Wednesday 04/12/19

  1. In MACRO NEWS, Trump pours cold water on an imminent China trade deal, insults President Macron and promises not to touch the NHS. Boris sticks with his digital tax, Labour’s nationalisation plans come under fire and Brazil’s economy surprises on the upside.
  2. In TECH NEWS, Alphabet’s top dogs step down and Epic looks to the future
  3. In INDIVIDUAL COMPANY NEWS, UniCredit announces job cuts
  4. In OTHER NEWS, I bring you a fascinating fact…



So Trump vents his opinions on all sorts on his London trip, Labour’s plans are criticised and Brazil’s economy surprises on the upside…

Trump says China-US trade deal may not happen until 2021 (The Guardian, Phillip Inman) shows Trump pouring cold water on the idea that a trade deal with China is about to happen any time soon. He said at the Nato summit in London yesterday that “in some ways, it’s better to wait until after the election for the China deal. Bit they want to make a deal now”. * SO WHAT? * Stock markets around the world fell on the back of these comments, but I just think that remarks like this are all part of the negotiation process. Chinese officials have been saying recently that a first phase deal was imminent, but no-one, apart from the negotiators themselves, really knows what the actual situation is. Neither side wants to be blamed for the breakdown of any talks – so they will always say things like this to make the opposition look bad or to put pressure on them.

In other news about what Trump has been saying on his current UK trip, Trump and Macron clash as Nato leaders gather (Financial Times, Michael Peel and Laura Pitel) shows that the two leaders clashed over Syria, Turkey and the future of Nato and Donald Trump says he wants ‘nothing to do with’ NHS (Financial Times, Jim Pickard) addresses concerns about the NHS being targeted in some way as part of a post-Brexit US-UK trade deal. The fear is that US drug companies may demand higher prices for their drugs in the UK and greater access to the NHS.

Meanwhile, Johnson risks Trump ire with digital tax pledge (Financial Times, George Parker, Chris Giles and James Politi) shows the PM sticking to his promise to impose a digital sales tax, which could annoy Trump, as it will target big US companies like Google, Amazon etc. in trying to make tech companies pay tax in the countries where they operate rather than shuffle money around between tax havens.

Labour’s election promises came under fire in UK utility investors prepare to fight with nationalisation in prospect (Financial Times, Jonathan Ford and Gill Plimmer) as lawyers predict that investors in UK utilities and telecoms will fight against them and Labour nationalisation risks years of disruption, IFS says (The Guardian, Larry Elliott) highlights the criticisms of Labour’s plans from the Institute for Fiscal Studies (IFS) think tank. The IFS warned that Labour’s proposed plans for mass-nationalisation would be too expensive and too complicated and recommended instead to tighten regulation. Unsurprisingly, shadow chancellor John McDonnell rejected this saying that “Labour’s proposals for nationalisation will enable us to meet our decarbonisation targets all the sooner”.

Elsewhere, Brazil’s economy grows faster than expected in third quarter (Financial Times, Bryan Harris and Andres Schipani) shows that the country’s economy actually grew by 0.6% in the third quarter, coming in above analyst expectations and giving some hope of economic recovery, * SO WHAT? * This will be good news for Brazil’s policy makers as they try to revitalise what has been an ailing economy by embarking on a major programme of deregulation and privatisations. They will take this to heart for now, but focus will probably ow turn to interest rates, which hit record lows last week.



Alphabet’s top dogs step down and Epic Games aims for a future after Fortnite…

In Google’s co-founders Page, Brin give up management roles (Wall Street Journal, Rob Copeland) we see that co-founders Larry Page and Sergey Brin are to step down from the day-to-day management of the company they founded in a garage in 1998 and hand over control to current Google CEO Sundar Pichai. * SO WHAT? * The two have been toning down their involvement over the years, but the move is a surprise. They will remain on Alphabet’s board and will still control a majority of the voting power, so I wouldn’t expect much to change. It’s just a historic moment for the company!

Epic funnels ‘Fortnite’ cash into boosting games platform (Financial Times, Tim Bradshaw) looks at Epic Games’ novel manoevering in anticipation of life after Fortnite – it is to make its proprietary gaming platform, Unreal Engine, available to other developers in return for a cut of the next hit game. Fortnite is still generating massive amounts of cash but it is expected that earnings will tail off eventually. Unreal Engine is free to use at first but will take a 5% royalty fee for any games that are built using its toolkit. * SO WHAT? * I think this is really exciting because Unreal Engine and rivals such as Unity Technologies bring the capabilities of big Hollywood studios and major games publishers to a wider base of creatives. I often find that many games developers tend to dwindle into obscurity once their massive hit becomes yesterday’s news, so Epic Games’ strategy to use Fortnite’s cash to buy up companies to beef-up its toolkit is a very sensible idea.



UniCredit makes some bold announcements…

In UniCredit plans 8,000 job cuts and first share buyback in a decade (Financial Times, Stephen Morris and Alice Woodhouse) we see that Italy’s biggest lender is taking drastic measures as part of a four-year strategic plan unveiled by its chief exec yesterday. They will also involve 500 branch closures in an effort to save €1bn of costs in

Western Europe. * SO WHAT? * I think the company is to be applauded for announcing some important moves to get it back on track. There had been speculation of the bank merging with other European banks such as Commerzbank or Societe Generale, but it seems that the CEO is now rejecting that course of action in favour of share buybacks. If the share buyback gets approval from the regulator, it may prompt other banks to follow suit.



And finally, in other news…

As you know, Watson’s Daily is all about learning. So that’s why I was intrigued by The Ingenious Reason Medieval Castle Staircases Were Built Clockwise (Mental Floss, Ellen Gutoskey Well I never!

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Some of today’s market, commodity & currency moves (as at hrs green is up, red is down). THIS IS INTENDED AS A ROUGH GUIDE ONLY!

FTSE 100 *Dow Jones *S&P 500 *Nasdaq**DAX *CAC-40 *Nikkei **Shanghai **
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

(markets with an * are at yesterday’s close, ** are at today’s close)