Watson’s Weekly 05-07-2025

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.

IN WAR NEWS…

• Russia hit Ukraine with a massive attack as Russia turned the screws and Ukrainians cried out for more help with defence.

IN TRADE & TARIFFS…

• The G7 tried to strike a deal with Trump to avoid “revenge” taxes.
• Trump threatened to raise tariffs on Japan as we get closer to the end of the 90-day “ceasefire” of “revenge taxes” which is due on July 9th and he kept the threats coming – this time pushing them to accept American rice.
• The president also struck a trade agreement with Vietnam, but still kept a 20% tariff on the country whilst forcing them to give American products more access with zero tariffs. I guess that Vietnam will be relieved that it’s not going to be the 46% that Trump had previously threatened.
• The EU blocked Britain’s attempt to join the Pan-Euro-Mediterranean (PEM) convention trade agreement, saying that it would involve rewriting the terms of the existing post-Brexit EU-UK trade deal.
• The UK imposed a strict limit on steel imports following pressure from British steelmakers. This is intended to fend off the potential dumping of cheap steel in our market that was destined for America.

IN TRUMP THINGS…

• He said that he’s found a group of “wealthy people” to buy TikTok, but he didn’t say who and added that any deal would still have to get approval from ByteDance and the Chinese administration.
• The Trump/Musk feud blew up again due to Musk’s opposition to the BBB. Trump responded by semi-threatening to deport Musk and send him back to South Africa.

IN COUNTRY NEWS…

• IN THE US – To cut a long story short, the House of Representatives approved Trump’s “big, beautiful bill” with some amendments. As a result, there’s an enormous amount of money going into border security (it’s almost double the UK’s entire defence budget!), fossil fuel companies are going to well while companies involved in the electro-tech revolution are generally going to suffer. There’s a lot of detail here but Trump got what he wanted and it looks like it’s working for him at the moment. We’ll just have to wait and see whether his measures will have as much of an effect on inflation as everyone says they will.
• In the meantime, Trump continued his personal attacks on Fed Chairman Jerome Powell to get him to cut interest rates and it sounds like Powell is now open to the possibility of cutting them at the next Fed meeting.
• IN CANADA – the country scrapped the digital tax just hours before it was due to come into force in order to get Trump back to the negotiating table. He had terminated trade talks abruptly last Friday over the implementation of this tax.
• IN CHINA – manufacturing activity shrank thanks to the effects of the trade war filtering through.
• IN THE UK – there was a nervous build-up ahead of the expected announcement of welfare reforms that were supposed to deliver £5bn of cost savings but in the end Starmer had to cave to pressure on the bill to the extent that no cost savings were going to be made. After pointedly refusing to support his embattled chancellor in a torrid Commons performance, he later came out in support of Reeves, saying that she’d be in the position for “a very long time to come”. Given the fiscal hole left by this lack of cost savings, speculation increased about which taxes would be increased in the autumn Budget to make up for it.

IN COMMODITIES…

• IN SILVER – we’ve seen that this shiny metal is also having a decent run as well as gold as more investors see it as a safe haven asset in a world of Trump-driven uncertainty and wars. Its use in a growing number of industrial applications means it is becoming a double-play on being a safe haven asset and a reflection of growth sectors.

IN ENERGY NEWS…

• IN RENEWABLES – the newly-passed BBB is going to punish a lot of clean energy companies that used too many Chinese components.

IN CURRENCY NEWS…

• THE DOLLAR – the greenback has had its worst H1 performance in over 50 years against a basket of currencies as Trump’s tariffs have prompted a sell-off to the extent that it’s now fallen by its steepest rate in the first six months of the year since 1973!

IN CRYPTO NEWS…

• Since South Korea’s newly-elected president said that he’d allow crypto-backed assets to be backed by the Won, companies that would directly benefit, like Kakao Pay and LG CNS have seen their share prices more than double and rise almost 70% respectively this month. Retail investors have been particularly keen to jump on the stablecoin bandwagon.
• London-listed companies are now increasingly investing in bitcoin as a way to bolster their share prices! They are all trying to copy billionaire Michael Saylor’s company Strategy whose valuation has boomed by almost 400% since August 2020 when it announced that it would plough billions of dollars into bitcoin.

IN MARKETS NEWS…

• Hong Kong’s stock exchange has been outperforming mainland China’s by the biggest margin since 2008! This has been thanks to rising investment flows from the mainland and thirst for tech companies such as Alibaba and Tencent which aren’t listed on the mainland. This has probably helped power the IPO boom as Dealogic numbers say that listings on the Hong Kong Stock Exchange have raised $13bn so far this year which means that it is behind only the NASDAQ and ahead of the New York Stock Exchange’s performance!
• UK bond markets recovered after Reeves’s wobble in the Commons this week. They had been worried that she’d lose her job and that someone new would take over, which would have injected a bit of uncertainty. Starmer eventually voiced support, so everyone calmed down.

