Watson’s Weekly 24-01-2026

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.

WHAT HAPPENED AT DAVOS…

• Davos 2026 was being cast as a potential last-chance saloon for the existing global order, with some hoping the annual gathering of world leaders might provide space for diplomacy to break the current impasse. Treasury secretary Scott Bessent brushed off European concerns as “hysteria”, while Emmanuel Macron attempted to rally European leaders by warning against accepting a global order dictated by those with “the biggest voice or the biggest teeth”.
• UK-US tensions escalated further as Trump attacked Keir Starmer over the UK’s deal to transfer sovereignty of the Chagos Islands, including a UK-US air base, to Mauritius. Trump branded the deal an act of “weakness” and “stupidity”, despite the fact that his own administration had previously endorsed it. The intervention appeared less about policy and more about stirring, reinforcing expectations that Trump would use Davos to spread confusion and “flood the zone” in order to distract from weakening support at home.
• RE GREENLAND – Greenland then became the focal point of geopolitical tension. Scott Bessent argued that Europe is too weak to guarantee Greenland’s security and that they wouldn’t be able to come to a co-ordinated decision regarding Greenland. European leaders pushed back, with UK parties – including Nigel Farage – uniting to condemn Trump’s tariff threats.
• Commentators warned that Europe must not appease Trump over Greenland, arguing that backing down would risk the disintegration of the Western alliance and signal weakness to China and Russia. Recent crises – from Covid to Ukraine and now Trump – have exposed the fragility and imbalance of Western dependencies on China, Russia and the US.
• Denmark sent additional troops to Greenland, adding to the small existing force. There was debate as to whether Europe should deply its never-used Anti-Coercion Instrument – the so-called “big bazooka” to push back against Trump’s threats but analysis suggests that weaponising Europe’s holdings of US assets would be impractical and potentially more damaging to Europe than America.
• Eventually, Trump backed away from his threats to use force to seize Greenland but the episode has crystallised global mistrust of the US. Canadian prime minister Mark Carney responded with a widely praised speech calling for new alliances among “middle powers” in a post-US-led world. Despite the easing of immediate threats, Trump’s vague rhetoric inspires little confidence and his repeated confusion between Greenland and Iceland raised eyebrows. EU leaders greeted the climbdown with caution, remaining deeply wary of where the transatlantic relationship is heading next.
• Markets reacted in predictably volatile fashion this week, waxing and waning to the beat of Trump’s drum. Fear prompted the resurfacing of the “sell America” trade of 2025, European defence stocks continued to surge and markets slid while precious metal prices boomed but that was followed by recovery thanks to the TACO trade.
• Trump’s antics appear, at least temporarily, to have united Europe, though it remains to be seen whether that resolve endures or whether Trump will try to fracture it with selective sweeteners – a dynamic that could also complicate UK politics given Farage’s admiration for Trump.

OTHER TRUMP THINGS…

• REGARDING THE MEDIA – Trump’s war with the media appears to be paying off. Major outlets have softened their stance amid lawsuits and pressure, while Trump floods the zone with controversy and communicates directly with supporters via Truth Social, aiming to dominate a confused information landscape.
• THE LATEST ON TRUMP’S COURT CASES – the Supreme Court looks sceptical of Trump’s attempt to sack Fed governor Lisa Cook, even as Treasury secretary Scott Bessent attacked Jay Powell for defending her.
• REGARDING HIS BANK BALANCE – Trump continues to fudge ethical lines, buying a ton of bonds in Netflix and Warner Bros just days after he said that he’d “be involved” in a potential merger between the two companies. He also launched five ETFs that are linked to Truth Social! Each one has a theme that encapsulates Trump-themes – American-based companies, real estate in Republican states, energy production and infrastructure, security and defence and tech – including bitcoin.
• REGARDING VENEZUELA – even Chevron is wary of Trump’s Venezuela ambitions given the gaping chasm between Trump’s impatient demands and shareholder demands for longer term returns.

HOW DID THE MARKETS REACT TO ALL THIS?

