Friday 24/04/26

UK public sector borrowing hit £12.6bn in March as Iran war strains finances (Financial Times, Valentina Romei) cites the latest stats from the OBR which show that public sector borrowing overshot market forecasts versus March last year but the Middle East situation is likely to increase the strain. UK braces for price rises driven by Iran war as economic confidence plummets (The Guardian, Richard Partington and Tom Knowles) cites the latest GfK survey which showed consumer confidence hitting its lowest level since October 2023 but then UK business activity rose more than expected in April (Financial Times, Valentina Romei) highlights a rise in private sector activity, according to the latest PMI survey that monitors activity in the manufacturing and services sectors. It seems that companies were prompted to bring forward purchases in anticipation of war-related price rises.

In prediction market news, US soldier charged with making prediction-market bets on Maduro’s seizure (Financial Times, Stefania Palma) shows that a soldier involved in planning the raid to take Venezuelan president Maduro used classified information to place various bets on Polymarket on things like “US Forces in Venezuela” and “Maduro out” that netted him over $400,000. He then tried to hide the money by transferring most of his winnings to a foreign crypto vault and then a new online brokerage account. He faces four counts with each one getting him a maximum sentence of between 10 and 20 years in prison! * SO WHAT? * This guy had the misfortune of being caught. I get the uncomfortable feeling that are far more people who should be facing the same fate as this guy will get away with it because they are better protected and/or more savvy about covering their tracks. I hope more people get caught doing this because this is inherently wrong!

French weather service alerts police to tampering after suspicious Polymarket bets (Financial Times, Leila Abboud, Sarah White, Stephanie Stacey, Philip Georgiadis and Laura Dubois) highlights the reporting by France’s weather forecasting service, Météo-France, to the police of interference with its temperature gauges at Paris-Charles de Gaulle airport. Temperatures spiked while humidity dropped sharply at the same time for a few minutes on April 6th and 15th. This coincided with suspiciously-timed bets on the highest temperature of the day in Paris. One wallet made $13,990 profit on a stake of less than $30 after betting that the temperature in the city

would hit 21°C. On both of the dates mentioned, trading volume on Polymarket’s “Highest temperature in Paris” market breached $500,000 – which is more than double the average daily volume for this market. * SO WHAT? * As I’ve said many times before, this prediction market malarkey needs to be regulated ASAP because there is so much scope for criminal activity – and the temptation to tilt the odds in your favour will only get greater as household incomes get tighter. At the very least there need to be stringent ID checks.

In oil news, BP board suffers triple climate rebellion from shareholders (The Guardian, Jillian Ambrose) highlights a bit of a bump in the road for the oil major as over 50% of shareholders voting at the company’s AGM voted against the company’s plans to ditch its existing climate reporting and against the proposal to replace in-person annual shareholder meetings with online-only events. * SO WHAT? * This is a pain for the new leadership, which is trying to turn things around, but it’s not terminal. Surely any pain here will be mitigated by ongoing oil price strength…

The world is watching the wrong oil price (Daily Telegraph, Hans van Leeuwen) is an interesting article that takes a closer look at oil prices, concluding that we’re all concentrating on the wrong one – and the situation is much worse that we are giving it credit for. The current pattern goes something like this: when Brent crude breaches $100 a barrel, Trump says something on Truth Social or to a journalist that sends the price back down again. Then he makes threats to get him closer to a deal, which sends it up again. Traders are now just responding to his social media output…but the reality of oil is actually different. * SO WHAT? * Closure of the Strait of Hormuz is the worst case scenario and yet it doesn’t feel like the market is reflecting it because most people follow Brent futures – but if you want to know how much barrels of oil cost right now to be loaded onto a tanker, Brent Dated is the price to follow – and it is way higher than the Brent futures price (by early this month, when Brent futures were at $109.27, the Brent Dated price hit $144.36!). The gap has been narrowing, but Brent Dated is still higher. The argument is that it is the Dated price that more realistically reflects the risk of fuel shortages and rising fuel prices. Usually, the futures prices and Dated prices are quite similar but since the Iran war broke out they have continued to diverge.

It’s all getting a bit tricky out there on the jobs front. In Big Tech, Meta to cut 10% of jobs to ‘offset’ Mark Zuckerberg’s AI spending (Financial Times, Hannah Murphy) highlights a dramatic cut that the tech giant says will be made next month (that’s about 8,000 jobs). Zuck added, in a memo, that he was no longer going to fill 6,000 positions that had been planned. He said in January that capex would boom – and this freaked out a lot of investors, so I guess this is his response. Microsoft to offer 7% of US staff voluntary redundancy for the first time (Financial Times, Rafe Rosner-Uddin) shows that the cloud giant is offering voluntary redundancy for the first time in the company’s 51-year history – and comes hot on the heels of the company’s decision to axe over 15,000 employees last year. It has also faced concerns from investors about the eye-watering amounts the company is spending on AI and AI infrastructure.

Elsewhere, Nike to Cut 1,400 Workers in Latest Round of Layoffs (Wall Street Journal, Inti Pacheco) shows that the company announced cuts as part of a broader effort to streamline its

global operations. The COO played it down, saying that this was all part of previous plans that are part of the overall push to turn the company around under new-old CEO Elliott Hill.