IN BUSINESS TRENDS…

• POWER – US energy groups are spending more on building power plants and transmission lines so that they can service the demand from data centres. As if to illustrate the point, Google announced a commitment to buy 200 megawatts of electricity from Commonwealth Fusion Systems’ planned power station in Virginia in the 2030s. In the meantime, smelters (who obviously use a lot of electricity) say that they’re finding it hard to compete with Big Tech companies because they’re willing to pay more for power.
• SENTIMENT – the latest BCC quarterly survey showed that business confidence hasn’t yet recovered from the April tax and wage rises but then the latest services sector PMI showed that output hit a ten-month high thanks to more new orders, so that’s a good sign.

INVESTMENT NEWS/TRENDS…

• M&A – Home Depot agreed a $5.5bn deal to buy building products distributor GMS. It’ll become part of Home Depot’s SRS Distribution subsidiary. Is this a sign of more M&A to come??
• IPO – aptly-named GrabAGun announced plans for a flotation on the NYSE in a few weeks’ time. It’s going to do this via a SPAC-backed merger. The “Amazon of Guns” even has a finance option called “Shoot now, pay later” 🙄.

FINANCIALS NEWS…

• BANKS – US banks announced dividends and share buybacks after they passed the Fed’s annual 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. In Europe, Santander announced that it would buy TSB for £2.65bn and this is likely to mean branch closures because of overlaps between TSB and Santander branches.
• PERSONAL FINANCES – the UK launched its biggest financial advice shake-up in over a decade to help British savers get access to “targeted support”. The FCA reckons that around 7 million British adults have over £10,000 in cash savings and no investments and that 13.5m to 30.6m could benefit from such support. 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

IN EMPLOYMENT TRENDS…

• US jobs growth came in stronger than expected in June and unemployment fell from 4.2% to 4.1%, so it sounds like Trump’s got more to boast about at the moment!
• CEOs are, with increasing frequency, saying that AI is unequivocally going to take jobs. CEOs from Ford, JP Morgan, Amazon and Anthropic are among those who have already said this in public – and then we heard that Microsoft plans to cut 4% of its workforce as CEO Satya Nadella recently said that up to 30% of the company’s code was now being written by AI bots!
• The number of robots in Amazon’s warehouse look set to exceed the number of humans for the first time as the number of robots used by Amazon has increased fivefold since 2020.
• The latest research from Adzuna shows that the number of entry-level roles has dropped by 31% since the launch of Chat GPT in November 2022. The fall has been particularly sharp in retail, logistics, warehousing and administration.
• Top AI researchers and engineers are in massive demand at the moment and are attracting incredible signing on bonuses and pay packages generally! For instance, Sam Altman recently said that Meta had promised $100m sign-on bonuses to some of its most high-profile AI engineers!
• New rules on work-related migration say that work visas will be restricted to graduate-level jobs with a number of 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.

IN CONSUMER TRENDS…

• Middle East tensions are likely to push up food prices as supply chains are disrupted. About a third of urea exports, 44% of sulphur exports and almost 20% of ammonia exports travel through or are produced in countries on the west of the Strait of Hormuz.
• UK disposable income fell at its steepest rate since 2023, according to the ONS and dry weather pushed up UK food inflation as harvests were hit. The Met Office even said that this spring was the warmest and sunniest spring in the UK ever recorded!
• It was interesting to see that a survey by IWSR, a market researcher for the global beverage industry, which found that 73% of Gen Z respondents out of the 26,000 people across the 15 biggest alcoholic drinks markets surveyed had consumed alcohol in the last six months versus 66% two years ago. This goes against everything we’ve been hearing about how younger people are drinking less. Is there hope yet for the likes of Diageo, Pernod Ricard and Heineken??
• IN PROPERTY – Mortgage approvals increased for the first time in four months and UK house prices fell as there was a lull in activity after the frenzy going into the April stamp duty deadline. There’s a lot of economic uncertainty at the moment but mortgage rates are heading down, lenders are trying to lend and we’re in peak selling season now – so if this month is a bit of a dud then it could be a bad sign. Another interesting trend shows that first-time buyers are increasingly turning to regional cities as places to live, reversing the “escape to the countryside” trend of lockdown.

