Here’s our news story about the threat of job losses at Arcadia:

The pound is staging a late mini-rally, as traders cling onto hopes of a Brexit breakthrough over the weekend.

Government ministers have been holding fresh talks with Northern Ireland’s DUP party, whose support could be vital to getting Theresa May’s Brexit deal over the line.

But what cost could it come at? They’ve already secured £1bn in extra funding for Northern Ireland in 2017, after May lost her majority.

Of course, they’ll also need reassurance that the Irish backstop couldn’t create a border between Northern Ireland and the rest of the UK.

Optimism that a no-deal might yet be avoided has pushed pound up half a cent to almost $1.33.

Some better US economic news - consumer confidence has picked up, as Americans welcomed the end of the government shutdown.

Here’s Capital Economics on the decline in US factory output last month.

The further decline in manufacturing output in February confirms that the global industrial slowdown is now weighing more heavily on US producers.

With tighter fiscal and monetary policy constraining domestic demand, the weaker external environment is another reason to expect a sustained slowdown in economic growth this year.

Pantheon Macroeconomics’s Ian Shepherdson also sees trouble ahead:

R3, the trade body for Insolvency Professionals, has a handy guide to pre-pack administrations here.

Simon Underwood, business recovery partner at accountancy firm Menzies LLP, reckons Interserve’s collapse won’t cause as much disruption as the Carillion crisis 14 months ago.

Like Carillion, Interserve has limited capital and slim operating margins, therefore opting for compulsory insolvency may become the most suitable approach.

“The fact that a large proportion of Interserve’s public sector contracts are in non-critical areas, such as building maintenance, means its failure is unlikely to cause chaos on the same scale as Carillion. On the other hand, with a number of important infrastructure projects, such as the M5 Junction 6 improvement works, resting on Interserve’s continued trading, the Government may well need to intervene.

He’s also got advice for companies owed money by Interserve:

“With suppliers vying to get their contracts resolved with administrators, it is essential that they seek third-party advice at the earliest possible opportunity and ensure cash-flow protection is at the top of their agenda. As well as attempting to renegotiate payment terms with their own suppliers, entering into ‘Time to Pay’ arrangements with HMRC may help them to ease the cash-flow burden and minimise operational disruption.

The Telegraph’s Ben Marlow makes an excellent point -- thousands of small investors have been wiped out, because two large hedge funds refused to support the Interserve rescue.

He’s referring to Coltrane, of course, and Farringdon Capital Management (a Dutch hedge fund which owned around 7%).

We still don’t know if jobs will be lost, or what losses will be inflicted on companies who supplied goods and services to Interserve.....

Here’s our news story on the Interserve collapse:

Labour MP Rachel Reeves says Interserve’s collapse shows the government should stop outsourcing vital services to the private sector.

Here’s more reaction:

Interserve’s fate was sealed once its biggest shareholder, hedge fund Coltrane Asset Management, opposed the deal.

It wasn’t prepared to see its 28% stake shrunk to just 1.5%, through the debt-for-equity plan drawn up with its creditors.

Those lenders had agreed to swap debt totalling £485m in the company for newly issued shares worth approximately £435.2m.

Interserve’s shares have now been suspended - although not before tumbling to 6.2p, down a third today.

Shareholders had already suffered huge losses, as the company’s financial position deteriorated:

China’s premier Li Keqiang is also concerned about the state of the global economy.

Speaking in Beijing today, Li says that China has “encountered new, downward pressure, and promised to do more to help the economy.

Li pledged:

“Of course, we are faced with many uncertain factors this year....

We can deploy quantity-based or price-based policy tools such as reserve requirements and interest rates. This is not monetary easing but to more effectively support the real economy.”

China’s central bank has already cut interest rates in recent months, while the government has pledged tax cuts to help businesses and consumers.

But what China really needs is an end to the trade war with China. The signs there aren’t good -- hopes for a summit between president’s Trump and Xi in March have faded.

