Wednesday 17/05/23

1. In MACRO, OIL & CRYPTO NEWS, Thailand’s election result stirs things up, Putin continues to rake in the oil revenues and MPs call for crypto to be treated as gambling
2. In CONSUMER, RETAIL & LEISURE NEWS, US consumer spending rebounds while Home Depot suffers, Boohoo.com hits a loss, Marston’s toasts WFH and Greggs gets late-night opening
3. In TECH NEWS, OpenAI’s chief calls for rules and Facebook charges for verification
4. In MISCELLANEOUS NEWS, Ford looks to scale back in China, the FTC warns of pharma consolidation, Disney’s ex-boss faces serious accusations, Land Securities’ portfolio takes a hit and Vodafone has a clear out
5. AND FINALLY, I bring you a great teacher…

So Thailand gets a refresh, Putin keeps selling oil and MPs want crypto to be treated like gambling…

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:

Thailand’s Harvard-educated election winner challenges military’s grip on power (Financial Times, Eli Meixler) highlights the shock general election win for Pita Limjaronenrat, the leader of the Move Forward party. The job now is for him to get together a coalition to oust the country’s military-backed government, which will be tricky given its radical reform agenda. * SO WHAT? * This is a significant result in that it signals a break in the norm and represents the dissatisfaction of the country’s young and urban voters whose distrust in the establishment has been stoked by numerous coups and crackdowns. The leader has both a political and business background, which should prove to be useful. Among the items of its radical reform agenda is a potential breaking of the biggest taboo in Thai politics – amendments to the lèse majesté law which forbids insulting the royal family. Doing so currently could land you a sentence of up to 15 years in prison!

Meanwhile, Russian oil sales reach record level (Daily Telegraph, Chris Price) shows that Vlad has been able to finance his war machine to the tune of €15bn despite international embargoes and a price cap. The IEA contends that export volumes in April rose to their highest level since Russian invaded Ukraine. That said, oil revenues are actually 27% lower than they were in April last year. China and India accounted for almost 80% of Russian crude exports…

Cryptocurrency trading in UK should be regulated as form of gambling, say MPs (The Guardian, Kalyeena Makortoff) highlights the conclusions of parliament’s Treasury committee which say that the government should stop wasting more taxpayer money in promoting things like digital tokens without showing what the benefits are. MPs argued that crypto trading and investing can be addictive, has more similarities with gambling than anything else and should therefore be regulated as such. * SO WHAT? * Although the FCA is widely expected to oversee crypto, the Treasury committee said that going down this path risks legitimising crypto and lulling punters into thinking that it’s safer than it actually is. Crypto bros will no doubt say that the assets are legit and that you could argue that investing in the stock market is gambling (it kind of is!) but then again these companies have tangible underlying assets – cryptocurrencies don’t. I think it would be quite something for crypto to be treated like gambling – and I think it would be a massive retrograde step for a government that has purported in the past to have crypto ambitions.

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!

US consumer spending rises but Home Depot sees a slowdown, Boohoo announces a loss, Marston’s toasts WFH and Greggs gets a Leicester Square victory…

In the US, Shoppers Boosted Retail Sales in April, Reversing Two Months of Declines (Wall Street Journal, Gwynn Guilford and Sarah Nassauer) shows that American consumer spending actually rose in April for the first time in three months! The Commerce Department reported a rise in retail sales (which encompasses spending at stores, online and in restaurants) after declines in February and March. Spending increased on cars and dining out but decreased for petrol and big ticket items. * SO WHAT? * Consumer spending is the main driver of US GDP, so clearly this is an important development. It is worth saying that the 0.4% seasonally adjusted rise in retail sales does not include spending in areas like healthcare, education, travel, housing or entertainment but the Commerce Department will release a more comprehensive number later on this month. Still, it does point to a consumer that appears to be remaining steadfast in the face of tricky economic headwinds. However, Americans Curb Spending on Home Improvements (Wall Street Journal, Sarah Nassauer and Dean Seal) shows that a “ceiling” appears to have been reached on the appetite for home improvements as Home Depot said that spending has slowed down markedly this year, leading it to warn that its annual sales will fall for the first time since 2009! It seems that most of the “urgent” home projects have been completed since lockdown and that spending priorities have changed. It also expects to see earnings drop by 7-13% this year on lower margins, which is higher than previously indicated…

