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.
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IN BIG PICTURE NEWS...
The US government has a shutdown, Trump continues to push for vengeance and Labour has a conference
IN WAR NEWS…
- Netanyahu said that Israel supports Trump’s peace plan for Gaza which involves a “Board of Peace” to oversee an apolitical Palestinian committee that would govern Gaza. It’s up to Hamas now.
- The US continued to change its tune on Ukraine and is now offering it more intel that’ll help its long range missiles and drone strikes to be more accurate.
IN DEFENCE NEWS…
- Polish PM Donald Tusk appealed to banks to accept higher taxes to fund the increase in defence spending without hurting household finances.
- Australia announced its biggest overhaul of the military since the second world war and will embark on a A$25bn defence spending spree to make it more self-reliant.
IN TARIFF & TRADE NEWS…
- The EU is getting increasingly concerned about the possibility of the existing list of 407 items that are subject to 50% import taxes in the US growing because US officials have hinted that the list could expand to include “derivative” products. The list is currently being reviewed and it looks like it will get reviewed every quarter. This will clearly create a lot of uncertainty.
- Trump tightened export controls on Chinese companies by including subsidiaries of groups already on the “entity list”. This is the trading blacklist of companies and individuals subject to export controls. Going the other way, China announced that it would curb the use of Nokia and Ericsson in its telecoms networks. This echoes calls by European governments who have urged reticence in the use of Chinese companies such as Huawei and ZTE in critical infrastructure but it seems that this has actually had limited impact on their market share.
- Trump announced new tariffs on timber and wood furniture that will kick in from October 14th. There will be import tariffs of 10% on softwood timber and 25% on kitchen cabinets and upholstered wood furniture – and they’re going to rise higher from January next year to 30% and 50% respectively unless countries agree a deal to lower them!
IN TRUMP THINGS…
- IN MAHA MATTERS – Trump announced the direct-to-consumer drug sales programme called “TrumpRx”. Consumers can go on to TrumpRx.gov, which has a list of drugs and a direct link to the pharmaceutical companies that sell them in order to cut out the middleman. Pfizer’s agreed to cut drug prices by 50-85% of current rates and make them available on the website. Other pharmaceuticals companies are expected to follow suit. The share prices of cannabis stocks – including Tilray Brands, Canopy Growth and Cronos Growth – got a boost from Trump posting about the potential benefits of CBD on Truth Social.
- IN VENGEANCE UPDATES – the administration said that the liberation day tariffs would remain even if the Supreme Court ruled them to be illegal. Trump said that US cities should be used as military “training grounds” because “America is under invasion from within, he’s pursuing the 95 year-old investor George Soros through the courts to get him back for donating hefty sums of money to human rights groups, investigative journalists, advocates for democracy and other causes, including Democratic campaigns and he’s making YouTube pay $22m for a new ballroom in the White House as punishment for suspending his account in the aftermath of the Capitol Hill riots.
- Meanwhile, it looks like Fed governor Lisa Cook is going to keep her job until the US Supreme Court hears arguments in her case in January. Perhaps this will give time for supporters of Cook to rally round and consolidate their position…
IN INDIVIDUAL COUNTRY NEWS…
- IN THE US – The US government went into shutdown as Democrat and Republican lawmakers couldn’t agree on funding. Hundreds of thousands of jobs are impacted and output will be lost. No one knows how long the shutdown will last or how many government jobs will be lost permanently but Trump is threatening to use this as an opportunity to further slim down the state.
- IN THE UK – Labour held its conference this week and it looks like the government’s softening us up for some Budget body blows! Later in the week, the Bank of England was a bit naughty because it swapped business data figures after they were published. This doesn’t make the ONS look good and it makes you feel like our central bank is flying blind, particularly given that we’ve still got dodgy employment numbers because the ONS can’t do its job properly.
IN ENERGY NEWS…
- Data shows that Britain has the highest household electricity prices in the world for the second consecutive year, putting extra pressure on Miliband and his net zero targets.
- It turns out that Britain has spent over £1bn this year switching off windfarms because the grid can’t cope with the extra capacity. The industry calls this curtailment – and curtailment costs are passed on to customers via higher bills! More pressure on Miliband…
- The future of OVO Energy is looking tricky after it failed financial resilience tests set by Ofgem. It’s not the only one though – Octopus Energy is also at risk as is another company that hasn’t yet been named.
IN CRYPTO NEWS…
- Prices of bitcoin, ether and other crypto assets have fallen sharply recently – and it’s hitting the digital asset treasury (DAT) companies who are ploughing money into this asset class. If things continue this way, it could get very dangerous for them and possibly the assets that they hold because they could become forced sellers.
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IN BUSINESS, INVESTMENT & EMPLOYMENT TRENDS...
