Wednesday 20/10/21

  1. In SUPPLY CHAIN & CRYPTO NEWS, businesses say supply chain strain is to continue, restaurants and hotels face huge inflation and P&G ups prices while a Bitcoin ETF starts trading and Facebook launches a digital currency wallet
  2. In POST-CORONATRENDS NEWS, vets feel the strain and Gorillas raises $1bn
  3. In INDIVIDUAL COMPANY NEWS, we look at Facebook’s metaverse push, Netflix’s Squid Game boost and Very’s success
  4. AND FINALLY, I bring you Facebook’s weirdest group…

1

SUPPLY CHAIN & CRYPTO NEWS

So supply chain issues continue to have repercussions while Bitcoin has an ETF and Facebook launches a crypto wallet…

UK supply chain crisis to last until at least 2023, business leaders warn (Financial Times, Peter Foster) shows that a number of business leaders from a broad variety of industries warned MPs yesterday that the repercussions of the supply chain crisis will last well into 2023. They also said that small businesses would suffer most from labour shortages (presumably because they can’t absorb higher costs of increased wages to attract staff). Restaurants and hotels facing ‘terrifying’ 18% inflation, MPs told (The Guardian, Joanna Partridge) picks up on the same story but focuses on one area that is of particular concern. * SO WHAT? * When you have a killer combination of higher raw material costs, rising wages, soaring transport costs because of logjams and staff shortages and rising energy bills it’s hardly surprising that there’s so much panic going on. According to the ONS, inflation was at 3.2% for August and this morning we’ve seen that the rate weakened slightly to 3.1% in September – but this is still a high level bearing in mind that the long-standing target for inflation for the Bank of England is 2%! There is no choice for companies BUT to pass on these higher costs to customers who seem willing, at the moment, to pay.

This is illustrated by Procter & Gamble will raise prices to combat freight costs (The Times, Callum Jones) which says that the consumer goods company is going to up the prices of more household goods due to increasing commodity prices and freight costs. It has already increased prices for Pampers nappies and Always sanitary pads and has informed retailers about the upcoming price rises for grooming, oral and skincare products in America. On a similar vein, Stores’ own-brand cleaning goods set to cost more (The Times, Tom Howard) shows that McBride, which supplies most British supermarkets with their own-brand cleaning products, is going to have to raise prices again after doing so in the summer to cover rising costs. * SO WHAT? * Prices rises are just getting ridiculous now

aren’t they?!? At the moment, consumers are OK with paying the extra, but that isn’t going to last forever. We need to think about where households are going to cut their budgets in future – and I think streaming (Netflix et. al) will be a prime (no pun intended) target!

Meanwhile, in the world of crypto, Bitcoin exchange traded fund debuts on Wall Street (Financial Times, Steve Johnson) shows that the snappily-named ProShares Bitcoin Strategy ETF (ETF stands for Exchange Traded Fund) had a successful launch on the New York Stock Exchange yesterday on decent volume. It closed 4.7% on the day and was the second most heavily traded new ETF on record. * SO WHAT? * The success clearly shows that there is still an appetite for Bitcoin despite regulatory rumblings and China’s aggressive rejection of the cryptocurrency! Bitcoin itself traded higher on hopes that this ETF will further embed it into the mainstream but Bitcoin ETF: regulatory arbitrage – by US regulators (Financial Times, Lex) points out that the fund doesn’t actually hold Bitcoins – it holds futures contracts on the cryptocurrency and even then the contracts only account for 25%, with the remaining 75% being invested in boring financial instruments like Treasury bills. Basically, this ETF will give punter muted exposure to Bitcoin but it will give financial advisers a useful way of giving their clients exposure. I imagine this could be a real money-spinner!

Facebook launches digital currency wallet Novi (Financial Times, Siddharth Venkataramakrishnan and Hannah Murphy) is a very interesting article which shows that Facebook has – at last – launched a pilot of its digital currency walled Novi in the US, but intriguingly has opted to use the Paxos Dollar stablecoin and not its own cryptocurrency Diem, which didn’t get regulator approval. Novi can be downloaded via iPhones 0r Android and register with government-ID. Paxos dollar is the eighth-biggest stablecoin but makes up less than 1% of a $130bn industry whose dominant player is Tether. It was apparently chosen because its reserves are all held in cash and cash equivalents, which means that users can withdraw money in their local currency. Facebook continues to face resistance on all sides, it seems!

