Watson’s Weekly 16-08-2025

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…

• Trump and Putin scheduled a meeting for Friday in Alaska and there was talk that Russia would “propose a West Bank-style occupation of Ukraine”, something that Baltic country leaders warned against. Trump has no Russia specialists advising him and the bulk of what’s been done so far is via his mate Steve Witfoff, who is a real estate developer. Putin, on the other hand, is an old campaigner noted for his skill at negotiation.
• France, Germany and the UK indicated their willingness to reimpose sanctions on Iran unless the country engages in negotiations with the US and the international community about its nuclear programme by the end of August 2025.

IN DEFENCE NEWS…

• Europe continues to up production of arms and defence equipment and the Porsche holding company is looking to expand into defence and related sectors via a specific fund while Rheinmetall is already doing well from the huge increase in defence spending.

IN TARIFF NEWS…

• Trump announced an additional 90-day pause on China tariffs, presumably because the Chinese have a very strong negotiating position! The deadline is now November 10th.

IN TRUMP THINGS…

• The president took control of the city’s police force and deployed 800 National Guard troops in Washington, citing “a public safety emergency”. He felt compelled to do this because of what he described as “a situation of complete and total lawlessness”.
• In Trump’s ongoing campaign against current Fed chief Jay Powell, he said that he has “three of four” candidates in mind to replace him and hinted that he’d name the candidate before the end of Powell’s tenure, essentially rendering the Fed chief powerless. If the president installs “an inflation nutter”, risks of higher inflation and a weaker dollar increase.
• Staying on the subject of Trump picking people for key roles, he’s selected “highly respected” economist EJ Anotni from the rightwing Heritage Foundation thinktank to replace the head of the Bureau of Labor Statistics that he fired recently.
• Trump softened his stance on the Intel chief, who he initially said should be sacked for his links to China. Intel’s share price jumped as the market got excited about the prospect of Intel doing some kind of deal with the government.
• Trump’s move to open up 401k retirement plans to crypto and private equity investments got closer as the Labor Department rescinded 2021 guidance that had prevented it but it is worth saying that with greater potential rewards come greater potential risks.
• Companies involved in executing Trump’s anti-immigration measures are doing very well. Palantir, Geo Group and CoreCivic are just some who are making a lot of money – and they’re probably going to make more given that the BBB gave ICE $45bn to play with…

IN INDIVIDUAL COUNTRY NEWS…

• IN THE US – inflation held steady in July but then US producer prices showed an unexpected jump as the impact of Trump’s tariffs fed through to higher costs of goods and services. Is this just the beginning of the tariff impact coming through?
• IN THE UK – we heard that exports to the US fell to their lowest level since 2022 as almost a third of UK businesses that export to the US said that they’d been affected by US tariffs and are now bracing themselves for higher costs. UK GDP grew by 0.3% in the three months to June, which was  worse than the previous quarter but not as bad as everyone had been expecting. The chancellor got some good news this week in that the latest HMRC data showed that fears of a mass exodus of non-doms proved to be unfounded while a report from the Centre for the Analysis of Taxation suggested that an IHT clampdown won’t prompt a mass sale of family farms – although a separate report by Arla said that 13% of dairy farmers said they’d quit within a year, putting the nation’s food security at risk. Meanwhile, UK prices for Eli Lilly’s Mounjaro are going to rise by up to 70% from September 1st as pharma companies bend to Trump’s demand that drugmakers should cut prices for American patients and put prices up in other countries.

IN COMMODITIES NEWS…

• OIL – The likes of BP, Chevron, ExxonMobil, TotalEnergies and Shell are among those now putting more effort into seeking out new oil and gas reserves as momentum for the clean energy transition wavers as momentum for fossil fuels gathers pace.
• RARE EARTHS – Chinese authorities are now deliberately limiting export volumes of rare earths to prevent stockpiling by western companies. It clearly wants to maintain its massive advantage here!
• GOLD – Trump confirmed that gold imports will not face US tariffs, clearing up some initial confusion about whether they’d be taxed or not.
• BUTTER – prices are at all-time highs currently – which is bad news for bakers and particularly those who make croissants!!! This is down to falling milk supplies and the tendency for dairy processors to prioritise cheese-making (because the by-product is whey protein, for which there is huge and rising demand!).

