Tuesday 02/12/25

Costco Joins Companies Suing Trump Administration Over Tariffs (Wall Street Journal, Sarah Nassauer and Gavin Bade) shows that the American retailer has become the latest – and one of the biggest – companies to join a group that’s suing the Trump administration in the US Court of International Trade over the reciprocal tariffs he imposed earlier this year. * SO WHAT? * The group says that the tariffs are illegal and they want a refund. Costco said that it filed the lawsuit to ensure that it gets a refund IF the Supreme Court concludes that the tariffs collected under the auspices of the IEEPA aren’t lawful. It’s possible that there could be a ruling on the matter by the end of the year. Costco is America’s third-largest retailer by revenue.

In the ongoing aftermath of last week’s Budget, Keir Starmer accused of creating new welfare trap by scrapping two-child benefit cap (Financial Times, Chris Smyth) the PM has been accused by analysts at the Policy in Practice consultancy of “trapping people” on welfare by giving them a “substantial” incentive to claim sickness benefits to get the most out of the removal of the two-child benefit cap. Meanwhile, OBR chair quits after inquiry into early release of budget document (The Guardian, Pippa Crerar, Peter Walker and Kiran Stacey) shows the chair of OBR falling on his sword (pushed??) to take the fall for the monumental **ck up whereby the contents of the Budget were released almost an hour before the chancellor announced it last week. Will that be an end to the matter I wonder??

NHS to pay 25% more for innovative drugs after UK–US zero-tariff deal (The Guardian, Lisa O’Carroll) shows that a new transatlantic agreement has been made whereby the UK has agreed to pay 25% more for new medicines by 2035, something that could cost an additional £3bn a year. Critics say that ministers just caved to Trump’s demands and it’s not clear how it’s going to be paid for. * SO WHAT? * I think that this HAD to be done because pharmaceuticals companies have been complaining for ages about the intransigence of drug pricing thresholds. After all, the formula used to judge whether drugs are value for money or not hasn’t been changed since it was introduced in 1999! This deal now means that the UK-made drugs exported to the US will NOT now incur the 100% tariffs threatened by Trump on drugs made outside America (for the next three years, anyway). The National Institute for Health and Care Excellence (NICE – it’s missing the “H” because it was originally called the National Institute for Clinical Excellence but then

absorbed the Health Development Agency about twenty years ago, but I guess no-one can pronounce NIHCE 🤣) decides what drugs will be bought by the NHS and so now the pricing thresholds have been increased, there will be more flexibility. This will also mean that NICE will be able to approve an additional three to five more drugs per year in addition to the 70 usually classed as good value for money. Hopefully, this will also give UK-based pharmaceuticals less excuse to ditch the UK for America.

BP ditches hydrogen hub on Teesside after rival AI plan is backed (The Times, Emily Gosden) chronicles the latest move by the oil and gas major to walk away from its green energy commitments as it has now abandoned plans to produce low-carbon hydrogen on Teesside because the owners of the site preferred rival plans to build a large AI data centre there. I think that if I was the landowner, I’d do the same! Given the choice of oil and gas company with questionable long-term commitment to renewables and the development of something I know will be immediately impactful, I’d go for the latter…

Then in Bitcoin champion Strategy launches ‘dollar reserve’ amid crypto sell-off (Financial Times, Nikou Asgari) we see that the share price of bitcoin hoarder Strategy fell again after it launched a $1.44bn US dollar reserve to finance its dividends and cautioned that it could take a massive $5.5bn hit if the price of crypto doesn’t recover this year to somewhere between $85,000 and $110,000. Strategy has funded its bitcoin buying by using a mix of debt and equity products, many of which pay out in dividends. Bitcoin has fallen from $126,000 in early October to around $85,000 in just over a month – and Strategy is hurting. The company holds 650,000 bitcoin, currently worth about $56bn. This equates to about 3.1% of the world’s bitcoin. The CEO of Strategy, Michael Saylor, says that the dollar reserve “will better position us to navigate short-term market volatility…”. * SO WHAT? * This does highlight the danger of being very exposed to crypto. I wonder whether the Redditors out there will jump on this. If they can somehow get everyone to sell bitcoin, forcing the price down, hoarders will have to sell some of their holdings and then the retail investor mob could buy bitcoin back at lower prices. That way, they’d stick it to the big boys AND get some bitcoin on the cheap…

