Tuesday 28/05/24

1. In MACRO NEWS, the AfD hits a bump, Sunak’s campaign courts controversy and Labour gets Big Business endorsement
2. In RETAIL & CONSUMER GOODS NEWS, shop price inflation falls, online shopping sees a concerning trend forming, senior politicians urge more scrutiny of a potential Shein IPO, Korean ramyun gets hot and sneaker rivals try to get a new spring in their step
3. In TECH NEWS, Scarlett Johansson’s AI clash could prompt further skirmishes, xAI hits its fundraising target and China raises big money to boost its chip industry
4. In MISCELLANEOUS NEWS, we hear that hybrids aren’t all that, Essex University could be in a quandary and Latham & Watkins races up the rankings
5. AND FINALLY, I show you how to make nachos for 20 people at the same time…

So the AfD has a wobble, Sunak’s campaign takes shape and Labour gets Big Business approval…

Hi there! Just to let you know, I’m preparing for a major overhaul on Watson’s Daily that will enhance the existing offering. You may not see the updates instantly, but I shall let you know when the big “switch-over” takes place this summer. I think you will love what’s to come!

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:

Scandals deprive Germany’s AfD of breakthrough in local polls (Financial Times, Sam Jones) shows that Germany’s far-right AfD had a bit of a wobble in the local elections as the far-right populist party suffered repercussions from a string of recent scandals. It has lost ground to parties like the centre-right Christian Democratic Union but even so its popularity has increased by over 10% in the polls compared to where it was in the equivalent local elections five years ago. * SO WHAT? * The rise of the populists in Europe is not over. I get the feeling that the political pendulum in Europe is still swinging to the right and that this will be just a bump in the road unless European governments take a co-ordinated approach on immigration.

Back in the UK, Sunak unveils £2.4bn pensioner tax cut in bid to stabilise election campaign (Financial Times, George Parker) shows the government setting out its pre-election stall as it is going to announce a tax cut for pensioners today where it will unfreeze the personal allowance for pensioners in order to avoid millions of people who get the state pension being sucked into the tax system. Interestingly, according to YouGov, the over-70s are the only age group more likely to vote Conservative than Labour. Mind you, Scrap stamp duty for over-75s to solve housing and care crisis, says retirement home boss (Daily Telegraph, Melissa Lawford) sounds like it could also be a vote-winner if it came to fruition as it could make it easier for older people to sell up and downsize, freeing up homes for younger buyers, according to the CEO of retirement home builder Retirement Villages Group. There has been a boom in under-occupation over the last few decades as parents remain in family homes long after their kids move out. Stamp duty is a particularly sensitive issue for older

people because it may mean that they can’t live in a new home for a long time, which causes concern because of the need to pay for future care. * SO WHAT? * We’ll be seeing a slew of initiatives as the Conservatives do their best to woo voters. TBH, the policy that caused the most concern in our household over the weekend was the one about the reintroduction of national service, although it seems to me that everyone got hysterical about the prospect 18 year-olds being immediately transported to the front line of some conflict – which actually isn’t the case. Still, it did get people talking! I think that the main danger that Starmer will have in his path to number 10 is that voters may just assume that he’ll win and not bother voting – whereas if the Conservatives are to have any chance of winning, they will need to mobilise the voters to get out there to the polling booths!

Rishi Sunak’s tour map suggests defensive Tory election strategy (Financial Times, Jonathan Vincent and George Parker) takes a look at Sunak’s campaign schedule, which has thus far concentrated on seats that the Conservatives won narrowly in the 2019 election, suggesting that he is concentrating on damage limitation rather than winning new hearts and minds. The polls suggest a drubbing for Sunak right now…

Inside the first TikTok election (Daily Telegraph, James Titcomb) shows that, 14 months after banning TikTok on government devices, Sunak is now embracing the app and using the Conservative party account’s first official TikTok to promote his national service policy! Labour had already pre-empted it with various (quite amusing) memes. * SO WHAT? * When you consider that the importance of social media for news has absolutely exploded in recent years, you can understand why politicians are increasingly having to get involved. In 2012, 85% of adults got their news from TV and 53% from radio, according to Ofcom. Last year this had fallen to 70% and 41% respectively while use of the internet for news has jumped from 41% to 68% AND ALMOST 50% OF ADULTS GET THEIR NEWS FROM SOCIAL MEDIA! Last year, 10% of people said that they got their news from TikTok – which is more than Radio One. TikTok is now seen to be THE most important way to reach younger voters.

Meanwhile, Labour secures the backing of 120 business executives (Financial Times, George Parker and Michael O’Dwyer) shows that Labour now has the backing of 120 business chiefs thanks to its City of London charm offensive powered by its promise to restore “stability” to the UK if it won the election. The chiefs have endorsed Labour in a letter, something that will bolster its credentials for running the economy. The letter to The Times said that “We are in urgent need of a new outlook to break free from the stagnation of the past decade and we hope by taking this public stand we might persuade others of that need too”.

