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 BIG PICTURE NEWS...
Iran blows up, Anthropic gets punished and USD1 gets attacked
IN WAR NEWS…
The week started off with the build-up of US forces in the Middle East while Iranian students mounted more anti-regime protests which them culminated in the US and Israel launching huge airstrikes on Iran and the killing of Supreme Leader Ayatolla Ali Khamenei, among many other senior leaders. Iran retaliated by hitting various military and non-military targets in the region. It’s not clear what’s going to happen next.
IN TRUMP THINGS…
TARIFFFS – the recent Supreme Court decision regarding the illegality of Trump’s tariffs prompted him to implement a 10% flat-rate tariff across the board, then a 15% tariff which then changed back to 10% (all in a matter of days). China and Brazil are going to benefit most from this while Britain is one of the biggest losers because it negates the deal that deal that we had with Trump and kills any advantage that we might have got from it. Trump’s side maintains that the ruling won’t stop the tariffs and the president then threatened “more obnoxious” tariffs. That hasn’t stopped over 900 legal challenges being brought against them from angry corporates who want their money back.
STATE OF THE UNION – Trump delivered the longest ever State of the Union address bigging up what he’s done so far. Affordability for Americans is still an issue and there was no mention of the Epstein files.
vs ANTHROPIC – US defence secretary Pete Hegseth threatened to cut Anthropic from the Pentagon’s supply chain if it did not back down from its stance that it does not want its tech to be used for military purposes. Anthropic dug its heels in and then Trump instructed all government agencies to stop using it. It will be replaced by OpenAI.
PANAMA – Maersk and MSC have now taken over operations of the two key ports of Balboa and Cristóbal following the ejection of the previous Hong Kong-based operator CK Hutchison Holdings last month. Trump got what he wanted in Panama but CK Hutchison is appealing the Supreme Court ruling.
IN REGIONAL/INDIVIDUAL COUNTRY NEWS…
GERMANY – the latest official stats show that China has overtaken the US as Germany’s top trading partner. This news came ahead of Merz’s first visit to China since taking office, which took place this week.
THE UK – military spending is actually going to fall as a percentage of GDP in 2027-28 but this reflects the growth of the UK economy rather than a fall in spending in absolute terms. Still, it goes against the current trend and Starmer’s stated plans where he recently indicated that he wanted military spending to be sped up.
IN ENERGY NEWS…
Findings from the Adam Smith think-tank suggest that British businesses are now paying almost double their French equivalents for electricity, putting us at a major competitive disadvantage. The think-tank puts this down to reliance on “expensive renewables” and France’s access to other sources, particularly nuclear.
In the meantime, we heard that Ofgem reckons that if all datacentre projects that are currently seeking grid connections go ahead and operate at full capacity, they will require more power than Britain’s peak energy demand. This is going to mean higher bills…
France’s Engie struck a deal to buy UK Power Networks – the company that owns the electricity cables and power lines in London, the south-east and east of England and serves 8.5million customers – for £10.5bn.
IN NUCLEAR NEWS – German nuclear fusion start-up Proxima Fusion is getting €400m in financing from Bavaria to put towards a €2bn test facility. However, it still needs to get another €1.2bn from the government to make this project happen.
IN RENEWABLES – a new geothermal power plant started up this week near Redruth. It will power a modest 10,000 homes, but power generated in this way runs for about 96% of the year – which is way more than solar (25% of the year) and wind (20-40% of the year).
IN MINING – Japan is looking to extract rare earth elements from the floor of the ocean in an effort to chip away at China’s dominance in rare earths. Japan had discovered resources off a remote island that lies within its exclusive economic zone back in 2011 but the situation is much more urgent now!
Anglo American halved the value of its diamond business – its third cut in three years. It’s all down to sluggish economic growth in China and the rise in popularity of lab-grown diamonds. It’s still trying to sell the business…
IN CRYPTO NEWS…
World Liberty’s stablecoin, USD1, was attacked by hackers. World Liberty Financial insisted that its flagship stablecoin was “completely safe” and that social media influencers were paid to spread “FUD” – aka Fear, Uncertainty and Doubt – in order to hit the value of USD1 and benefit from the chaos they manufactured themselves.