Then in KPMG Cutting 10% of U.S. Audit Partners After Voluntary-Retirement Push Falls Short (Wall Street Journal, Mark Maurer) we see the Big Four accountancy firm making significant headcount reductions after years of trying to get them to take early retirement. About 100 US audit partners are for the chop. The company says that this is because it wants to align the number of partners with the size of the audit business. * SO WHAT? * Large accountancy firms have been cutting jobs after over-hiring during the pandemic. This latest cut is unusual because it’s usually the minions that get the bullet rather than the partners.

In White House accuses China of ‘industrial-scale’ theft of AI technology (Financial Times, Demetri Sevastopulo and Cristina Criddle) we see that the US government has accused China of wholesale nicking of its AI IP and said that it would tighten this thieving of US innovation. This just marks the latest tensions around Chinese groups allegedly using advanced AI research to power its own. * SO WHAT? * I’m sure that there’s a lot of this going the other way as well, but rather than just whinge about the Chinese supposedly stealing this IP surely the government and the tech companies need to do more about protecting themselves.

In the same vein, China hackers steal western secrets by targeting consumer gadgets (Financial Times, Sam Jones) highlights something rather concerning – that Chinese government hackers are using devices that feed into the Internet of Things (so things like home routers and smart fridges) in cyber attacks on western national infrastructure, according to a number of leading intelligence agencies. They are allegedly using botnets which are easily set up because individuals and businesses often fail to update the software for these devices when buying them. The idea behind the hacks is to compromise military and civilians systems so that the US will be hindered in a response to a potential Chinese invasion of Taiwan.

Then in UK in talks with Anthropic over Mythos access for banks (Financial Times, Ortenca Aliaj, Madhumita Murgia and Laith Al-Khalaf) we see that Anthropic is currently in talks with the UK government about rolling out its Claude Mythos model to key British businesses. Banks and financial institutions are particularly keen on getting access. Almost all of the companies that have had access thus far have been American. Meanwhile, Anthropic and Freshfields agree deal to create legal AI tools (Financial Times, Kaye Wiggins) highlights a deal between the two companies to build specialist legal AI tools that could subsequently be sold to rival law firms. Anthropic will use the expertise from Freshfields’ lawyers to design a model that drafts documents, reviews contracts and carries out due diligence on companies. In exchange, Freshfields will roll out Claude across all of its offices around the globe and get early access to

future Anthropic models and tools (except for Mythos). * SO WHAT? * This is the first time that Anthropic has signed an agreement with a law firm. Law firms are already making progress with AI and platforms like Harvey and Legora are already available. However, this latest deal is probably going to poke the profession into having a bit more of a sense of urgency regarding the tech. There’s still no clear conclusion yet about how AI is going to change delivery, pricing or costs in the legal profession. Anthropic has agreed partnerships with other industries – including with Accenture and Goldman Sachs.

High earners race ahead on AI as workplace divide widens (Financial Times, Madhumita Murgia and John Burn-Murdoch) cites the results of an FT poll of 4,000 workers in the US and UK which show that the highest-earning and most experienced workers are adopting AI in their workflows much faster than others. 60% of the best paid workers use AI daily versus just 16% of lower earners. There’s also a gender divide as well – as men are much more likely than women to use AI tools. * SO WHAT? * The fear here is that AI may deepen earnings inequality by boosting the productivity of workers at the top end of the earnings curve but not doing the same for those at the bottom. Interestingly, it seems that the heaviest users of AI at work weren’t the youngest ones – those in their thirties were. I see no reason why the gender divide shouldn’t narrow but in terms of the other stats on usage, I’m going to be blunt here and say that those in their thirties and that are better paid are the ones who probably worry the most about AI taking their jobs because they’ve arguably got more to lose.

Elsewhere, Intel Shares Jump 20% as AI Agents Drive Big Growth (Wall Street Journal, Robbie Whelan) shows that Intel had a decent performance in the March quarter and beat market expectations thanks to rising demand for CPUs that AI agents use. Intel had previously been left behind because GPUs, which they don’t specialise in, were in vogue – but that’s all changed now. The Trump administration buying a 10% stake in the company last year will have helped as well! Sales in its datacentre division were particularly strong.

In a quick scoot around some of today’s other interesting stories, L’Oréal hails ‘lipstick effect’ as war boosts sales of small comforts (The Times, Guy Taylor) shows that the French cosmetic group has benefitted from the phenomenon where shoppers seek out comfort purchases in times of hardship (i.e. putting on some lippy gives you a little lift for relatively little cost) as it announced decent results yesterday. Investors had been bracing themselves for fallout from the Iran war so this was a pleasant surprise for them.

On the other hand, Sainsbury’s and WH Smith warn of hit from Iran war (The Times, Isabella Fish and Guy Taylor) shows that both retailers got more cautious about the outlook while

Foxtons suffers 35% slide in income from house sales (The Times, Tom Howard) reflects what’s already going on in the property market as a result of the Iran war impact.

Tesla roars back in Europe as electric car demand surges (The Times, Robert Lea) is an interesting article which shows that Tesla is coming back from the wilderness of last year as it saw sales of its new EVs rise sharply in Europe last month. EV sales now make up over 20% of all new registrations across the continent. The European motor manufacturers’ association, the ACEA, said that sales had risen thanks to a combination of government subsidies and the sudden rise in fuel prices resulting from the war.

Here’s a general knowledge quiz to end the week!