Watson’s Weekly 14-06-2025

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE COLOURED HIGHLIGHT REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

THIS WEEK…

• 242 people died in an Air India plane crash just after take-off. Only one man survived. It was a Boeing 787 -8. Boeing has done it again. Investigations are taking place.
• The World Bank said that the 2020s are on the way to being the weakest decade for the global economy since the 1960s. It cut its forecast for global GDP growth this year from 2.7% down to 2.3%.

IN WAR & DEFENCE NEWS…

• Israel launched a major attack on Iran and killed two of Iran’s top generals in the process. Any progress that had been made in the region is obviously out of the window now. I would have thought that oil prices and freight rates will  rise if this looks like it’s going to get much worse.
• Trump is appealing for “non-traditional” contractors to get involved in the bidding process for working on Trump’s proposed “Golden Dome” defence shield so that it’s not just the usual defence companies who bid.
• The Pentagon has now launched a review of the Aukus nuclear submarine deal made in 2021. It’s being overseen by a sceptic of the original plan. If they rip this agreement up I have to say that I think that no-one will trust the Americans ever again on something as serious as this. What would be the point??

IN TRUMP NEWS…

• Trump and Musk’s allies urged the two billionaires to make up and play nice once more. A few days later Musk said on X that he regretted “some” of his posts. I guess that the two will probably realise that, in reality, they actually need each other.
• Trump’s vendetta against Harvard has forced it to appeal to other universities at home and abroad to host students affected by the visa clampdown. I don’t this this’ll work as it’ll just be too disruptive at a formative time in life. America’s universities are going to suffer as a result of all this drama.

IN INDIVIDUAL COUNTRY NEWS…

• IN THE US – inflation rose by less than expected to 2.4% in May, which would suggest that Trump’s tariffs haven’t yet taken effect. Trump threatened “to force” the Fed to lower interest rates, but he’s said this before and when it looked like he was going to take it a step further and sack the Fed chief, markets 💩 the bed and the president relented. ABC suspended a journalist for calling Trump and advisers “world-class haters”, which was unsurprisingly jumped upon by press secretary Karoline Leavitt and we are yet again seeing more aggressive quelling of dissenting voices by this administration. The state department is planning to make significant cuts to headcount as the “Trumpisation” of America continues and anti-vaxxer Robert F Kennedy decided to fire all 17 members of a top vaccine advisory committee in a move that’s bound to shift America’s immunisation policy. This committee made recommendations about vaccine dosages for Americans and at what age they should be administered. IN TRADE – big US company execs converged on Washington to urge Trump to express concerns about his tax policies while Germany’s ThyssenKrupp warned that these policies could be fatal for the European steel sector. Towards the end of the week, Trump boasted about a trade deal being done with China, but imports from the country will still attract a 55% rate while exports from the US will attract a 10% rate. IN IMMIGRATION – Federal agents clashed with anti-deportation protesters in LA leading Trump to send in the Marines and the mayor putting a curfew in place. However, a federal judge then told Trump to return control of California’s National Guard to the state because his actions were “illegal – both exceeding the scope of his statutory authority and violating the Tenth Amendment to the United States Constitution”. All of this is putting immigrants on edge and Latinos are keeping a low profile, spending less and getting afraid about going to work.
• IN CHINA – the country’s inflation figure fell for the fourth month in a row. Domestic demand continues to be sluggish despite a string of measures announced here and there to spark the economy out of its coma.
• IN ITALY – there was a vote on speeding up citizenship for foreigners but it failed in the end due to insufficient voter turnout.
• IN UK – it looks like Trump’s on the verge of enacting key parts of the upcoming US-UK trade deal. We definitely need it as our exports to the US saw their biggest ever drop and our monthly GDP had a weaker-than-expected fall. On the plus side, the FTSE100 closed at a record high as investors shifted money away from the US and the latest data from the REC and KPMG showed 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. That would provide a boost for markets. Rachel Reeves announced the government’s spending review and winners include the NHS, defence, schools and consultants. Losers include the Home Office, DEFRA, transport and council taxpayers. Reeves announced a programme of affordable homes, a “housing bank” to provide long-term funding for builders and reinstated winter fuel payments in a major U-turn on policy.

IN OIL NEWS…

• US oil output looks set for its first drop next year, according to forecasts from the Energy Information Administration, as lower-for-longer oil prices will de-incentivise US oil producers (the oil price needs to be at a level where they will be able to make a profit. That being said, perhaps Israel and Iran’s actions may boost the oil price for a while at least. Prices surged initially.