The two side are now aiming for April.... or possibly even later, judging by these quote from secretary of state Mike Pompeo:

One for the chartists...

Back to Japan... and Uhuru, the Japanese-based IoT [Internet of Things] company backed by Softbank, reckons the Bank of Japan is being “typically conservative”.

CEO Takashi Sonoda tells us:

“The Bank of Japan is being typically conservative and basing outlook on historical data. The general mood in Japan is one of confidence. This is especially true in the area of technology.

Japan is positioning itself to be at the forefront of the data distribution economy and is confident this will grow rapidly.”

UK outsourcer Interserve, which handles thousands of government contracts including cleaning hospitals and prisons and providing school meals, may be about to fall into administration.

A pre-pack administration would allow the firm to keep operating:

Here’s the background to this morning’s shareholder meeting, on whether to approve a restructuring plan that would almost wipe out existing investors.

Vincent-Frěděric Mivelaz of Swissquote Bank says the Japanese economic outlook has deteriorated.

Economic headwinds forced the BoJ to revise exports and production downward. January exports dropped -9% (prior: -5.80%), their lowest in three years and the third consecutive drop while imports have rebounded 0.50% (prior: -2.20%) in the same period.

There was an unexpected pick up in the January current account balance of JPY 600.4 billion (prior: JPY 452.8 billion) amid a sharp rise in investment income due to an expansion phase in financial markets, yet the drop in January machine orders by 5.40% suggests further slowdown in Q1.

BoJ’s change of language from “increasing as a trend” to “recently showed some weakness” shows the situation is not expected to improve until Q3. Assumptions of 2% inflation have now become wishful thinking.

As I was saying....

Japan’s stock market rallied today, as investors calculated that the BoJ won’t tighten monetary policy soon given the weak global outlook.

European stock markets have also picked up pace, hitting their highest level in five months this morning.

Jasper Lawler of London Capital Group says:

A report that more progress had been made in trade talks between US and China calmed market jitters and lifted Asian markets overnight. Sentiment was also supported by news that the UK Parliament voted to postpone Brexit.

In an ironic twist, the Bank of Japan governor also criticise Modern Monetary Theory, claiming the idea is extreme.

Asked about MMT (very broadly speaking, the idea that government deficits aren’t intrinsically bad, unless they fuel inflation), Kuroda told reporters:

I think it is an extreme argument that won’t be accepted widely.

The government holds responsibility over fiscal policy and Japan’s public debt is very high. It’s important to improve Japan’s fiscal health in the long term.”

MMT advocates might be rolling their eyes, given Japan’s recent economic history. It’s managed to swell its national debt to twice its national income without struggling to finance its deficit. Plus, the BoJ’s money-printing scheme has been notably ineffective in fuelling inflation.

Bloomberg’s Gearoid Reidy tweets:

Bjørn T Sillemann, analyst at Danske Bank, points out that Japan’s manufacturing has weakened recently (activity shrank last month for the first time since 2016).

BoJ governor Kuroda insisted that he’s not giving up on getting Japan’s inflation rate up to 2%.

He told reporters:

“I don’t think there is a need to make any changes to our price target.”

But.... despite years of record low interest rates, and a massive QE programme, Japanese inflation only rose by 0.4% last month.

Naomi Muguruma, senior market economist at Mitsubishi UFJ Morgan Stanley Securities, suspects the Bank may have to rethink its plans.

“Over the longer term, the BOJ will probably have to reconsider again what the best policy framework is, given that it will take a very long time to hit the price target.”

There’s a danger that economic weakness could drag Japan close to recession again (it shrank in the third quarter of 2018, before expanding in Q4).

Darren Aw, Asia economist with Capital Economics, reckons the BoJ may be forced to boost its stimulus programme later this year.

Aw says (via the FT)

There is a good chance that Japan’s economy will contract again in Q1, for a third time in five quarters.

Given this, the key question for the Bank of Japan is no longer when it might retreat from its ultra-loose policy stance but whether it can do any more to support the economy.”