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.
ECONOMIES SEE RECESSION, GERMANY SEES SIGNS OF RECOVERY, THE UK CONSIDERS NEGATIVE INTEREST RATES...
- IN THE US – US Fed chief Jerome Powell warned that an economic recovery could take until the end of 2021 (Monday). I would say that he hasn’t got a clue and that the end of 2021 is close enough to be psychologically within reach but far enough out to sound plausible. The main point of what he said was that it’s going to take a while
- JAPAN fell into recession (Monday) after its second successive quarter of contraction and it doesn’t look like things are going to get better any time soon…
- Germany and France put on a united front to put forward a €500bn bailout package for Europe (Tuesday). This sounds great, but they will have to get the other 25 members of the eurozone to agree to the terms. It does show, however, a major step forward for a Europe that has so far been dragged down by discord in the face of the coronavirus. Meanwhile, the Bundesbank highlighted signs of economic improvement (Tuesday) as stronger performance in construction mitigated difficulties in the manufacturing and services sectors
- IN THE UK, the Bank of England discussed the possibility of introducing negative interest rates (Thursday) and Chancellor Rishi Sunak extended the mortgage holiday (Thursday), which will come as a relief to many people who are uncertain as to their current and future income
THERE'S A MIXED PICTURE ON RETAIL ON BOTH SIDES OF THE ATLANTIC...
- IN THE US – troubled department store JC Penney filed for bankruptcy protection (Tuesday) following on from similar moves from Nieman Marcus and J.Crew. On the other hand, Apple started opening some of its American stores (Tuesday) while Walmart (Wednesday), Target (Thursday) and Home Depot (Wednesday) all seem to be doing well (although I do wonder how sustainable that is with Home Depot if the housing market doesn’t fire up soon). In signs of a tentative return back to normality, US retailers are phasing out hazard pay (Wednesday) which isn’t going down well with employees or their unions as they argue that nothing has really changed in terms of being exposed to risk. Amazon, Kroger and Rite Aid are among those to go down this road, but in fairness to them they all said that the pay rises and one-off bonuses were for a limited time only and the deadlines have been extended more than once
- IN THE UK – Things are still looking pretty tricky for retailers and anything related to them. Retail landlord Intu is asking for a “standstill agreement” with its lenders (Tuesday) and French Connection is looking wobblier by the day (Wednesday) as it said that it will run out of cash in the next few months. Marks & Spencer’s nightmare continues (Thursday) as clothing sales have been decimated by the lockdown. Food has done OK but has been has been held back by the fact that many of its outlets are close to offices (which are closed) and transport hubs (like railway stations, which are also closed). Hopefully, its fortunes will improve from September when its partnership with Ocado is due to start
- It is worth highlighting that Shopify unveiled more services for retailers (Thursday) and an expansion into groceries and its own logistics network. It’s behind Amazon in this, but it seems like it has ambition. It’s also going to be part of Facebook’s new service that I’ll mention in the next section…
SOCIAL MEDIA ANNOUNCES SOME KEY DEVELOPMENTS...
- Facebook announced a new service on its platform called Facebook Shops (Wednesday) which aims to create a digital store front for retailers, taking Amazon on at its own game. Given Facebook has 2.6bn current users, this could be an attractive alternative proposition – especially given allegations from third party sellers that Amazon users “their” data to make competing products at lower prices. Separately, Facebook’s Mark Zuckerburg said that he expects half of his employees to be working from home within ten years (Friday) as people get used to working like this during the outbreak
- Spotify announced a big deal to get Joe Rogan’s podcast exclusively on its platform (Wednesday). It is said that this deal was worth in the region of $100m, but there was no official confirmation. It fits in well with Spotify’s recently stated strategy of moving into engaging content outside of music
...AND SOME MAJOR ADVANCES HAVE BEEN MADE...
- Two UK battery makers, AMTE Power and Britishvolt, are looking to join forces (Thursday) to make batteries for carmakers and energy storage groups. There’s talk of a £4bn project between the two that could be funded by an IPO further down the line. This could be an exciting development as car making in the UK continues to decline
- The world’s biggest catering company, Compass, decided to raise a chunky £2bn from investors (Wednesday) in order to help it survive the sudden lack of business that the sudden closure of canteens and educational establishments (their bread and butter!) has led to. This would seem like a prudent move from the company and should give them some breathing room
- AstraZeneca is ramping up production capability for a prototype coronavirus vaccine (Friday), which sounds exciting but means nothing unless the drug manages to pass all the tests! Still, a move in the right direction…
AND IN UPDATES FOR WATSON'S YEARLY...
- Watson’s Yearly updates: Not so many updates this week. India, Turkey and South Africa cut their respective interest rates by around 0.5% each this week in an ongoing response to the coronavirus outbreak
BANTER
My favourite “AND FINALLY” stories of this week were the brilliant Man’s awkward error on personalised glass for fiancee’s 30th birthday (The Mirror, Paige Holland https://tinyurl.com/yd3q5fmc) and news on two coronavirus-inspired inventions. Firstly, there’s the rather ridiculous Mask in a restaurant? This one can gobble like Pac-Man (Reuters, Eli Berzlon https://tinyurl.com/ycfayj52) and then the actually quite practical Japan has a Reassuring Door Opener to soothe coronavirus fears, so let’s try it out (SoraNews24, Casey Baseel https://tinyurl.com/y93aet7o).