IN ENERGY NEWS…

• World Bank lifted the ban on funding nuclear energy – a major shift in policy which should do a lot to ease financial bottlenecks.
• IN THE US – Trump is looking at repealing regulations governing CO2 emissions and other pollutants as part of Trump’s “energy dominance” agenda while Westinghouse is in talks with US officials and partners about potentially building 10 new big reactors as part of the US government’s plans to to quadruple nuclear energy capacity by 2050.
• IN EUROPE – German fusion energy tech company Proxima Fusion attracted €130m at its latest funding round as excitement surrounding nuclear fusion technology continues.
• IN THE UK – the government committed £11.5bn of new state funding for the Sizewell C nuclear power plant in addition to pledging an investment of over £2.5bn into nuclear fusion over the next five years. Although the cost of Sizewell C has been huge it’s probably better to stick with it and see it through otherwise the UK will get left behind in the power revolution. We also heard some very important news this week – that the government had finally awarded Rolls-Royce the contract to make a fleet of Small Modular Reactors across the UK after a protracted selection process.

IN CRYPTO NEWS…

• Peter Thiel-backed crypto group Bullish filed for a Wall Street IPO as it clearly wants to lean into Trump’s crypto-friendly administration. Bullish had previously tried to do an IPO via a SPAC deal in 2021 but it fell through.
• Crypto influencer Anthony Pompliano is going to become the CEO of SPAC-backed ProCapBTC which is set to raise $750m to spend on Bitcoin.

IN EMPLOYMENT TRENDS…

• The latest data from the ONS shows that the number of people in employment between April and May has fallen at its sharpest rate since the pandemic thanks to the sudden introduction of higher NICs and minimum wage. Chancellor Reeves may well hope that this slowdown will make it more likely that the Bank of England will cut interest rates.
• AI continues to shake up the world of employment. The guy who runs Anthropic reckons that AI could wipe out 50% of entry-level office jobs over the next five years and VC firm SignalFire says that the number of recruits in big tech companies has already dropped by 25% versus 2023. Duolingo has gone “AI-first” but we’ve also seen Moderna merging its HR and tech functions, IBM is now using AI agents to replace hundreds of HR staff and Klarna says that AI now managed over two-thirds of customer service calls.

IN CONSUMER TRENDS…

• IN PERSONAL FINANCES – millennial millionaires are getting increasingly mobile with their money and not simply continuing what their parents have done. Capgemini research has shown that this demographic is much more likely to shift tax residence and even advisers, which is prompting the advisers to make more efforts to keep them. Another challenge advisers are facing is that people are living longer lives, which means that their money has to stretch further. Meanwhile, Britons are hoarding cash “amid economic uncertainty and fear of outages”. They will soon be able to invest in more “exciting assets” though – the FCA has given the go-ahead for trading in private companies later this year in the Private Intermittent Securities and Capital Exchange System (PISCES), which is designed to be the missing link between public and private markets and provide a source of funding for fast-growing companies that aren’t yet IPO-ready.
• IN SPENDING HABITS – people are drinking less alcohol, particularly those in the younger demographic. This is a nightmare for alcoholic beverage firms, particularly those more weighted towards wine and spirits like Diageo. This is because of factors including rising indifference, weight-loss drugs and the legalisation of cannabis in the US. Meanwhile pubs in the UK are having a nightmare with rising costs making the price of a pint increasingly prohibitive, which could also be having a negative effect on consumption. In America, Trump’s tariffs on steel and aluminium are going to have an effect on the price of tinned foods (prices could rise by 15%) and this is likely to effect the poorest houses the most. UK consumers are increasingly opting for high loan-to-value mortgages a) because house prices are going higher and  b) because there are more such mortgages becoming available. The last time such high loan-to-value (LTV) loans reached similar levels was in Q2 of 2008 at the height of the global financial crisis!

IN RETAIL NEWS…

• Russian companies that took over when foreign companies quit the country in the wake of its invasion of Ukraine are now lobbying Putin to keep things as they are and not let them back in again. This could be a reaction to recent calls by Putin to put together guidelines for the return of foreign companies.
• Western retail giants are still facing tough times in China as domestic consumption continues to be sluggish. The real estate market has yet to recover and until we see sustained progress here I think that consumer confidence is going to remain at depressed levels.

BACK HOME…

• UK retail sales growth slowed down in May
• On the plus side, M&S has resumed online orders as the retailer inches back to normality after being hacked.
• The “Finest” range helped to boost sales at Tesco in Q1.
• Elsewhere on the high street, activist investor Palliser Capital built up a 5% stake in WH Smith but I don’t know what they’re going to be able to do with it.
• Poundland got sold for £1 to US firm Gordon Brothers, which said that it would put up to £80m into it to help a turnaround. I think that there’s a lot wrong with a company that sells cheap stuff not being able to make a ton of money when household finances are tight, so I think a major revamp is needed – starting with a name change.

ELSEWHERE…

• Zara’s owner, Inditex, reported a rare disappointing performance for Q1 and a sluggish start to the summer season. Still, I guess there’s time for things to change!

