Friday 13/06/25

More than 240 dead after Air India flight to London crashes (Financial Times, Krishn Kaushik, Chris Kay and Andres Schipani) heralds a terrible tragedy that happened yesterday as a Boeing 787 Dreamliner crashed in Ahmedabad just after take-off. Miraculously, one guy survived but I suspect that casualty numbers will continue to rise as it crashed into a residential area. This is the latest disaster involving a Boeing plane and Air India crash casts shadow over Boeing recovery plans (Financial Times, Sylvia Pfeifer) highlights this. * SO WHAT? * First and foremost, this is an absolute tragedy as so many innocent people lost their lives. However, looking at this from a commercial point of view, this is going to be a nightmare for Boeing which doesn’t seem to be able to catch a break as it seemingly lurches from one disaster to the next. At this moment in time, the cause of the crash is not known, but if this is down to yet another quality control problem this will set the company back years (at the very least). Still, it’s nothing compared to the human suffering right now.

Then in Middle East live: Israel launches major attack on Iran (Financial Times, Peter Wells and George Russell) we see that Israel launched an attack on Iran and it looks like this resulted in the deaths of two of Iran’s top generals – its armed forces chief of staff and the commander of the Islamic Revolutionary Guard Corps. US forces in the region are now readying themselves for an Iranian counterstrike and reiterated support for Israel’s actions. Saudi Arabia, on the other hand, condemned the attack.  It remains to be seen as to what effect this may have on recent diplomatic and trade developments in the region – but it’s not going to be positive…

Over in America, US Senator Alex Padilla wrestled to ground at Los Angeles news conference (Financial Times, Lauren Fedor, Stefania Palma and Steff Chavez) highlights what could well have been a publicity stunt (so it definitely worked!) or just an overenthusiastic reaction to a Democratic senator from California asking a genuine question at a press conference held by the homeland security secretary. Alex Padilla said that he wanted to ask a genuine question but was then “almost immediately forcibly removed from the room” and then forced to the ground and handcuffed by the FBI. The FBI said that Padilla was removed by Secret Service agents “when he became disruptive while formal remarks were being delivered”. Meanwhile, Judge orders Trump to return control of California’s National Guard to state (Financial Times, Stefania Palma) shows that a federal judge has now told Trump that he must cede control of California’s National Guard to the state’s governor because his actions were “illegal – both exceeding the scope of his statutory authority and violating the Tenth Amendment to the United States Constitution”. This is clearly a victory for the embattled Democratic governor of California, Gavin Newsom, but he described it as “a win for all Americans”. The government is, unsurprisingly, appealing the ruling.

In other developments, State department planning to lay off hundreds of US-based staff (Financial Times, Guy Chazan and Demetri Sevastopulo) highlights imminent headcount reductions as part of a broader reorganisation initiated by secretary of state Marco Rubio. The foreign service labour union, AFSA, said that this comes at a time when the department’s workforce was already stretched very thinly. Some are saying that about 1,600 US-based jobs could be lost in the shake-up. It’s thought that 132 offices could be closed, some of which will have focused on human rights and the promotion of democracy. The “Trumpisation” of America continues…

Trump ‘may have to force’ Fed on interest rates (Daily Telegraph, Melissa Lawford) shows that

the president is back on the offensive with the Fed once more, branding the Fed chief a “numbskull” and saying that he should cut interest rates by one whole percentage point! Trump blamed him for keeping America’s debt costs high. He had previously threatened to sack Powell in April, but then the markets freaked out and he backed down. I don’t know how Trump is going to be able to follow through on his threat of “forcing” Powell to bend to his will. At the moment, it just sounds like sabre-rattling…

In Donald Trump ready to enact key parts of US-UK trade deal within days (Financial Trimes, Peter Foster, George Parker and Gill Plimmer) we see that the much-hyped US-UK trade deal is getting ever closer with both sides now hammering out details about the part of the deal that will deliver zero-tariff access to the US for UK steelmakers. Some are saying that a deal could be signed by the end of this week.