• They reacted positively after Trump appeared to dial down his threats over Greenland, triggering a rebound in sentiment.
• Some observers suggest that emerging markets are currently a better gauge of investor mood than gold, with money flowing out of the US and into higher-risk markets as investors bet that Trump’s antics are unlikely to crash the global economy. The rationale is that US growth will continue to feed through into global demand – and that will benefit exporting economies while America’s vast investment in AI will continue to provide a major boost to chipmakers such as TSMC and Samsung.

MEANWHILE…

• The collapse of the $TRUMP memecoin — down 94% over the past year — highlighted the fading of the memecoin frenzy, although it has still outperformed the even steeper decline in his wife’s token!
• South Korea’s KOSPI stock market punched through a record 5,000, driven by soaring chip stocks and an incredible 20% rise this month alone!

IN REGION/ INDIVIDUAL COUNTRY NEWS

IN ASIA…

IN CHINA – the country managed to hit its 5% GDP growth target in 2025, despite Trump’s best efforts to slow it down via tariffs, thanks to its strong export performance offsetting a weak domestic economy. There’s a looming demographic time bomb, though, as the country recorded just 7.92 million births last year – the lowest number since records began in 1949! This marks the fourth consecutive year of population decline.

IN JAPAN – Prime Minister Sanae Takaichi decided to take a gamble by calling an election just three months into her premiership. She is clearly trying to capitalise on her current momentum ahead of the February 8th vote in the hope of securing a stronger lower-house majority and a firmer mandate to push through her agenda.

UK

• Inflation ticked up for the first time in five months, rising to 3.4% in December. While this is thought to be a temporary and unwelcome blip, it came in above expectations and slightly reduces the likelihood of an imminent interest rate cut by the Bank of England.
• On the plus side (for the Treasury at least!), government borrowing fell sharply to £11.6bn, well below forecasts and far lower than the previous year. Stronger tax receipts, which have been driven by higher National Insurance contributions and wage growth, suggest fiscal drag is doing its job as more people are pulled into higher tax brackets!
• Meanwhile, the Labour government is under pressure over a series of costly policy U-turns totalling around £8.2bn, according to the left-leaning Resolution Foundation think tank. Reversals on sickness benefits, winter fuel payments, business rates for hospitality and digital IDs have created uncertainty that it argues is undermining business confidence and investment, complicating Labour’s promise to boost growth.
• Rachel Reeves has also ruled out extending business-rates relief promised to pubs to hotels and restaurants, despite pressure from the hospitality sector, which warned that closures could accelerate sharply this year.
• The government is also trying to keep tech firms anchored in the UK, highlighted by a £25m investment in software platform Kraken via the British Business Bank in its largest direct investment so far . The hope is that it will eventually list in London.
• Ministers suffered a defeat in the Lords after peers backed an Australia-style ban on social media for under-16s, pushing the government towards faster implementation.
• Reeves boasted about a “golden age” for UK capital markets following regulatory and tax tweaks but optimism is tempered by a thin IPO pipeline and the risk of renewed uncertainty from Trump.

COMMODITIES

• In Venezuela, lawmakers backed oil-sector reforms that would allow private companies access to an industry monopolised by the state for the last 25 years. Although this looks good in theory, there are doubts about how robust this will be in the event of a new government coming to power and deciding to ditch it all. That’s why so many oil companies are reluctant to commit the massive amount of funds needed to drag Venezuela’s creaking oil sector up to standard
• Brazil is leveraging its vast rare-earth reserves in talks with both the US and EU, putting it in a strong strategic position as Western economies seek alternatives to sourcing from China.
• Although gold has had a well-publicised boom over the last year, silver prices have tripled in a year amid tight supply and heightened geopolitical anxiety. In many ways, silver is actually a decent bet because although it’s a precious metal like gold, it also has more industrial uses.

ENERGY

• Trump’s leverage over European energy security has become increasingly clear, with US LNG now accounting for a majority of EU imports and a large share of the UK’s gas supply. Any disruption could quickly push bills higher.
• Miliband’s new £15bn programme aimed at tackling fuel poverty will direct energy subsidies towards solar, batteries and heat pumps, de-emphasising insulation initiatives.
• In nuclear energy news, the life of the Sizewell B nuclear plant is going to be extended from 2035 to 2055 to help plug looming capacity gaps.