IN AI…

• Meta announced a $15bn investment in Scale AI, a company which labels and categorises data before it’s used to train AI models – and this might come in useful for when we enter a new phase of humans generating more quality content! Open AI’s co-founder Ilya Sutskever reckons that we may be nearing the point where existing data has been “consumed”, so we’ll need more!
• Microsoft is now going to rank the “safety” of AI models sold to cloud customers on three metrics – quality, cost and throughput. This will certainly keep AI model developers on their toes!
• Oracle shares jumped thanks to the company’s upbeat forecasts for the growth of its cloud infrastructure division.
• Meanwhile, Apple held its annual developer conference this week. It said that app developers would get access to its AI models but on the other hand, it’s having trouble with giving Siri AI upgrades.
• OpenAI made bullish forecasts, saying that it reckons subscription revenues will almost double to $10bn
• Europe’s Mistral is benefitting from winning contracts from European companies wanting to support regional champions rather than give it all to the Americans.

IN CHIPS…

• Nvidia unveiled a raft of UK partnerships to bolster AI capabilities but its chief said that we lack the requisite infrastructure to make the most of our potential in AI at the moment.

IN REGULATORY NEWS…

• UK ministers have said that they’re going to delay AI regulation for at least a year in order to put together a more “comprehensive” AI bill in the next parliamentary session to address areas such as safety and copyright.
• WhatsApp is joining the legal action against UK demand for Apple’s to provide a “back door” to its security systems because it, like Apple, wants to protect users’ rights to privacy

IN OTHER NEWS…

• Snap is having another go at launching its own smart glasses. They will be called “Specs” and combine AI image recognition and the ability to display high-def 3D images.
• Sam Altman’s digital ID project, World, is launching in the UK. The project was started in 2019 but launched properly in the US in April.
• Fears are growing in London about the vulnerability of our promising tech companies to American takeovers. Spectris, Alphawave IP and Oxford Ionics all attracted bids from American buyers. Will it always be so??

IN MEDIA NEWS…

• Warner Bros Discovery announced that it will split its TV and streaming businesses
• Disney and Universal are suing Midjourney for copyright infringement.

IN ADVERTISING…

• WPP’s CEO Mark Read stepped down as CEO after conceding that he’s losing ground to the onslaught of AI while social media creators are now on track to overtake traditional media in ad revenue this year as they get more revenues through ads, brand deals and sponsorships.

OVERALL…

• Tesla drivers in France are now suing the company because they want to terminate their contracts early because of Musk’s political antics. If it goes their way, things could get nastier for Tesla as owners from other countries could try the same thing.
• BYD launched its cheapest car, the Dolphin Surf, in the UK with a starting price of £18,650. The equivalent vehicle in China costs just £6,000, so even if there are high tariffs there’s a lot of wiggle room!
• Xpeng says that it has 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.
• French energy giant EDF’s purchased UK car charging company Pod Point which operates in 5,600 fuelling stations. It is the third biggest charging group in the UK. It needed rescuing!

IN DRIVERLESS…

• Chinese regulators are slowing down the rollout of self-driving features in cars as they’ve been getting increasingly alarmed about safety and liability.
• The UK transport secretary Heidi Alexander announced plans to bring a small number of driverless taxis to the UK in an effort to catch up with advances in the US and China. Commercial trials of fully driverless taxi services will start next spring, which is a year earlier than expected.

• IN FINANCIALS – private equity firms are finding it increasingly difficult to sell out of their investments because of the lack of IPOs. Meanwhile, Apollo has decided to delay the hiring of junior bankers following criticism by investment banks that they’re poaching all their best staff. IN INSURANCE, the High Court told insurers to pay out AerCap $1bn for their planes that got stranded in Russia when the war with Ukraine broke out. IN BANKS, shares of fintech Chime performed very well on the company’s NYSE debut, the EU is gearing up to slap sanctions on two small regional Chinese banks for allegedly facilitating banned trade with Russia by using crypto transactions and although Monzo’s doing well in the UK, it’s still got a way to go before becoming customers’ “main bank”…
• Starbucks announced the latest phase of its turnaround under new CEO Brian Niccol. It’s going to hire more baristas and use algos to work out better efficiencies for ordering. There was some debate as to whether Starbucks should sell off at least a part of its China business, which is suffering from ever-tightening competition.
• Mattel announced a “strategic collaboration” with OpenAI to “bring the magic of AI to age-appropriate play experiences”.
• Eurostar announced plans to launch new services from London to Frankfurt and Geneva in order to service rising business demand.
• The billionaire Cadogan family just announced record profits from their London estate for the second consecutive year in 2024. This reminds me of another family doing rather well at the moment – the Grosvenors!

I’m so sorry. It’s so juvenile of me but I’m afraid that this was my favourite video of the week 🤣🤣🤣!