Watson’s Weekly 19-07-2025

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…

• President Zelenskyy nominated a new PM in a major reshuffle of his cabinet and the US threatened Russia with “severe” tariffs and sanctions whilst also sending more weapons to Kyiv.

IN DEFENCE…

• Macron promised to increase France’s defence budget by €6.5bn over the next two years but you wonder where he’s going to get the money from given France’s rubbish finances at the moment.

IN TRADE & TARIFFS…

• IN TRADE – Trump announced a trade deal with Indonesia that will result in imports from Indonesia to the US attracting a 19% tariff and Indonesia buying $15bn worth of US energy exports, $4.5bn of agricultural goods and 50 Boeing jets. Trump had threatened the country with a 32% tariff last week. Brazil’s president Lula called Trump’s 50% tariff threat “unacceptable blackmail” but he’s not actually doing anything to retaliate. After all, Brazil’s in a trade deficit with the US! Meanwhile, the US Commerce Department is launching two national security investigations into imports of unmanned aircraft systems and their constituent parts along with the study of polysilicon supply chains.
• IN TARIFFS – Trump has so far raised $50bn in tariffs but now he’s threatening import taxes on pharmaceutical imports “probably at the end of the month”, starting off with a low tariff that will rise over time to “a very high tariff”. The EU’s preparing a list of potential retaliatory tariffs against the US for if Trump follows through on his 30% tariff threat that comes into force from August 1st.

IN TRUMP THINGS…

• RE JAY POWELL – Trump apparently asked some Republican members of Congress whether he could sack the Fed chief but then he had to swiftly deny this. JP Morgan chief Jamie Dimon emphasised the importance of the independence of the Fed but it seems that Trump and chums are going to fit up Jay Powell for “grossly” mismanaging an “ostentatious” refurbishment of the Fed’s HQ.
• RE EPSTEIN – the MAGA base has been split over the handling of the Epstein debacle after it appeared that there was a client list and then the FBI said that there wasn’t and it doesn’t look like Trump’s administration can sweep this under the carpet. That didn’t stop the US justice department firing Jeffrey Epstein prosecutor Maurene Comey but then Trump ordered the release of the Jeffrey Epstein testimony to try and put a lid on the whole thing.
• RE COCA-COLA – Trump randomly stuck his oar in with Coca-Cola, saying that it should use cane sugar instead of corn syrup – but then Coca-Cola pushed back saying that corn syrup gets a bad rap. You would have thought it would be a nightmare for Coke to make the switch, no?
• RE EDUCATION – data from UCAS shows that there’s been a notable uptick of American students applying to UK universities. UK universities really need to increase their overseas student intake as finances have been struggling for some time!
• RE IMMIGRANTS – companies including CoreCivic and Geo Group along with the likes of smaller companies like Management and Training Corp, LaSalle Corrections and Akima Global Services are all booming because of Trump’s desire to rid his country of illegal immigrants. Back in April, the acting director of US Immigration and Customs Enforcement Todd Lyons told some gathered military and tech companies at the 2025 Border Security Expo that he wanted America’s deportation system to be like Amazon Prime delivery “but applied to human beings” 😱! What a disgusting analogy.

IN INDIVIDUAL COUNTRY NEWS…

• IN THE US – inflation increased by the sharpest rate in five months, which suggests that Trump’s tariffs are now filtering through. Moody’s Analytics’ latest forecasts show that that the US is at its highest risk of recession in the next 12 months since the pandemic. This is all thanks to the trade war and a slowdown in real consumer spending.
• IN CHINA – China’s economy grew by 5.2% in Q2 thanks to continued strong exports outweighing weak consumer demand, property sector weakness and the effects of Trump’s tariffs. This means that the country’s official GDP growth target for the year of 5% is very much achievable.
• IN FRANCE – France’s PM Francois Bayrou clearly has a death wish as he had the temerity to suggest that France should scrap VE Day and Easter Monday as part of a broader effort to do something about the country’s massive debts. Obviously this isn’t going to go down well!
• IN THE UK – UK inflation rose unexpectedly to 3.6%, potentially making it more difficult for the Bank of England to cut interest rates but it sounds like the Bank will also very much be taking employment numbers into account when making the decision. Chancellor Reeves made a big song and dance about cutting red tape as part of a new financial services strategy but it’s questionable as to whether banks need this and the consensus seemed to be that the so-called “Leeds Reforms” were pretty inconsequential. Other than that, the government announced plans to lower the voting age to 16 in England, to bring it in line with Wales and Scotland and the FTSE100 broke the 9,000 for the first time ever this week! The index has benefited from investors shifting money into the UK from the US because of all the uncertainty Trump is causing at the moment.

IN COMMODITIES NEWS…

• OPEC kept its oil demand outlook steady and will continue to increase output.