It can’t come soon enough given British exports to US suffer biggest fall on record (The Times, Mehreen Khan) cites the latest data from the ONS which shows that our exports to the US suffered badly in the wake of Trump’s “liberation day” tariffs. Not only that, but UK economy suffers worst monthly contraction since 2023 (Financial Times, Valentina Romei and Jim Pickard) cites the latest figures which highlight a weaker-than-expected fall in monthly GDP. On the plus side, FTSE 100 closes at record high as Trump’s tariffs shake faith in US (Daily Telegraph, Chris Price) shows that we’re benefitting from investors shifting their money away from the US to the UK as the instability and unpredictability of the US under Trump continues to freak them out. Also, Worker supply increases at fastest rate since pandemic (The Times, Jack Barnett) cites the latest data from REC and KPMG which shows that the supply of available workers increased to its highest level since December 2020, which means that wage growth is more likely to slow down, which in turn could make it easier for the Bank of England to justify cutting interest rates.

UK financial regulators should copy Singapore model, say peers (Financial Times, Martin Arnold) is an interesting article which suggests a possible solution to the problem of the British company exodus from the LSE – that we should be more like Singapore and be willing to take on more risk, be more supportive of economic growth and become more welcoming to businesses. So said the report from the House of Lords Financial Regulation Committee. The group concluded that the FCA and PRA have put in place “unnecessary frictions” since the 2008 banking crisis that clip the wings of growth and innovation. Singapore punches way above its weight when it comes to attracting multinationals – to the extend that it now has the world’s fourth highest GDP per capita, behind Luxembourg, Ireland and Switzerland. * SO WHAT? * Clearly something needs to be done otherwise the LSE is just going to suffer the death of a thousand cuts.

Then in Crypto influencer Anthony Pompliano set to launch bitcoin-buying vehicle (Financial Times, Antoine Gara and George Steer) we see that the high profile crypto influencer is about to become the CEO of the weirdly-named ProCapBTC in a SPAC-backed acquisition that will lead to a subsequent raising of $750m to spend on bitcoin. Pompliano has 1.7m followers on X. * SO WHAT? * You can’t blame anyone for wanting to jump on this crypto bandwagon at the moment, particularly given how well Circle’s IPO went recently, TMTG’s increasing involvement and the imminent IPOs of Bullish and Gemini. Momentum continues to build…

In consumer trends news, Falling alcohol sales have Big Booze over a barrel (Financial Times, Lex) shows that alcoholic drinks makers are having a very rough time at the moment particularly as younger people in large parts of the developed world are drinking less. Along with rising indifference, weight-loss drugs and the legalisation of cannabis in the US are all factors. Evolving tastes have had a particular impact on companies more exposed to wine and spirits – and Diageo is a good example of that, given that its share price has more than halved since the beginning of 2022. It’s worse for Jack Daniel’s maker Brown-Forman, though, as its share prices has lost two-thirds of its value since its 2020 peak! On the other hand, research consultancy IWSR reckons that developing markets like India, Brazil, Mexico and South Africa are expected to drive sales over the next decade and AB InBev, which owns the Stella Artois and Budweiser brands (among many others!) and is more exposed to Central and South America, has seen its share rise by about 40% so far this year. This is in stark contrast to Molson Coors, for instance, which is more US-focused and seen a 10% fall in its share price. * SO WHAT? * This is not great news, but at least there are some growth areas to be had. In addition to this, low or no-alcoholic beverages are really gaining traction. Will we see another reshuffling of brands in response to this perhaps??

On the food side of things, Tuna, beans, Spam: Trump’s tariffs threaten the canned foods millions rely on to survive (The Guardian, Victoria Namkung) shows that Trump’s tariffs on steel and aluminium are having an effect on other areas. In this case, prices for tinned goods could rise by 15% – and that’s going to have a particularly acute impact on poorer households. American can makers import almost 80% of tin mill steel because American steelmakers shut down domestic facilities over the years, leaving just three domestic production lines. CEOs from companies such as Del Monte, Goya Foods and Hormel Foods are appealing for Trump to exempt mill steel and aluminium from tariffs.

