Wednesday 12/04/23

1. In MACRO, COMMODITIES & BITCOIN NEWS, we see a gloomy IMF, Glencore upping the ante and Bitcoin breaking $30k
2. In TECH NEWS, Biden considers AI rules, China proposes new AI rules and SoftBank commits to a stateside IPO
3. In FINANCIALS NEWS, HSBC hires SVB bankers in the US, KKR buys a chunk of FGS Global and EY rejects a split
4. In INDIVIDUAL COMPANY NEWS, Tesla eyes Milton Keynes, BMW electrifies, Arrival is running out of gas and Sainsbury’s tries to appeal to customers
5. AND FINALLY, I bring you a test of Britishness…

So the IMF spreads the gloom, Glencore ups the ante and Bitcoin breaks $30k…

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:

IMF cuts global growth forecast, with UK still bottom of the pack (The Times, Mehreen Khan) shows that the IMF has cut its outlook for the world economy as the banking turmoil took the edge off what was looking like fragile optimism at the beginning of the year. It now forecasts global GDP growth to run at 2.8% this year, which is a 0.1% downgrade from what it forecast in January. It is also saying that there is a 15% probability of “severe downside” of financial stress spreading to emerging markets and leading to a reduction in lending across the world economy. And, of course, the UK will keep its status as the worst-performing big economy as the IMF loves bashing the UK! * SO WHAT? * I always find IMF forecasts amusing. They are delivered with such gravitas and yet they come out with 💩 like “there’s a x% chance of this/that”, which just sounds like a massive 🍑-covering exercise. I mean, you’d laugh if the weather forecaster on the telly said that there’s 50%

chance of rain wouldn’t you! Still, people will take whatever stats from this report to back up their own theories. I think things like this are to be seen as a consensus guide rather than anything else.

Glencore offers $8.2bn cash sweetener in takeover bid for Teck (Financial Times, Harry Dempsey) highlights the miner’s continued overtures to buy Teck Resources, who rejected its initial offer. The updated offer now allows investors to choose cash instead of shares or a combination of the two while the overall value of the offer remains the same. Teck is considering it but also grumbling about it at the same time. Investors love a bit of cash, so this may be attractive to some although it’s not sounding good at the moment…

Bitcoin price rises above $30,000 for first time since June 2022 (The Guardian, Alex Hern) shows that Bitcoin breached the $30,000 barrier yesterday for the first time since June 10th last year – which came just before crypto lending company Celsius stopped withdrawals ahead of its eventual demise. As usual, no-one knows why it’s so strong (especially given that crypto companies like Binance are having such a tough time of things at the moment) but allegations have in the past been made (by the US National Bureau of Economic Research, no less!) about the effects of “wash trading” where crypto currencies are sold between related accounts that increase trading volume artificially. The US SEC has also maintained that the market can be influenced by individuals with a “dominant position” via fraud and manipulation. The mystery continues!

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!

Biden considers AI rules, China reviews AI and SoftBank heads stateside…

Biden Administration Weighs Possible Rules for AI Tools Like ChatGPT (Wall Street Journal, Ryan Tracy) shows that the Biden administration is looking into whether rules need to be implemented on AI tools to stop the spread of discrimination of harmful information. The Commerce Department has issued a formal public request regarding accountability measures that could include some kind of certification process before official release of new AI models. Answers, which will be accepted over the next 60 days, will be used to help shape policy. * SO WHAT? * I think it’s good that someone is actually taking the initiative here so let’s hope that they come up with something decent. I really do think, though, that there needs to be more international co-operation on this front given that AI has no national borders!

China slaps security reviews on AI products as Alibaba unveils ChatGPT challenger (Financial Times, Ryan McMorrow and Nian Liu) shows that the Chinese are taking a more robust stance on AI as the Cyberspace Administration of China (CAC) released new draft measures that will slow down AI product releases. It said that providers would have to submit products for review ahead of public release and it would establish a database to register them. It added that there must be user verification and tracking. The new measures were announced just hours after Alibaba became the latest company after the likes of SenseTime and Baidu to

announce the launch of its answer to ChatGPT. It said that content generated should reflect “core socialist values and must not contain any content that subverts state power” etc. * SO WHAT? * I think that AI chatbots in China will always be at a disadvantage to AI chatbots developed in, say, the US because I think that, to be truly useful, the chatbots have to have access to the broadest array of GOOD QUALITY information. Given that China always wants to control the narrative, I can see lots of information sources just not being used because they don’t (or parts of them don’t) align with party values, thus narrowing what the AI is being fed. It will be interesting to see how this develops as it is still a fluid situation!

