Cuba constitution vote, UK bank results, Walmart earnings
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Cuba constitution vote, UK bank results, Walmart earnings

September 21, 2019


Here are some of the top stories
we’ll be watching this week. Cubans are set to vote
on a new constitution. There’ll be results from
UK banks HSBC, Lloyds, and Barclays. Investors will be watching
for earnings from Walmart. And Israel is preparing
to host leaders from several central
European countries. First up, the people
of Cuba are set to vote on a new
constitution on Sunday. The vote promises to be the
biggest political overhaul in a generation. Although the country’s
Communist party will retain its primary
role, the new constitution will introduce limits on
the number and duration of presidential terms. Two five-year terms
will be the maximum, compared to Fidel Castro’s
three decades in the role. There will also be an age
limit for future presidents. And private property
will be allowed for the first time since the
Cuban Revolution in the 1950s. However, despite the symbolic
significance of these changes, Cubans will also be watching
several international developments which could
make an impact at home. The FT’s John Paul
Rathbone has this analysis. It won’t amount to much of a
hill of beans for most Cubans. Because their biggest worry is
what’s going on in Venezuela, which is Cuba’s
biggest ally and is entering into economic
freefall and basically, near global political isolation. And Venezuela is
Cuba’s closest ally. It’s in the past provided
aid for Cuba, which Cuba can no longer count on. Also, Cuba has got this
cold thaw, this cold freeze with the United States. Donald Trump is threatening
to make the embargo tougher. So all those changes,
which are taking place outside the island,
will rather make what’s going on
inside the island pale into relative insignificance,
even though the constitution is a big deal in Cuba’s context. Now to the UK,
where investors will be watching figures from HSBC,
Lloyds, and Barclays next week. On Tuesday,
shareholders in HSBC, which generates the majority
of its revenue from Asia, will be looking for signs
of whether the bank is being affected by a slowdown in
China and trade tensions between China and the US. Lloyds is expected to signal
its confidence with a £2bn share buyback when it
reports on Wednesday. Then on Thursday,
Barclays will aim to show evidence of a turnaround
at its investment bank. More broadly,
though, the results could signal weakness
in the UK economy amid huge uncertainty caused by
Brexit, as David Crow reports. There will be a question
around how well the UK economy is performing. There are various indicators
that the banks can talk about, which they often
see as predictive of a turn in the cycle. But the other big question
will be preparedness. How well prepared is the
UK economy for stepping off the cliff for a no-deal Brexit? Banks have done an
awful lot to ensure that they as institutions
are prepared for Brexit. But when you talk to
executives, the main lenders, they would say the
UK economy itself. And obviously, they
play a big role in that, is less well prepared
for a sudden exit. Now, it was supposed to have
been a bumper festive season for US retailers. But shock figures out last
week showed the biggest drop in retail sales since 2009. On Tuesday, investors
will be watching closely for earnings
results from Walmart for more insight as to whether
the economic data for December was just an anomaly. Like-for-like US sales are
forecast to be up around 3 per cent, although profits
are expected to be flat. As Alistair Gray reports, the
rise and fall of competitors is just one factor
the retail leader is having to contend with. Some of Walmart’s
big-box periods have already posted upbeat sales
numbers for the festive season. At Target, like-for-like
sales rose 5.7 per cent over November and December. Walmart is also
benefiting from problems at rivals that have
struggled to adapt to the rise of e-commerce. The collapse of
Toys “R” Us should have helped its toy business. But Walmart, of course, is
locked in a battle with Amazon. While it’s faring better
than many retailers, its margins are
coming under pressure. That’s partly because
of the investments it’s having to
make in ecommerce. And rising transport costs are
also weighing on profitability. And finally, leaders of the
Czech Republic, Slovakia, Hungary, and Poland will
meet in Jerusalem this week for a summit that will attempt
to strengthen ties with Israel. The four central
European countries form a cultural and
political alliance known as the Visegrad
Four group, which has been meeting since 1991. Tuesday will be the first
time the summit has been held outside of Europe, however. And the choice of host city
has raised some eyebrows internationally. The FT’s Valerie
Hopkins has more. These four countries are among
the most conservative in Europe and have called for a return
to Christian values, which is one of the reasons
why people think it’s quite interesting
that premier Netanyahu has been cultivating such strong
ties with these countries. Additionally, it should be
noted that each of these four countries has a complicated
relationship with the past, Poland especially, seeking to
pass controversial legislation that would criminalise blaming
any nationality besides Germans for the Holocaust,
and Hungary as well, having a complicated
relationship with anti-Semitism. And that’s what the week ahead
looks like from the Financial Times in London. [MUSIC PLAYING]

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