, Mark Sweney) highlights record quarterly sales for the prancing horse as rich people continue to spend unabated – prompting Ferrari to raise its full-year forecast for full-year revenues – and Man Group hit by client nerves over market turbulence (Financial Times, Laurence Fletcher) shows

that one of the world’s biggest hedge funds saw weaker-than-expected fund inflows as clients sought to withdraw money in anticipation of imminent market turbulence while Man Group: long story falls short for UK hedge funds with go-go algos (Financial Times, Lex) suggests that its fortunes may actually turn around in the event of market volatility and its fancy algorithms.

Meanwhile, Nuclear fusion start-up bids to raise £400m (Daily Telegraph, Howard Mustoe) shows that Oxford start-up First Light Fusion is now looking to raise £400m to fund the next stage of its research into nuclear fusion. The company hopes to raise the target in the next few months as the new development edges the technology closer to commercialisation.

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…

You’re going to think I’m going soft, but I have to confess that I watch at least one of these sorts of videos before I go to sleep to wind down at the end of the day. I just find it relaxing and it makes me smile! Here’s a contest between a big dog and a very tiny kitten. Yes, sorry. Extreme cuteness alert!

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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 **
7,409 (-0.06%)32,396.17 (-1.23%)4,091.19 (-0.67%)12,348.76 (-0.16%)13,449 (-0.23%)6,410 (-0.42%)27,743 (+0.53%)3,164 (-0.71%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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