Wednesday 02/07/25

US Senate passes Donald Trump’s ‘big, beautiful’ tax and spending bill (Financial Times, Lauren Fedor, Myles McCormick and Stefania Palma) shows that Trump managed to get his landmark tax and spending legislation through the Senate with 51 votes to 50 after JD Vance had to cast the tiebreaking vote. The bill now goes to the House of Representatives where it could still come up against stiff opposition ahead of the July 4th deadline. Is Donald Trump’s ‘big, beautiful bill’ a political curse for Republicans? (Financial Times, Lauren Fedor and James Politi) suggests that it’s still going to be difficult to get it through – and then it seems that the American people themselves don’t seem to be convinced. Opinion polls reflect disquiet because they don’t like the fact that the bill will extent tax cuts for rich people whilst at the same time cutting healthcare and social programmed for poor people. A Morning Consult survey conducted over the weekend showed that 50% of voters were opposed while 36% supported it. The cuts to Medicaid could freeze 12m citizens out of access to health insurance over the next few years. Will this come back to bite the Republicans in the midterm elections??

Trump continued to be in feisty form as Donald Trump threatens to raise tariffs again on Japan (Financial Times, Aime Williams and Leo Lewis) highlights an escalation of trade rhetoric days before the 90-day “reciprocal” tariff suspension comes to an end (July 9th) and it looks like he may get the interest rate cut he’s looking for in Jerome Powell does not rule out cut in US interest rates this month (The Times, Mehreen Khan) as the Fed chief said that an interest rate cut in July was neither “on or off the table”. Powell maintained that any decisions will be made by the Fed “in a completely non-political way”.

Then in Trump and Musk’s feud blows up again with threats of Doge and deportation (Financial Times, Nick Robins-Early) we see that the bromance has taken another turn for the worse as Musk’s sustained criticism of the BBB stung the president into semi-threatening to deport Musk to South Africa whilst suggesting that he could cut government subsidies to Musk’s companies. Musk says that the BBB will “bankrupt America” and he has threatened to form his own “America Party”. * SO WHAT? * There seems to be so much BS flying around at the moment but, as I’ve said before, I think that both men ultimately need each other. The problem is that Musk is so vocal about his opposition to the bill that goes to the very core of Trump’s presidency that it is getting increasingly difficult for them to be able to find common ground.

Back home, Starmer guts UK welfare reforms to avoid Commons defeat (Financial Times, Anna Gross, George Parker, David Sheppard and Jim Pickard) shows that he managed to get his own controversial bill through Parliament – but only by watering it down significantly. The much-diluted bill eventually got parliamentary approval yesterday evening. It now looks like it could actually lose the government money! The original plan was to generate net savings of £5bn! It all centred around the initial intention to tighten eligibility criteria for the personal independence payment (Pip), which is the main disability payment – but this ended up being wildly unpopular. * SO WHAT? * This is a bad look for the government and will embolden MPs to push back on any other policies that Starmer might want to introduce. What a turnaround for someone who came into office surfing a massive wave of optimism. He’s going to need a succession of wins pretty darn quickly now in order to salvage any credibility…

UK visa revamp allows lower-skilled office workers to come to Britain (Financial Times, Delphine Strauss) highlights new rules laid out in Parliament yesterday regarding work-related migration. Work visas are, as a default, going to be restricted to graduate-level jobs although there will be exceptions for a range of lower-skilled office jobs on a “temporary shortage list” of occupations that still qualify for visas until the end of 2026. The Home Office said that 111 roles that had previously been eligible for visas would no longer qualify for them. * SO WHAT? * Clearly, the devil is in the detail here and employers are going to have to have a good look at what the new rules are to see whether they are going to have to change their recruitment strategies…

Meanwhile, AI talent wars lead to superstar salaries for top tech staff (Financial Times, Melissa Heikkila, Clara Murray and Cristina Criddle) shows that top AI researchers and engineers are in huge demand at the moment and employers are doing as much as they can to

hang on to their best talent. Sam Altman recently said that Meta had promised $100m sign-on bonuses to some of its most high-profile AI engineers! Some top AI engineers are getting over $10m a year whereas pay packages generally average out at anywhere between $3m and $7m – a 50% jump from 2022. * SO WHAT? * Interestingly, the talent pool seems to be pretty well-covered in the US and now companies are looking further afield to recruit in Europe. What a time to be alive if you’re an AI expert!

