Wednesday 27/09/23

  1. In MACRO & BUSINESS TRENDS NEWS, the pound has a torrid time, the business environment in China deteriorates and Meta pays big money to break its London office lease
  2. In CONSUMER & RETAIL TRENDS, US consumer confidence falters, UK first-time buyers dwindle rapidly and Asos cuts profits forecasts
  3. In TECH NEWS, the FTC goes after Amazon and OpenAI chases a $90bn valuation
  4. In MISCELLANEOUS NEWS, Tesla could come under the scope of the EU investigation, the EU is in talks with Moderna and Smiths Group reports
  5. AND FINALLY, I bring you some very impressive basketball training moves…



So sterling has a bad time, China’s business environment gets tougher and Meta pulls the plug…

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Pound on worst run since Truss debate (The Times, Jack Barnett) highlights a bad patch for sterling as it is currently on course to have its worst performing month versus the dollar since the whole Truss/Kwarteng mini-budget fiasco! Yesterday it hit lows not seen since March when the financial sector was hit by the Silicon Valley Bank and Credit Suisse collapses. * SO WHAT? * This comes just after having outperformed all other major currencies for the first half of the year! As expectations of further major UK rate rises recede, money appears to be chasing the dollar. Bad news for British holiday makers and importers!

Meanwhile, China’s Business Environment Is Deteriorating, U.S. Companies Say (Wall Street Journal, Yuka Hayashi) cites the results of the latest survey from the US-China Business Council

which shows that American companies are saying that China is becoming a much more difficult place to do business. Sales and profits are in decline and investment is also down and/or delayed as uncertainty prevails due to the ongoing US-China trade tensions. Interestingly, over one-third of respondents said that they had cut or paused planned investment in China over the last year, which is a record high – and particularly telling as most of the companies in the survey are big US multinationals that have a long history in China. * SO WHAT? * Expectations had been high earlier this year following the lifting of Covid restrictions but then the economy slowed down and geopolitical tensions ratcheted up. Given the current crackdown on data and other moves, it looks unlikely that the environment is going to improve any time soon.

Then in Meta pays £149m to forfeit London office it has never used (Daily Telegraph, Tim Wallace and Matthew Field) we see that Facebook’s parent company has decided to pay the equivalent to seven years of rent in order to get out of its lease agreement of 1 Triton Square, near Regent’s Park. It still had 18 years on the office lease for a building that it never moved into while it continues to use a nearby building on Brock Street. * SO WHAT? * When you consider that working practices have changed dramatically over the last few years it is unsurprising that companies have consequently re-evaluated the space they need for their employees. When you overlay that with Mark Zuckerberg branding 2023 as a “Year of Efficiency”, cutting down on office space generally whilst redesigning what they DO have to include more shared work areas and hot-desking sounds like the next logical step. That said, Meta is the latest company to demand increased in-person office presence – mandating a three-day working-in-the-office minimum! British Land will no doubt be delighted at getting money for nothing – but it will be keen to get a tenant in the building as soon as possible.

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 confidence takes a hit, UK first-time buyer numbers shrink and Asos slashes profit forecasts…

In Consumer confidence falls in US (The Times, Jack Barnett) we see that US consumer confidence has trended lower for the second consecutive month, according to the latest data from the US Conference Board. * SO WHAT? * Optimism appears to be waning in the US as worries increase that it will fall into recession over the next year. It has theoretically avoided a technical recession (for which you need two consecutive quarters of economic contraction) – although it seems the Americans did it by fudging the figures – and while headline and core inflation have fallen considerably from their peak, they are still at levels that are way above their historical averages.