IN BUSINESS TRENDS…
- UK business confidence fell to a record low, according to the latest survey from the Institute of Directors thanks to ongoing unease over labour costs and energy prices. I wouldn’t have thought it will get much better until we know more about what the Budget has in store…
IN INVESTMENT TRENDS…
- IN IPO NEWS – Data centre property developer Fermi floated in New York with great success (up 55% on the first day of trading) while its listing on the LSE was a bit meh (down 8.7%), but the listing still showed increasing confidence in the market. Meanwhile, the Treasury is going to grant a stamp duty holiday to new LSE listings in order to make listing here more attractive. It would mean that investors won’t have to pay the 0.5% tax on buying shares of newly-listed companies. Shawbrook is getting ready to list as its two PE firm owners are itching to revive plans that were put on ice earlier this year when markets had a bit of a turn when Trump announced his tariffs.
- IN LBO NEWS – games maker Electronic Arts is going private via a massive $55bn LBO involving a consortium of big investors who are paying $210 per share in cash. Will there be further LBOs in the gaming industry given the potential susceptibility to AI?
- IN M&A NEWS – Bain Capital, which owns Gail’s and Pizza Express, has put in a bid for Costa Coffee. Coca-Cola is trying to offload it at the moment.
- IN MONEY RAISING NEWS – chipmaker Cerebras Systems just raised $1.1bn from investors in its latest funding round with a view to an IPO further down the line. It is taking on the mighty Nvidia and has an impressive client list including the likes of Meta, Amazon Web Services and Mistral in addition to US government departments and healthcare institutions.
IN EMPLOYMENT TRENDS…
- IN THE US – unofficial data from the payrolls processor ADP showed that private sector employers shed the most jobs over September since 2023. Economists were expecting more jobs not fewer! Walmart’s CEO was adamant that “AI is going to change literally every job” but then the latest research from Yale University’s Budget Lab showed that the US jobs market isn’t yet showing any “discernible disruption” from AI. That being said, a study conducted by researchers from Oxford Uni and VC firm Vela Partners found that AI models beat VCs in finding tech companies that would later raise at least $500m or sell a company for this amount of money. Interestingly, AI was less good at finding winning founders!
- IN THE UK – the latest report from Adzuna reflects not only an overall fall in hiring but also particular weaknesses in job opportunities for graduates, healthcare workers and teachers.
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IN CONSUMER, RETAIL & LEISURE NEWS...
IN CONSUMER TRENDS…
Consumers are having a lot to deal with at the moment!
- BEEF PRICES – prices for steak in the US have been booming thanks to tight supply and strong demand. Beef prices in August were up by 13.9% year-on-year versus the overall inflation rise of 2.9%! In the UK, beef prices shot up by 25% in August year-on-year and has contributed to rising food price inflation. I think this is the cumulative impact of the last few years where we’ve seen supply chains shift, war and weather-powered knock-on effects and now tariffs.
- PETROL PRICES – an investigation by the CMA concluded that petrol stations have been ripping off drivers. Some supermarkets have seen their profit margins double from 4% in 2017 to somewhere between 8% and 9.1% in the three months to June. I’m not sure what action will be taken for now but the introduction of the Fuel Finder scheme, which which gives drivers real-time pricing data, can’t come soon enough! It is going to launch by the end of the year.
- BUY NOW, PAY LATER – UK Finance’s latest report shows that although young people fuelled the boom in BNPL, the uptake of the service has more than doubled over the last year in the 55-to-64 year old age category!
- REAL ESTATE – in the US, the housing market market remains stuck in its worst rut for years as sales of existing homes fell to their lowest level in almost thirty years, according to data from the National Association of Realtors. In the UK, data from Nationwide showed that the property market returned to growth in September after a brief summer lull but Zoopla said that uncertainty surrounding potential property tax reforms are holding back activity for homes priced over £500,000. Speculation about various Budget initiatives has just resulted in people just sitting on their hands.
UK households have increased their savings rate in the three months to June, according to the latest data from the ONS. The savings rate is defined as the percentage of household disposable income that is saved. It’s the first fall since 2023. This suggests that consumers are losing confidence in the economy.
IN RETAIL NEWS…
- IN TRAD SHOPS – the latest monthly report from the BRC showed that shop price inflation rose by 1.4% in September, up from 0.9% in August. Retailers warned that any tax rises could push inflation ever higher. Tesco announced a decent performance and warned of a potential supermarket war leading into Christmas while the owner of Selfridges, Cambridge Retail Group, announced a £130m drop in sales thanks to a slowdown in the flow of rich foreigners coming to London. It, and other luxury retailers, continues to appeal to the government to offer duty free shopping once again.
- IN ONLINE RETAILERS – 270,000 people have signed a Change.org petition to ban Shein in France! Shein has put in a number of pop-up shops but the French senate has just approved legislation aimed at restricting the march of ultra-fast fashion companies including the likes of Shein and Temu. Asos’s woes continued as it issued a profit warning, sending its share price down by 4.8%. It’s down by over 40% this year!