Meanwhile, back in the UK, Boohoo Group refuses to shed a tear despite falling to £91m loss (The Times, Isabella Fish) shows that the fast-fashion group reported a loss thanks to supply chain losses, a more nervous customer and higher costs but it tried to

reassure investors with its “back-t0-growth” strategy and the streamlining of the way it manages its inventory. The chief exec sounded positively chipper about the effect of improving macro conditions while Boohoo swings to £91m loss as shoppers return more items (The Guardian, Sarah Butler) added that the high cost of returns was also a factor in the weaker figures as shoppers were returning more fitted items rather than the roomier hoodies and joggers they’d ordered during lockdown. * SO WHAT? * Clearly Boohoo.com has had a lot on its plate what with integrating relatively recent purchases of Karen Millen and Debenhams and other investments in the platform. It’s not alone either with the whole returns problem – Asos has the same issue. However, I’d say that the most pressing matter for Boohoo.com (and other apparel retailers!) is how it combats the rise and rise of Chinese growth monster Shein.

In leisure, Marston’s raises toast to working from home (The Times, Dominic Walsh) shows that the pub chain (which used to be known as Wolverhampton & Dudley Breweries) saw revenues, sales and operating profits all rise as it benefited from the WFH trend. This is because over 90% of its pubs are in suburban areas, so they weren’t as affected as rivals that have a predominantly urban estate nearer offices.

Then in Greggs wins right to late-night opening for Leicester Square bakery store (The Guardian, Sarah Butler) we see that not only has it won the right to open its flagship Leicester Square store until 2am from Thursday to Saturday (with various conditions attached – and it will probably have to employ bouncers!) but Greggs serves up tasty rise in sales during tough times (The Times, Dominic Walsh) shows that it managed to post strong like-for-like sales growth and is on track to hit full year expectations. New products such as chicken goujons and its vegan Mexican chicken-free bake have kept the tills ringing and its late-trade pizza deal boosted evening sales. Additional new products are in the pipeline to keep the party going…

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!

OpenAI’s chief calls for rules and Facebook copies Twitter…

In OpenAI chief says new rules are needed to guard against AI risks (Financial Times, Cristina Criddle and Hannah Murphy) we see that Open AI’s chief exec Sam Altman appealed to lawmakers to regulate AI as soon as possible to avert any “interactive disinformation” in the run up to next year’s US presidential elections. Altman made the plea in front of a US Senate subcommittee held on privacy, technology and the law yesterday where he supported independent audits, a system of licensing and warnings in the style of nutritional labels on food. The US Congress is looking at how to regulate the industry and will be seeking the input of other industry sources over the next few months. * SO WHAT? * Interestingly, this exchange seemed to be quite civil, which is probably because Altman was seen to “care deeply and intensely” about the potential risks of AI as he himself said that “I think if this technology goes wrong, it can go quite wrong…we want to work with the government to prevent that from happening”. The

debate continues – but in the meantime, the AI tech is just getting better and better! Proper guidelines need to be brought in as quickly as possible!

Then in Facebook charges £10 a month for Twitter-style verification tick (Daily Telegraph, Gareth Corfield) we see that Facebook and Instagram rolled out a £10 paywall in the UK yesterday that will enable its users to get a blue tick verification badge on their profiles. The new feature is called Meta Verified and will give users to extra features like two-factor authentication. They will also be able to use exclusive stickers across Facebook, Reels and Instagram Stories. If you get the feature via iPhone, Meta Verified will cost £11.99 per month, reflecting Apple’s App Store surcharge. It’ll be interesting to see what the take-up of this is like – particularly in comparison with Twitter’s blue tick!