SoftBank’s Masayoshi Son set to sign off on Nasdaq listing for Arm (Financial Times, Leo Lewis and Kana Inagaki) heralds the potential nail in the coffin of London getting even a sniff of Arm Holding’s imminent flotation. At the moment, it looks like the flotation could take place sometime this autumn in New York with appeals to have a dual-listing in London falling on deaf ears. The next problem will be how to value a company that doesn’t really have any comparable peers! * SO WHAT? * Masayoshi Son’s SoftBank needs this IPO to rake in as much money as possible as his company is just churning out the losses at the moment. He was even desperate enough to sell down his holding in Alibaba to generate some much-needed cash recently so I guess that’s why he’s putting all his hope in New York which, in theory, has a better depth of tech-savvy investors that will be more likely to bless the deal with a more generous valuation than the sceptics in London.

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!

HSBC scoops up SVB bankers, KKR buys a chunk of FGS Global and EY turns away from a split…

HSBC hires dozens of SVB investment bankers in US push (Financial Times, Joshua Franklin) shows that HSBC is now going even deeper into its foray with SVB (after buying the UK business for £1 following SVB demise in America) by hiring over 40 investment bankers from the stricken tech-focused bank. HSBC said that a group of these ex-SVB bankers will set up a new banking business focused on tech, healthcare and venture capitalist clients. * SO WHAT? * It certainly looks like HSBC may have bought a bargain here and I bet that the bankers weren’t as expensive as they could have been either! In theory, this all sounds like a good combo. HSBC will have wanted a way in to these juicy sectors but found them difficult to crack, but with SVB’s expertise and HSBC’s vastly superior balance sheet I would have thought this should be a hit with clients and give them peace of mind. We’ll just have to wait and see!

KKR takes 29% stake in public relations group FGS Global (Financial Times, Ivan Levingston and Arash Massoudi) highlights the private equity firm’s purchase of a chunky 29% stake in FGS global, which provides strategic and crisis advice to companies and execs. Ad giant WPP will still be the majority shareholder in FGS Global, which has been formed in the last few years by the merger of Finsbury, Hering Shuppener, Glover Park Group and then Sard Verbinnen. FGS was the top PR business for M&A last year, according to Mergermarket. The financial communications industry is going through a lot of consolidation at the moment.

Ernst & Young Halts Breakup Plan After Revolt by U.S. Leaders (Wall Street Journal, Jean Eaglesham) heralds the end of the will-they-won’t-they drama of whether or not to split the business into audit and consulting. Basically, the US partners were against a split because they thought the audit business would become too weak – and won. The company will now be left with disgruntled senior staff, a split between its US business and everywhere else and confused clients. I suspect that there will be a lot of infighting now as the company tries to move forward to what has become a great distraction. Their rivals must be loving it!

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!

Tesla eyes Milton Keynes, BMW electrifies, Arrival runs on fumes and Sainsbury’s appeals to Nectar holders…

In a quick scoot around some of today’s other interesting stories, Tesla eyes UK sales with Milton Keynes warehouse deal (The Times, Robert Miller) shows that Tesla is about to sign a deal for a new warehouse that should help to boost car sales in the UK. If it goes ahead, it would be Tesla’s first major UK warehouse. * SO WHAT? * This sounds like a good move and, given that sales of Tesla cars in the UK shot up by 18.6% year-on-year, it looks like sales could well be enhanced by such a facility!

Electric cars accelerate as BMW looks to the future (The Times, Robert Lea) reflects the rising electrification of BMW as 11% of all cars sold by the group in Q1 were full EVs. The company plans to increase this to 20% in 2024, then 25% in 2025 and 33% in 2026. * SO WHAT? * Obviously, it’s good PR to show a decent path to

electrification but the eagerness isn’t purely out of concern for the environment – EVs are among the models that have the best profit margin! The evolution continues…

Arrival/Spac: desperate companies need desperate financial engineering (Financial Times, Lex) shows that the EV start-up has now burned through most of its cash and is now merging with another SPAC to keep it alive! At the height of the boom, SPACs’ main purpose was to float companies but now it may be that they are used to save them!

Sainsbury’s begins offering lower prices to Nectar card holders (The Guardian, Sarah Butler) shows that the supermarket has started to offer lower prices on over 300 items to members of its Nectar loyalty card scheme. * SO WHAT? * I guess this is just a way to steer more people towards using its loyalty card scheme to make them less likely to stray towards the German discounters!

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…

I have to say that I think this is a pretty amusing list: 15 things all Brits do on holiday from 4am breakfasts to airport pints (The Mirror, Milo Boyd). I recall one stag-do in Copenhagen (don’t do this – the people and place were lovely but good Lord it was expensive!!!) where I was with a lot of Scots and we started at the pub in the airport very early in the morning (5/6am?), were drinking all flight, dropped the bags at our room and were straight at the bar before going out drinking again. It was a relentless nightmare 🤣. And it went on for three days!!! Needless to say I did not keep up at all times with the pace.