Samsung’s Next Salvo Against Apple: A Triple-Folding Smartphone (Wall Street Journal, Jiyoung Sohn) heralds the arrival of the Galaxy Z TriFold which is scheduled to hit the US market in Q1 of 2026 after going on sale in South Korea and some other countries this month. It folds in on itself like a pamphlet, is thicker than most phones and is very pricy, starting at about $2,445. It’s pretty niche but will be the first tri-fold phone to be introduced globally. Huawei offers a tri-fold phone that folds into a Z but it’s only available in China. Samsung has offered foldable phones since 2019 while Apple is planning on launching its first folding phone towards the end of next year!

Apple replaces head of AI with executive poached from Microsoft (Financial Times, Rafe Rosner-Uddin) heralds a shake-up at Apple as its current VP of AI is going to be replaced by a Microsoft exec who was previously at Google, working on Gemini. * SO WHAT? * Apple has been slow in AI development so clearly the company’s making this move to pep things up a bit. This is a key appointment given how AI could be Apple’s most important driver in the future post-Tim-Cook era.

OpenAI takes stake in Thrive Holdings in latest circular deal (Financial Times, Tabby Kinder and Peter Wells) highlights the latest circular deal in the tech world as OpenAI bought a stake in

Thrive Holdings, a private equity group that was set up by Thrive Capital. Thrive Capital invested over $1bn into OpenAI late last year – and has seen it triple in value since then! The financial details of the deal were not disclosed but instead of investing money, it’s thought that OpenAI will be giving the companies that Thrive Holdings owns access to OpenAI’s products in addition to its researchers, developers and engineers.

Then in Black Forest Labs: one-year-old German start-up challenges AI giants (Financial Times, Tim Bradshaw and Melissa Heikkilä) we see that under-the-radar German AI start-up Black Forest Labs is emerging as one of the world’s foremost developers of AI image generation. It effectively tripled its valuation to $3.25bn in its latest funding round in just 15 months! During that time, it has struck deals and partnerships with the likes of Meta, Adobe and Canva. It’s one of the few European companies developing its own AI models, along with France’s Mistral. Demand for image-editing AI systems has boomed over the last year, which probably explains the high interest!

There’s a rare bit of good news for Musk in Tesla breaks sales record as Norwegians rush to beat tax rises (The Times, Emma Powell) as the latest figures from the Norwegian Road Federation show that sales of Tesla’s cars trebled last month, reaching a record high, as buyers rushed to dealers before a planned increase in EV taxes from January. That being said, its overall market share on the continent fell to 1.6% between January and October, down from 2.4% in the same period last year. Tesla sales across Europe as a whole continue to weaken as buyers have gone lukewarm over the brand due to Musk’s politics to varying degrees.

In Stellantis car production in France set for 11% drop by 2028 (Financial Times, Ian Johnston) we see that production at Stellantis’s French factories is going to fall over the next three years as

Stellantis has been hit harder than many other carmakers by the slowdown in demand in Europe. Stellantis, along with other carmakers, continues to lobby the European Commission to relax its planned ban on new sales of combustion engine cars in 2035.

Zipcar, world’s biggest car-sharing company, to close UK operation (The Guardian, Jasper Jolly) heralds the UK exit of the world’s biggest car-sharing company, owned by US group Avis Budget. It will remove access to its shared fleet across London at the end of this year. * SO WHAT? * Carsharing companies have been in a tricky spot for a while now and I guess that the increase in London’s congestion charge and its new inclusion of EVs was probably the nail in the coffin (or at least an opportune moment to leave). Car sharing clubs just haven’t really taken off in the UK as much as in other countries such as Germany and Switzerland.