In retail news, Fake McDonald’s lobbies Vladimir Putin to block return of western companies (Financial Times, Courtney Weaver and Max Seddon) is an interesting article which shows that companies who have taken over the businesses of western brands after the invasion of Ukraine are keen to hang on to what they’ve built up since then. This could be a reaction to recent calls by Putin to put together guidelines for the return of foreign companies or perhaps it’s just because they’ve made so much money over the last few years, they don’t want the “good times” to end! Western sanctions have made Russians less reliant on exports and rising wages, driven by higher military wages, have powered domestic demand and private consumption. * SO WHAT? * I certainly don’t blame these companies for wanting to protect what they’ve built up! I’d also suggest that many western companies would be mad to return to Russia anyway, particularly if Putin is in power because you just don’t know what he’s going to do. It’d be interesting to know what Russians think of these offerings compared to the Western ones they had before…

Meanwhile, Trouble is brewing in China for the West’s retail giants (Daily Telegraph, Hans van Leeuwen) shows that, despite Trump boasting about a new trade deal with China, Chinese consumers might have other ideas as companies including Estee Lauder, Diageo and Unilever have all remarked on Chinese consumer caution on spending and the negative impact that this

has had on operations there. * SO WHAT? * The fact of the matter is that Chinese consumers are still being very cautious and until they start to get any confidence back EVERYONE’s going to suffer. The real estate market continues to be very weak and until we see sustained recovery here I think that consumer confidence is going to remain at depressed levels.

In UK retailing news, Upmarket Finest range helps lift Tesco sales amid UK ‘home dining boom’ (The Guardian, Joanna Partridge) shows that sales of its own brand jumped by 18% in Q1, which helped to lift overall sales in the quarter and the UK’s biggest supermarket also managed to grow its market share over the period as well. * SO WHAT? * Some analysts are saying that the success of the “Finest” range is down to customers going to restaurants less and eating more at home in order to save those pennies. So far so good in terms of keeping the German discounters at bay!

Meanwhile, Activist investor builds stake in WH Smith to boost share price (The Times, Isabella Fish) highlights the acquisition by activist investor Palliser Capital of a 5% stake in the retailer that recently sold off its high street business to a private equity firm. It reckons that the current share price is too low and has underperformed the broader travel, leisure and retail sectors. * SO WHAT? * This sounds like a reasonable move, but you do wonder what Palliser can do to improve the situation. WH Smith has thankfully jettisoned the millstone around its neck and it has undergone a lot of overhauls over the years. I personally don’t think you can mess too much with the management as yet because, TBH, they did what they needed to do with the high street business and they probably need a bit of time to recalibrate. The last thing they need at the moment is some jumped-up investor poking their nose in. Who knows, maybe they’re just in it for the ride…

Staying on the high street, Poundland sold for £1 with dozens of store closures expected (The Guardian, Joanna Partridge) shows that Poundland has been bought by US investment firm Gordon Brothers for a token amount. Poundland currently has over 800 outlets in the UK and around 16,000 employees. Gordon Brothers said it would invest up to £80m in Poundland to facilitate a turnaround. At the moment it looks like it’s going to slash the number of stores and renegotiate with landlords in order to pay lower rent. * SO WHAT? * Given the backdrop of higher prices and squeezed household budgets, you would have thought that discount stores like this would make a killing. Unfortunately for them, supermarkets such as Tesco, Aldi and Lidl have cottoned on to this and adjusted their pricing strategies accordingly. Given that Poundland’s profit margins were thin anyway before the higher NICs and living wage came in, this has been a tough year. I personally don’t think that having low prices alone is enough for a retailer to survive any more. Maybe it’s time for Poundland – like Asda – to find its voice again so that it can have its own identity and be heard among everyone else! I’d start off by changing the name for instance – I think it’s limiting (I mean, how much can you ACTUALLY get for a pound these days??) and boring. I think that Poundland will always sound cheap – in all senses of the word – and so will never be able to break out of its box. At least a different name would be a start and perhaps give it more flexibility. Major surgery is required here IMO.

