Monday 31/03/25

The US presidential tariff juggernaut continues in Trump threatens secondary tariffs on Russian oil if no deal on Ukraine (Financial Times, James Politi, Ben Hall and Christpher Miller) where this time he’s threatening secondary tariffs on Russia because he’s getting frustrated about Putin’s foot-dragging over ceasefire talks with Ukraine. This signifies a change in tone for Trump who has, thus far, been slagging off President Zelenskyy and sucking up to Putin. He said over the weekend “Russia must be forced into peace…only pressure will work”. Talks and posturing continue…

Ukraine ceasefire to increase Russian threat in Baltic region, ministers warn (Financial Times, Charles Clover) is an interesting article which considers implications of a Ukraine ceasefire – namely that Estonia, Latvia and Lithuania are extremely concerned about Russia using any ceasefire to re-arm and shift troops to NATO’s north-eastern flank as a precursor to a potential invasion. Baltic countries are particularly concerned about a major military exercise called Zapad that is due to be held near their borders with Russia and Belarus this autumn. The idea of these exercises is to practice for a conflict with NATO countries – and it is conducted on an epic scale. * SO WHAT? * This clearly makes commitment of Baltic country troops to help Ukraine much more difficult because they don’t want to go there and leave their own countries open. It just goes to show that this isn’t just a Uraine problem – it has much wider implications.

Trump revokes permits for oil companies in Venezuela to pressure Maduro (Financial Times, Jamie Smyth and Joe Daniels) highlights Trump tightening the screws on Venezuela as his administration is revoking a number of permits and licences for western companies to do business in the country. A number of companies – including Eni, Global Oil Terminals, Repsol, Maurel & Prom and Reliance – had been granted waivers to operate in the country by Joe Biden. * SO WHAT? * This is all part of a plan to put pressure on Venezuela’s president, Nicolás Maduro. Last week, Trump imposed a 25% tariff on all imports from any country that buys oil from Venezuela. Some believe that the exemption licences were worth over $4.5bn last year to Maduro’s government, a sum that his opposition say was used to finance ongoing repression…

Then in Trump says he is ‘not joking’ about seeking a third term in office (Financial Times, Alex Rogers) we see that Trump is entertaining the possibility of a third term in office as he said in a phone interview with NBC News yesterday that there were means to get around the two-term limit. He is currently 78. The 22nd Amendment to the US Constitution states that “No person shall be elected to the office of the President more than twice”.

His attack on the legal profession seems to be achieving its goals in Top US law firms balk at backing Perkins’ challenge to Trump sanctions (Financial Times, Sujeet Indap) as none of the top 20 US law firms have offered “unconditional support” to Perkins Coie to challenge Trump’s sanctions against it while only three from the top 100 have. As things stand, Perkins Coie will be banned from federal government work and will see their security clearances taken away. * SO WHAT? * It’s easy to criticise law firms here who don’t have the ⚽⚽ to push back against the Trump backlash but they employ a lot of people – and it would be employee lives that they are playing with if they decide to play hardball against a president that is early in his term, has a majority and is seeing success at steamrolling all and sundry. Those affected are challenging the constitutionality of the executive orders…

Not being content with attacking the legal profession, Emboldened Trump Squeezes Traditional Media (Wall Street Journal, Josh Dawsey, Jessica Toonkel and Isabella Simonetti) shows that the president is turning his attention to the media as Associated Press has been banned from media events because it refuses to call the Gulf of Mexico the Gulf of America. AP is still banned from Air Force One and the Oval Office as it refuses to compromise. * SO WHAT? * The thing is that more people are engaging with podcasts and social media to get their news, so it’s getting easier for Trump’s administration to sideline such media outlets. So far, this administration has attacked universities, entertainment companies and law firms by using litigation, threatening to pull federal funding and forcing the elimination of DEI practices. Since Trump has taken office, media outlets have been scrambling to train journalists in how to act in the new pressured environment where the White House wants to take control of its overall message.

In Greenland’s new leader insists US ‘is not getting’ control of the territory (Financial Times, Richard Milne) we see that Greenland’s new PM, who was elected on Friday, is adamant that Trump will not take control and maintains that Greenlanders will determine their own future. The US administration continues to refuse to rule out military force to invade and take it over.