Then in Robots to overtake human staff in Amazon warehouses (Daily Telegraph, James Titcomb) we see that the number of robots in Amazon’s warehouses are set to exceed the number of humans for the first time. The number of robots used by Amazon has increased fivefold since 2020. I guess this all supports what CEO Andy Jassy said recently about the rising use of AI leading to fewer “corporate” jobs.

In US banks announce big shareholder payouts as Fed eases stress tests (Financial Times, Akila Quinio and Joshua Franklin) we see that Wall Street’s biggest banks announced a slew of dividends to shareholders and share buybacks yesterday after the Fed confirmed that 22 banks successfully passed yearly “stress tests” that judge their ability to withstand potential economic and market crises. These tests were the first ones since the Fed loosened the severity of its testing scenario. * SO WHAT? * Banks are obviously loving the sound of a more relaxed regulatory regime after years of restrictions. It sounds like there’s going to be a real freeing up of capital here, so in addition to all this share “buy-backery” and dishing out of dividends perhaps we’ll see some of that industry consolidation that everyone’s been talking about…

Meanwhile, Santander is buying TSB for £2.65bn (The Times, Robert Miller and Ben Martin) shows that Sabadell is offloading TSB after all the recent drama, for the sum of £2.65bn in cash. It won the bidding ahead of Barclays. Sabadell bought TSB from Lloyds Banking Group for £1.7bn back in 2015. The sale to Santander is expected to complete in Q1 of 2026. * SO WHAT? * I think that this is a pretty interesting move from Santander, which has been subject to speculation that it wanted to ditch its UK operations. Santander says that the acquisition of TSB reflects its

commitment to the UK, but I guess you could say that this may offer an even juicier proposition for a potential acquiror further down the line…

Following on from what I said yesterday about cash ISA allowances and pension pots, FCA tries to warm up the investment-wary masses (Financial Times, Lex) highlights reforms by the FCA for the financial advice industry. There is a need for this because just 9% of UK adults received financial advice last year, according to the FCA, and there are currently over 7m people with over £10,000 of investible assets that are entirely held in cash. The 2012 Retail Distribution Review was supposed to improve advice standards, but it resulted in customers not getting any sort of guidance because advisors subsequently priced many out of the market. The new guidance means that firms will be able to offer more detailed guidance with less red tape. Better AI could also help to provide more tailored advice at a cheaper cost * SO WHAT? * Banks, such as Lloyds, and wealth managers like St James’s Place and platforms such as AJ Bell will, in theory, be able to battle for market share of a bigger pie IF people take advantage of this new push to invest – but it’s going to take some convincing! 

In a quick scoot around some of today’s other interesting stories, Car Sales Cooled in June as Trump Bump Fades (Wall Street Journal, Sharon Terlep) cites the latest car sales numbers from the likes of GM, Ford and Toyota. They showed that the initial “Trump bump”, where consumers rushed to beat Trump’s 25% tariffs on imported cars and trucks, has died down. New vehicle sales fell in June to their slowest pace in a year. * SO WHAT? * Given a combination of people bringing forward car purchases to beat the tariffs and an uncertain economic outlook, it’s difficult to see any near-term positive catalysts here. Sales started to slow down in mid-May and this then leached into June.