In BYD launches cheapest UK model in bid to overtake Tesla as biggest electric carmaker (The Guardian, Jasper Jolly) we see that the Chinese car maker has launched its cheapest model, the Dolphin Surf, in the UK with a starting price of £18,650. This price point puts it among the cheapest vehicles available to today in the UK. * SO WHAT? * This should have non-Chinese makers quaking in their boots, particularly because you know that BYD’s still got a ton of margin it could lop off. The equivalent model in China costs just £6,000, for instance! Given that the UK has not imposed tariffs on Chinese car imports, we are a major target for Chinese car manufacturers now.

Then in Chinese carmaker Xpeng develops advanced chips for VW cars (Financial Times, Gloria Li and Edward White) we see that Xpeng claims to have made chips for autonomous driving that are better than Nvidia’s equivalent products and it reckons it will be able to win over VW and others as customers. It’s planning to integrate its proprietary Turing AI chip into some of the models that VW is launching in China next year. VW has a 5% stake in Xpeng. * SO WHAT? * Wow! This sounds impressive and shows just how far Chinese chip design has come in trying to

catch up with foreign-made semiconductors. Xpeng is among a group of Chinese companies – including Nio, Huawei, Horizon Robotics and Black Sesame Technologies – vying for supremacy in automotive chip design and they are making some serious advances.

French forced to rescue British charging company as drivers shun EVs (Daily Telegraph, Michael Bow) highlights French energy giant EDF’s purchase of UK car charging company Pod Point which operates in 5,600 fuelling stations. It is the third biggest charging group in the UK. * SO WHAT? * The company floated in 2021 at a £350m valuation but its share price has evaporated by 94% since then! I’ve always said that I think being a standalone charging company is a dangerous business to be in because rapidly advancing battery technology will consign range anxiety to history – but even more importantly, the demand for EVs has been poor. Maybe EDF has snapped up a bargain here that it will be able to take full advantage of as more people buy EVs over the coming years.

In a quick scoot around some of today’s other interesting stories, Will Starbucks’ big bet on its baristas pay off? (Financial Times, Gregory Meyer) highlights the latest efforts by Starbucks’s CEO to turnaround the company’s fortunes – Brian Niccol said he’s going to hire more baristas in a bid to make Starbucks a friendlier environment once more so that it will attract more customers. It will also use algos to work out better efficiencies for mobile, drive-through and counter orders. The new “Green Apron Service” is expected to roll out in North America by the end of the summer. Starbucks should give up China for a mug’s game (Financial Times, Lex) goes further and says that it should sell all or part of its struggling China business to someone who has the right expertise and can take it forward in an increasingly competitive market. * SO WHAT? * Extra staff sounds like a nice idea but analysts are worried about how much this is going to cost. I think that the China disposal idea is good though as competition from domestic challengers like Luckin Coffee is getting fiercer. FWIW, although I think that Starbucks’s coffee it OK I find ordering there a major faff and it takes ages. If it can shorten the gap between ordering and picking up your drink I think that will help enormously – as will simplifying the menu (IMO).

Barbie-maker Mattel partners with OpenAI to make AI child’s play (Financial Times, Gregory Meyer and Rafe Uddin) highlights an interesting venture as the two companies announced a “strategic collaboration” that will “bring the magic of AI to age-appropriate play experiences”.

No specific examples were given but the companies said that “safety, privacy and security” would be paramount. * SO WHAT? * I think it’s good that Mattel has put its towel on the sun-lounger, so to speak, but we’ll have to see what they come up with! They are expected to announce their first product later this year.

Meta invests $15bn in Scale AI, doubling start-up’s valuation (Financial Times, George Hammond, Melissa Heikkila and Cristina Criddle) gives us a bit more detail on the Meta/Scale AI deal in terms of who’s doing what. Thus far, the focus of Scale’s business has been the labelling of data, a manual process where images and text are correctly labelled and categorised before they are used to train AI models. * SO WHAT? * I think that this is actually a very canny move, particularly as content creators continue to push for more accountability of AI models using their material. Having Scale on board will be very useful for Meta IMO.

Then in Shares of fintech Chime soar in market debut (Financial Times, George Steer and Akila Quinio) we see that the flotation of mobile payments group Chime went really well on its NYSE debut yesterday. It opened up 59% and raised $864m. It really does look like America’s IPO market is gathering momentum…

The woman on this video is hilarious IMO! What do you think?? Great deadpan delivery!