Consequences to Trump’s policies are detailed in Deloitte is hit hardest by Trump’s spending clampdown on consultants (Financial Times, Stephen Foley, Chris Cook and Joe Miller) where the Big Four accountant is emerging as the biggest loser from Trump’s push to slash spending on consultants. According to FT analysis of data provided by DOGE, Deloitte has had at least 129 contracts terminated or cut down – and this is more than double any other consultancy! Ten consulting firms have been ordered to put together a detailed plan to save the government money by the end of today. * SO WHAT? * According to DOGE, Deloitte’s terminated contracts will save the US taxpayer $372m – and that doesn’t include its recently-cancelled IT services deal with the IRS, a contract that was worth $1.9bn over seven years to Deloitte and other contractors.

The pressure continues in US tells European companies to comply with Donald Trump’s anti-diversity order (Financial Times, Leila Abboud, Adrienne Klasa and Henry Foy) where Trump’s administration has sent a letter to companies outside the US who are suppliers or service providers to the American government ordering them to ban DEI programmes and officially confirm such status. The letter went on to say “If you do not agree to sign this document, we would be grateful if you could kindly provide us with detailed reasons, which we will forward to our legal department”. * SO WHAT? * For the moment, it seems that this is legally unenforceable and so some execs and their advisers have not yet responded. Still, it doesn’t half se the tone! Advertising giant WPP cuts diversity references from annual report (The Guardian, Simon Goodley) highlights the latest company to dance to Trump’s current mood music, but given that WPP’s biggest market by far is the US, this is hardly surprising!

In Musk-related news, Elon Musk’s artificial intelligence group buys X for $45bn (Financial Times, Hannah Murphy) shows that xAI bought X for $45bn, bringing together two of his main businesses in an all-stock deal that valued xAI at $80bn. * SO WHAT? * This is going to be one hell of a combination, particularly with Musk at the helm. It’s pretty amazing to think that xAI only started in 2023 to “understand the true nature of the universe” and give OpenAI some competition! This will combine xAI’s AI capability and X’s sheer reach – a formidable combo! As an aside, this could be absolute gold for winning elections IMO…

Meanwhile, Brands spend nominal sums on X ads to keep Elon Musk happy (Financial Times, Hannah Murphy and Daniel Thomas) shows that big brands are making sure that they are spending enough on ads on X to keep Musk off their backs whilst also trying not to endorse him too much, given the public backlash against him. Talking of which, Protests hit Tesla dealerships across the world in challenge to Elon Musk (The Guardian, Dara Kerr and Edward Helmore) demonstrates more anti-Musk sentiment as demonstrators held rallies in front of almost every Tesla showroom in the US and many across the world. Protestors asked people to a) not buy a Tesla, b) sell Tesla stock and c) join the “Tesla Takedown” movement. I don’t think this is really going to have all that much of an effect now, but maybe it’ll be cumulative and people will just stop buying them…

While all of that continues to rage on, Elon Musk’s Mission to Take Over NASA—and Mars (Wall Street Journal, Emily Glazer and Micah Maidenburg) shows that Musk’s ambitions to go to Mars remain undimmed. The fact that his mate Jared Isaacman just became the head of NASA at his behest, meaning that he’ll be getting closer to his long-held ambition to send people to Mars. This could be huge for SpaceX, particularly given that the White House looks likely to kill a Boeing-built rocket project as part of a coming budget plan. If this was cancelled, billions of dollars could suddenly become available to get to Mars, with the ultimate goal of building “a self-sustaining civilisation on Mars”. * SO WHAT? * Musk is clearly ambitious – and he is a genius. However, if you get in the way of what he wants to do, he will just sweep you aside! With Trump in his corner, he is unstoppable…

Pete Hegseth says US is setting up a ‘war-fighting’ base in Japan (Financial Times, Leo Lewis) shows that the US defence secretary has said that America has already begun upgrading its military forces in Japan as part of efforts to build a more robust deterrence against China. The idea is to improve co-ordination with Japan’s Self-Defence Forces and will no doubt soothe any nerves about America’s ongoing commitment in the region.