2

POST-CORONATRENDS NEWS

Vets get stressed and Gorillas raises $1bn…

Vets feel the strain as pet boom and labour shortages hit (Financial Times, Sarah O’Connor) highlights the aftermath of the massive pet boom we saw under lockdown. Share prices of CVS Group and Pets At Home, both of whom provide pet services, have skyrocketed by around 115% and 70% respectively but Veterinary associations around the world have highlighted the plight of burned-out vets and nurses as many leave the profession. The UK vets helpline Vetlife received ten times the number of calls last year than it did in 2014, the Royal College of Veterinary Surgeons (RCVS) has called a summit on labour shortages next month and the British Veterinary Association is appealing for people to “think long and hard” before buying a pet. * SO WHAT? * There are many similarities in the veterinary profession with other areas that are suffering from a shortage of labour – for instance, the RCVS says that over half of the UK’s vets in recent years have been from other European countries. However, many in the profession have been unhappy about conditions for years and their pay isn’t as much as you’d think either, given how qualified they are. Did you know that the average salary for a vet in 2020 was £45,150 and for a nurse anywhere between £23,000

and £28,300? There has also been a trend of big companies buying up independent practices – and with that comes a much heavier focus on generating profits, which puts them under even more strain. It seems to me that this is a profession that is at a real crossroads at the moment – and is one that is ripe for major change. Can companies really improve a profession that is a vocation? The fact that so many people bought pets under lockdown will only put further pressure on those working within it and something is going to have to give.

Another trend we saw a lot of under lockdown was grocery delivery. Gorillas grabs $1bn to join big beasts of rapid groceries start-ups (The Times, Ashley Armstrong) shows that the grocery delivery start-up managed to close a $1bn funding round backed by Delivery Hero, the German online takeaway company. This now gives Gorillas an implied valuation of $3bn just one year after it was founded! The company promises groceries within ten minutes at retail prices from 180 warehouses in nine countries, delivering from dark stores or warehouses and charges customers a £1.80 delivery fee. * SO WHAT? * The rapid development of rapid grocery delivery is pretty impressive and Gorillas competes with Weezy, Flink, Dija and Getir. Supermarkets are keen to get in on the act with Tesco launch its one-hour service, Morrisons launching its ten-minute Hop service and Sainsbury’s has a Chop Chop one-hour service. Clearly everyone and their dog is getting involved here, but I really do wonder how big this market could get!

3

INDIVIDUAL COMPANY NEWS

Facebook wants to plough ahead, Netflix gets a Squid Game boost and Very is successful…

Following on from what I said yesterday, Facebook/metaverse: investment in virtual realm is a beguiling distraction from reality (Financial Times, Lex) has a very interesting take on Facebook’s interest in the metaverse as the next phase of the internet. It says that the word itself is about 30 years old and describes something that doesn’t yet exist while companies like Microsoft and Epic Games have been keen to jump on the bandwagon. Venture capitalist Matthew Ball has even created a ruling council which includes the likes of Nvidia, Amazon and Facebook, among others. * SO WHAT? * Although all this talk of the metaverse sounds like a load of hot air, if it does actually become “a thing”, Facebook spending the big bucks now will ensure that it will be a major winner as it will be difficult to catch up. 

In Squid Game mania helps Netflix to make a killing (The Times, Callum Jones), we see that Netflix has forecast a sharp rise in growth going into the end of this year as it starts to release a number of hits whose production was delayed under lockdown. The company managed to beat expectations for the current quarter and as it revels in the success of the record-breaking Squid Game, it looks like it’ll be backing that up with new series of The Witcher, You and Tiger King. * SO WHAT? * With Squid Game boosting the viewing figures and a healthy pipeline of proprietary content coming up, it looks like Netflix is back on track!

Then in What crisis? Very sales defy online trading wobbles (The Times, Ashley Armstrong) we see that the online retailer managed to post record sales and profits as the momentum it gained under lockdown continued. The mood has cooled somewhat on some of the online lockdown winners such as Moonpig, THG, In The Style, Boohoo and Asos but Very (which was formed in 2005 via the merger of Littlewoods and Shop Direct) remains upbeat on its prospects and says that it is all set for Christmas!

4

...AND FINALLY...

…in other news…

I thought I’d leave you today with the rather bizarre Inside Facebook’s weirdest group – where Wetherspoon’s customers compare chip sizes (The Mirror, Rosaleen Fenton and Andy Crick). Whaaaaat??? Weird and yet compelling at the same time…

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Some of today’s market, commodity & currency moves (as at 0757hrs 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 **
7,218 (+0.19%)35,457.31 (+0.56%)4,519.63 (+0.74%)15,129.09 (+0.71%)15,516 (+0.27%)6,670 (-0.05%)29,256 (+0.14%)3,587 (-0.17%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿
$82.38$84.36$1,776.021.378331.16380114.481.18429$63,820.91

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