In a quick scoot around some of today’s other interesting stories, Blackstone, Apollo and KKR sign up to UK stress test of private credit (Financial Times, Alexandra Heal and Martin Arnold) shows that the three private capital groups have agreed to participate in the Bank of England’s assessment of the resilience of the private credit market. The Bank of England uses stress tests for banks to see how they would fare under different scenarios to see how robust they are but this will be the first time that non-bank lenders will participate. The results of these tests will be published next year. * SO WHAT? * Given the growth of unregulated private capital over the last few years in particular, I think it’s a good idea that the Bank of England should include them in its assessment. This has been brought into focus recently by the collapse off US car parts supplier First Brands and subprime auto lender Tricolor.

HSBC signs deal to use Mistral’s AI tools (Financial Times, Ortenca Aliaj) shows that the bank has signed a deal with the French AI start-up whereby it will be able to access its models to develop generative AI models that can be used by staff across the bank for a range of things including financial analysis and translation. Financial details weren’t disclosed. Sounds interesting and I’m sure there will be other similar deals in the future…

Airbus finds problem with fuselage panels after fixing software glitch (The Guardian, Lauren Almeida) shows that Airbus’s problems haven’t all gone away as it announced that there were issues with fuselage panels, which will have to be repaired. This comes just after the weekend where loads of its planes were grounded around the world to get a software upgrade for a different fault! It seems that Boeing doesn’t have the monopoly on poor quality issues!

European farmers face ‘real crisis’ as agricultural commodity prices tumble (Financial Times, Susannag Savage) shows that farmers aren’t really going to benefit all that much from improved harvests this year as agricultural commodity prices have fallen on futures markets due to global supplies rising. One of the main problems that European farmers have is that while the prices of their produce falls, higher input costs and intensifying competition are squeezing margins. In the UK, wheat prices are just over half levels reached in 2022 after Russia’s invasion of Ukraine but prices of fertiliser, fuel and machinery have hardly changed. * SO WHAT? * Annual food inflation in the UK was 4.9% in October, a rise from 4.5% in September and that was largely driven by the

higher costs of five products – beef, butter, milk, coffee and cocoa – where shortages have driven prices skywards. However, outside that, it’s a different story. British and European farmers have a major structural problem – that high environmental and labour standards push up costs to the extent that they can’t compete with produce from countries where regimes have looser standards. If farmers decide to exit, no-one is going to replace them…

Top consultancies freeze starting salaries as AI threatens ‘pyramid’ model (Financial Times, Stephen Foley and Ellesheva Kissin) shows that the likes of McKinsey and Boston Consulting Group aren’t increasing pay for grads in 2026, according to Management Consulted, which coaches students through the interview process. This suggests that management consultancies are getting more cautious about their hiring policies. According to Management Consulted research, first year packages for undergrad hires in the US totalled between $135,000 and $140,000 at McKinsey, BCG and Bain & Co in 2024 and 2025, while MBA grads can expect $270,000 – $285,000. Starting salaries at the consulting arms of Deloitte, EY, KPMG, and PwC tend to be lower – but they’ve remained unchanged for even longer, since 2022. * SO WHAT? * It’s interesting to see that AI is affecting management consultants at the same time as they’re advising their clients on how to use AI themselves! The impact of AI could change the traditional pyramid structure whereby loads of grads are taken on then shed in an “up or out” promotion culture and shift to an “obelisk” structure where there will be fewer layers of juniors – or even an “hourglass” structure where AI automates mid-level routine tasks. The head of consultancy Alvarez & Marsal suggests a “box model” where the number of senior staff needs to match more closely the number of juniors because it will rely more on experienced professionals.

Black Friday deals came early as competition hits fever pitch (The Times, Isabella Fish) cites findings from the latest BRC-NIQ report which shows that shop price inflation has been kept under control thanks to retailers launching Black Friday offers earlier than usual this year. Overall shop prices were 0.6% higher than they were in November last year, down from 1% the previous month while food inflation also eased off to being 3% higher versus October’s 3.7% level. Hopefully, this will help consumers as we head into the end of the year…

I think that I would agree with what this guy says about the subtle nuances of “speaking British” 😁. For those of a delicate nature, I warn you that there’s a swear word in this video 🤭…