Watson’s Weekly 08-11-2019

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.

• Markets hit new highs as hopes for an end to the US-China trade war increased (Friday) with both sides talking about a phased repealing of tariffs. However, there have been many false dawns before so when/if a concrete agreement is actually reached I would expect markets to get a decent boost
• Canada got some good news as China decided to lift the ban on Canadian pig and beef imports (Thursday) that happened to be imposed after Canada arrested Huawei exec Meng Wanzhou on US fraud charges. It may be that China relented more because it has culled half of its pig population and is short of pork rather than anything else, but I’m sure that Canadian farmers won’t be complaining!
• There was a blow to the Regional Comprehensive Economic Partnership (RCEP) deal as India refused to sign the Asia-Pacific trade pact (Tuesday) because it didn’t want a deluge of Chinese imports when it’s got big trade deficits with it already. 15 other nations (including the 10 Asean nations plus China, Japan, South Korea, Australia and New Zealand) did, however, sign it. This trading agreement has been under discussion since 2012 and India left the door open to joining at a later stage
• There was embarrassment for Brazil as it launched an auction of deep-sea oil deposits to great fanfare (Wednesday) only to fall flat (Thursday) as oil majors declined the opportunity due to high prices, complicated sharing rules, doubts about Brazil’s regime and increasing pressure to decrease reliance on fossil fuels

• Over in the US, Walgreens Boots Alliance caused a stir by mulling a management buyout (Wednesday) which would be the biggest leveraged buyout in history. However, the mood was more sombre elsewhere as troubled department store chain Sears announced even more store closures (Friday) amid poor trading and Gap announced the departure of its CEO (Friday) who just couldn’t revive its fortunes. His plans to split the company into two separate ones – Old Navy and Gap – are still apparently intact. Robert Fisher, son of the founders, will be the CEO for the time being. Don’t feel too sorry for the departing Art Peck, though – his compensation since being made CEO in 2015 was worth about $40m!
• Back in the UK, Mothercare ceased all UK trading (Wednesday) after the administrators came in. This wasn’t really a surprise given that it’s been in trouble for quite some time. However, the overseas business is going OK so the name might not disappear completely. Clarks announced even more store closures (Thursday) as continued efforts to turn things around aren’t working/working quickly enough and Superdry also announced disappointing sales (Friday) as co-founder Julian Dunkerton continues to try to put his company back on the growth track. M&S isn’t exactly shooting the lights out (Thursday) as the clothing business continues to drag and all this gloom is putting increasing pressure on Intu (Thursday), the retailer landlord. One bright spot amid the gloom was Primark, who continues to put in solid performances (Wednesday), even announcing ambitious US expansion plans.

• Toyota saw its first half profits climb to an all-time high (Friday) in a notably strong performance versus its competitors. Sales grew in all of its key markets including Japan, the US, Europe and Asia including China
• Aston Martin continued to disappoint (Friday) as it announced yet another quarterly loss in the three months to September. Its forthcoming DBX has got even more of a job to do now to support the company – but at least Astons will be in next year’s Bond film, and that’s usually good for sales
• Germany’s car manufacturers appealed to the government for help (Tuesday) to boost demand for electric vehicles

• Everyone got excited about the launch of the Saudi Aramco IPO (Monday). OK, so it doesn’t look like it’ll get the $2tn valuation Crown Prince Mohammed bin Salman was looking for, but investor interest will certainly be piqued by the promise of guaranteed annual dividends of even more than the $75bn already promised (Friday)
• Then in a quick look at a couple of IPOs that have done really badly since launch, both Uber (Thursday) and Peloton (Wednesday) underwhelmed with their results. There are only so many times that you can promise to be profitable and then not deliver (unless, of course, you are Elon Musk – in which case investors will still keep throwing money at you 😜!).

My favourite “alternative” stories this week are about food and drink from the rather unhealthy Fish and Chip shop sells battered Quality Streets – and they’ve ranked best ones (The Mirror, Courtney Pochin https://tinyurl.com/yxfl2pca) to the rather horrendous sounding Japanese crowdfunding underway for bottled Onionade, just like mom used to make (SoraNews24, Master Blaster https://tinyurl.com/y4vgubfa). OMG 🤢

I hope you have a great weekend whatever you get up to!