Monday 05/06/23

1. In BIG PICTURE & BUSINESS TRENDS NEWS, OPEC decides on oil production cuts, Coinbase suffers, higher inflation is powering fast-food chains and AstraZeneca bets on China
2. In TECH NEWS, Apple’s set for a big announcement and we look at why mental health apps might not be that good for you
3. In PROPERTY-RELATED NEWS, longer mortgages surge in popularity and property investors look to Manchester and Bristol
4. In MISCELLANEOUS NEWS, Freshfields brings in more trainees and lawyers warn against AI
5. AND FINALLY, I bring you a test of your attention to detail…

So OPEC decides to support the oil price, Coinbase suffers, fast food chains prosper and AstraZeneca’s all-in on China…

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:

In Opec+ to extend cuts in oil output into 2024 as prices flag (The Guardian, Jess Clark) we see that the cartel reached an agreement to cut its output by 1.4m barrels a day and left the door open to further cuts in 2024. The next OPEC meeting is scheduled for 26th November. The oil price went higher on the announcement.

In crypto news, Coinbase: waning retail trade keeps platform in the doldrums (Financial Times, Lex) shows that bitcoin prices and trading volumes are diverging. Although bitcoin has risen by 63% so far this year, helping to power Coinbase’s share price up by over 90% over the same time period, retail investors are trading less and there’s still the ever-present cloud of heavier regulation hanging over things. The number of monthly transacting users (MTU) fell over Q1 while both trading volumes and total transaction revenues were over 50% and 63% weaker respectively. * SO WHAT? * This is a problem because retail trading makes up about 95% of Coinbase’s transaction revenue and 71% of total group revenues. “The halving” notwithstanding, there may be a bumpier ride ahead.

Meanwhile, Inflation drives fast-food boom as consumers reject restaurants (Daily Telegraph, Melissa Lawford) cites the latest

Mastercard data which shows that customers across the Continent are spending more on fast food as consumers seek out “affordable treats” and downgrade from pricier restaurants. Barclaycard figures show that spending on takeaways has increased for 12 consecutive months while restaurant spending has decreased in nine out of the last 11 months. McDonald’s announced a 12% increase in its international sales for Q1 while Subway also saw a 12% increase over the same time period. In contrast, the casual dining sector appears to be suffering as rising inflation his household incomes. * SO WHAT? * I guess that going to fast food restaurants as a “treat” could be one of the last things to be cut from some household budgets, but TBH, I think there are much better “affordable treats” out there. Still, fast food continues to be popular at this time and casual dining, having had a bit of a boom thanks to a short period of post-Covid euphoria, is on a downer once more. There will always be stronger and weaker players here, so opportunities could present themselves to stronger players to pick up sites of those who have fallen by the wayside to take advantage of any future uptick.

Meanwhile, AstraZeneca defies geopolitics to bet on China (Financial Times, Hannah Kuchler and Eleanor Olcott) shows that the pharmaceutical giant is now buzzing about opportunities in China due to the “explosion” of biotech companies in the country and its ageing population that is increasingly affected by chronic diseases. AstraZeneca is the largest overseas pharmaceutical company in China by sales and will try to invest as much as it can in China within sanctions restrictions. * SO WHAT? * This is really interesting as you can see that there is huge potential for drug makers in China and, in the current climate, overseas companies are looking at forming partnerships with Chinese counterparts because they are judged to be safer than acquisitions because of political risk and, of course, intellectual property theft. With the money that they have made from Covid, it must be extremely tempting to go shopping in such a huge market!

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!

Apple gets everyone excited and we see why mental health apps might not be the answer…

Tim Cook seeks next iPhone moment for Apple with bet on VR (Daily Telegraph, James Titcomb) bigs up the anticipation ahead of tonight’s expected unveiling of Apple’s new VR headset, which would be Apple’s first properly new product (i.e. zero input from Steve Jobs) under CEO Tim Cook’s tenure. The expectations are that it will be expensive (about $3,000), won’t be released for quite a few months yet and will have limited battery life. * SO WHAT? * The expected launch is particularly hotly anticipated because the headset has the potential to become an alternative to the iPhone rather than just another peripheral. Also, according to IDC, sales of VR headsets fell by 21% in 2022 and by a massive 54.4% in Q1 this year – so headsets badly need some kind of stimulus, which is something that Apple may be able to provide. Virtual reality start-ups pin hopes on Apple to lure back funding (Financial Times, Patrick McGee) emphasises this hope as morale across the industry has been low, having suffered a lot of “VR winters”.  Apple’s headset is expected to allow FaceTime calls, fitness functionality and 3D versions of some existing apps and some gaming. Given the price, it is expected that software developers will be buyers and they will play with it to develop new experiences. Will it live up to the hype???

