Davos meeting, Meng Wanzhou in court, US earnings
The FT's James Sandy previews some of the big stories the FT is watching this week, including the World Economic Forum gathering in Davos, the extradition hearing against Meng Wanzhou, US earnings results - from Netflix and others - and a monetary policy decision from the ECB
Written by Simon Greaves and Martin Arnold. Filmed by Nicola Stansfield. Produced and edited by James Sandy.
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Here are just some of the stories we'll be watching this week. Davos hosts the 50th meeting of the World Economic Forum. Huawei's chief financial officer faces extradition hearings in Vancouver. Netflix leads the latest round of earnings results from the US. And Christine Lagarde is set to announce the latest monetary policy decision from the European Central Bank. First up, the world's top economists, politicians, and business leaders will gather in Davos this week for the 50th meeting of the World Economic Forum.
High on the agenda, the impact of an ongoing trade war between the US and China. There'll also be plenty of discussion around big tech and how it's regulated. Recent years have seen a shift in emphasis from shareholder to stakeholder capitalism. Companies are increasingly focused on delivering good for society through environmental, social, and governance goals. As our business commentator Rana Foroohar reports, however, judging the impact of these measures can be a challenge.
One of the things that you're going to be hearing a lot about is how to measure that good. How do you come up with the value of ESG investing? A lot of CEOs are saying that they're fine with the idea of moving to a stakeholder capitalism as long as they know what they're going to be judged for. You're also going to see a lot of talk about big tech, and big tech versus the regulators. Last year at Davos there was a big square-off between America and Europe over how to regulate technology. You had China trying to defend the surveillance state, and all stakeholders trying to come up with a new method for valuing the digital economy and coming up with new rules of the road in an era in which data is the new oil.
Now to Canada, where extradition hearings are about to begin for Huawei's chief financial officer Meng Wanzhou. Miss Meng was arrested while changing planes in Vancouver in December 2018. She is accused of defrauding HSBC and breaking US sanctions on Iran. The case has soured relations between China and the west. The US and China are still engaged in a trade war, and Huawei doesn't know whether it will be allowed to supply parts for 5G networks around the world. David da Silva has more.
Canadian businesses have also been caught up in this saga. Last year, China banned the import of Canadian pork and beef, which was later reversed, but they also blocked canola seed from two of Canada's biggest exporters. As well, Canada is under pressure from the United States to ban Huawei from its 5G networks. So far the Canadian government has not decided on that, and there is some concern about dangling the access to 5G as a political tool. Any ban would indicate to the Chinese company that US pressure tactics on its allies might win, and then that could have larger effects on Europe and elsewhere.
Wall Street earnings season continues this week, as companies report fourth-quarter results from 2019, among them, the entertainment streaming service Netflix, which has returned 4,000 per cent to investors since 2009, despite a disappointing performance last year. Other companies reporting include Johnson & Johnson. The consumer health care group faced legal action last year after it was alleged asbestos was found in its baby powder. The company was also involved in settlements over its alleged part in America's opioid crisis. Richard Henderson has this analysis.
Netflix was the best performing stock in the decade ending in 2019. In 2019 it faltered, though, in part because Disney and Apple released new streaming services, so new competition facing Netflix. Johnson & Johnson are fighting against legal battles. And finally, Procter & Gamble shares did very well last year because there was concern that economic growth was slowing, and so investors went into stocks like Procter & Gamble, which are considered safe. But this year, equity investors will want to start seeing earnings driving returns, not the central bank stimulus that drove much of the activity we saw throughout 2019.
And finally, Christine Lagarde is expected to start a strategic review of the European Central Bank's monetary policy on Thursday. Confidence has been growing amongst eurozone investors, but growth in the region is expected to hover at just above 1 per cent this year. Most economists expect Miss Lagarde to leave monetary policy unchanged. There may still be useful information for ECB watchers, though, as Martin Arnold reports.
Global trade tensions have eased, the prospect of a hard Brexit is receding, and the eurozone economy is showing some signs of stabilisation. It's into this climate that Christine Lagarde will, for the second time, present the monetary policy decisions at the European Central Bank since taking over as its president last November. Ms Lagarde is not expected to announce any changes to monetary policy. But what she will announce is the framework for the strategic review of the ECB's monetary policy tools and objectives that she has promised to launch this year.
And that's what the week ahead looks like from the Financial Times in London.