Watson’s Weekly 07-06-2019

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. You will need a FULL SUBSCRIPTION to be able to click through all the links which take you to the relevant articles.

• Trade war chat rumbled on this week as rhetoric continued between the US, China and now Mexico (Monday) while Huawei and FedEx got caught up in the crossfire (Monday). Global markets took heart from the Fed adopting a more sympathetic tone towards the possibility of interest rate cuts (Wednesday) but Australia DID go ahead and cut interest rates to a record low of 1.25% (Wednesday) in a bid to stop the economy falling into its first potential recession in 28 years
• Former star fund manager Neil Woodford had massive redemptions this week from his biggest clients (Wednesday, Thursday, Friday) for underperformance. He tried to halt the redemption doom loop but that only served to highlight his shortcomings. At the end of the week, it turned out that one of his mates, Mark Dampier (who is also head of research at Hargreaves Lansdown, the financial services company that was also a long-time cheerleader of his funds) sold out of his shares in Hargreaves Lansdown worth about £600,000 on May 16th for £23.92 a share – along with his wife who sold shares worth about £5m on the same day (Friday). This was only weeks before they fell to what they are now – £19! The couple were £1.5m better off than they would have been as a result. Either Dampier is an absolute genius or something very fishy has been going on…

• The biggest news in the sector this week was FCA withdrawing from the proposed merger with Renault (Thursday). The rapid change of heart was blamed on the French government’s intransigence but it seems that there are some close to Nissan who think that the deal may not yet be completely dead…
• Jaguar Land Rover and BMW teamed up on the development of Electric Drive Units (Thursday) for the next generation of battery-powered vehicles. The two companies will share R&D planning and joint procurement. Hyundai announced that it was offering to sell its hydrogen fuel cell system to rivals to encourage wider adoption of the technology (Monday)
• Meanwhile, Ford announced the closure of its Bridgend factory (Thursday) which could get worse in the event of a no-deal Brexit (Friday). However, despite UK car sales continuing to weaken (Thursday), online marketplace Auto Trader unveiled some strong results (Friday) as car dealers increased their spend to get priority listings

• Arcadia, the group behind Topshop, Topman, Dorothy Perkins etc., postponed a key vote on CVAs this week (Thursday). It needed approval from 75% of its creditors for its seven proposed CVAs to help the group, but when it became apparent that this wasn’t going to happen, Philip Green postponed the vote to next week to give him time to negotiate. Interestingly, the owner of Monsoon and Accesorize was waiting to see how the Arcadia vote was received and decided to postpone a vote on its own CVA proposal as a result (Friday)
• Meanwhile, Sports Direct’s Mike Ashley is about to make an offer for Game Digital (Thursday) having built up a sizeable stake in the company
• It was a good week for Joules (purveyor of brightly coloured clothing to the middle classes) and Loungers (which owns “Lounges” and “Cosy Clubs”) who both announced strong results (Friday)

• The meat substitute hype continues, according to research by Technomic (Wednesday) as 15% of US restaurants offered meatless burgers in March, up from 3% a year earlier. White Castle, TGI Fridays, Del Taco, CKE and Red Robin Gourmet Burgers have all introduced burgers from these companies and rising demand (and consequent hype!) means that the likes of Beyond Meat and Impossible Foods are struggling to keep up with demand
• Beyond Meat unveiled its first set of results since its flotation last month (Friday) and its quarterly sales more than tripled (although it is currently still loss-making overall). The company predicted that it could break even this year due to rolling out its plant-based products to more restaurants. Sizzling, or what?!?

I’m going to leave you with just one “alternative” story this week – and it’s the one that freaked me out the most: Japanese artist turns man’s face into eerily realistic human flesh coin purse (SoraNews24, https://tinyurl.com/y3ubbq6z). Try getting THAT image out of your head! Happy weekend!