As America withdraws its defence commitment to Europe, The niche minerals now surging in price as defence spending booms (Financial Times, Ellie Saklatvala) highlights which minerals are seeing a spike in demand as Europe boosts its defence spending – antimony (used to harden lead bullets and making flame-retardant materials), rhenium (used for high-pressure turbine blades for jet engines) but also tungsten, chromium, tanatalum, niobium, cobalt, molybdenum and vanadium – while The gaps in Europe’s defence capabilities and who might fill them (The Times, Dominic O’Connell) shows just how difficult it’s going to be for Europe to wean itself off heavy reliance on American know-how. The Stockholm International Peace Institute reckons that, between 2019 and 2023, 55% of Europe’s defence imports came from the US! This is a significant uptick versus the previous five-year period where it was 35%. Hensoldt, Thales, Saab, Airbus, Leonardo, BAE Systems, Dassault, OneWeb/Eutelsat, MBDA and Rheinmetall are just some of the companies that could step up, although it won’t be possible overnight. * SO WHAT? * Of course there is now rising demand from European governments because of America’s cooling off, but America’s behaviour is also spooking other countries who ordered their defence equipment, believing that this bought them a bit of protection as well. Given that this is no longer the case, they are keen to look to European suppliers as well. You would have thought that order books are going to be full for quite some time to come!

In investment news, Norway urged to drop ‘crazy’ ban on investment in defence companies (Financial Times, Richard Milne) takes a look at getting rid of a ban that currently prohibits its sovereign wealth fund, the biggest such fund in the world at $1.8tn, from investing in defence companies. This ban has been in place since it was imposed in the early 2000s when its parliament imposed various ethical rules. Clearly, the geopolitical environment has changed since then and there is a push now to lift this restriction. * SO WHAT? * This is just another example of countries reacting to the changing relationship with NATO and the US – remember Switzerland’s recent change in stance last week??

Meanwhile, Europe must act to stop tech start-ups leaving to list in US, Swedish PM warns (Financial Times, Richard Milne) shows Sweden’s leader appealing for Europe to make its capital markets more attractive in order to stop the flow of tech companies across the Pond. Sweden already lost out on Spotify (New York in 2018) while Klarna has already chosen to go stateside and Einride, a driverless truck start-up, is seriously considering it. * SO WHAT? * Europe has often moaned about not being able to produce big tech companies, but now that it has, it seems that the next problem is not having the ability to hang on to them! I think that this is a depth-of-capital problem and investors having less risk appetite in Europe generally than their American counterparts. I wonder whether the key to this is to ramp up retail investor interest??

Rise in US consumer spending weaker than expected (The Times, Louisa Clarence-Smith) cites the latest numbers from the Bureau of Economic Analysis which show that American consumer spending was weaker than expected in February while Shoppers defy the gloom with surprise February boost (The Times, Isabella Fish) cites the latest data from the ONS which highlights a surprise strengthening of retail sales volumes on this side of the Atlantic. British consumers might also get a boost soon as per Banks ask UK Supreme Court to reverse landmark car finance ruling (Financial Times, Martin Arnold) which highlights an important Supreme Court hearing this week regarding the car financing mis-selling scandal. * SO WHAT? * If the original ruling is upheld, banks will have to pay consumers billions in compensation. The hearing will last three days and will consider two questions: firstly, did car dealerships have a fiduciary duty to act in the best interests of their customers when arranging the car loans and secondly, whether lenders paying commissions to dealerships for arranging the financing are liable for their breaches of fiduciary duty.

There’s some good news in Retailers’ optimism about profit and growth is highest in a decade (The Times, Jack Barnett) which cites the latest Lloyds Business Barometer as saying that

confidence among retailers hit its highest level since August 2015 in March! Given all the doom and gloom we’ve been hearing, this is welcome respite! Mind you, ONS figures last week showed that retail sales rose strongly in January and February…

WH Smith stores to be rebranded with made-up name (Daily Telegraph, James Titcomb) heralds the death of WH Smith as a high street brand as it’s been bought by investment company Modella Capital and will be rebranded “TG Jones” for no apparent reason. WH Smith was founded in 1792. The UK high street is no match for WHSmith’s wanderlust (Financial Times, Lex) mentions that only Fortnum & Mason has been around longer as a retailer and that apart from the name change things will carry on as usual (for now). We’ll just have to see what’s next for the new “TG Jones” while the remaining travel business of WH Smith at railway stations and airports waits to see what will happen to its US business.

I must say that I did not realise the Guinness banter that bar staff have to deal with until I saw this!