IN ENERGY NEWS…

• NUCLEAR – Energy developers Terra Innovatum, Terrestrial Energy and Eagle Energy are looking to raise over $500m via mergers with SPACs to accelerate the development of their SMRs.
• WIND – Ørsted announced poor results, which pushed its valuation down to all-time lows. The value of its US projects has plummeted, which isn’t going to help the prospects for its $9.4bn equity raising. Meanwhile, research from energy analytics firm Montel shows that Scottish wind farms were paid not to produce 37% of their output over the first half of this year because of grid constraints. This just highlights shortfalls in our grid system! Shocking!!!
• GENERALLY – Tesla is applying to launch a household electricity supplier in GB sometime in the next few months as it has formally applied to Ofgem for an electricity supply licence. If granted, Tesla would be able to provide electricity to domestic and business premises in England, Scotland and Wales next year! It is expected to be branded Tesla Electric.

IN CRYPTO NEWS…

• Bitcoin reached a new high of $124,480 but then pulled back on signs of strong US inflation. Still, Bitcoin’s value has increased by 26% so far this year.
• Trump’s World Liberty Financial is going to set up a crypto treasury business with blockchain company ALT5 Sigma Corporation, which trades on the NASDAQ. Crypto treasury companies sell debt or shares and use the money to buy crypto.

IN BUSINESS TRENDS…

• The latest data from BDO shows that UK manufacturers’ confidence hit a nine-month high in July thanks to Trump’s tariffs not being as bad as manufacturers had originally thought.

IN INVESTMENT NEWS…

• The latest Bank of America survey showed that investors are buying up emerging market stocks because they are being seen as undervalued. On the other hand a whopping 91% of fund managers said that US equities were overvalued.
• In the UK, seven UK local authority pension funds look set to combine assets with a bigger fund manager called Border to Coast. This is all part of a broader plan by the chancellor to create fewer managers with bigger financial clout.
• Saudi Arabia’s PIF made an $8bn writedown on the value of its holdings in gigaprojects – including Neom! Its finances are being hit by cost overruns and weaker oil prices. The PIF owns five gigaprojects which are part of wider plans to diversify the kingdom’s income away from oil.
• IN M&A – China is creating the world’s biggest shipbuilder by merging two state-controlled shipbuilders – China State Shipbuilding (CSSC) and  China Shipbuilding Industry – in a deal worth $16bn. The enlarged company will have a single listing on the Shanghai Stock Exchange. Brussels approved the €4.1bn acquisition of Just Eat Takeaway by Prosus, Centrica bought a £1.5bn gas terminal – Europe’s biggest gas import terminal – in a sign of ongoing commitment to fossil fuels (well it is a gas company!) and Canadian t-shirt maker Gildan got closer to buying US underwear maker Hanesbrands.

IN EMPLOYMENT TRENDS…

• The latest KPMG-REC monthly survey showed that falling demand for workers is hitting wages. Vacancies also dropped at their fastest pace since April last month.
• The latest data from the ONS showed that UK employers have been cutting back on bonuses and hiring over the last few months thanks to economic uncertainty. This was also reflected in a dramatic fall in profits at agency recruiter PageGroup.

IN BANKS NEWS…

• HSBC voiced concern about its commercial property loan book as Hong Kong’s prime office rents have dropped by over 20% since 2022 and vacancy rates have hit record highs of around 19%! It said that 73% of its commercial property loans are risky. This figure was less than 30% just a year ago!
• Santander became the latest one to relax lending rules to allow homebuyers to get a bigger mortgage. Now applicants earning £100,000 or more can now borrow up to 5.5 times their income with a deposit or equity of up to 10% of the home’s value!

IN INSURANCE NEWS…

• Admiral has decided to put aside £50m to settle claims that it undercompensated customers for car claims. It’s not the only insurer to do this but it’s the first one to acknowledge its shortcomings and others are expected to follow.

IN FINTECH NEWS…

• Klarna’s loss has widened over Q2 ahead of its much-anticipated New York listing. Klarna is keen to tap into current market feelgood – and who could blame it! It has been trying to move away from its BNPL roots to morph into becoming a neobank offering debit cars, interest-bearing loans and the whole shebang.

IN CONSUMER TRENDS…

• The latest BRC-KPMG figures highlighted a better-than-expected July for spending as clothing and homeware sales were up. A similar conclusion was drawn from the latest figures from Barclays as shoppers spent on affordable luxuries.
• Consumers were not, however, spending money on home improvements according to Marshalls, a specialist in pavements, pavoirs and roofing. The company announced an unexpected profit warning last month.

IN RETAIL NEWS…

• River Island managed to avoid collapse as a High Court judge approved its restructuring plan.
• Topshop looks like making a high street comeback as there are plans for new physical stores. Asos bought it back in 2021.
• Troubled fashion accessories retailer Claire’s has appointed administrators in UK and Ireland just a week on from its parent company filing for bankruptcy in the US and Canada. This is obviously a great shame for those involved.

