Wednesday 22/11/23

  1. In TECH NEWS, we look at the latest on OpenAI, Sam Altman, Emmett Shear and Nvidia
  2. In CAR-RELATED NEWS, Ford downsizes its Michigan battery ambitions, Stellantis talks to CATL, Northvolt makes a major breakthrough and France gets on board with the UK on delaying EV tariffs
  3. In M&A NEWS, Broadcom-VMware’s merger gets approval, Carlyle sells its stake in McDonald’s China business and CRH goes shopping
  4. In MISCELLANEOUS NEWS, Binance’s chief admits money laundering, Deliveroo riders get classed as contractors, we look at Budget expectations and AO World returns to profit
  5. AND FINALLY, I bring you some really great stretches…

1

TECH NEWS

So Sam Altman returns and Nvidia continues to surf the AI boom…

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:

 

Here we go again!!! OpenAI says Sam Altman to return as chief executive under new board (Financial Times, Camilla Hodgson) heralds the return of “Mr AI” himself, Sam Altman, to the company he co-founded, under the supervision of a new board consisting of former Salesforce chief exec Brett Taylor, former US Treasury secretary Larry Summers and existing board member and chief exec of Quora, Adam D’Angelo. Fellow co-founder Greg Brockman will also be returning but we don’t know yet in what capacity.

OpenAI Says Sam Altman to Return as CEO (Wall Street Journal, Deepa Seetharaman) adds that Taylor will be chairman of the board and that there is likely to be an independent investigation into the kicking out of Altman last week. * SO WHAT? * This sudden development effectively negated four other articles that I would have mentioned here 🤣 as the situation has just moved so quickly! Tweets by new OpenAI boss about Nazis and rape attract attention (The Times, Ben Martin) would suggest that the tenure of newly-appointed interim CEO Emmett Shear is likely to be even shorter than that of Liz Truss’s as Prime Minister 🤣🤣🤣

Then on the hardware side of things, Nvidia’s Sales Surge, With No End in Sight for AI Boom (Wall Street Journal, Asa Fitch) shows that the company reported yet another quarter of booming sales – and it was confident enough to announce a strong revenue outlook thanks to the ongoing frenzied demand for its chips. Sales almost tripled over Q3, which smashed Wall Street forecasts and profits rose to $9.2bn versus the rather more pedestrian $680m a year earlier. I guess that the main cloud on the horizon is whether there will be more restrictions in China although it seems that there’s plenty of demand for the moment…

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!

2

CAR-RELATED NEWS

Ford downsizes Michigan plans, Stellantis talks to CATL, Northvolt makes a discovery and France agrees with the UK for once…

There was a lot of newsflow on batteries today! Ford Downsizes Plan for Michigan Battery Factory, Citing Slower EV Demand (Wall Street Journal, Mike Colias) shows that Ford has decided to continue to build an EV battery plant in Michigan – but on a smaller scale than it had originally intended. It said that this was due to a cooling-off in demand for EVs. I bet it’s also got a lot to do with concerns about the potential fallout it could get from using CATL’s battery technology in the current “anti-China” climate (Chinese company CATL is the world’s biggest battery maker!). The company said that it would be producing about 40% fewer batteries than it had planned originally. Meanwhile, Stellantis and China’s CATL in talks over European battery plant (Financial Times, Peter Campbell) shows that the European car manufacturing group is not being put off working with the Chinese company as it is in negotiations for a supply agreement for batteries that could result in a 50-50 manufacturing joint venture that will, on the one hand, increase affordability of EVs but on the other will make Europe more dependent on Chinese battery tech. * SO WHAT? * It does seem to be somewhat hypocritical that European carmakers are doing their best to exclude Chinese car manufacturers whilst simultaneously signing up to get Chinese batteries! It just goes to show how desperate the situation is getting with regard to batteries in particular. They are generally the most expensive part of an EV, so it is vital for the sake of increasing sales that the cost of batteries comes down. This is one of the reasons why Chinese car manufacturers can sell their cars for such competitive prices.

That being said, ‘Breakthrough battery’ from Sweden may cut dependency on China (The Guardian, Alex Lawson) shows that Europe’s energy and EV industries could cut their dependency on raw materials from China thanks to the launch of Northvolt’s “breakthrough” sodium-ion battery, which costs less and is more sustainable than existing lithium ion batteries. The battery is unique in that it does not use lithium, nickel, graphite or cobalt – all of which are becoming increasingly scarce (and expensive) at the moment! The battery is currently designed for electricity storage plants but could potentially be used in EVs! It’s not as powerful as current batteries but it is safer than alternatives at high temperatures. * SO WHAT? * This is an amazing discovery but it sounds like it’s not quite ready for the masses (particularly regarding its use in EVs). Still, the fact that something that has been developed that does not require increasingly scarce raw materials could prove to be a game-changer and is potentially the only solution for the world to avoid being increasingly reliant on China for raw materials and batteries.

