This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week.
THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.
THIS WEEK WAS ABOUT INTEREST RATES AND TRADE...
- In interest rate news this week, the US Federal Reserve cut interest rates (Thursday) by 0.25% to the 2-2.25% range. Markets weakened as they were pricing in a deeper 0.5% cut. The Bank of England kept interest rates unchanged at 0.75% (Friday) despite agreeing with the US and European approach presumably because it wants to give itself capacity to make a big cut on Brexit
- The US-China trade war came to the forefront again this week as Trump initially accused China’s negotiators of not following through on their promises (Wednesday) and then proceeded to slap a 10% tariff on an additional $300bn-worth of Chinese goods (Friday). This is having a negative effect on Asian (Friday) and German manufacturing (Friday)
THERE WAS A BIT OF AN M&A BONANZA AS WELL...
- Pfizer put its off-patent drug division together with Epi-Pen maker Mylan (Tuesday) to create an off-patent pharmaceutical group, allowing it to focus more on the high margin drugs
- Just Eat announced intentions for a £9bn merger with Takeaway.com (Tuesday) which would form one of the world’s biggest online food delivery companies if it went through
- The London Stock Exchange announced an all-share takeover of Refinitiv (Friday), which will transform it from a trading platform into a UK-based rival to the market information behemoth that is Bloomberg
- Spectacles and sunglasses giant EssilorLuxottica bought the majority of GrandVision in a €7bn (Thursday) as part of its bid to expand its geographic footprint
UK RETAIL CONTINUED TO HAVE A BUMPY RIDE...
- Sports Direct were a bit naughty and delayed their already delayed results until after the close on Friday 26th (Monday) due to an unexpected Belgium tax bill (!) and then Grant Thornton resigned as its auditor (Tuesday) as Sports Direct looks increasingly toxic. Needless to say, their results were pretty poor
- Primark is asking landlords for cheaper rents (Monday) as it continues to do well, but is surrounded by other tenants who are paying less because of the number of CVAs. This is playing havoc with retail landlords (Tuesday)
- On the plus side, Next announced strong results (Thursday) prompting it to lift full year guidance and Greggs was also a high street winner (Wednesday) as it announced strong sales. However, the shares went a bit weaker because investors were hoping the company would raise full year guidance – and it didn’t, due to caution over Brexit
TECH SAW SOME INTERESTING DEVELOPMENTS AS WELL THIS WEEK...
- Huawei surprised everyone by announcing very strong sales (Wednesday) despite the US ban
- Apple announced strong revenue performance (Wednesday) but it also lost its #1 spot as the quoted company with the biggest cash pile (Thursday) to Google due to its notably increased spend on share buy backs and dividends. I wonder whether Google will start to follow suit given that it’s probably not going to be able to make a major acquision, given the regulatory environment at the moment. If it does, shareholders may be in for a windfall…
- On the other hand, Samsung announced poor results (Wednesday) which is probably due at least in part to consumers holding onto their existing handsets and waiting for 5G phones (Friday)
- Elsewhere, Spotify fell short of expectations on new subscribers (Thursday), TikTok got into trouble in its #1 overseas market (Thursday) and Epic Games is to introduce a new competitive esports league (Tuesday) called the Fortnite Championship Series