IN CONSUMER GOODS…

• Birkenstock put in a strong sales performance over the quarter, which possibly casts doubt over Crocs’ doom and gloom last week when it said that the “ugly shoe trend” looked like it was coming to an end.

IN LEISURE NEWS…

• IN TRAVEL – Tui said that tighter border rules are putting European visitors off going to the US. Despite this. the company posted market-expectation beating pre-tax profits and was confident enough to upgrade its full-year profit guidance.
• IN RESTAURANTS – Pasta Evangelists announced plans to open 100 new restaurants, creating up to 1,500 jobs. Will this become the next “Jamie’s Italian” or “Carluccio’s”?? The world’s biggest pasta producer, Barilla, has a majority stake in the company (which it bought for £40m) so the restaurant chain is certainly well financed.
• IN GAMBLING – the CEO of gambling company Entain whinged about punters going to the black market to gamble if the government taxes it too much. I don’t think anyone would be surprised about this reaction!

IN CHIP NEWS…

• Nvidia and AMD are going to pay away 15% of the revenues they get from selling chips to China to the US government as part of the deal for them to keep selling into the China market. Trump also sounded more open to the idea of Nvidia selling more advanced AI chips to China but Beijing is not so keen and is asking tech giants like Alibaba and ByteDance to justify why they’re using Nvidia chips and not domestic alternatives.
• Although Apple managed to avoid a 100% chip tariff, it did so by pledging a huge chunk of money to increase production in the US. However, smaller vendors and suppliers just don’t have the same ability to do this so they look like they’ll be hugely impacted because they don’t have the same ability to promise huge investment in US production.

IN AI NEWS…

• South Korean AI start-up Upstage has caused a stir because it has produced an LLM that performs on a par with more advanced and expensive LLMs made in the US and China. It has become the only Korean LLM to be classified as a leading edge “frontier model” by the benchmarking analysis provider Artificial Analysis.
• Anthropic has offered the Claude chatbot to US lawmakers for $1! It’s thought that this will encourage the wider adoption of AI tools in the federal government. OpenAI already has such an arrangement in place and it’s thought that Google is also looking to do something similar.
• Perplexity AI has seemingly made a $34.5bn offer to buy Google Chrome’s browser. This sounds somewhat bizarre given that the whole of Perplexity AI itself is only worth half that! It said that it has the finances in place but you do wonder…
• Musk is threatening to sue Apple because it keeps putting ChatGPT ahead of Grok on the download charts. I think this is just noise because less than 24 hours before this he was celebrating Grok hitting #1 in Apple’s download charts in Singapore.
• Sam Altman and OpenAI announced plans to invest in a venture called Merge Labs that will connect human brains with computers, in competition with Musk’s Neuralink. Sounds interesting, no??
• DeepSeek’s next AI model has been delayed because it’s trying to use Huawei chips and not Nvidia’s. There have been a lot of technical problems as a result.
• CoreWeave’s shares collapsed by 20% in reaction to it posting bigger-than-expected Q2 losses. That being said, the company said that demand for its services is running ahead of its ability to build fast enough.

IN MEDIA NEWS…

• Paramount sealed a $7.7bn exclusive US rights deal with UFC for seven years to be the US broadcaster of the UFC slugfest.

IN SOCIAL MEDIA NEWS…

• TikTok is going to shut down its Berlin moderation team and replace them with contract workers and AI. Workers are now, understandably, striking. Is this the sign of things to come, though?

• IN REAL ESTATE DEVELOPMENTS – HSBC has decided to reverse its decision to quit Canary Wharf. It’s just signed a 15-year lease for an office that’s a short walk away from its current global HQ, which it will leave in 2027 to relocate to the City. The latest RICS survey showed that the residential property market is cooling down as the prospect of tax increases and uncertainty over interest rate cuts weighs on prospective buyers. Posh estate agent Savills piped up, adding that inheritance tax raid fears are also hitting house sales. Meanwhile, a merger between student accommodation players Unite Group and Empiric was announced this week. It comes after a tricky few years in a sector that has been particularly badly impacted by the pandemic and the rise in construction costs.
• Tesla is looking to introduce robotaxis in New York. It’s keen to roll out its robotaxi service in America’s most populated city and is recruiting data collectors to drive vehicles around the streets. The drivers will collect audio and video to train Tesla’s Autopilot software.

My favourite video this week was, obviously the one with the only four things you will ever need for a top notch video – an old man, a guitar, a dog and some false teeth 😁 Superb 🤣🤣🤣