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.
THERE WERE SOME MAJOR CORONAVIRUS DEVELOPMENTS THIS WEEK...
- The week kicked off with the IMF’s Managing Director Kristalina Georgieva warning that the coronavirus would endanger a fragile global recovery (Monday) and the markets fell sharply as the week went on (Friday)
- In CHINA, the quality of data came into question (Wednesday) and President Xi is now under increasing pressure to decide whether to relax quarantine restrictions to help the economy and risk further spreading of the virus or to just stick to the current protocols. Chinese authorities are doling out “Force Majeure” certificates (Friday) allowing Chinese companies to break contracts with foreign firms, effectively gifting them a get-out clause. Overseas companies won’t like it but ultimately I think objections will fall on deaf ears
- In the US, Trump seems to be in denial about the coronavirus (Thursday) and said that it is “very much under control”, that a vaccine is close and that “the stock market is starting to look very good”. The problem is that Trump has cut funding to a number of groups that could help in controlling the outbreak, so if he is wrong the electorate may swing against him and effectively gift someone like Bernie Sanders the keys to the White House. However, Trump has appointed vice president Mike Pence to be in charge of the response to the coronavirus – so effectively he now has a ready-made fall-guy! If the coronavirus does not take hold in America, he can say “I told you so” – and if it all goes wrong he can blame it all on Mike Pence!
- Italy has had a tough week as its Northern cities have suffered from the outbreak. The Venice Carnival was closed down early, football fixtures and the 6 Nations rugby fixtures were also postponed. Italy’s economy is already suffering and it is trying to manage down expectations on budgets (Wednesday). The fact is it was already teetering on the edge of recession – but that looks like a near certainty now! You do wonder how much leeway Europe will give the Italians, though, because it’s not as if the rest of Europe is firing on all cylinders (look at Germany!)
- The UK says that the March 11th Budget will go ahead as planned (Wednesday) – but some of the key decisions may be booted later on into the year to wait until the dust settles
- Iran continued to face difficulties in terms of public distrust (Monday) as it became the country with the most coronavirus-related deaths after China (Tuesday). This could be very damaging for the region given that the effectiveness of governments and their their respective healthcare capabilities can vary from country to country
- Elsewhere in Asia, South Korea had to quarantine 7,000 soldiers (Tuesday) and Japan decided to shut all of its schools from Monday onwards (Friday)
IT WAS ALSO AN EVENTFUL WEEK FOR FINANCIALS...
- Revolut managed to raise $500m (Tuesday) in its latest funding round, which made it the most valuable fintech in Europe (Thursday)
- However, there were a lot of job losses announced elsewhere in the sector (Thursday) at Lloyds Bank, Virgin Money and Direct Line as the impact of changing consumer tastes continues to hit
- Klarna posted its first ever loss (Thursday) due to the cost of expansion and higher default rates
WE SAW AMAZON'S FIRST CASHLESS SUPERMARKET AND MORE DEVELOPMENTS IN MEATLESS...
- Amazon opened its first cashierless supermarket this week (Wednesday) after the success of its Amazon Go format but a reporter managed to fool its technology (Friday). Still, Amazon is considering licensing out the technology, but I’m not sure how many takers it will have at this time
- Meatless alternatives came to the fore again this week as corporate giant Cargill announced its entry into the meatless market (Tuesday) and Beyond Meat announced it would be pouring more money into marketing (Friday) to combat criticism that its products are over-processed
AND IN UPDATES FOR WATSON'S YEARLY...
- In the “Themes for 2020” section, music streaming continues to gain momentum as the latest report from the Recording Industry Association of America (RIAA) says that US recorded music sales increased by 13% last year. Streamers such as Spotify and Apple accounted for 80% of revenues last year in the US and they are now gaining ground on those at the peak of 1999, when CD sales represented 90% of overall revenues. In meat-alternatives, Cargill indicated that it is planning an April launch of meatless patties and other non-meat minced products made from soya and plant-based proteins. The competition is hotting up! In packaging, glassmakers are seeing an opportunity to regain ground that has been taken by plastics as a sustainable option. Arglass Yamamura is building a $123m facility in Georgia and is the US’s first new glass container factory in 12 years. Interestingly, glass is the only common packaging material that the FDA classifies as “generally recognised as safe” and makers are making concerted efforts to make it more recyclable. In the “Country-by-country overview for 2020” section, the government in Spain won an important parliamentary vote that backs its deficit proposals meaning that it is getting closer to approving a new budget. This is a major step forward for a country that has been in political deadlock for the last to years. The leftwing government wants to make higher earners pay more tax in order to finance increased spending; in Russia, there is going to be a nationwide vote on March 10th on Vladimir Putin’s proposed changes to the constitution – which also give him a backdoor way of extending his rule; in Japan, the ongoing spread of the coronavirus puts the Tokyo Olympics in jeopardy – and a final decision of whether they are to go ahead as planned will be made by the end of May; problems continue in Iran as dissatisfaction increases over the regime’s clumsy attempts to contain the coronavirus given that it is now the country with the most coronavirus deaths outside China; in South Africa, the government has announced plans to cut back on its public sector wage bill as part of a desperate effort to reduce the biggest ever fiscal deficit in the post-apartheid era. Finance minister Tito Mboweni, outlined plans to cut civil servant pay over the next three years. Moody’s is looking to downgrade the country to junk status next month. Eskom and South African Airways continue to suck up state spending. Over a third of South Africa’s state spending goes on wages.