Watson’s Weekly 15-02-2019

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.

• The latest round of US-China trade talks were held in Beijing this week (Tuesday) and investors got increasingly excited when Trump made positive noises (Wednesday) and then even more excited when Xi himself got involved unexpectedly (Thursday). A lot of politicians, industries and companies will be praying for further progress to end the impasse that has dragged on since last summer
• Eurostat figures showed a fragile Europe with Germany only just avoiding recession (Friday) and Italy not being so fortunate. UK inflation fell below the Bank of England’s 2% target (Thursday) which should help consumers feel more flush given that wages continue to rise
• World trading activity continues to be sluggish (Wednesday) as the Baltic Dry Index hit new lows but on the other hand China announced surprisingly strong export numbers (Thursday) although many think that this was at least partly due to companies rushing to put their order through before the current trade truce deadline
• In commodities news, copper prices seem to be turning a corner (Tuesday) on stronger China demand and we see that Asian battery makers are continuing to seek out more stable cobalt supplies (Tuesday) given DRC’s difficulties

• Sony changed the chief of its Sony Interactive Entertainment division (Wednesday) as the company heads into the maelstrom that always happens in the lead-up to the introduction of the next generation of consoles. PS4 won the battle in the latest generation, but can Microsoft stage a comeback with its next offering?
• Electronic Arts announced a successful launch of its Fortnite rival, Apex Legends (Tuesday) which prompted a lot of buying activity in the shares but then it wasn’t all sunshine and unicorns for game developers as Activision Blizzard announced that it was cutting 8% of its workforce (Wednesday) in an attempt to change strategic course given changing gamer behaviour

• US consumer activity slowed down considerably (Friday) which could mean that fourth quarter US GDP figures will be weaker than many people expect
• Patisserie Valerie found a buyer (Friday) but lost Sports Direct’s Mike Ashley in the bidding process (Monday) as he had put in a cheeky bid. Frozen food supremo Iceland said it was ready to buy outlets (Tuesday) that would come on sale post a successful Sainsbury’s/Asda deal – but there will be competition from the likes of B&M, Home Bargains and Irish-owned toy chain Smyths, who are also on the lookout for expanding their footprint

• Morgan Stanley bought Solium Capital (Tuesday) which could give it more access to start-ups and rich millennials, slotting in nicely beside its existing stock management business that is more Fortune 500/senior exec-focused. The deal is expected to complete by June 30th
• Alibaba’s financial affiliate – and the world’s biggest start-up – Ant Financial bought British company WorldFirst for $700m (Friday) in its first ever UK acquisition as the company tries to expand outside its own domestic market
• JP Morgan announced the creation of its own cryptocurrency (Friday). Chairman and chief exec Jamie Dimon is a vocal critic of bitcoin but a fan of the blockchain technology behind it. Santander and HSBC are also experimenting with doing something similar…

My favourite “alternative” story of this week was ‘Tinder for cows’ matches livestock in the mood for love (Reuters, Matthew Stock https://tinyurl.com/yxgaetdf). What a great idea!

Have a fun weekend!