Fixing up Nike is a marathon, not a sprint (Financial Times, Lex) considers last week’s investor euphoria of sorts where Nike’s share price went up despite a pretty rubbish set of results. So far, the “new” CEO has cut down on inventory, improved relationships with Nike’s wholesale retailers and prioritised product development for sports athletes. * SO WHAT? * Elliott Hill has done a good job of getting all the bad news out there and is making concrete progress on a number of fronts. Nike has come back from the dead before and investors seem to be giving Hill the benefit of the doubt when it comes to believing whether he can pull this off. It will take time, though.

WhatsApp plans to allow businesses to send voice notes to users (The Times, Louisa Clarence-Smith) highlights plans to allow businesses to send WhatsApp voice notes to users as part of its push to introduce adverts. Meta announced yesterday that it is introducing functionality that will enable all users to call large businesses on WhatsApp or ask them to call back. There will also be the ability to continue a conversation via messaging following the phonecall. Businesses will also be able to send voice notes to customers in “the near future” and do video calls. * SO WHAT? * This sounds great and all – particularly when you consider that WhatsApp has three billion users – but unless it starts to put ads on parts of WhatsApp that people use the most – I don’t think it’s going to make as big a splash as the company hopes. At the moment, you’ve got to  look on your “Updates” tab. It seems to me that the company will be pushing this as a “soft-launch” with a view to putting it all where everyone’s going to actually see it!

AstraZeneca boss ‘wants to shift stock market listing to US’ (The Guardian, Jasper Jolly) heralds another potential escapee of the LSE as its CEO has reportedly said that he’d be up for shifting the company’s listing from the UK to New York. * SO WHAT? * At the moment, the government is negotiating with the pharmaceuticals industry over rebates that pharma companies have to pay on sales of new medicines to the NHS so maybe the CEO is using this threat to get a bit more leniency. AstraZeneca can legitimately argue that the US is a very attractive market and it is somewhere that the CEO wants to target “as part of our 2030 ambition”…

Meanwhile, UK house prices fall as stamp duty hits demand (The Times, Jessica Newman) cites the latest Nationwide figures which show that house prices dropped more steeply last month than they did since February 2023 as the rise in stamp duty costs hit demand. * SO WHAT? * At the moment, there are concerns about the economy – and now the prospect of tax rises to come in the Autumn Budget – but decent wage growth and falling mortgage rates will no doubt make it tempting for many to buy property. Given that we’re right in peak selling season right now, I think that if this next month is weak as well, it could be a sign of big problems ahead.

M&S shops get £300m upgrade as part of cyber attack recovery (Daily Telegraph, Hannah Boland) shows that M&S is most definitely on the mend after its hacking problem as its CEO said that the whole of its online capability will be restored within the next four weeks. In addition to this, it announced plans to spend £300m on revamping almost 40 stores across the country to win shoppers back. The CEO said that the hope is that within 18 months, “half of our store estate will be new or renewed”. It’ll be interesting to see whether this has a detrimental effect on Waitrose…

Elsewhere, Smythson sold to private equity firm Oakley Capital (The Times, Isabella Fish) shows that the 138-year old leather goods maker and stationer has been bought by European private equity firm Oakley Capital from Tivoli Group, which has owned Smythson since 2009. Oakley already owns Alessi, Globe-Trotter and Connolly. Smythson has been suffering for some time so this will be welcome respite!

Then in Channel 4 to offer AI-generated ads on its streaming service (The Times, Emma Powell) we see that Channel 4 is going to offer AI-powered ads on its online streaming service using tech provided by Streamr.ai and Telana in an effort to get business from smaller and mid-sized companies who wouldn’t normally be able to afford TV advertising. It’s in the testing stage at the moment, but hopes to have a broader launch later this year. * SO WHAT? * I think that this is an interesting response to dwindling TV ad revenues. I guess this way you can generate a broader volume of business without damaging your margin too much.

This onion crisp recipe looks quite tasty so I think I’ll have to give it a go! Re the seasonings, I’m thinking paprika, chilli flakes (possibly cumin?? I know that might be a bit controversial but I think it might work) as well as salt and pepper, but I guess you could put anything on there! Maybe sour cream and sweet chilli dip to go with that??