On the macroeconomic side of things, the EU rejected Italy’s proposed budget. Funnily enough, the Italians didn’t like this and appeared to be cosying up to the Russians as the Italian PM visited Putin in Moscow.
The implied threat here is that if the EU continues to take a rigid view of its own budgetary guidelines Italians will seek help elsewhere. Depending on what that form takes and whether they actually go through with it or not, it could be quite damaging to the Eurozone as a whole.
Talking about the Eurozone, growth fell to its lowest level in two years and Germany faces tricky times as an upcoming regional election could cause terminal damage to Angela Merkel’s leadership. The Eurozone’s top three economies all face problems currently – Germany with Merkel and her fragile grand coalition, France with its mass exodus of senior ministers and Italy with its rogue government.
The UK High Street
The UK high street continued to suffer as Patisserie Valerie faced another investigation, GBK announced that it was pursuing a CVA and Debenhams announced its biggest ever loss and a load of store closures – although it has yet to say which ones.
Surely, Sports Direct’s Mike Ashley will be making a bid at some point? He’s obviously got his hands full with House of Fraser, but there would surely be a lot of cost synergies to be had if he put them together.
There were some interesting developments in the automotive sector this week as Tesla managed to turn a profit, much to investors’ delight, China’s Geely announced a ride-sharing venture with Daimler in China and Ford signaled continued troubles overall despite a strong showing in its domestic market. The company really needs to sort out its China business, and it made an initial step to do so by appointing a new head of China on Tuesday this week.
Other Company news…
Other than that, WPP’s problems continued with a profit warning from its new CEO. The company is still struggling in a world where the likes of Facebook and Google are increasingly dominant. Also, Dyson created a bit of a stir this week as it announced it was building a new electric car facility in Singapore and NOT in the UK. Mind you, given the massive tax incentive and its proximity to the world’s biggest car market, it’s hardly all that surprising.