Thursday 04/07/24

1. In MACRO NEWS, European central bankers get nervous, the UK’s services sector “seizes up” and City analysts reckon that a Labour landslide will increase investment and confidence
2. In RETAIL NEWS, Jeff Bezos offloads more Amazon shares, Amazon announces that it will build an Australian defence cloud and we look at why Amazon shouldn’t take on Shein and Temu while Saks’ owner buys Neiman Marcus
3. In MISCELLANEOUS NEWS, BMW attacks EU tariffs on Chinese EV imports and Hawksmoor restaurants go up for sale
4. AND FINALLY, I bring you a naughty little trick to play on someone…

So European central bankers get nervous, UK service sector growth loses momentum and City analysts are positive about the prospects of a Labour landslide…

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:

European central bankers warn of risks to region’s economy (Financial Times, Martin Arnold) shows that members of the ECB governing council are getting increasingly worried about the potential effects of rising trade tensions and high government debt that could result from a French election win by the far-right Rassemblement National despite recent news of falling inflation and rising growth in the bloc. There are also rising concerns that what’s happening in France could spread across the continent as populists in the region seem to be gaining momentum. However, it’s not just Europe that the members are worried about – it’s the prospect of Trump getting to the White House as he’s talking about slapping 10% import taxes from the EU, which they reckon will cut 1% of GDP rom the bloc. This could potentially neutralise

their forecast of 0.9% GDP growth that is expected for this year. For now, though, markets reckon that the ECB will keep interest rates on hold after cutting them for the first time in almost five years last month.

Back home, UK service sector growth ‘seizes up’ as firms put plans on hold before election (The Guardian, Richard Partington) cites the latest data from the S&P Global PMI for the services sector which shows that growth slowed right down last month as companies put projects on hold in the run-up to the election. Growth slowed down in June to its lowest level in seven months. * SO WHAT? * I don’t think this is at all surprising as companies tend to rein things in ahead of an election or an important vote. Ironically, I think that Sunak may have done everyone a favour by calling an early election because it means that there was only going to be six weeks’ worth of “drag” whereas I would argue that we could have been doomed to a summer and autumn of drag had the election been held later in the year.

Meanwhile, Labour landslide may boost investment and confidence in UK, say City analysts (The Guardian, Richard Partington) shows that City analysts are coming round to thinking that a landslide victory for Labour would actually be a good thing from a markets perspective because investors might see it as a “safe haven” in relation to other countries that are in a bit of turmoil at the moment. They contend that a Labour majority could project more stability after the turbulence caused in the wake of Brexit, something that investors have been very wary of.

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!

Bezos sells off more stock, Amazon builds a defence cloud and we look at why Amazon shouldn’t copy Shein and Temu while Saks’ owner buys Neiman Marcus…

Jeff Bezos to offload $5bn of Amazon stock (Financial Times, Camilla Hodgson) shows that the founder and former CEO of Amazon has announced plans to sell almost $5bn worth of his stake in the company just days after its valuation breached the $2tn threshold. This means that he will have sold off over $13.4bn worth of Amazon shares this year.

Meanwhile, Amazon to build $1.3bn Australian defence cloud (Financial Times, Nic Fildes) highlights an important development for the company as Amazon Web Services, its cloud service division, has just won a $1.3bn contract with the Australian government to build three data centres for the secure sharing of information with allies. AWS is already the provider of cloud computing services to the US and UK governments, who are members of the Five Eyes intelligence alliance along with Australia, New Zealand and Canada. * SO WHAT? * This sounds like a good deal for all and it also underlines AWS’s credentials in providing “top secret” contracts.

Amazon should not join Shein and Temu’s race to the bottom (Financial Times, Lex) shows that the FT is of the same opinion as me

regarding Amazon’s latest move to launch a new discount service in the mould of Shein and Temu. It contends that the Chinese e-tailers are burning cash in order to build market share while Amazon actually has a robust and difficult-to-emulate logistics network that actually works properly and poses massive barriers to entry for any newcomers. Building up a supplier network in China is going to take time, energy and money. Amazon should stick to what it does and let Shein and Temu burn themselves out rather than join them.

Then in Saks Owner to Buy Neiman Marcus—With Help From Amazon (Wall Street Journal, Suzanne Kapner and Lauren Thomas) we see that HBC, a holding company that bought luxury department store Saks Fifth Avenue in 2013, has agreed a deal to buy rival Neiman Marcus in a $2.65bn deal. Supporter say this will create a luxury retailing powerhouse while Amazon, which will take a minority stake in the company (which is to be called Saks Global) will provide it with tech and logistical expertise. * SO WHAT? * I think that this sounds reasonable enough from a strategic point of view but I continue to question the wisdom of the existence of department stores anyway (at least in their current form). They can indeed be beautiful and pleasant places to visit but I think that they are always going to be limited in scope because their prices are generally higher than they are elsewhere. They have to get over the fact that many customers see department stores as glorified shop windows where they see the item and then order it cheaper online later on. I think that Amazon’s involvement is a positive though on the logistics side… 

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!

BMW speaks up for China EV imports and Hawksmoor is up for sale…

In a quick scoot around some of today’s other interesting stories, BMW attacks EU tariffs on Chinese electric car imports (Daily Telegraph, Matt Oliver) shows that – surprise, surprise – a German manufacturer with major operations in China has publicly condemned EU moves to slap hefty duties on imports of Chinese EVs to Europe. * SO WHAT? * This is just BMW 💩ting itself about China potentially retaliating with similar moves of its own. Mercedes-Benz’s big cheese did the same thing a few months back, as did VW’s. Duties on Chinese EV imports are due to come into force from today…

Then in Hawksmoor restaurants for sale in deal that may value it at £100m (The Times, Helen Cahill) we see that the British

steakhouse chain is now up for sale as it looks to expand abroad. It is thought that an auction could get bids of over £100m. It was founded in east London by two guys in 2006 but has been 51% owned since 2013 by Graphite Capital, which has also backed Wagamama and Corbin & King. * SO WHAT? * I have to say that I think this is a terrible idea. Selling steak to the Americans?? It’ll be nice for the founders to cash out and Graphite Capital could get a decent lump sum as well given that they invested when the business was valued at £35m. However, I think they are entering a very crowded market. I would personally like to have seen them invest more in the UK market where there is less competition (and that is comparatively – because there are loads of decent steak places around, like Goodman for instance). Maybe they just want to cash out and leave the rest to some other poor mug. You couldn’t blame them after the nightmare they had under Covid.

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 this is a bit juvenile but it is an amusing trick to play on someone 🤣! I take no responsibility for any injuries people may get, though, as a result of this! Probably best not to do this against a brick wall (or against a window)…