IN INVESTMENT & BUSINESS TRENDS...
IN INVESTMENT TRENDS…
The latest data from EPFR showed that European equities are on track to see their biggest ever monthly inflows in February via ETFs and mutual funds. The money is flowing in because investors are showing an increased desire to cut exposure to the US.
US software stocks had a bit of a volatile week as they rebounded after a sell-off.
Private credit companies saw their share prices hit as investor concern was sparked by Blue Owl’s decision to permanently restrict redemptions and a private credit fund managed by KKR saw a big jump in troubled loans.
European traders raked in their highest revenues since at least 2015, according to data from Visible Alpha. This is all down to market volatility fuelled by AI concerns/euphoria and geopolitical uncertainty. Meanwhile, Wall Street traders are now making money out of corporates selling the rights to any refunds that they might get out of the recent Supreme Court decision.
There’s an emerging trend of investors buying into the “HALO trade” (this stands for Heavy Asset, Low Obsolescence) as an alternative to buying expensive US tech assets. Japan’s got loads of these types of companies.
A report from a little known US firm called Citrini Research spooked investors with a report about a near-future where AI systems crash the entire US economy. It was at least partly responsible for the most recent tech sell-off which even caught the venerable IBM because an Anthropic tool could be used to replace a lucrative service IBM provides in updating the software of its machines.
IN M&A NEWS – it looks like 2026 is going to be a big year for biotech M&A. There have been some big deals already but after an uncertain year for Big Pharma what with Trump tariff threats hanging over them, the industry has emerged out of the other side with financial firepower, a bit more tariff certainty and the proximity of the widely-publicised patent cliff to incentivise more deals.
IN FUNDING NEWS – the UK’s driverless car company Wayve managed to raise $1.5bn from its latest funding round, giving it an implied company valuation of $8.6bn! Meanwhile Stripe’s valuation shot up to $159bn in its latest employee share sale. Stripe is not publicly listed.
IN BUSINESS TRENDS…
Consultancies are doing well from advising corporates on how to use AI to boost productivity and how to supply power to datacentres. Research group Source Global reckons that the US consulting market is set to grow by 7% this year.
Prenup agreements are booming among Gen Z couples in the US, but it looks like the trend is going to come here as well! Prenup start-ups are doing very well in the US and there’s a UK start-up called Wenup which launched in 2023 and breached £1m in revenues last year.
There’s a growing “WorkTok” trend where employees video their daily office routines. It provides people with windows into different professions and can be a great – and cheap – publicity for the company if done correctly. However, it can have consequences for the influencer if they’re not careful.
Gambling companies, like Flutter, continue to face pressure from prediction market companies like Polymarket and Kalshi. Trading on prediction markets has shot up in the last year or so and they have been able to get around sports gambling bans in some US states by saying that they come under the Commodity Futures Trading Commission.
Lloyds Bank announced plans to stop opening joint, premium or student accounts for customers at its branches. They will instead be directed to use its app and website. This comes at a time when it is closing over 100 branches across the country. If Lloyds is going to do this, I would expect at least some of the others to do the same.
IN EMPLOYMENT & CONSUMER-RELATED TRENDS...
IN EMPLOYMENT TRENDS…
JP Morgan analysts reckon that UK unemployment will hit 5.5% in the first half of this year thanks to businesses continuing to hold off on hiring after the chancellor effectively jacked up employment costs since last April. Adzuna figures show that job vacancies have fallen to their lowest level for five years, with the number of grad roles falling particularly sharply while CEBR research shows that young people being hardest hit by the cost of living crisis, something that was also reflected by the Bank of England’s chief economist.
Financial services company Block announced that it would cut 40% of its workforce because it believes that AI will be able to do a lot of the heavy lifting. This news came at the same time that the company announced a decent Q4 performance and a positive outlook for 2026.
HR departments could come under greater scrutiny as a report from centre-right think-tank Policy Exchange suggested that the HR sector is too big and its equality, diversity and inclusion policies are costing British businesses billions of pounds per year. The report said that the HR industry in the UK is proportionally almost double the size of the EU and 60% bigger than in the US! Apparently, between 2011 and 2023, there was an 83% increase in the number of people working in HR in the UK!