INVESTMENT TRENDS

India looks set for another bumper year for IPOs, with Mukesh Ambani’s Reliance Jio expected to headline what could become the country’s largest-ever stock market listing. After more than $20bn was raised through Indian flotations last year, Kotak Investment Bank estimates that market debuts could reach $27bn this year, underlining strong investor appetite for Indian growth stories.

At the extreme end of the scale, SpaceX is laying the groundwork for a potentially historic IPO. Elon Musk’s rocket company has reportedly been in discussions with Bank of America, Goldman Sachs, JPMorgan Chase and Morgan Stanley, and is said to be targeting a staggering $800bn valuation. If realised, this would dwarf Saudi Aramco’s $29bn float in 2019, currently the world’s largest public listing.

Closer to home, Waterstones is enjoying a notable revival despite a long-term decline in children reading for pleasure. The bookseller’s resurgence has been strong enough to prompt consideration of a London listing, although it will be keen to avoid the fate of the “class of 2021” IPOs such as Made.com, Dr Martens and Deliveroo, which collapsed after listing.

In M&A news, Zurich Insurance has gone public with a £7.7bn takeover bid for UK insurer Beazley, its fifth approach in roughly a year. Beazley’s shares jumped 42% on the announcement, while rivals Hiscox and Lancashire also rose on expectations of wider consolidation. A deal would bolster Zurich’s speciality insurance arm and deepen its access to the Lloyd’s of London market, though Beazley’s board insists the bid undervalues the company and its long-term prospects.

Elsewhere, GSK has agreed to buy Californian biotech firm RAPT for $2.2bn, adding a promising food allergy drug to its pipeline. The deal reflects a broader trend of consolidation across pharmaceuticals and biotech, driven by fragmented markets and looming patent expiries.

Defence remains a standout business trend. Newly listed European defence firms such as Renk and Exosens have seen their share prices almost triple in a year, while the sector is already up 15% in 2026. With Czechoslovak Group preparing a flotation valued at up to €30bn, momentum shows little sign of fading amid geopolitical tensions. That backdrop is also pushing industrial shifts, with Renault teaming up with a French defence group to manufacture drones for Ukraine at government urging.

In contrast, defence experts warn that the UK has spent little additional money on conventional forces despite bold rhetoric, raising concerns about readiness and capability. Finally, Trump’s Greenland-related tariff threats risk pushing Britain’s car industry back into crisis, with wider damage possible across manufacturing and pharmaceuticals as uncertainty mounts.

TECH NEWS

(AI)
The IMF has added its official voice to concerns about the sustainability of the AI boom, warning in its latest World Economic Outlook that global economic resilience could be at risk if the AI bubble bursts. While hardly a shocking insight, it gives extra weight to Davos debates just as the IMF upgraded its 2026 global growth forecasts, noting that the world economy has proved more resilient than expected so far. That resilience, however, is increasingly tied to continued progress in AI.

In the UK, MPs are pressing regulators to stop sleepwalking into AI-related financial risks. The House of Commons Treasury committee has urged the Treasury, the Bank of England and the FCA to become far more proactive, calling for stress tests to assess how markets would cope with an AI-driven shock. Given the speed at which AI is being embedded into trading, risk management and lending decisions, the request feels overdue rather than alarmist.

Warnings about AI’s social impact were also aired in Davos, with JPMorgan boss Jamie Dimon arguing that the rollout may need to slow unless governments do more to support displaced workers. He cautioned that technology could advance faster than society can absorb, risking unrest unless retraining, relocation support and early retirement schemes are put in place. Nvidia’s Jensen Huang struck a more upbeat note, highlighting job creation across energy, chips and infrastructure, though that optimism arguably assumes that the current build-out phase continues indefinitely.

Microsoft chief Satya Nadella added a more pragmatic perspective, suggesting that the AI boom could falter unless adoption spreads more widely across industries and into developing economies. With so much capital riding on AI, broader usage is essential to justify the scale of investment and reduce the risk of speculative excess.

In China, ByteDance is emerging as a serious challenger in the corporate cloud market. Its Volcano Engine platform is rapidly gaining traction through aggressive pricing and an expanded sales force, putting pressure on incumbents such as Alibaba, Tencent and Huawei. Leveraging its vast data reserves and computing infrastructure, ByteDance has already become China’s second-largest AI infrastructure and software provider, though execution will be critical as it pushes deeper into enterprise services.

