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 SAW THE FED SPEAK, EUROPEAN DEBATE AND A BREXIT U-TURN...
- IN THE US – Fed chief Jerome Powell said that there wouldn’t be any interest rate increases until 2022 (Thursday), adding that “We’re not thinking about raising rates. We’re not even thinking about thinking about raising rates”
- IN EUROPE – Everyone is still debating who is going to get access to the coronavirus recovery fund (Monday) but some countries (the ones that won’t do so well out of it!) are arguing that a number of “outdated” economic measures to calculate who gets what
- IN OIL – Saudi Aramco says that it’s raising prices in every region (Tuesday) noting particularly strong demand from Asia, especially China. Some US shale producers are returning to the market (Monday), but then again BP announced it is to cut 14% of its global workforce (Tuesday) – and other oil majors are expected to follow suit
US AND UK CONSUMERS ARE SPENDING (A BIT) WHILE RETAILERS TRY TO MUDDLE THROUGH...
- ON THE CONSUMER SIDE OF THINGS, Americans have been spending a lot on beauty products in lockdown (Tuesday) and the latest data showed that the number of US new jobless claims is continuing to fall (Friday). In the UK, retail sales are improving (Tuesday) but consumers are still anxious about shopping (Wednesday) despite the government announcing that non-essential shops will be opening on Monday (Wednesday)
- IN THE US – Simon Property Group is trying to pull out of the $3.6bn acquisition of smaller rival Taubman Centres (Thursday) that it agreed before coronavirus hit. It says that it has a clause in the contract that covers this, Taubman (obviously) thinks differently. Expect lots of this sort of thing to happen as deals negotiated before coronavirus hit unravel as acquirors try to avoid massive outflows of cash and acquirees try to make them stick to the agreement! Lawyers are going to have a field day in fees!
- IN THE UK – business secretary Alok Sharma announced the reopening of non-essential shops on Monday 15th (Wednesday), which I would have thought will be a mixed blessing for retailers because they’ll be allowed to trade (good), but footfall is likely to be lower (bad) and they won’t have an excuse not to pay rent any more (bad). On that front, retail landlords only expect to be paid 15% of the rent due on the June payment (Monday). The number of tenants will continue to dwindle as The Restaurant Group announced restaurant closures (Thursday), the Monsoon Accessorize founder bought virtually the whole company out of administration (Thursday) – but not the shops – putting at least 500 jobs in jeopardy (he’s negotiating rent with landlords currently and will decide closures based on that) and Mulberry cut 25% of its workforce (Tuesday)
- IN EUROPE – Inditex, the owner of Zara (among other brands) said it would close up to 1,200 shops over the next two years (Thursday) as it published its first ever quarterly loss. It is aiming to increase the percentage of online sales from 14% to 25%.
THE AIR TRAVEL INDUSTRY CONTINUES TO HAVE A 'MARE WHILE AUTO-MAKER VALUATIONS GET CRAZY...
- Anything to do with air travel these days is having a nightmare. Airbus is trying to get some kind of aeroplane scrappage scheme off the ground (Monday) and France has decided to pour €15bn into rescuing the industry (Wednesday), particularly Airbus and Air France. Elsewhere, Cathay Pacific got a bailout from the Hong Kong government (Tuesday) and it looks like US airlines aren’t likely to return to profitability until 2022 at the earliest (Wednesday). Heathrow launched a redundancy programme (Friday) and Lufthansa announced 22,000 jobs cuts (Friday)
- The automotive industry has also been having a tough time. However, there were some interesting developments this week like electric truck start-up Nikola Corp overtaking Ford’s valuation (Wednesday) despite never having sold a vehicle (!) and investors going mad for Tesla when it announced it was ready to mass-produce an all-electric semitrailer truck (Thursday). Online car retailer Vroom had a successful IPO (Wednesday), probably benefiting from the hype created by last week’s IPOs of Warner Music and ZoomInfo
...AND THERE WERE SOME OTHER NOTABLE DEVELOPMENTS THIS WEEK...
- Airbnb said that bookings were looking strong (Monday). I have been saying that I think Airbnb is going to be a “winner” from the coronavirus if it can get through this difficult period (which it has been doing thanks to cash injections from outside investors) because it is an attractive option for those wanting a holiday closer to – but not at – home. It offers less hassle than a hotel and more flexibility on location IMO
- Ocado raised £1bn to help it expand its internet sales capability and robot factories (Thursday)
- Just Eat Takeaway announced the acquisition of Grubhub (Thursday), which makes strategic sense given a business like this needs scale – and their business models are quite similar (although their geographies don’t overlap)
- Beyond Meat announced expansion of its European production capabilities (Friday), which should be a boon to its product distribution capability
- Snap announced a project called “Snap minis” (Friday) where developers provide them with cut-down versions of apps. This sounds like a good idea as it will give the platform more content and potentially broaden its appeal
AND IN UPDATES FOR WATSON'S YEARLY...
- Watson’s Yearly updates: watch this space!
My favourite “AND FINALLY…” story this week the tea abomination in Traumatised Brits say American woman’s cup of tea attempt should be ‘illegal’ (The Mirror, Paige Holland https://tinyurl.com/y9oag2t6) and some guidance on how to make amends in Doc Brown’s excellent My Proper Tea rap. This guy is a genius! Just to warn you, he does say some slightly naughty words…