Then in France signals support for UK call to delay tariffs on electric vehicles (Financial Times, Andy Bounds and Peter Foster) we see a rare example of when France and the UK are on the same page as it said that it wants to delay the introduction of tariffs between the UK and EU that are supposed to come into force from next year. * SO WHAT? * Interestingly, France has up until now been the only major European opponent of the UK’s request to postpone the 10% duty on EV sales. It seems somewhat hilarious to me that the French side has only just realised that the UK is the biggest market for European production. The post-Brexit Trade and Cooperation Agreement (TCA) states that a 10% tax will be imposed on EVs imported to the UK if their batteries have substantially been made outside Europe or the UK (and of course many of them have because many of them are Chinese!). The debate 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!

3

M&A NEWS

Broadcom-VMware gets the go-ahead, Carlyle sells off its chunk of McDonald’s China business and CRH goes shopping…

There was a smattering of M&A news today including Broadcom-VMware $69bn merger to close after China approves deal (Financial Times, Eleanor Olcott, Cristina Criddle and Ryan McMorrow), which showed that, after much foot-dragging, the chip mega-deal will go ahead after all following approval from the Chinese anti-monopoly regulator. Is this a sign of a thawing of relations between Washington and Beijing?? The merger had been set to close on October 30th but the deadline had to be extended because the Chinese were slowing things down (presumably in response to the US tightening tech restrictions on chips in particular).

Then in Carlyle wins big on $1.8bn sale of stake in McDonald’s China business (Financial Times, Antoine Gara and Kaye Wiggins) we see that US private equity firm Carlyle managed to

offload its minority 28% stake in the Chinese operations of McDonald’s to McDonald’s itself. It will have made a tidy profit on the sale while McDonald’s is now more able to rebuild exposure to the region. * SO WHAT? * This is the latest example of western private equity firms moving out of their China investments against a backdrop of ongoing trade tensions between the US and China. Some say that Carlyle will have made over six times its money on the price Carlyle originally paid for the stake, excluding fees! Not a bad return!

Elsewhere, Concrete offer is building block for American shift by CRH (The Times, Robert Lea) shows that the former FTSE100 constituent and now-biggest-building-materials-producer in the US and Europe just announced a $2.1bn acquisition of some major production plants from Martin Marietta Materials. This will give it more exposure to “attractive, high-growth markets” – and CRH added to the feel-good by upgrading its annual profit forecast! Yay!

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!

4

MISCELLANEOUS NEWS

Binance’s chief admits money-laundering, Deliveroo riders get classed as contractors, UK Budget speculation intensifies and AO World returns to profit…

In a quick scoot around some of today’s other interesting stories, Crypto giant Binance admits to money laundering and agrees to pay $4.3bn (The Guardian, Edward Helmore) highlights the rather dramatic news that Binance’s CEO, Changpeng Zhao, will resign after pleading guilty to money laundering yesterday. He will also pay a $50m fine and be barred from any involvement in the business. Binance itself will pay a fine of almost $1.8bn plus a $2.5bn settlement of criminal charges. * SO WHAT? * The company had been under investigation for over three years and had been found to be engaged in “consistent and egregious violations” of US law that allowed dodgy dealing which supported “activities from child sexual abuse, to illegal narcotics and terrorism across more than 100,000 transactions”. This latest comeuppance comes less than a month after fellow crypto-bro and cheerleader-in-chief Sam Bankman-Fried was convicted of seven counts of fraud and conspiracy. I think this is absolutely disgusting behaviour and put a lot of people at risk for the sake of greed. The question now is can crypto shake its association to these companies?? What direction will it take now?

Elsewhere, UK Supreme Court rules Deliveroo riders are not employees (Financial Times, Cristina Criddle) shows that Deliveroo riders are now deemed to be contractors in a landmark

decision for the gig economy. They will no longer be recognised as employees or represented by trade unions. Funnily enough, the Independent Workers’ Union of Great Britain (IWGB) said it was disappointed and that it will continue to argue for protections for what it sees as employees, rather than contractors! * SO WHAT? * This is an important decision not just for Deliveroo but for the whole gig economy. The IWGB is looking to appeal against the ruling under international law after failing at the highest level in the UK.

Jeremy Hunt to reveal £9bn-a-year permanent tax break for business (Financial Times, George Parker, Sam Fleming, Delphine Strauss and Michael O’Dwyer) gives us a few things to watch out for in today’s Budget. It’s expected that he’ll give businesses a £9bn permanent tax break, will cut national insurance and implement over 100 supply-side reforms to get people back to work and jolt the economy back to life. Yesterday, he announced an increase in the national living wage from £10.42 to £11.44. We’ll report back tomorrow in more detail!

Then in Fridge seller AO World is out of the cold with return to profit (The Times, Isabella Fish) we see that AO World has returned to profit after a year engaged in painful cost cutting – and not only that, it was even confident enough to jack up its full-year profit forecasts! The company said that trading had improved in the lead up to Black Friday with an uptick in demand for coffee machines. Frasers Group will no doubt be particularly pleased as it bought a 22% stake in AO World earlier this month!

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!

5

...AND FINALLY...

…in other news…

This guy featured in a video I put on here recently – but I thought I’d include this video because he does some brilliant stretches for those of us who are slumped over a computer for vast tracts of the day! Why not give them a go??

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Some of today’s market, commodity & currency moves (as at hrs 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 **
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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