Watson’s Weekly 31-05-2019

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. You will need a FULL SUBSCRIPTION to be able to click through all the links which take you to the relevant articles.

• European elections created a stir (Tuesday) as the major UK parties took a pasting while the LibDems, Brexit Party and Greens all benefited from Labour and Conservative Party splits over Brexit. It’ll be interesting to see what impact these news MEPs will have especially given that Nigel Farage’s eurosceptic party won 29 seats to become the joint biggest force in the EU parliament – with the same number of seats as Germany’s CDU, Angela Merkel’s party!
• Bitcoin’s winning streak continued (Tuesday) as it hit $9,000 – meaning that it has strengthened by 70% this month! As usual, no-one really seems to know why…

• In the UK: Shopping centres continue to be a problem area (Tuesday) as shopping centre owners are breaching their loan terms due to a plunge in their market value amidst ongoing turmoil among retailers. Miss Selfridge’s Oxford Street flagship store is to close down (Tuesday) as part of parent company Arcadia Group’s bid to restructure and Boots announced 200 potential store closures (Wednesday) as its US owner, Walgreens Boots Alliance, continues to see sluggish performance from its operations outside its domestic market. On the other hand, Aldi and Lidl continue to take market share from the UK’s “Big Four” supermarkets (Thursday) and higher costs are being passed on to consumers (Wednesday) presumably because a) companies can’t absorb them any more and b) wages are currently outpacing inflation
• In the US: Abercrombie & Fitch announced slow sales and a downbeat outlook (Thursday) following others – such as Kohl’s, JC Penney and Nordstrom – who have also seen weaker sales. Gap continued this trend (Friday) as Chief exec Art Peck blamed poor weather, weaker footfall, lower tax refunds and a decision to delay marketing spend until later in the year
• In China: E-tailing giant Alibaba looks like it’s planning a secondary listing on the Hong Kong stock exchange (Wednesday) to take advantage of better investor sentiment towards tech companies and as a way to mitigate any US blow-back from the ongoing US-China trade wars

• Consolidation in the payments industry continued this week as Global Payments bought TSYS in a $21.5bn all-stock deal (Wednesday) not long after Fiserv’s $39bn deal to buy First Data and the Fidelity National Information Service (FIS) agreement to buy Worldpay for $43bn earlier this year. Further deals in this space look likely as this business is all about scale
• Fiat Chrysler announced it was seeking a merger with Renault in a €33bn deal (Tuesday) which got an initial blessing from France and Italy (Wednesday) although there will be a number of challenges that could yet get in the way (Friday) of the deal going through. I have no doubt that we’ll be hearing much more about this over time considering its size and strategic importance

• Under pressure Chinese telecoms equipment company Huawei warned that 1,200 of its US suppliers will suffer as the US continues its crackdown (Thursday) and paranoia continues to pervade its Shenzhen HQ (Friday) as American employees were banished two weeks ago and local employees are now restricted from talking about tech to anyone with an American passport ????. China is responding by putting more effort into making its own chips (Thursday) but Nokia and Ericsson are benefiting from Huawei’s problems (Thursday) as they are being asked to replace Huawei equipment
• Other than that, EE rolled out 5G in the UK (Friday) to great fanfare. What’s surprising here is that we are actually ahead of most European countries in 5G – which is in contrast to our delayed 4G roll out! It’s only in six big cities and the phones and contracts are more expensive – but the 5G party has started! Vodafone is expected to commence its 5G rollout next month

I’ve got two stories for you this week. Firstly, there’s the abomination in Benidorm bar sells 2,600 calorie Full English pizza – but it’s dividing opinion (The Mirror, Zoe Forsey https://tinyurl.com/y2t26lfu) and then the rather bizarre-looking-but-quite-frankly-blimmin-useful invention in How to stay cool in Japan this summer? With a mist-spraying Fanbrella (SoraNews24, Oona McGee https://tinyurl.com/yywr9p56). If you are planning on going to watch the Olympics in 2020, you should definitely go and get yourself one of these!

Have a great Bank Holiday weekend, whatever you’re up to!