Elsewhere in AI innovation, Silicon Valley start-up Logical Intelligence claims a breakthrough with its new “energy-based” reasoning model, Kona. Designed to solve problems more accurately while using less power than larger models, it targets high-stakes industries such as robotics, manufacturing and energy. The appointment of Meta’s former chief AI scientist Yann LeCun to its board ahead of a funding round valuing the firm at over $1bn adds credibility, and reflects how start-ups now have multiple funding routes without needing to sell out to Big Tech.

The funding frenzy continues with UK-based AI voice company ElevenLabs reportedly in talks that could value it at $11bn, potentially making it one of Europe’s most valuable start-ups. Whether it remains independent or attracts a US suitor remains an open question.

Legal drama also flared as Elon Musk sued OpenAI and Microsoft for $134bn, claiming entitlement to “wrongful gains” made possible by his early backing. With Musk having left OpenAI in 2018, the case looks set to enrich lawyers if nothing else.

(CHIPS)
On the hardware side, Nvidia faces fresh complications after suppliers halted production of parts for its H200 chips following Chinese customs blocks, an unexpected snag just as the chips gained US approval for the China market. Meanwhile, Japan’s Kioxia is thriving as data centre demand lifts margins for its commoditised NAND flash chips, pushing its share price sharply higher — though its fortunes remain tied to how long the current build-out lasts. By contrast, Intel slipped back into losses, disappointing investors with weak guidance and a lack of clarity on customers for its next-generation chips.

(HARDWARE)
Apple is reportedly developing an “AI pin” wearable that could launch next year, joining a crowded and experimental market. While wearables are gaining traction — notably through Meta’s Ray-Ban tie-up — questions around privacy, usability and whether a single device can truly replace others remain unresolved. Apple’s habit of entering late but dominating categories keeps expectations high.

(SATELLITES)
Finally, Starlink is emerging as a serious threat to UK broadband incumbents. With prices now undercutting BT and Virgin Media, and an IPO likely to provide vast funding, Musk’s satellite network could upend a poorly loved market. For consumers this is good news; for incumbents, it’s a warning to adapt quickly or risk being left behind.

MEDIA NEWS

The BBC has announced a landmark shift in strategy by agreeing to make bespoke content specifically for YouTube, rather than simply posting clips and trailers from existing programmes. The move reflects the broadcaster’s need to adapt to changing viewing habits and reach audiences where they already are. The BBC will produce a mix of entertainment, news and sport for the platform, starting with coverage of the Winter Olympics next month, while also making the content available on iPlayer and BBC Sounds. Notably, this means UK viewers without a TV licence will still be able to consume some BBC output via YouTube, inevitably raising questions about whether this is another small step towards the eventual erosion of the licence-fee model.

(STREAMING)
Netflix, meanwhile, beat market expectations in Q4 as subscriber numbers climbed beyond 325 million, helping it post strong sales. Alongside the results, it unveiled an improved $82.7bn all-cash bid for Warner Bros Discovery’s studio and streaming assets. Despite the bullish headline, Netflix shares dipped in after-hours trading after it warned that completing the deal would add $275m in costs this year. Paramount Skydance is also still pushing its own all-cash offer for the entirety of Warner Bros Discovery, keeping takeover speculation firmly alive.

SOCIAL MEDIA NEWS

TikTok has set up a new US-based data security unit under a deal brokered by Trump’s team, with a consortium of American investors taking an 80% stake in the joint venture. While safeguards have been promised around data, algorithms and content moderation, ByteDance retains direct control of TikTok’s core US business lines. Critics argue this effectively hands Beijing a major win, lifting a long-standing cloud over TikTok’s growth. Given Trump’s earlier hardline stance, the compromise looks like a pragmatic climbdown that avoids an unpopular ban while keeping US users onside.

In the UK, an Australia-style ban on social media for under-16s is edging closer after peers forced the government to move faster than planned. Supporters cite risks such as sextortion, cyberbullying and addiction, while sceptics question the evidence base. From a parental perspective, however, a ban feels like a sensible precaution that offers support rather than endless delay in the face of clear harms.

