Watson’s Weekly 27-06-2020

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.

• It was interesting to note this week that the gap between the Nasdaq (tech companies) and the Down Jones and S&P 500 is the widest it’s been since 1983 (Wednesday), which suggests that Big Tech performance is behind much of the recent market uplift, although some argue that it’s not just tech that’s involved in any rallies (Monday)
• Business activity decline is slowing down in Europe and the UK (Wednesday) according to the latest IHS Markit PMI survey. It’s worth noting that these are surveys and thus gauge sentiment – so you do need to see some cold hard figures from other sources before you get too excited. Still, it’s going in the right direction at least!
• The UK is trying to hammer out a trade deal with Japan in super-quick time (Tuesday) – these things normally take years but Japan wants to conclude talks by the end of 2020! The UK also heeded recent European advice and made foreign takeovers of key UK assets harder (Monday)
• Lockdown easing is now stretching to international travel, with “travel corridors” between Asian countries and European ones (Thursday). The UK is also considering the same (Tuesday). Meanwhile, the carnage continues in the air travel industry as Qantas announced 6,000 job cuts and the grounding of 100 planes (Thursday), British Airways announced cuts of up to 20% to cabin crew wages (Friday) and Easyjet raised £450m by issuing new shares (Thursday) in a bid to get itself some “emergency money”

• The whole Wirecard thing is just getting ridiculous. It has now filed for insolvency (Friday) and it seems to me that the German regulator and longtime auditor EY are going to come in for an almighty amount of criticism. I almost wonder whether this will do to EY what Enron did to Arthur Anderson almost 20 years ago
• WhatsApp Pay got a nasty surprise (Friday) as it got suspended in Brazil by the central bank only days after announcing its rollout! Banks all got together to complain about it and it seemed that the central bank freaked!

• UK shoppers returned to the high street (Thursday) and pubs and restaurants are among those asking for VAT to be cut to 5% (Thursday) in order to help them out. JD Sports let Go Outdoors fall into administration (Monday) and then bought it out again (Wednesday). Amazon finally had the acquisition of its 16% in Deliveroo approved (Thursday) after a year-long investigation by the UK’s CMA (what a waste of time that was!). Meanwhile, retailers withheld rent payments to landlords (Friday), which was the last straw for retail landlord Intu. It entered into administration after not being able to come to an agreement with lenders over its massive debts
• Over in the US, Albertsons’ IPO underwhelmed investors (Friday) as its flotation price wasn’t set at the top of the range. America’s #2 supermarket by outlets started trading on Friday but fell by 3.4% into the close. After all the recent feel-good IPOs that rocketed up 60% and 90%, Albertsons’ one brought everything back to reality. Investment bankers eager for fees will hope this is a blip and not a sign of things to come…

• Zoopla forecast a bump up and then decline for residential property prices (Wednesday) as pent-up demand from lockdown runs its course and consumers get increasingly concerned about their jobs and financial situations in the coming months
• Demand for office space is likely to suffer (Wednesday) as a result of more people working from home and ongoing social distancing restrictions. Companies will be rethinking their future office requirements to take into account altered working practices

• Watson’s Yearly updates: watch this space!

My favourite “AND FINALLY…” stories of the week both had their origins in Japan – and they both involve “frightening” fun! There was this idea of a haunted drive-in: Coronavirus leads to the creation of haunted drive-in in Tokyo this summer (SoraNews24, Casey Baseel https://tinyurl.com/y7k8xolg) which looks superb (if a little messy!) and then the restrained terror in No screaming allowed on Japanese roller coasters, and new video shows it can be done (SoraNews24, Casey Baseel https://tinyurl.com/y7g2x66r). Interesting to note that the guy on the right (the president of the theme-park’s parent company!) seems to be rather concerned about his hair being out of place. I guess if you are not screaming, you need something else to focus on 😂!