IN RETAIL NEWS…

• IN GROCERIES – Asda announced plans to overtake Primark as the UK’s biggest retailer! Asda’s not-so-secret weapon here is George. This sounds like a great idea – and if it garners more footfall then you’d think that grocery sales will rise as well! M&S is going to be fully up-and-running after the hacking attack within the next four weeks and the company also announced a £300m store revamp across the country. It sounds like things are going in the right direction for both Asda and M&S!
• IN APPAREL – Shein got hit with a €40m fine in France for misleading consumers on price cuts and environmental commitments following an 11-month investigation.
• ON THE HIGH STREET – WH Smith has had to accept £12m less than promised for its high street business from PE buyer Modella Capital. Modella pushed for better terms after a period of “softer trading”. Watches of Switzerland announced record revenues but it warned that profit margins would be hit by US tariffs. Trading seemed to be powered by demand for Rolex watches and US growth. Smythson was bought by PE firm Oakley Capital from Tivoli Group. Oakley has a stable of high-profile brands so this could prove to be quite interesting!

IN CONSUMER GOODS NEWS…

• Nike’s share price boomed 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. Nike’s spike was down to investor belief!

IN RESTAURANTS NEWS…

• Greggs had a disappointing trading update as the warm weather has killed sales of their pastries. It could even impact its full year profits.

IN TECH NEWS…

IN AI…

• Getty Images has accused Stability AI of bringing its brand into disrepute by allowing its watermark to appear on pornographic images. Stability AI had been aware of its AI producing watermarked explicit images and just carried on regardless. If Getty is successful, this could have big implications for tech companies because it would mean that even if a model was trained abroad, if it breached copyright and was available here, it would be unlawful.
• Microsoft announced an AI diagnosis system that it says correctly identifies ailments up to 86% of the time versus just 20% on average (😱!) for British and American physicians! Could this herald a major shift for this profession??
• OpenAI signed a $30bn data centre deal with Oracle – one the of the biggest cloud agreements ever signed for AI! This represents a major expansion of OpenAI’s “Stargate” data centre project. Funnily enough, Oracle’s shares hit a record high on the news.
• Swedish AI start-up Lovable approached a $2bn valuation in its latest funding round and provides the latest example of the increasing investor rush to “vibe-coding” companies.

IN CHIP NEWS…

• Nvidia’s top brass have been cashing in on the company’s popularity by selling over $1bn-worth of shares over the last 12 months in previously-agreed share sale plans. Over $500m of that was this month as the company’s share price hit a record high.
• The US government has now removed restrictions imposed in May on chip software makers on sales to China. The ban was put in place in response to China restricting the export of rare earths. This may ease the proposed $35bn merger between Synopsys and engineering software developer Ansys because Chinese regulators had been dragging their feet.

IN OTHER TECH NEWS…

• The UK government is looking at how best to sell anonymised public data but pricing this is difficult because the information has different values to different people. It could go down the subscription route or perhaps set up some kind of exchange.

IN MEDIA NEWS…

• IN ADVERTISING – Channel 4 said that it’s 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.

IN SOCIAL MEDIA NEWS…

• Children face lifetime social media bans for sharing classmates’ nude photos and videos under proposals from Ofcom. Platforms would have to make sure that users couldn’t just sign up under a new name and carry on.
• WhatsApp wants to allow businesses to send WhatsApp voice notes to users as part of its push to introduce adverts. This sounds like a good idea strategically for Meta, but it will have to be very careful about the implementation so as not to alienate users IMO.
• Bumble’s CEO was caught in employee backlash as they reacted to a 30% cut in the global workforce, with the axe falling particularly heavily in London. Founder Whitney Wolfe Herd said that “dating apps are feeling like a thing of the past”. Sounds ominous!

IN AUTOMOTIVE NEWS…

• IN THE US – car sales eased in June as the “Trump bump” faded. Buyers had rushed to beat the 25% tariffs on imported cars and trucks but new vehicle sales fell in June to their slowest pace in a year. Tesla sales continued to go in reverse as global deliveries fell by 13.5% in Q2 and it seems that Musk is focusing more on self-driving taxis and humanoid robots.
• IN THE UK – the latest figures from the New AutoMotive consultancy showed that 25% of new cars registered in June ran only on electric batteries. Electrification continues to gather pace! Meanwhile, Lotus decided to reverse its plan to shut down its Norfolk factory following offers of government support. On the other hand, Nissan announced that it would cut about 4% of the workforce at its Sunderland plant as demand for its EVs continue to slide. On the plus side, a Nissan spokesman said that “Our Sunderland plant remains at the forefront of our electrification strategy”.
• IN FLYING TAXI NEWS – US air taxi start-up Joby Aviation completed test flights in Dubai. Its air taxis is designed to transport a pilot and up to four passengers at speeds of up to 200mph. Baby steps to being commercially available??

• AstraZeneca’s CEO threatened to shift the company’s listing from London to New York, which is spooking out investors given that it’s the UK’s biggest company, but it could just be the CEO poking the government for its ongoing NHS rebate negotiations.

My fave video from this week was the one about how to cool your car down in hot weather! However, Jake Schogger told me he tried this and it didn’t work !!! I have yet to try it because my wife has the car this week (she was away for work)…have you tried it? How did it work out??