IN ENERGY NEWS…

• The recent drought in the UK has prompted a drop in renewable power generated by SSE because hydroelectric power stations have had to be switched off due to lakes and rivers drying up.
• Tenant farmers in the UK are suffering because they’re being kicked off land by the landowners who want to get more money from tenants who are replacing agriculture with solar panels. This is now happening across the country – often in prime farmland.

IN CRYPTO NEWS…

• Central banks are still uncertain about what to do about the rise of stablecoins – whether to embrace them or recommend alternatives.
• Meanwhile, Trump made moves to open up crypto investing to US retirement funds and the House of Representatives passed legislation (the so-called “Genius Act”) to regulate stablecoins by a convincing margin. Crypto continues to make steady progress towards the mainstream!
• Crypto asset manager Grayscale filed for an IPO in the US in the latest example of a crypto firm coming to market. Trump’s embrace of the industry really seems to be emboldening the crypto community!
• Bitcoin breached $123,000 this week, meaning that it has strengthened by over 30% so far this year. The crypto feelgood continues!

IN EMPLOYMENT TRENDS…

• UK payroll employment dropped for the fifth consecutive month and wage growth slowed. Hospitality and retail jobs have fallen sharply since chancellor Reeves’s budget . That being said, the latest REC-KPMG report showed that the number of people looking for jobs in June increased at the fastest rate since November 2020.
• Agency recruiter Robert Walters had another poor quarter, blaming economic uncertainty, and it doesn’t expect global hiring trends to improve in the near future.
• Graduates are using AI to complete their degrees and they’re using them for job searches as well, while company usage of AI is reducing the number of roles available. Charity Tech First said it’s going to use more face-to-face interviews in selecting candidates because they won’t be able to use AI to cheat! Unfortunately, there’s a rise in scammers targeting grads with fake job ads, taking advantage of their eagerness to get a job.
• H&M used a “digital twin” of a real model in its latest ad campaign. If this is widely adopted there could be huge implications.

IN CONSUMER TRENDS…

• China’s consumers can’t get enough of Walmart’s warehouse-style stores, Sam’s Club, and it is one of China’s fastest-growing foreign retailers with 56 stores there – and there are plans to up that to 60 by the end of the year. It’s doing significantly better than rival Costco!
• UK spending improved over June thanks to the hot weather, according to the latest figures from the BRC. Separately, figures from Barclays showed that consumer card spending overall weakened slightly in June but discretionary spending rose a tad.

IN FINANCIALS NEWS…

• IN BANKS – US bank reporting season started in earnest this week. Bank of America, Goldman Sachs and Morgan Stanley all saw better trading revenues as their trading teams benefited from market volatility caused by Trump’s actions. JP Morgan Chase and Citigroup said that they are seeing signs that the US economy is bouncing back – “driven by the American entrepreneur and a healthy consumer” and even Wells Fargo is looking interesting as it had its asset ceiling removed recently, freeing it up to expand either in investment banking or targeting the deposit and lending businesses of smaller regional rivals. In the UK, Standard Chartered launched crypto trading for clients, the first major bank to enable spot crypto transactions. Starling Bank said that it’s now thinking of a New York listing as it moves ahead with its expansion into the US market. This is quite a shift because it has previously said that it was “very committed” to a London IPO.
• IN OTHER FINANCIALS – the FCA is going to be regulating the BNPL market and will impose tighter affordability checks on even the smallest purchases. Also, BNPL firms are now going to have to become FCA-authorised.
• Wise shares were sold off in trading after it announced disappointing revenue growth. That said, it did manage to win new customers over the quarter.

OVERALL…

• Apple promised to buy $500m worth of rare earth magnets from MP Materials as it tries to extend its US supply chain.
• Fujitsu’s proprietary generative AI platform and hybrid computing infrastructure businesses have actually been doing very well but the whole thing is being overshadowed by the ongoing Post Office scandal.

IN CHIPS…

• Nvidia got the nod from Washington to re-start sales of H20 chips to China, something that the commerce secretary, Howard Lutnick, said was part of an agreement involving rare earths and Nvidia gladly vowed to “accelerate recovery” of China sales.
• Chipmaking supplier ASML said that the impact of Trump’s tariffs wasn’t as bad as it had been expecting thanks to AI driving strong order flows and overall performance in Q2 had been good but it was a bit iffy about the outlook.

