40 days, 40 fights

September 23 - 27, 2013

AMERICAS

 Markets: US budget talks weighed on markets towards the end of the week, and concern the US government may partially shut down and default on its debt caused markets to fall.  The S&P 500 lost 1.1% over the week, its first weekly loss of the month. The index remains up by about 19% for the year. 

Companies: Generally, Luxury goods have held market prices due to purchasing in China. This was not true of Nike, however, who lost in China (its third largest market, which contributed only 9% revenues). Whether this is from a economic slow down in the country, or another factor is unknown. 

Blackberry announced it has agreed to a $4.7 bn buyout from Fairfax (its largest shareholder with c. 10% ownership). From crackberry to crapberry, its a sad day. Blackberry has until November 4 to seek superior offers.

One writer blame's Gretzky for the company's demise:

Because one possible cause for BlackBerry’s problems was co-founder Jim Balsillie’s quest to own a National Hockey League team and base it in Canada. It has been said that if his dogged pursuit to own a franchise had succeeded, he would have become a national hero. But it may also have been a distraction too many when Apple and Google were busily transforming the smartphone business.

Once a competitor to Blackberry, it has been many years sine Apple's superiority was questioned. In its opening weekend, Apple sold 9 mn of the new iPhone 5c and 5s.  

LIBOR remains an issue: U.S. prosecutors are preparing to announce criminal charges against past or present employees of ICAP PLC for their alleged roles in rigging benchmark interest rates...  ICAP is expected to pay slightly less than $100 million in penalties for its alleged role

 Otherwise: Research looking at numbers of academic publications suggest Canadian economists have lost interest in the Canadian economy. Its seaks to a larger issue around Canadian studies, as well.

Another part of the story is incentives for promotion, pay and prestige. Higher expectations to publish may dissuade scholars from studying Canadian issues because it is harder to publish this work in the best journals outside of Canada – which is where scholarly reputations are made. 

In Asia: Abe addresses the UN about the power of womenomics and the needs to bring women into the workforce to continue to grow GDP. Here is his op-ed in the Wall Street Journal. 

EMEA

Italian economics returned to the limelight this week when Berlusconi pulled his ministers out of the current government coalition. Apparently he thought his 77th birthday was the time to make his move. More.  

Additionally, there is a case to be made for retail and consumer companies coming to market in the near term. The retail sector has outperformed across Europe this year. In the UK, September retail sales to be growing at their strongest rate since July 2012.

Red Ed moves right. Ed Miliband's speech at the Labour party conference suggests a leftward move, including freezing energy prices. By his reckoning, it will save consumers around £120 and cost energy companies somewhere between £4.5 and 7 bn.  For the record, electricity prices in Britain are lower than the European average.

THE UPCOMING WEEK

Keep an eye to US government possibly shutting down... The Republican house voted down a bill that would amend the budget and keep the government going this weekend.  They have until midnight tonight (Monday). Is the government shut down? 

 Twitter makes its IPO public this week, hoping to trade before US Thanksgiving in November. 

Merkel's win in Germany seemed to be a stabilizing force for European markets last week. Some even said it was "a ringing endorsement" for efforts to preserve the euro. This week we must ask who she will align the Christian Democrats with when forming a coalition government.  

Tory party conference starts Monday. What will Cameron say and do? 


40 days, 40 fights by Badly drawn boy is emphasizing the lack of agreement around US budget talks.