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!

Ford wants to reverse China investments, the FTC pushes back on pharma, Disney’s ex-chief faces serious heat, Landsec sees a weaker portfolio valuation and Vodafone has a clear out…

In a quick scoot around some of today’s other interesting stories, Ford to scale back China investments amid EV competition from local rivals (Financial Times, Peter Campbell) shows that Ford is actually ballsy enough to de-emphasise future investments in China (the opposite of pretty much everyone else!) because it reckons that western carmakers won’t necessarily be all that successful there in the long run. It said that it would do more on commercial vehicles in the country and use it as a window into better understanding battery tech. * SO WHAT? * I personally think that this is actually quite an insightful take as western car manufacturers are starting to get their asses kicked by local makers including BYD, Great Wall, SAIC and Changan. There is no guarantee that they will do well there (even Tesla got the could shoulder treatment a few years ago) and it seems that the younger generation is turning increasingly choosing cars from domestic makers over foreign ones. However, there’s always the risk that not having a proper presence in the world’s biggest car market could potentially be damaging as, of course, “you have to be in it to win it”.

Elsewhere, FTC warns of ‘rampant’ pharma consolidation as it targets $28bn Amgen deal (Financial Times, Stefania Palma) shows that US regulators are getting increasingly wary of “rampant consolidation” in the pharmaceuticals sector as the FTC is now suing to block Amgen’s proposed $28.3bn deal to buy Horizon Therapeutics. * SO WHAT? * This is notable because it’s the first time in over 10 years that the FTC has involved itself in blocking a deal in the pharmaceutical sector. The concern here is that consolidation will lead to drug price hikes as competition weakens. FWIW, I think that the pharmaceutical sector has always been fragmented and that the big players always gobble up the smaller players who have great ideas and not much money. I wonder whether there’s more consolidation going on because some companies have done incredibly well from making and supplying Covid vaccines over the years and are looking to plough that money into improving their respective drug pipelines.

Ex-Disney chief accused of fraud in lawsuit over streaming losses (Daily Telegraph, James Warrington) heralds tricky times for ousted Disney CEO Bob Chapek as shareholders have accused him of misleading them about streaming losses. It is alleged that he engaged in a fraudulent “cost-shifting scheme” that had the effect of diverting a meaningful amount of marketing and production costs away from its streaming platform, which inflated the success of Disney+. Investors are seeking damages due to a decline in the company’s share price and they allege that the company and/or some of its execs either knew or knowlingly disregarded the fact that their statements were false and misleading. Ouch.

Back in the UK, Landsec boss warns of ‘higher for longer’ interest rates (Financial Times, Joshua Oliver) shows that the chief exec of one of Britain’s biggest landlords was highlighting the “higher for longer interest rate environment” as an impediment to the whole industry as the value of the company’s property portfolio fell. Landsec’s portfolio took a particularly painful valuation hit from its City of London offices which lost 15% of their value in the year versus West End offices which fell by a more manageable 8%. * SO WHAT? * The commercial property sector in particular relies heavily on a lot of debt – and when interest rates are rising to historically high levels, it gets particularly painful as the cost of servicing that debt keeps going up.

Another big story today was Vodafone to cut 11,000 jobs globally (The Times, Alex Ralph), which heralds the deepest round of cuts in the company’s 40-year history and equates to about 12% of its workforce. New CEO Margherita Della Valle is doing the classic new-CEO thing of taking the opportunity to do a spring clean and streamline operations but Vodafone/Della Valle: calls for a break-up will intensify (Financial Times, Lex) is sceptical as to whether this latest turnaround plan will work better than if the company were just to break itself up.

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…

Teaching kids times tables can be a nightmare. Well, this teacher has come up with a novel solution: Teacher’s genius trick to teach kids times tables using Taylor Swift’s Shake it Off (The Mirror, Paige Freshwater). How brilliant is this??