In the UK, First-time buyers in UK drop by a fifth as higher mortgage costs bite (The Guardian, Julia Kollewe) cites the latest research from Halifax Mortgages which shows that the number of first-time buyers has fallen by 22% and their average age has gone up by two years over the past decade to 32 while separate findings by Rightmove have identified “doer-upper” properties as being most in demand. This is potentially because they are generally 8% cheaper than average property prices while newly refurbished

homes fetch an average premium of 19%. * SO WHAT? * Although falling mortgage rates are coming through, they are falling from a high level! Mind you, it is also worth noting that strong income growth over the last few months means that the house price to income ratio (aka “the affordability ratio”) has dropped from 5.8% in June last year to 5.1%, which actually means that house prices for first-timers are now at their most affordable since June 2020! It certainly doesn’t feel like it though, does it! The average deposit that’s actually put down for a first home is £54,116, which equates to a chunky 19% of the property price. I don’t think many people have this kind of sum knocking around in their bank account, so no doubt it’s Bank of Mum and Dad stepping in once more (for those whose mums and dads can afford this!).

Then in Asos cuts profit forecast after wet summer hit sales (The Guardian, Julia Kollewe) we see that the online fashion retailer reported weaker sales in July and August thanks to wet weather, prompting it to slash its full-year forecasts. * SO WHAT? * The gloom here stands in stark contrast to Next’s recent results, where the company RAISED its full-year forecasts, as Asos continues to return to profitability. Falling freight costs and a reduction in inventory levels should help reaching this objective.

Want to engage with myself and the team at Wats12on’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!



The FTC takes on Amazon and OpenAI seeks a punchy valuation…

Amazon using monopoly power to hurt consumers, rivals and sellers, FTC claims (Financial Times, Stefania Palma and Camilla Hodgson) shows that the FTC and 17 states filed a lawsuit against Amazon yesterday alleging that it overcharged customers, stifled competitors and mistreated third-party sellers on its website, using its massive market power. * SO WHAT? * This is going to be the biggest test yet for FTC chair Lina Khan’s resolve to take on Big Tech. She was appointed by Biden and achieved prominence following the publication of a 2017 academic paper that called for Amazon’s break-up! This could get interesting!

OpenAI seeks $90bn valuation (The Times, Max Kendix) shows that the hottest company of the moment, is sounding out investors about a potential share sale that could value the company at between $80bn and $90bn – a level that’s almost three times what it was just eight months ago! * SO WHAT? * If it achieved this valuation it would make it one of the biggest start-ups globally, behind only Elon Musk’s SpaceX and ByteDance! Rumours are that the potential deal would enable existing employees to sell their existing shares. At the moment, Microsoft has a 49% stake in the company but is thought to be mulling over the possibility of pouring more money in!

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’s China business will also face scrutiny, the EU looks to do a deal with Moderna and Smiths Group reports…

In a quick scoot around some of today’s other interesting stories, Foreign brands including Tesla to face scrutiny as part of EU probe into China car subsidies (Financial Times, Joe Leahy) shows that it’s not just Chinese brands that are going to come within the scope of the EU probe into Chinese subsidies – Tesla and European carmakers that export cars out of China to the EU would also come under scrutiny. Export controls were discussed between the EU side and China side in a series of meetings in Beijing but China remains p!ssed off with the EU investigation. Negotiations are ongoing…

Then in EU in talks with Moderna over new vaccine supply deal (Financial Times, Donato Paolo Mancini) we see that the EU is negotiating with US drugmaker Moderna about a new Covid-19 vaccine as authorities get increasingly concerned ahead of ‘flu season. BioNTech/Pfizer, which is the other manufacturer of mRNA vaccines, already has a multiyear deal going on with the EU. It looks like a deal could cover the provision of jabs until 2026. * SO WHAT? * This is good news for the vaccine producers who have been suffering a bit of late thanks to falling demand for their jabs.

Elsewhere, Smiths shake-up pays off but worries persist in US (The Times, Robert Lea) shows that the British engineering company, Smiths Group, announced record profits and revenues. There are still concerns about the slowdown in America’s building market and sluggish profitability in its security scanners business.

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…

If you want to get anywhere in life, you’ve got to keep striving to improve! Sometimes that can be hard and there are times when you have to do what you can with what you have. That’s what makes this guy particularly impressive IMO! You can’t fault his work ethic or ability to improvise 👍

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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)