- IN CONSUMER GOODS – Nike managed to beat expectations when it published its latest numbers, implying that turnaround efforts are starting to filter through following the appointment of a new CEO last year.
IN LEISURE NEWS…
- IN HOLIDAYS – cruise company Carnival Corp had a a great quarter in North America and Europe and is continuing to see strong bookings. EasyJet announced its entry into the luxury market via its new Luxury Collection brand but I wonder how successful it will be given that it is known for being cheap and cheerful. I think it’s possible for high end brands to “trade down” but that it’s much more difficult for them to “trade up”, but we’ll just have to see!
- IN RESTAURANTS – Greggs announced some price rises, saying that it couldn’t hold off any longer because of higher ingredients prices. The timing of this seems a bit weird to me – surely it could have waited a big longer for the Budget and then blame it all on the government! Maybe things are not going well in the background…
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IN TECH & MEDIA NEWS...
IN AI NEWS…
- Global AI players such as OpenAI and Perplexity are trying to broaden their respective footprints in India by launching India-focused plans and products this summer in order to target the country’s youthful population.
- Alibaba is making great progress in AI – and its share price has so far this year outperformed the likes of Nvidia, Meta Platforms and Palantir.
- ChatGPT is launching a new tool to let parents know if their children try to discuss suicide or self-harm with its AI chatbot. OpenAI is introducing tighter parental controls which will allow parents to link their own ChatGPT account to a child’s, which will enable it to pass on alerts.
- OpenAI saw its valuation leapfrog that of SpaceX and it’s now become the world’s most valuable start-up as a result, following an employee share sale. It now has a $500bn valuation!
- “Grief tech” is an interesting growth area for AI at the moment as it helps people to process loss. Obviously, there are variations as to how this all works but the “real life chatbots” use a combination of video chat, text, phone or voice assistant to communicate with a digital version of someone who is no longer alive. Players in this area include Hereafter AI and You, Only Virtual.
IN CHIP NEWS…
- SK Hynix and Samsung got a boost to their respective share prices on news that they’d signed a letter of intent with OpenAI to supply chips to its $500bn Stargate data centre project.
IN HARDWARE NEWS…
- Dyson suffered its first loss in sales for 22 years thanks to a combination of slowing economic growth, weakening consumer confidence some one-off events that included a factory fire in the Philippines.
IN HACKING & PRIVACY NEWS…
- IN HACKING – JLR’s shutdown due to hacking had a detrimental effect to UK manufacturing as a whole, driving activity to a five month low! Over in Japan, Asahi got hacked, meaning that it was unable to process orders, make deliveries or offer customer service in Japan. This prompted panic buying of Asahi Super Dry from thirsty Japanese! It is interesting to note that a common link between all the recent hacks involving M&S, Co-Op and JLR is Tata Consultancy Services (TCS), an Indian IT and outsourcing giant. Some are wondering whether hackers have been targeting the helpdesk function that is shared among customers.
- IN PRIVACY – the Home Office is having another go at Apple. It wants access to British users’ data via a backdoor. It tried this before to get any users’ data, but it had to back down. Meanwhile, Meta said that it would use conversations that users have with chatbots to personalise advertising and content across its platforms in an example of how tech companies are going to monetise the use of AI.
IN MEDIA NEWS…
- Universal and Warner Music are closing in on making deals with companies including ElevenLabs, Stability AI, Suno, Udio and Klay Vision regarding how to pay for content. They are also in talks with Spotify and Google. The talks are focusing on how labels get paid for creating AI-generated tracks and for training LLMs and, at the moment, it looks like they’re seeking out a structure similar to the one that’s used for streaming.
- Mirror journalists are on the verge of taking strike action under the banner of the National Union of Journalists following publisher Reach’s decision to make big job cuts last month. Unions are worried about the increased pressure on staff after years of cuts as well as the rising use of AI.
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IN MISCELLANEOUS NEWS...
- IN CAR NEWS – Automakers braced themselves for the expiry of the $7,500 tax credit which expired earlier this week. Makers reckon that sales will fall off a cliff but they did well in the period leading up to the deadline as everyone rushed to beat it! Tesla even hit a new sales record in Q3 as a result. Elsewhere, BYD saw its sales fall for the first time since February 2024 thanks to sluggish domestic demand in China. Overseas sales have been strong, though!
- IN PHARMACEUTICALS – AstraZeneca announced that it will list its shares directly on the NYSE, replacing its ADRs. It will still keep its listing and HQ in the UK. Is this a shot across the bows towards the UK government to make them play nice?? Also we heard that GSK’s CEO Emma Walmsley is going to step down at the end of this year. She’s been the CEO since April 2017.
- IN PAYMENTS – international payments group Swift is creating its own blockchain to enable faster and more secure transactions between global banks. It’s going to be working with Bank of America, Citigroup and NatWest – along with many others – to create this shared digital ledger. This could be big because it could make a huge impact on how quickly payments are processed. It’d presumably be good for security as well…
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