I thought that Mental health apps: the AI therapist cannot see you now (Financial Times, Lex) was worth mentioning because mental health has been at the forefront of many a conversation for a while now, particularly through Covid and beyond. Apps like Calm and Headspace have garnered a lot of attention over the last few years and, according to Pitchbook data, mental health tech groups have raised almost $8bn in capital since the beginning of 2020. * SO WHAT? * When you consider that 20% of US adults suffer from mental health problems and that around 5% have a serious mental illness, plus the fact that there’s a shortage of therapists, using easy-to-access apps sounds like a good move. However, mental health practitioners have warned that unsupervised “self-medication” could be very dangerous at worst or at the very least, no real substitute for therapy. Telehealth companies like Talkspace and Amwell, which connect users to online therapists, have suffered greatly from not having enough qualified professionals to meet demand but there is now talk that AI could play a role with its conversational interplay in the future. I think that this is potentially a real minefield that could have major consequences and that only “proper” apps that provide real benefit from qualified professionals should be allowed to exist. After all, you wouldn’t perform brain surgery on yourself using YouTube videos now, would you!

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!

Longer mortgages get popular and property investors look outside London…

Record demand for 35-year loans as home buyers face surging rates (Daily Telegraph, Szu Ping Chan) cites the latest stats from UK Finance which shows that more first-time buyers are taking out mortgages with 35 year terms or more than they ever have done before (or at least since stats on this began in 2005). Apparently, 19% of all loans taken out by first-timers in March were for 35 years plus – almost double what it was in December 2021, when the Bank of England started raising interest rates from 0.1%. Halifax says that the average age of a first-timer is now 32, meaning that mortgages will span their entire working life and potentially extend into retirement. * SO WHAT? * Yes, repayments will be much higher, but those taking out these mortgages are willing to do this to reduce their monthly payments. I suspect that this trend will continue for as long as property prices remain stretched on the affordability front.

Meanwhile, Property investors look past London bubble (The Times, Tom Howard) cites property agent CBRE as saying that Manchester and Bristol could be getting more attractive for investors who want to look outside London for opportunities in offices, retail and student accommodation. The predictions take into account things like income and demographic trends plus universities and housing affordability. Outside Manchester and Bristol, Birmingham is expected to see the biggest growth in the retail estate market, Belfast is predicted to be the key destination for investment in leisure properties, Cambridge is expected to be the best place for lab space and Brighton is predicted to excel in senior living developments and hotels. * SO WHAT? * Clearly a lot can happen in ten years (which is the time period that CBRE were looking at in their research), but I’ve always thought that London – although perhaps more volatile – is always going to be key. That said, with more home working and better infrastructure effectively bringing cities closer together I think that cities outside London stand the best chance of benefiting from investment than they ever have done.

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!

Freshfields takes on more trainees and lawyers warn against AI…

In a quick scoot around some of today’s other interesting stories, Freshfields brings in more trainees (The Times, Jonathan Ames) highlights the fact that the magic circle firm has increased trainee numbers by over 35% showing that at least one of the big firms remains confident about the future despite tricky economic conditions. The number of trainees being taken on by the magic circle has been falling since the financial crisis of 2008 and Freshfields’ recent move will now put them ahead of Linklaters and above A&O and Clifford Chance. Is this move a statement of confidence in deal flows turning around??

Then in Lawyers warned against AI in cases (Daily Telegraph, Adam Mawardi) we see that Harry Hodgkin, the chief exec of The Barrister Group, urged caution in using AI in its current form because barristers’ good global legal reputation could be damaged if it was relied on too much. Law firms are experimenting with it (A&O launched its Harvey chatbot in February and Lexis+ is being trialled with Reed Smith and Baker McKenzie, for instance) but there was a very embarrassing instance last month when a New York lawyer had to apologise to a judge for citing court cases that ChatGPT came up with that didn’t actually exist! AI in law is clearly a work in progress!

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 know that a lot of people think they have good attention to detail, but how about trying this to see if you actually have good attention to detail: You have eyes like a hawk if you can spot the number 725 among the 775s in 7 seconds (The Mirror, Grace Hoffman). Go on – have a go!