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.
THERE WERE SOME BIG DEVELOPMENTS ON THE MACRO AND OIL FRONT...
- IN THE US, the number of Americans claiming unemployment benefits rose again, but by slightly less than analysts were expecting. There was some cheer, though, towards the end of the week as investors started to think about lockdown easing and news that Gilead’s Ebola drug seemed to be working well against the coronavirus (Friday)
- IN ASIA, China announced terrible GDP figures for the first quarter (Friday), Japan declared a “state of emergency” on Thursday this week and PM Abe announced that the government would be distributing $1,000 to every citizen (Friday) to help them through the crisis
- IN EUROPE, it seems that the “agreement” reached by European finance ministers last week to bail Europe out did not go down well with the poorer southern European countries and Italy complained loudly (Tuesday), President of the European Commission Ursula Von der Leyen sounded a more concessionary tone and President Macron called for more understanding by the richer countries (Friday) or risk Europe falling apart. Meanwhile, some European countries are preparing a tentative exit from lockdown (Friday). Incidentally, the UK said it would refuse an offer for a Brexit extension (Friday). A timetable for further Brexit talks was decided this week, but it sounds like exit is still supposed to be for the end of this year
- IN OIL, the production cuts that were announced last week didn’t really do much to boost the oil price, despite the 10m barrels a day cut equating to about 10% of the world’s oil supply. Even Trump’s attempts to talk up the price failed (Tuesday) but I think that major problems remain. Demand has evaporated and oil inventory has built up so much that there isn’t much space left to store it – even on tankers anchored out to sea! Demand will need to pick up and help run inventories down before these production cuts will have any effect
IT WAS ALSO A BIG WEEK FOR BANKS, AIRLINES AND CARS...
- This week saw loads of US BANKS reporting their results. Big losses on loans were announced by the likes of Wells Fargo, JP Morgan, Bank of America, Citigroup and Goldman Sachs, but it seems that Morgan Stanley did the least badly (Friday). Trading revenues for all of them were up as investors got involved in market volatility, but on the flipside, lucrative fee income from investment banking was way down. It’s impressive that they still managed to churn out a profit for the quarter, but I think it’ll be even more impressive if they manage to do it for the next one!
- There was a lot of chat about AIRLINES this week. US airlines including American, Delta, United, Southwest, Alaska and JetBlue agreed to a $25bn bailout deal with the US Treasury (Wednesday) but that won’t be much help if there aren’t any passengers (Thursday). Wizz Air and Norwegian Airlines were the latest European airlines to get in trouble (Wednesday) and EasyJet is starting to think of how to fly whilst social distancing (Friday)
- CAR MAKERS featured in this week’s news, what with Renault deciding to pull out of its China JV (Wednesday) because it just wasn’t working. They were late to the China party anyway, but will still maintain a presence by concentrating on electric vehicles and light commercial vehicles. Also, Toyota, Renault and VW were talking about phasing in production (Wednesday) in their European plants. Nice news, but I wonder where all the customers are going to come from!
THERE WERE ALSO SOME MAJOR DEVELOPMENTS FOR INDIVIDUAL COMPANIES...
- Facebook decided to rein in its ambitions for Libra (Friday), which is not surprising given the hatred thrown its way by politicians, central bankers and the financial industry in general. It will still exist, but in a much more limited form
- Airbnb managed to raise yet another $1bn (Thursday) as it seems that it still has “pulling power” with investors. I think that it has a decent business model and should stand to benefit greatly once lockdown restrictions are lifted. Although international travel may take some time to normalise, I would have thought at least some of the slack would be taken up by people travelling domestically
- Verizon bought videoconferencing company BlueJeans Network for an undisclosed sum (Friday), which is probably a good purchase from a strategic point of view but I am sure that they wish they’d closed it down earlier because the two sides have been in talks for a year! No doubt they could have bought it for a more reasonable price had they closed it off before the coronavirus outbreak! Still, I think that videoconferencing will continue to grow even once this lockdown is eased as people will have had ample time to get used to it
AND IN UPDATES FOR WATSON'S YEARLY...
- I have added a number of updates to Watson’s Yearly this week. There’s a load of cancellations of sporting events, movie releases and the postponement of the Democratic National Convention from July the week of August 17th. Also, I’ve added stories about the US swiping a big order of facemasks from Germany and other things. You really should have a read of Watson’s Yearly as it has LOADS of information in it that will be useful to you – especially if you want to see things from a global perspective. It’s pretty long, so you may not be able to read it all in one sitting, but you should revisit it from time to time!
It was all looking pretty quiet for much of this week on the “alternative story” front, but then Friday happened. Two cracking stories that were my favourite this week were All the wonderfully British things that won’t be happening this May (Metro, Jen Mills https://tinyurl.com/y7yb9mya) which highlights some uniquely British events that we need to support when things get back to normal! However, my favourite story for quite some time is this one: Dog steals set of false teeth and wears them perfectly leaving owner in stitches (The Mirror, Luke Matthews https://tinyurl.com/yclbclmq). This is something that you can’t unsee and I still find myself laughing when I think of it.