Nafta re-negotiations, Walmart results

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Hello and welcome to the "Week Ahead" from the Financial Times in London. Here are some of the big stories we'll be watching this week. The Trump administration begins renegotiations of the North American Free Trade Agreement with Canada and Mexico; the world's biggest retailer, Wal-Mart, reports quarterly earnings; the German parliamentary election campaign begins in earnest; and there's GDP data out of Japan. First, to North America, where Donald Trump's long-promised communication of the North American Free Trade Agreement with Canada and Mexico gets underway this week.

Negotiators from all sides are gathering in Washington for the first round of formal talks. and with the clock already ticking, there are signs that there's going to be plenty of tough negotiating ahead. NAFTA has forged close links between the US and Mexico, who buy each other's goods, eat each other's food, and rely on each other's skills. But the countries are divided on several issues, such as Trump's plans to build a wall on the border with Mexico. Our world trade editor Shawn Donnan has more.

There are three key things we're going to have to watch this week. The first of them is the tone. NAFTA and the whole subject has been a really fraught one so far, especially between the US and the Mexicans. Donald Trump campaigned last year on the idea of ripping up NAFTA, also the whole idea of building a wall on the Mexican border and making Mexico pay for it, which has been a source of tension all year for them.

The second thing is really the speed. There's a hugely ambitious schedule here. This is the first round of negotiations, they're planning seven before the end of the year. They want to get this all wrapped up by early next year, ahead of presidential elections in the middle of the year. And the third thing is really the substance and really to figure out how much ripping up and rewriting Donald Trump and the Trump administration are going to want to do and how much of that rewriting the Canadians and the Mexicans are going to let them do.

Next, to Wal-Mart. Quarterly earnings at the US retailer are expected to be slightly down when it reports this week. That's despite the company selling more stuff in each of its stores every quarter, which is quite an impressive feat for a retailer which is already the biggest in the world and a dominant force in the sector. The projected fall in earnings reflects two things, as our retail correspondent, Mark Vandevelde, reports.

The nature of retail is changing. They need to start competing online. They're incredibly good at running these huge stores where you have a few staff and customers do most of the work. But they want to compete with Amazon now so they're bringing in some of the same promises that Amazon make, whatever you want delivered in two days anywhere in the US. That's expensive stuff for them to do.

And of course, they have to do it as well as running these huge stores. Those costs aren't going away. The second thing is that Wal-Mart is by far one of America's largest employers, and it's decided in the past couple of years that it needs to spend more and put more effort into making Wal-Mart a good place to work. So its costs of employment have gone up, as well, and that's hurting earnings.

Now to Germany, when Angela Merkel embarks on the first full week of campaigning for September's parliamentary election with a string of public speeches and television appearances. The German chancellor has just returned from a three-week break to a rude shock, an ARD television opinion poll showing her personal rating is down by a brutal 10 percentage points in just three months. But her main challenger, the Social Democrat chief Martin Schulz, was also down by four percentage points and he remains far behind in the polls. Here's our world editor, Dan Hall.

So Germany's election campaign gets underway in earnest this week. Angela Merkel is back from her mountain walking holidays. And only a few months ago she seemed to be cruising to victory, but actually the latest polls suggest she's lost some support. She will probably easily beat Martin Schulz, the centre left SPD candidate. But the poll is clearly a warning not to take voters for granted and not to try and stifle debate about the big issues facing Germany.

And finally to Japan, where GDP data due on Monday is expected to show the economy grew for a sixth consecutive quarter in the three months to June 30, the country's longest growth streak since 2006. Economists are tipping an annualised growth rate of 2.5%. This would represent a return to recent form for the Japanese economy, given growth in the first three months of the year was adversely affected by a one-off drawdown on oil inventories. And that's what the week ahead looks like from the Financial Times in London. See you again next time.

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