RETAIL NEWS

(CONSUMER)
UK consumer confidence has risen slightly but remains firmly negative, extending a bleak run that has now lasted a full decade. The GfK index, which tracks views on personal finances and the wider economy, has not posted a positive reading since January 2016, before confidence collapsed in the aftermath of the Brexit referendum. The labour market is also showing strain, with employment falling again and wage growth slowing, particularly in retail and hospitality. This looks like a hangover from recent budgets rather than a permanent shift, but it underlines how fragile the current economic backdrop remains.

(SUPERMARKETS)
Morrisons’ losses deepened to £381m as higher borrowing costs collided with weak consumer spending. The private equity-owned grocer argues it is more exposed to pensioners and lower-income shoppers, who are especially sensitive to price pressures. Strategically, Morrisons increasingly looks squeezed between Tesco, Sainsbury’s and Asda on one side and the relentless advance of Aldi and Lidl on the other, with Lidl closing in on its position. Alongside Asda, Morrisons appears to be drifting without a clear brand identity or compelling strategy, a risky place to be in such a competitive market.

(APPAREL)
Next’s acquisition of Russell & Bromley marked a sad end for a footwear brand founded in 1879. Next bought the brand, its IP and just three flagship stores for £3.8m after the chain fell into administration, with more than 400 jobs now at risk as most outlets close. It is the latest in a series of distressed high-street names snapped up by Next, including Cath Kidston, Joules and FatFace. While these deals are low risk given the prices paid, it remains unclear how much long-term strategic value they really deliver.

(GENERAL)
Christmas trading proved uneven across the sector. B&M cut its profit forecast and The Works reported falling sales after a disappointing festive period, reinforcing how patchy consumer demand remains even during the most important trading window of the year.

(LEISURE – COFFEE)
Independent coffee shops are increasingly leaving high-street chains out in the cold. Younger, higher-spending customers are gravitating towards niche operators, putting pressure on Costa, Starbucks and Pret. That shift was underlined by Coca-Cola abandoning attempts to sell Costa, while players such as Black Sheep Coffee and matcha specialist Blank Street continue to expand rapidly.

(LEISURE – PUBS)
JD Wetherspoon warned that profits will undershoot expectations after being hit by higher energy bills, wage costs, repairs and business rates. Relief from the government cannot come soon enough for the pub sector, which remains under intense cost pressure.

CONSUMER GOODS
Spirits makers are grappling with the largest inventory glut in more than a decade, with around $22bn of unsold stock weighing on balance sheets. Companies including Diageo, Pernod Ricard and Rémy Cointreau are now facing higher debt burdens and the risk of price wars as they try to clear excess supply built up during Covid. Some have already halted production, but they must now make difficult calls on future demand in an uncertain environment. At Carlsberg, core beer brands fell below half of total sales for the first time as consumers drink more moderately. While the group has minimal US exposure, global sentiment still matters for beer consumption.

• IN REAL ESTATE – UK estate agents are feeling more optimistic about home sales than at any point since October 2024, according to the latest RICS survey. Falling interest-rate expectations and the fading of Budget-related uncertainty are expected to lift buyer confidence and support housing activity this year. There is also debate about the effect an unintended side effect of spending heavily on weight-loss drugs – that it could adversely affect how much mortgage applicants can borrow! Some brokers warn that £200–£300 per month on such medication may be treated as a committed outgoing in mortgage affordability checks, potentially reducing a first-time buyer’s borrowing capacity by up to £20,000! Definitely food for thought.
  IN AUTOMOTIVE NEWS – the automotive industry is pushing back against plans to introduce a per-mile tax on EVs from 2028. AutoTrader reckons that it could deter nearly half of potential buyers, particularly those from lower-income households, at a time when EVs still carry a price premium over petrol cars. McLaren has received a $2bn cash injection from its Abu Dhabi owner, strengthening its position after cutting inventory and tackling quality issues. With backing in place, expansion beyond supercars now looks likely.
  IN PHARMACEUTICALS – Pharma dealmaking is expected to accelerate as patents covering around 12% of industry revenues near expiry. Merck’s talks to buy Revolution Medicines underline the trend. Meanwhile, AbbVie struck a $100bn investment deal with the Trump administration in exchange for pricing and tariff concessions – a sign that big-ticket political bargains may become more common.

My favourite video of the week was the one with the competitive firefighter! He made something very difficult look very easy!