Nafta talks, Walmart earnings

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. After another difficult week, UK Prime Minister Theresa May prepares to give a foreign policy speech; the world's biggest retailer, Walmart, reports earnings; the US, Canada, and Mexico begin the fifth round of Nafta talks; and there's third quarter GDP data from Japan. First, to London, where Theresa May is expected to set out her views on foreign policy in a speech on Monday night. The address comes after another difficult few days for the UK prime minister.

Last year, she used the speech at the annual Lord Mayor's Banquet to call for Britain to be the strongest global advocate of free markets and free trade. But this year, UK diplomacy has been rocked by scandal involving Priti Patel, who as international development secretary held 12 meetings in Israel in August without informing the Foreign Office. Ms Patel was forced to resign last week, while foreign secretary Boris Johnson was criticised for inaccurate comments that may have jeopardised the status of a British-Iranian woman detained in Iran. Here's our political leader writer Sebastian Payne.

It's been a turbulent time for Theresa May at home, with two departures of cabinet ministers and a reshuffle of her more junior ministers too. That instability in the UK has projected onto Britain's image across the world. And given the uncertainties of Brexit, which is the UK's relationship with its most important trading partner, a lot of the country's allies are looking for reassurance that Britain can still be relied upon for its international obligations in terms of defence and security and trading.

So it's up to the prime minister to reassure people in this speech and at the same time add some meat to this global Britain vision and ensure that Britain is still a key western country.

Now it's a WalMart, which reports third- quarter earnings on Thursday. The world's largest retailer has been pouring money into its online sales operation as it battles with Amazon to dominate shopping. Last quarter, Walmart's like for like sales climbed 1.8%, the 12th straight quarterly increase. So any kind of miss there would be a big deal. But all eyes will be on Walmart's push into e-commerce, as our US consumer correspondent Anna Nicolaou explains.

So their earnings have been kind of steady, but their profit margins have been falling because they're spending money. But it seems to be paying off. E-commerce sales have been growing I think it was 60% last quarter, and so people will be definitely looking at that number to see if they can kind of sustain that kind of growth. And the other thing is that last month, they put out some pretty optimistic guidance for next year.

They said they expect online sales to grow about 40% next year, and that should help fuel, I think, it was about a 3% rise in total sales. So for now, it seems like the strategy is to just kind of attack online as much as they possibly can and it is working out for them.

And now to Mexico City, where officials from the US, Canada, and Mexico will gather this week for the fifth round of negotiations over the updates to the North American Free Trade Agreement that were sought by Donald Trump. The talks, which began in August and which are scheduled to go on until March 2018, have already grown contentious, with the Trump administration seeking radical changes. The big question remains whether Mr Trump is truly committed to a deal that he's repeatedly declared to be a disaster for the US economy or whether he'd walk away from it altogether. Our world trade editor Shawn Donnan has more.

The reason the talks were contentious in Washington is because the US was tabling some pretty radical proposals. One of them was to have a sunset clause so that every five years the three countries would have to renew their commitment to Nafta. Another is a whole series of rules of origin for the auto industry. Those are the rules that govern how much of a car has to be made in a region to be eligible for zero tariffs.

And finally, there are some other big sticking points that have emerged, including over dispute settlement systems in Nafta. So what we're really going to see in Mexico City this week is the Mexican and Canadian response to some pretty tough negotiating by the Trump administration.

And finally, to Japan which reports GDP figures on Wednesday. Analysts think that growth weakened during the third quarter of 2017. With brisk overseas demands and the likelihood of fiscal stimulus after the re-election of Shinzo Abe as prime minister, the economy is still making steady progress, as our Tokyo bureau chief Robin Harding reports.

Analysts are expecting a seventh consecutive quarter of growth, the best run since 2001. Looking forward, the big question is wages. Prime Minister Shinzo Abe has asked companies to hike pay by 3% in the annual wage round next spring. If he gets that, it will provide the fuel for higher consumption and steady growth in 2018 as well.

And that's what the week ahead looks like from the Financial Times in London. See you again next time.

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