Watson’s Weekly 22-03-2020

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.

• The world’s central banks have been very active cutting interest rates. The US kicked off the week by knocking off another 0.5% off its interest rates (Monday) to take them to the 0-0.25% range, the Bank of England cut interest rates yet again (after cutting them by 0.5% last week) from 0.25% to 0.1% (Friday)– the lowest interest rate it has ever had in its 325-year history – and the ECB is buying a ton of bonds (Friday). UK chancellor Rishi Sunak made some dramatic announcements at the end of the week saying that the state would pay companies to stop sacking their workers by paying 80% of each employee’s salary. Pressure continues to build re what to do about the self-employed who are not covered by measures so far

• Airlines and airports are crying out for state help (Monday, Tuesday) as flight cancellations and travel restrictions continue to hit hard, restaurants and pubs in the UK close down and the number of retailers closing their shops continues to increase (Monday) including places like Lululemon, Under Armour, Urban Outfitters, Abercrombie & Fitch, Nike and Apple. Halfords closed down its Cycling Republic stores (Tuesday), Carphone Warehouse shut down all of its stand-alone outlets (Wednesday) and Laura Ashley went into administration (Wednesday). With so many sports events being cancelled around the world, bookmakers are looking at potentially massive losses (Tuesday) and UK property funds have stopped withdrawals (Thursday) as too many investors tried to get their money out at the same time and the funds could sell the underlying property assets fast enough. LSL and Countrywide also abandoned merger talks (Tuesday) amid turbulent market conditions

• Grocery and online retailers are doing very well indeed as they try to keep up with a massive upswing in demand. Amazon announced plans to increase its workforce (Tuesday), as did Walmart (Friday) and the Co-Op (Friday), among others. In the UK, I think that the incumbent supermarkets who have been seeing market share leach away to Aldi and Lidl over the last few years are going to see a massive boost because, unlike the German discounters, they have a fully-functional grocery delivery service. I would even argue that they will also benefit when the outbreak calms down because I think that they could win new customers who have never shopped online. These people may become accustomed to the advantages of online shopping and continue to do so – and they will be customers who would potentially have taken years to win over.
• If things get even tighter on the high street, it is possible that only “core” shops will be able to remain open. Supermarkets, M&S and convenience store/newsagents McColl’s, B&M, Pets at Home could be OK (Friday) according to some,  given that they supply basic needs. Companies that stream content are also doing very well as people need to be entertained and stimulated! Music revenues are up via Apple Music and Spotify (Tuesday), Netflix is doing so well that Brussels has asked it to lower picture quality to make sure there’s enough broadband capacity (Friday), Fitness apps are also seeing a boom (Thursday) as are companies who provide online learning (Thursday). In addition to this, companies involved in helping the sudden rise in those working from home are also doing well. For more in-depth comment on this, please see Watson’s Weekly – Working-From-Home Edition 😁

• Once again, there are too many changes to list here regarding cancellations of events etc. but I’ve updated the “Themes for 2020” section regarding streaming and updated interest rates

My favourite “alternative” story this week was, by far, Dad takes matters into own hands with quarantine maths lesson – and it’s epic (The Mirror, Courtney Pochin https://tinyurl.com/t9xdprn). A good use of mathematical skills 😂…