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 SOME INTEREST RATE ACTION, A TRUCE BETWEEN ITALY AND THE EU AND MORE BREXIT STUFF...
- In the US: the Federal Reserve announced a 0.25% increase in interest rates to a new range of 2.25-2.5% (Thursday), despite increasing pressure from President Trump not to raise them
- In Europe: Italy and the EU came to a compromise about the contentious deficit bit of Italy’s proposed budget (Thursday) although I suspect this is just kicking the can down the road to avoid any mess before next year’s EU parliament elections. Italy will now have a budget deficit of 2.04% of GDP versus the proposed level of 2.4% and will achieve this by delaying some of its spending plans, including the introduction of a basic income programme
- In the UK: Interest rates remained unchanged (Friday)at 0.75% as the Monetary Policy Committee (MPC) voted unanimously to do so. Basically, the Bank of England will wait and see how the Brexit thing unfolds. If it is anything less than smooth, they probably won’t be raising rates for a while by the sounds of it. Re Brexit, we are left with May’s deal, no deal, Norway Plus/full customs union membership or a second referendum (Friday)
- There was continued weakness for the oil price, which was mainly put down to booming shale oil production in the US (Wednesday). The Brent crude price has fallen by a third since it reached its highest level for four years in October and forecasts from the US Energy Information Administration show that production is going to continue to increase. It’s looking like the OPEC cuts won’t be enough to offset a potential oil glut going into next year
THERE WAS SOME DOWNBEAT NEWSFLOW FOR UK REAL ESTATE...
- Overseas landlords are abandoning the UK, according to the latest stats from Hamptons International (Monday) on a combination of lower expectations of house price growth, a tougher tax regime and the impact of expected Brexit-fuelled sterling weakness on rental returns
- The UK property market will stagnate in 2019 as house sales fall (Tuesday), according to the latest figures from the Royal Institute of Chartered Surveyors (RICS) due to Brexit uncertainty and affordability constraints. The RICS report observed that “House prices are now a greater multiple of earnings than at any point since records began. Such high house prices are shutting more and more people from accessing the market” and it is worth noting that there is still a shortage of supply and fewer forced sellers in the market meaning that “many vendors will be under no real pressure to sell, meaning they can choose to avoid listing their property at a time when the market is weakening”
THE HEADLINES CONTINUE TO BE DOMINATED BY RETAIL...
- There was a lot of doom and gloom around for the retailer naysayers what with the latest forecasts by retail analysis firm Springboard saying that footfall is expected to drop by 3% this week (Monday) as people are reining back on spending this Christmas both online and offline. Asos had a shocker (Tuesday) as it bore the brunt of a disastrous November. Given that Asos is an online-only retailer investors took its travails to be a sign that offline weakness is leaching into online retailers. Having said that, some believe that this sales shocker was more to do with a failed Black Friday campaign, with the implication being that it could be a one-off and Asos-specific issue rather than something more widespread
- On the positive side of things, the latest figures from the Office for National Statistics showed that total retail sales volumes were up by 3.8% versus November last year (Friday) – which was way above forecasts with rising pay, falling inflation and robust consumer confidence (presumably in personal finances rather than anything else) thought to be behind the unexpected surprise. There are still some strong performances from some bar/restaurant operators (Monday), with Loungers even eyeing a stock market flotation (Friday). Even John Lewis surprised on the upside this week (Wednesday)
THIS WEEK WAS A BUSY ONE FOR M&A AS WELL...
- The world’s #1 brewer AB In Bev is getting together with Canadian marijuana company Tilray to research cannabis-infused drinks (Thursday). The two companies will invest $50m each in researching how to get such drinks to market, taking into account factors like flavouring and the length of the high. I think this is going to be an AREA with BIG potential
- Marlboro-maker Altria decided to buy hefty stake in Juul for a hefty sum (Thursday)
- GSK did a deal with Pfizer that will split its business into two (Thursday) with a view to demerging its consumer health business within the next three years
- South Africa’s Naspers decided to invest $660m into Indian food-delivery company Swiggy (Friday) in a super-hot market
Given that this is the last Watson’s Daily before 2019 (and the nearest one to Christmas), I thought I’d leave you with an unashamedly festive collection of my favourite “alternative” stories for this week. Making a dog’s dinner of it! Hilarious snaps show playful pooches pulling some VERY funny faces as they try to catch flying treats in new calendar snaps (Daily Mail, Dianne Apen-Sadler https://tinyurl.com/y7w7uf7v) and People can’t get enough of this family’s hilarious “real life” Christmas cards (bestlifeonline.com, Diana Bruk https://tinyurl.com/y9ktmssp) made me laugh a lot and I think that Mouth-watering photos show what different holiday feasts look like around the world (Insider, Rachel Askinasi https://tinyurl.com/y72k2uoc) is quite educational!
I hope you have a brilliant Christmas and a fantastic New Year! See you again on January 7th for Watson’s Daily. The first edition of Watson’s Weekly will be on January 11th.