IN AI NEWS…

• A report from research lab METR found that AI’s not as useful for experienced coders as it’s cracked up to be, despite the coders themselves believing that using AI is actually helping them. Other reports by IBM, Salesforce, Carnegie Mellon University and Gartner Group have all found that the success rate of AI use in projects has been disappointing. One professor observed the phenomenon where people believe that it probably works better in other fields if it doesn’t work that well in their own – and called it “ChatGPT blindness”.
• Elon Musk is seeking another source of funding for xAI – Tesla! He’s going to put it to the shareholders.
• Separately, the Grok chatbot has launched a new “girlfriend chatbot” called Ani, a cartoon girlfriend programmed to act like a 22-year old and get spicy in conversations with users. Grok is available to users who are 12 and over and Ani is available to users of the free service. Whaaaat????
• Talking about chatbots, it seems that there’s a trend now where Russian hackers are trying to infiltrate AI models to spread propaganda. Right now, chatbots are becoming the favoured information gateway for many and people are increasingly relying on the AI summary rather than doing deeper research themselves. This could be very powerful, don’t you think??
• OpenAI said that it’s going to take a slice from online product sales made directly from ChatGPT via a new payment system that will be integrated into ChatGPT which ensures that users stay on the platform. Separately, OpenAI announced the launch of a new AI personal assistant that can be used to do things like find restaurant reservations, do the shopping and draw up lists of candidates for job vacancies. The new personal assistant doesn’t just think, it “acts” and combines AI research tools with the ability of controlling web browsers, computer files and software! Clearly this is quite intrusive so I’m not sure how well this is going to be received…
• Popular file-sharing service WeTransfer has promised that user content won’t be used to train AI following user backlash when it changed its service terms to include something to the effect that uploaded files could be used to “improve machine learning models”. Ah well, I guess they thought it was worth a try…
• AI start-up Perplexity saw its valuation hit $18bn at its latest funding round – not bad for a company that’s only three years old! The AI hype continues!

IN STREAMING NEWS…

• Netflix had a great Q2 and raised forecasts as a result. It’s had a great period of popular programming – with the likes of “Adolescence”, “Squid Game” and “Zero Day” – so it will have to keep momentum going!

IN CAR NEWS…

• Volvo Cars booked a $1.2bn charge on tariffs and costs relating to the delayed launch of the EX90 SUV.
• Jaguar Land Rover announced plans to cut up to 500 management jobs in the UK after weak sales ensued after Trump imposed his tariffs, which itself prompted a temporary suspension of exports to the US.
• Renault is edging ahead of rivals in the EV space as it’s narrowing the gap with the Chinese in terms of shortening the development cycle from four years to two. It’s doing this by deconstructing Chinese EVs, hiring Chinese engineers and doing what it can to learn as much about them from their joint venture partners.
• Stellantis announced that it is going to go all-in on EVs and hybrids and ditch plans for hydrogen-powered vehicles because the technology was not deemed to be profitable this decade.
• Carmakers are getting frustrated about the lack of clarity of the recently-announced UK subsidy scheme for EVs. Customers have been able to apply to take advantage of the new £650m scheme since Wednesday this week but carmakers are going to have to wait for a few weeks before they know which of their models are eligible.

IN CHARGING NEWS…

• The UK government announced £63m in funding for the UK’s EV charging infrastructure. This is all part of the effort to get people into EVs (which the subsidy scheme also plays a part in).
• Separately, Britain’s biggest independent petrol station operator, Motor Fuel Group (MFG), says that it’s on target to install ultrarapid EV charging hubs at 500 sites by 2030. It’s increasing the current pace of installation.

IN DRIVERLESS NEWS…

• Uber announced that it is buying 20,000 self-driving cars from Lucid after taking a stake worth $300m in the company. It will use the vehicles as driverless taxis that will be deployed over the next six years, starting with a major US city next year.

• IN RETAIL – M&S announced an exclusive partnership with David Jones department stores in Australia and online in an attempt to revitalise its overseas business. B&M put in a reasonable Q1 performance in terms of sales but ongoing concerns about its outlook continued to overshadow the shares as margins continue to be squeezed.
• IN LEISURE – EasyJet is on track to achieve record profits for the full year but there will be potential turbulence ahead in the form of French air traffic control strikes, higher fuel prices and the increasing tendency of people booking later, meaning that future visibility is more opaque. Fellow budget airline Wizz Air has decided to ditch expansion in the Gulf market because of “geopolitical instability” and is in talks with Airbus to rejig their order for some aircraft.
• IN PHARMA/HEALTH-RELATED NEWS – Chinese biotech shares are enjoying a major rebound thanks to new innovations and cheaper research costs leading to the development of cancer drugs that are as effective or better than existing western treatments. Meanwhile, measles cases more than doubled between 2023 and 2024 to levels not seen since 1997, according to the latest figures from the WHO. It has blamed vaccination rates that are yet to recover to pre-pandemic levels.
• Diageo’s CEO stepped down following the company’s lacklustre performance under her tenure. The next person will have a lot of issues to address!
• The self-styled “Amazon of guns”, GrabAGun, misfired on its stock market debut, dropping by 24%. BTW, I just had a look on the website. This is an absolutely shocking company!!!

My fave video this week was the one with the bloke trying to copy an influencer’s way of wearing a shirt! Brilliantly done!