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 deploy 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.
• 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.

IN INVESTMENT TRENDS NEWS…

• IN IPOs – at one end of the scale, SpaceX is laying the groundwork for a potentially historic IPO having been in discussions with Bank of America, Goldman Sachs, JPMorgan Chase and Morgan Stanley – and is said to be targeting a staggering $800bn valuation! At the other end, Waterstones is considering a London listing.
• Elsewhere, 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. Over $20bn was raised through Indian flotations last but some say this  could reach $27bn in 2026! Demand from retail investors is particularly strong.
• IN M&A – Zurich Insurance went 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 but Beazley’s board rejected the bid, saying that it undervalued the company.
• GSK agreed to buy Californian biotech firm RAPT for $2.2bn, thereby 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.

IN BUSINESS TRENDS…

• The defence industry remains a hot area. 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. Meanwhile, defence experts warn that the UK has spent little additional money on conventional forces despite bold rhetoric, raising concerns about readiness and capability.
• Trump’s Greenland-related tariff threats put the frighteners on Britain’s car industry and even if the tariffs don’t go ahead, this aggressive stance will very much concentrate the minds of other manufacturers and other sectors who have come to rely too much on the US over the years. They will surely have to wean themselves off the US over the longer term.

TECH NEWS

• IN AI – the IMF mentioned the risk and repercussions of the AI bubble bursting in its latest World Economic Outlook report. This is stating the obvious but I guess this just puts an official stamp on it. It also upgraded its 2026 global growth forecasts in its report, noting that the world economy has proved more resilient than expected so far.
• In the UK, MPs are pressing regulators to stop sleepwalking into AI-related financial risks and are calling for stress tests to assess how markets would cope with an AI-driven shock.
• In Davos, with JPMorgan boss Jamie Dimon argued that the AI rollout may need to slow down unless governments do more to support displaced workers, otherwise there could be civil unrest. 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 took a more positive stance, highlighting job creation, but I’d say that his argument becomes more tenuous once the build-out phase is completed.
• Microsoft chief Satya Nadella suggested 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. It has already become China’s second-largest AI infrastructure and software provider, though execution will be critical as it pushes deeper into enterprise services.
• Silicon Valley start-up Logical Intelligence claimed 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 funding frenzy continued 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 but I think this is just noise, but it is worth mentioning.
• IN CHIPS – Nvidia faced fresh complications after suppliers halted production of parts for its H200 chips following Chinese officials blocking shipments, an unexpected snag given that the chips only just gained US approval for the China market!
• Japan’s Kioxia is thriving as data centre demand lifted margins for its NAND flash chips, pushing its share price sharply higher.
• Intel slipped back into losses, disappointing investors with weak guidance and a lack of clarity on customers for its next-generation chips.
• IN HARDWARE – Apple is reportedly developing an “AI pin” that could launch next year, joining a crowded and experimental market. While wearables are gaining traction – particularly 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.
• IN SATELLITES – 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.

IN MEDIA NEWS

• The BBC has agreed to make bespoke content specifically for YouTube, rather than simply posting clips and trailers from existing programmes. It 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. This means that 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.
• IN STREAMING – Netflix beat market expectations in Q4 as subscriber numbers climbed above 325 million, helping it post strong sales. It also announced an improved $82.7bn all-cash bid for Warner Bros Discovery’s studio and streaming assets.

IN SOCIAL MEDIA NEWS…

• The seemingly never-ending TikTok issue in America has now been resolved! TikTok will 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. However, ByteDance retains direct control of TikTok’s core US business lines which basically hands Beijing a major win, lifting a long-standing cloud over TikTok’s growth.
• In the UK, an Australia-style ban on social media for under-16s is edging closer after the House of Lords 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

IN CONSUMER-RELATED NEWS…

• UK consumer confidence has risen slightly but remains firmly negative, extending a bleak run of pessimism that has now lasted since January 2016 😱!
• The jobs market is also showing strain, with employment falling again and wage growth is slowing, particularly in retail and hospitality.

IN RETAIL…

• IN SUPERMARKETS – Morrisons’ losses deepened to £381m as higher borrowing costs collided with weak consumer spending. It’s more exposed than most of its rivals to pensioners and lower-income shoppers, who are especially sensitive to price pressures.
• IN APPAREL – Next bought Russell & Bromley’s brand, 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 are to close. It is the latest in a series of distressed high-street names snapped up by Next, including Cath Kidston, Joules and FatFace.
• IN GENERAL RETAIL – B&M cut its profit forecast and The Works reported falling sales after a disappointing festive period, reinforcing how patchy consumer demand can be over the most important quarter of the year for retailers.
• IN LEISURE NEWS…
  Independent coffee shops are increasingly leaving high-street chains behind. 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.
• 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.

IN 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.
• At Carlsberg, core beer brands fell below half of total sales for the first time ever as consumers drink more moderately. While the group has minimal US exposure, global sentiment still matters for beer consumption.

• IN REAL ESTATE – Rightmove said that asking prices for homes increased by £10,000 in January, the biggest month-on-month jump (from December to January) for over ten years!
• A report from the Home Builders Federation (HBF) concluded that at least 1.5m people have been excluded from home ownership because of the lack of affordability for first-time buyers while a report from Nationwide said that although there has been a “continued improvement in affordability” over the course of 2025 thanks to higher wages, stagnant house prices and cheaper mortgage rates. That being said, many first-time buyers are still having to rely on the Bank of Mum and Dad (BoMAD).
• Meanwhile, the latest ONS data showed that house prices in the capital fell at their sharpest pace since the global financial crisis in November amid property tax and affordability concerns ahead of the Budget last year. The biggest falls came in the most expensive boroughs.
• IN AUTOMOTIVE NEWS – VW announced better-than-expected cash flow amid efforts to cut costs to take on Chinese competition. The company also cut investment plans.
• Chinese EV makers, especially BYD, continue to outperform international rivals and there’s more to come as Nio, Aion and Zeekr are set to launch in the UK this year.
• Germany will include Chinese auto marques in its EV support scheme, which means that Germans will be able to get incentives from all manufacturers. This is great for EVs and consumers – but you wonder whether this could be a nail in the coffin for German automotive manufacturing!
• IN FINANCE – JP Morgan boosted long-serving chief exec Jamie Dimon’s pay to $43m but there was a bit of a dampener on that as Trump then sued Jamie Dimon and JPMorgan Chase for allegedly de-banking him in the wake of the Capital riots when he lost the election to Biden.
• Ford and GM got permission to set up banking units, a move that will help them to provide automotive financing products throughout the US, generally via their dealer network.
• SocGen announced plans to cut 1,800 jobs in France by the end of 2027 via natural attrition rather than via redundancy. It currently employs about 40,000.
• Scottish asset manager Aberdeen saw outflows triple last year thanks to customers withdrawing money in the lead-up to the Budget late last year. It’s not the only one that saw a spike in outflows but the question is whether their outflows were worse than everyone else’s!

My favourite video this week is the one with that champagne song. I know this will divide the room 😁. My wife and kids think I have no taste – I just say that my music tastes are “eclectic” 🤔. What do you think??