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!

Shop price inflation drops, online shopping sees a worrying trend, senior politicians want more Shein scrutiny, Korean ramyun builds up steam and sneaker rivals push new tech…

Inflation in UK shops falls amid price cuts on furniture and TVs (The Guardian, Sarah Butler) cites the latest release from the BRC and NielsenIQ which shows that shop price inflation has now hit its lowest level since November 2021 thanks to falling food price rises. BRC chief Helen Dickinson observed that shop price inflation has now returned to more normal levels at 0.6%.

Meanwhile, Why more online shoppers than ever are ditching their baskets at the till (Daily Telegraph, Hannah Boland) is an interesting article which points out that increasing delivery fees and a recovery of the high street is prompting shoppers to ditch their digital baskets mid-order. Last year, there was a 9% increase in “basket abandonment”, according to data from Retail Economics and GFS, which equates to about £3bn in lost sales. The main reasons for abandonment were high delivery costs, limited delivery options and rising (or the introduction of) returns fees. * SO WHAT? * I think that there are a number of factors at work here – delivery charges have been rising steadily – as has the threshold for free delivery, serial returning has been clamped down on (which I think is a GOOD thing for retailers) and shoppers are just getting increasingly flaky, particularly as a result of the cost-of-living crisis. I would have thought this will all change when economies recover and consumer confidence rises once more. Until then, retailers will have to strike a balance between stemming the losses from returners and providing a transparent and smooth shopping experience for customers.

Then in Senior UK politicians call for greater scrutiny of potential Shein IPO (The Guardian, Eleni Courea) we see that senior politicians are calling for more scrutiny of Shein as it looks like it will float on the London Stock Exchange after its attempts to float in New York hit a regulatory roadblock. * SO WHAT? * Shein’s dodgy practices and mountain of lawsuits may be catching up with it – but who will win here? Will it be the ailing LSE, desperate to land a whopper and punch its NYSE rival on the nose with the help of the government – or will it be the politicians? On balance, I would have thought Shein will win IF the IPO is held sooner rather than later because politicians will be distracted by the election – and I also would have thought that the LSE will be very keen to wave this through because of this reason. We’ll just have to wait and see!

Maker of Shin Ramyun expands overseas as Korean noodles become hit (Financial Times, Song Jung-a) highlights the success of South Korea’s leading instant noodle maker, Nongshim, which says that it is acclerating its overseas expansion. The popularity of instant noodles has boomed in recent years and Nongshim’s most popular spicy noodle product, Shin Ramyun, saw $900m in sales in 2023 – with almost 60% of that coming from abroad! It is now targeting a tripling of annual sales in the US to become the biggest noodle maker in the market by 2030! At the moment, it is second behind Japan’s Toyo Suisan Kaisha which has almost 50% of the US market sewn up, according to Euromonitor International. * SO WHAT? * It seems to me that spicey noodles in particular have grown in popularity thanks to influencers picking them up, making them the centre of “challenges” and using them in their own recipes. Breaking out from being a niche product that you tend to buy in Asian supermarkets to being on the shelves of major supermarkets is a major step – but I think that it may be tricky for instant noodles to boom in Europe due to pride in local cuisine (in some countries!) and the perception that they are just junk food. That said, I am a major fan 😁 (I am particularly partial to Japan’s “Rao” noodles by Nissin, although Maruchan’s Kitsune Udon is also another one of my go-to choices!). It often used to make me laugh when I was a stockbroker that analysts who came over from Japan used to pack loads of instant noodles in their suitcases to eat while they were over on business trips! They used to be wined and dined in all sorts of fancy restaurants (sometimes by me!) but always seemed to crave a taste of home!

Then in Sneaker Rivals Race to Find the Next Super Foam (Wall Street Journal, Inti Pacheco) we see that the likes of Nike, New Balance, Under Armour and “new kids” like On and Hoka are constantly pushing the technological envelope to make the best sneakers. Hoka has benefited from concentrating on cushioning for its running shoes, meaning that the recent trend of thicker soles has made it particularly successful – sales of Hoka shoes hit $1.8bn in the year ended March 31st versus “just” $352m in 2020. On has since worked with Arkema (a French chemical conglomerate) to produce its Helion foam, Nike works with Zotefoams (a British company) that provided the material for one of Nike’s first “supershoes”, the Vaporfly and Dow Chemical is the company behind Under Armour’s Flow technology, which is currently being sported by NBA superstar Steph Curry. * SO WHAT? * It seems that the athleisure trend is continuing and footwear makers are continuing to try to satisfy both the athlete and the leisure wearer alike. It’s a competitive jungle out there but customers seem keen to put their money where their feet are!