IN CONSUMER TRENDS – the latest GfK survey showed that UK consumer confidence weakened over the last month due to concerns over the state of the economy.
IN CONSUMER GOODS – Diageo halved the dividend and announced price reductions in order to win back customers and investors sold the shares heavily as a result. Meanwhile, the Cornish brewery that makes Doom Bar is going to be shut down by Molson Coors, which has owned it for 15 years. The tough times continue or alcoholic beverage makers…
IN REAL ESTATE NEWS – Zoopla figures say that more homes are getting cheaper to buy than rent thanks to falling interest rates. Meanwhile, we’re seeing the return of “price bunching” around the £2m, £2.5m, £3.5m and £5m thresholds announced in the autumn Budget. In the US, the benchmark US mortgage rate has fallen below 6% for the first time since September 2022, potentially giving relief to borrowers and supporting Trump’s narrative that he’s making housing more affordable.
IN TECH & MEDIA NEWS...
IN TECH NEWS…
IN CHIPS – Meta agreed to buy $60bn worth of AI chips from AMD over a five-year period in yet another example of leading AI players doing deals to diversify their supply of chips! Meanwhile, Nvidia’s share price was flat despite another strong set of quarterly results and sunny outlook because investors are more worried about the sustainability of the AI investment boom.
IN HARDWARE – Dell saw Q4 sales boom thanks to strong demand in its AI server business.
IN SOFTWARE – Duolingo saw Q4 revenue growth slow down but it said that it will prioritise user growth in the next few years, which is likely to lower profitability. The company’s share price dropped by 24% as investors weren’t impressed by this.
IN MEDIA NEWS…
After a lot of faffing around, Paramount Skydance’s bid for Warner Bros Discovery beat Netflix’s offer, bring a close to a protracted process.
WPP’s new boss announced a turnaround plan for the troubled advertising group and – surprise, surprise – it involves cost cuts! She’s now aiming to save £500m.
IN AUTOMOTIVE NEWS...
IN AUTOMOTIVE TRENDS…
UK car production fell by 13.6% in January, according to the latest SMMT numbers. Production volumes are expected to increase over the course of this year, though.
IN INDIVIDUAL CARMAKER NEWS…
Lamborghini became the latest car maker to rein in its EV ambitions and it will instead focus on making plug-in hybrids. It will not launch an all-electric supercar.
Aston Martin is going to cut 20% of its workforce in the face of heavy losses. This is all part of a broader target to cut costs by about £40m. Most of the losses will be in the UK and will apply across the business. Aston Martin continues to struggle with sluggish sales volumes and rising debt.
IN DRIVERLESS NEWS…
Uber launched an array of autonomous vehicle-specific services including insurance and roadside assistance as part of broader efforts to make robotaxis viable.
VW announced ambitions to become “European champion” in self-driving vehicles. It’s going to launch driverless taxis later this year in LA with Uber. VW’s robotaxi unit, MOIA, already has 100 specialised ID Buzz test vehicles on the road in Germany, Norway and the US.
IN MISCELLANEOUS NEWS...
IN PHARMACEUTICALS – Novo Nordisk’s next-gen weight-loss treatment fell way short of expectations in clinical trials. The company’s share price fell by a chunky 16.5% in Copenhagen to its lowest level since June 2021. As if that wasn’t bad enough, it announced the halving of wholesale prices of Wegovy (50% from January 2027) and Ozempic (35%). This means that prices will be considerably cheaper than wholesale prices for Eli Lilly’s more effective Zepbound.
Plans to pedestrianise Oxford Street were approved. Work will start in the next few months with a view to completion in late 2027. More details are expected to be released next week.
Ocado announced plans to cut 1,000 jobs and restructure its technology unit in response to customers ditching its automated distribution centres. The tech division was its best-performing business until last year accounting for almost 80% of its underlying profit. Two-thirds of the job losses will be in the UK and half of them will be in R&D.
The student loan crisis hit the performance of Britain’s biggest university accommodation provider, Unite, whose share price dropped by a chunky 10% in response to its third profit warning in three months. It put its tricky situation down to more students in the UK opting to save money by living at home while they go to uni.
BANTER
My favourite video of the week is the one with the baguette rules! I must say that I did not know all of those!