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 BIG MACRO DEVELOPMENTS...
- Japan-South Korea relations continue to worsen as South Korea scrapped the intelligence-sharing pact with Japan (Friday). The heightened tension between the two neighbours is feeding through to the economy as Japanese exports fell (Tuesday) – a pain for Japan given that it is highly exposed to exports – and both sides appear to be digging their heels in, much to the consternation of the Americans who are keen to see stability in the region. I suspect that China, Russia and North Korea will use the current tensions to stir things up!
- Over in Europe, Italy’s Prime Minister resigned (Wednesday) and Germany edged closer to recession (Tuesday)
THERE WAS ALSO SOME INTERESTING M&A ACTIVITY...
- Bayer sold its animal-health unit to Elanco for $7.6billion (Wednesday) as part of a bid to shore up its coffers in anticipation of massive liabilities from the Roundup weedkiller/cancer litigation
- The UK’s #1 pub and restaurant operator Greene King was bought by Chinese conglomerate CK Hutchinson for £5bn (Tuesday) which caused excitement and fear in equal measure among investors and employees respectively (the latter because they are nervous about potential closures and job losses)
- US toymaker Hasbro bought Canadian company Entertainment One for $4bn (Friday) as it tries to broaden its appeal in a competitive market
THE TECH SECTOR SAW SOME MAJOR DEVELOPMENTS AS WELL...
- In the US, pressure is building on the likes of Google, Facebook, Amazon and Apple as it turns out that a group of states (some say it could be up to 20 or more) will be be launching an antitrust investigation next month (Tuesday), focusing on whether the outsize power wielded by major tech platforms is being used to strangle the competition. This could potentially coincide with the Justice Department’s antitrust investigation announced in July. Alphabet’s driverless division Waymo announced that it won’t be making cars from scratch (Tuesday) and said that it would be sharing its proprietary self-driving data set to all (Thursday) in a bid to accelerate the development of driverless technology. Also, Tesla is being sued by Walmart (Wednesday) because Walmart alleges that Tesla’s solar panels have been the cause of at least seven roof fires at some of its outlets
- In Chinese tech, Huawei was granted a 90-day grace period by the US Department of Commerce (Tuesday), during which it will be allowed to continue to trade with American companies. This will soften the blow of the complete ban Trump threatened recently and may go some way to easing talks with China scheduled for next month. E-commerce giant Alibaba decided to postpone its much-anticipated flotation on the Hong Kong stock market (Thursday) due to ongoing political unrest
...AND THERE WAS MIXED NEWS AMONG RETAILERS...
- In the US, Target put in a solid performance in the second quarter (Thursday), powered by investment in its stores, merchandise and online offering. The performance of the American seller of homewares, clothing, electronics and beauty products stood in stark contrast to the fortunes of Macy’s, Kohl’s and JC Penney. In the world of DIY, Lowe’s put in a strong showing (Thursday) as it started to see the fruits of a tough cost-cutting programme but Home Depot published disappointing numbers (Wednesday) as it blamed the ongoing US-China trade war for denting its sales growth this year. Mind you, the world’s biggest home improvement retailer, which has almost 3,000 stores in 50 states, left its full-year earnings per share forecast unchanged as chief exec Craig Menear believes that the “stable housing market” would continue to underpin the business
- The gloom continues in the UK as the latest report from the CBI showed that sales volumes and orders fell at the fastest rate for a decade (Friday) due to rising costs and increasing Brexit uncertainty. Tough trading conditions persist as Morrisons announced it was closing outlets (Friday), Laura Ashley published disappointing results (Friday) pouring cold water over any imminent turnaround hopes, Links has been put up for sale (Friday) by its current owner and even Asos was getting in on the gloom by asking suppliers for discounts (Wednesday) to shore up its own finances
I was most impressed by This Is Officially the Most Instagrammable Café in the World (BestLife, Diana Bruk https://tinyurl.com/y4oqkyga) this week. It’s not normally my sort of thing, but if the food in this place tastes as good as it looks, it should be sensational!
I hope you have an enjoyable weekend!