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!

The Scarlett Johansson thing could prompt repercussions, xAI hits its target and China raises big money to boost its chip industry…

Scarlett Johansson’s OpenAI clash is just the start of legal wrangles over artificial intelligence (The Guardian, Dan Milmo) is an interesting article which moves on from the recent furore over OpenAI’s apparent use of a voice that bore a striking reality to Scarlett Johansson’s. It shows that SAG-AFTRA, the American labour union representing those in the media industry, is seeing this as a “teachable moment” for the tech industry. It is pushing for a person’s image, voice and likeness to be protected as intellectual property at a federal – and, ideally, countrywide level – and is backing the No Fakes Act, a bipartisan bill in the US Senate that is looking to protect performers from unauthorised use in digital avatars and the like. * SO WHAT? * This could be interesting if people like Johansson take companies to court as there is a precedent in the 1980s when Singer Bette Midler sued Ford when they employed an impersonator to use her singing voice in a commercial. Midler won in the US court of appeals, meaning that the voice does NOT have to be an exact replica in order for it to be actionable. Legal battles are surely going to be increasing in number as AI continues to grow!

Then in Elon Musk’s AI start-up raises $6bn in funding (The Times, Tom Saunders) we see that Elon Musk’s xAI start-up has now managed to raise the $6bn it wanted in its latest funding round. This now gives the company an implied valuation of $24bn and some financial firepower to take on the likes of OpenAI and Anthropic. The money will be used to build its first products, its infrastructure and new technologies. xAI was launched in July 2023. With Musk throwing his hat (belatedly) into the ring, things are bound to get interesting!

Meanwhile, China raises $47bn for chip industry in drive for self-sufficiency (Financial Times, Ryan McMorrow and Cheng Leng) highlights the completion of the country’s biggest-ever funding round, raising a whopping $47bn to support China’s under-fire semiconductor industry. The National Integrated Circuit Industry Investment Fund Phase III (part of The Big Fund) is China’s biggest pot of capital to be focused on financing companies and technologies that overcome technological “choke points” for its semiconductor industry.  The money has been raised from the finance ministry, local governments, state-owned businesses and now state-owned banks. * SO WHAT? * This is a major development and share prices of chip stocks including SMIC and Hua Hong got a little boost on the back of this – but it will take time for progress to be made. Mind you, you do wonder how long America can stay in the lead now…

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!

Hybrid promises looks shaky, Essex Uni is in a quandary and Latham & Watkins races up the rankings…

In a quick scoot around some of today’s other interesting stories, Plug-in hybrid cars ‘costing £500 a year more to refuel than lab tests suggest’ (The Guardian, Jasper Jolly) cites analysis by the Energy and Climate Intelligence Unit (ECIU) which found that plug-in hybrid cars cost double to fuel versus manufacturers’ promises! If this proves to be true, could this be another “dieselgate” waiting to happen??

Then in Essex university’s success story stymied by politics of immigration (Financial Times, Peter Foster and Amy Borrett) we see an example of a university that has done well from attracting foreign students – but will consequently fall foul of new rules that are expected to dent that attraction considerably, particularly in India and Pakistan. Essex University now expects there to be revenue shortfalls – but over 50 others have recently announced job cuts and course closures in anticipation of fewer overseas students. Recent news that Sunak is thinking about axing the graduate visa scheme, which lets students live and work in the UK for two years after they graduate, is causing a lot of concern. Education is something that the next government needs to address as a matter of priority as uncertainty continues to grow…

How Latham & Watkins conquered the City of London (Financial Times, Suzi Ring) is an interesting article which looks at how the LA firm is increasingly winning mandates for high-profile blue-chip clients in the UK. Last year’s poaching of former Freshfields Bruckhaus Deringer capital markets lawyer Mark Austin, “the guy who has the longest IPO list in the country” according to a senior partner at one of the magic circle firms, was not only a landmark – it was a sign of how far the company had come in the City. US-headquartered firms have been growing their footprints in the City over the last 15 years, a trend that has accelerated post-Brexit thanks to a weaker pound giving American companies more financial firepower. Latham & Watkins has jumped up the rankings of legal advisors acting on UK M&A, according to Dealogic, from tenth to third in the last three years alone! * SO WHAT? * The company has poached so many partners that it has been nicknamed “Linklaters 2.0” and its deep pockets have proved to be increasingly irresistible to the favoured few. It sounds to me that US law firms are doing to British law firms what US investment banks did to British investment banks in the 90s and beyond. If they can provide a compelling workload and attractive pay prospects, things could get even more frenzied from here IMHO!

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 thought I’d leave you with how to make nachos for twenty people all in one go! Not sure about the “chef” adding rabbit droppings but hey, maybe they enhance the flavour…🤣