Watson’s Weekly 12-04-2019

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.

• There was talk about a global recession (Tuesday) as a number of leading indicators compiled by the OECD show the US, Japan, the eurozone, UK, Canada and Russia all losing momentum indicating the worst economic outlook since 2009. On the plus side, China, India and France showed signs of stabilising and Brazil even looks like it’s managing to pull itself out of its recent recession
• Theresa May got a Brexit deadline extension until October 31st (Thursday) with France’s Macron and Germany’s Merkel playing good-cop/bad-cop in negotiations
• President Trump is now levelling his sights on Europe (Tuesday) by threatening to impose tariffs on $11bn of EU goods just as he seems to be nearing a trade agreement with China. His main gripe is with subsidies going to Airbus – particularly pertinent at the moment considering the nightmare that Boeing is having at the moment

• It seems that some upcoming much-hyped flotation candidates are reining in some of the usual pre-listing BS as Pinterest talked about a time-limit on the dual share structure for its imminent IPO (Monday) given that investors are getting increasingly disgruntled with being frozen out when tech shares come to market and Uber even downplayed its valuation (Friday) saying that it may never make a profit! This is all highly unusual behaviour given that the general tendency of “hot” tech companies is to pump up the valuation and give new share owners almost zero (or actually zero) voting rights. Lyft’s performance since its recent IPO has been somewhat underwhelming – which is all the more concerning given the number of “stabilisation agents” on the deal who will be desperate to keep the feelgood party feeling going
• In M&A, Merck fought off competition to buy Versum for the sum of $6.4bn (Tuesday) and Garda World signaled a serious interest in buying all or part of G4S (Thursday). Although it’s not actually M&A, I thought I’d also mention that Fiat pooled its fleet with Tesla’s to meet CO2 emission standards (Monday), which is easy money for Tesla and shows that Fiat is lagging the rest when it comes to making environmentally-friendly vehicles

• Some recent stats show that more shops are being shut than are opening on the UK high street (Wednesday) and WH Smith’s results highlighted the disparity of rents (Friday) as it boasted that some of its outlets were rent-free because landlords valued their presence more than their rent. This is just more evidence of the difficulties facing many high street retailers
• Casual Dining Group is having trouble with its restaurants (Tuesday) but elsewhere on the high street, furniture retailer Dunelm unveiled strong performance at its Q3 results (Thursday) and there was news that Primark is having an initial dabble with online retailing (Friday) with click-and-collect being considered
• Elsewhere in retailing, Tesco announced some strong results (Thursday) marking a real comeback after a tricky few years under CEO Dave Lewis

• Boeing’s nightmares continue in the aftermath of the air crashes involving its 737MAX aircraft (Wednesday) as its order book grinds to a halt. Boeing’s suppliers are also starting to suffer (Friday) and the longer it goes on the harder it will be on them
• London-listed Indivior is facing a potential nightmare of a legal battle (Thursday) as it has been accused by the US Department of Justice of illegally elevating prescription sales of its opioid addiction treatment between 2006 and 2015 when it was part of consumer goods company Reckitt Benckiser. The company will contest this, but it’s not going to be pleasant. Reckitt Benckiser shareholders are worried that they will get embroiled in paying any punishment that they may be handed out as a result

My favourite story this week actually came out this morning – but I think it’s a positive note on which to end the week! Have a read of A dog named Cactus is dominating a race through the desert (The New York Times, Jere Longman https://tinyurl.com/y64dghaf). Ahhhhh!

Have a great weekend!