Monday 06/07/26

‘Trump accounts’: Wall Street-backed investment funds for children to go live (The Guardian, Chris Stein) heralds the launch of a savings plan for American kids born between January 2025 and December 2028. The savings vehicle will help parents to save money for their children by getting $1,000 to invest in funds managed by major Wall Street firms. That can then be topped up to $5,000 a year by parents, friends and employers! * SO WHAT? * I think that this is a great move and will be very popular. Will it be a vote winner for the midterm elections at the end of the year? Quite possibly. He certainly has ground to make up with voters who aren’t happy with his performance on the economy.

Turkey detains journalists and comic in crackdown before Nato summit (Financial Times, John Paul Rathbone) marks the start of an important week for NATO as Turkish officials cracked down on dissenting voices. A Turkish comedian was arrested for “inciting hatred and hostility” and insulting the president after his 90-minute routine got a whopping 11m views after ten days on YouTube where he called Erdoğan a “dictator”. This was all part of a security clampdown ahead of the NATO summit to be held on Tuesday and Wednesday this week. Saving Nato in the era of Trump (Financial Times, the editorial board) contends that some of the big questions that need answering at the summit include what role the US is going to take, whether it will withdraw forces and assets from Europe and how the roles of individual European countries will change in a world without the US military backbone. * SO WHAT? * NATO countries are trying to adapt to a world where the US steps back militarily – and it’s obviously taking time. Will the US stay long enough for NATO to catch up to the “new normal” or will it just leave anyway and leave gaps for Putin to exploit? We’ll know more later on this week!

Back in the UK, Andy Burnham warned over lack of cabinet as Number 10 transition talks step up (Financial Times, Lucy Fisher, George Parker and Anna Gross) shows that the PM-in-waiting is facing criticism that his transition to leadership is being scuppered by his unwillingness to confirm who’s going to be in his Cabinet when he takes office. Meanwhile, on the policy side of things, Lack of data puts England’s ‘mansion tax’ valuations at risk (Financial Times, James Pickford) cites research from Zoopla which shows that about 40% of homes that are estimated to be worth £1.5m or more have never had a sale picked up on the Land Registry! This means that the incoming “mansion tax” – aka the High Value Council Tax Surcharge (HVCTS) – that’s supposed to come into force in April 2028 won’t raise nearly as much as it could do! Under the incoming regime, homes in England that are valued at over £2m will attract a £2,500 per annum charge. This will increase on a sliding scale when those values are £2.5m, £3.5m and £5m. The government reckons it’ll get £430m per year on this “tax the rich” scheme. * SO WHAT? * FWIW, it sounds like this is going to be an administrative nightmare and I actually doubt whether this will really stand the test of time as a result. No doubt this will appeal to some but I just wonder whether there are better and more efficient ways to squeeze more money out of rich people that would be easier and cheaper to oversee.

In oil news, Brent could fall to $60 a barrel by Christmas, forecasts Citi (Financial Times, William Sandlund and Emily Herbert) cites forecasts by oil analysts at Citi, which would be half the peak level it hit during the Iran war, while Oil market opens up as retail traders pour in (Financial Times, Malcolm Moore) highlights a major move by the world’s biggest derivatives exchange, the CME Group, to enable individuals to bet on crude prices! CME’s standard futures contract represents 1,000 barrels of oil – but it will now offer a new 10-barrel contract in West Texas Intermediate to make trades more accessible to retail traders. This means that individuals will be able to get direct exposure to oil prices rather than playing them via oil company stocks or ETFs. * SO WHAT? * I think that this is huge. Retail traders have already shown an appetite to pit their wits against the pros via commodity-linked products traded on Hyperliquid and Binance – so this is a game-changer IMO. Given the huge amounts of money that trading teams of oil companies have made over the last few years, it’s not surprising that Joe Public wants a piece of the action. You do wonder whether this will mean that oil prices will become more volatile, given retail investors’ reputation for being flaky. That said, it may be good news for the pros because they love a bit of volatility…

Then in Canada unveils plans for new oil pipeline to break dependence on US (Financial Times, Ilya Gridneff) we see that PM Carney has announced plans to build a more than 1,000km oil pipeline that will stretch from Alberta to the western coast of British Colombia. This is part of efforts to make Canada an “energy superpower” and to wean itself off dependence on the US market. The Trans Mountain Corp will build the pipeline that will follow an existing route along with Pembina Pipeline Corp. Meanwhile, Canada plans to triple LNG production by developing five terminals over the next ten years and upgrade the Vancouver port. This is pretty dramatic stuff and will help a great deal with supplying Asia in particular.

US clean power prices set to soar as AI demand coincides with subsidy cuts (Financial Times, Martha Muir) cites a survey of solar and wind developers in the US by LevelTen Energy, a clean energy marketplace, which shows that the cost of clean energy Power Purchase Agreements (PPAs) will rise by anything from 40% to 120% once the subsidies enshrined in the Inflation Reduction Act for solar and wind projects expire. As an example, PPA prices in Texas could go from $55 per megawatt-hour to $121! Trump’s One Big Beautiful Bill says that renewable energy projects that begin construction after July 4th won’t be able to claim the Biden-era tax break that has – until now – covered up to 30% of the development costs. * SO WHAT? * This subsidy has provided US renewable projects with a notable boost resulting in US solar capacity almost doubling between 2022 and 2025. However, with the expiry of the subsidy looming – not to mention Trump’s support of the fossil fuel industry – it is thought that activity could slow down significantly. It all comes at a time when energy demand is increasing at pace, particularly from data centres. The Energy Information Administration reckons that US electricity demand will increase by anything between 25 and 50% by 2050 (that is a wide range, but hey!).

Big investors commit billions to private credit despite turmoil (Financial Times, Alexandra Heal and Eric Platt) shows that although a lot of the news flow has been about investors seeking to get their money out of private credit funds, the latest Prequin data suggests that large investors actually committed at least $16bn to private credit funds while retail investors headed for the exits. * SO WHAT? * This implies that big investors are still supporters of the private credit market despite a small number of big defaults and ongoing concerns about the exposure to the software sector. I wonder whether this is a sign that things are bottoming out for private credit funds while optimism is being supported by the strength of the US economy.

Iran war helps consultants return to growth (The Times, Tom Howard) is an interesting article that also goes against the grain of recent media coverage a bit as the combined revenues of Britain’s consultants rose by 3% last year, according to the latest data from the Management Consultancies Association (the MCA) – a decent performance compared to a slow 2024. Its annual industry report predicted that consultants’ revenue would increase again this year by another 6% thanks to companies needing their help to navigate ongoing geopolitical uncertainty. Energy resilience, supply chain diversification and general business streamlining have all been areas where their help has been sought. The MCA reckons that the next big area that consultancies will be able to latch on to will be cybersecurity following high profile attacks that hit JLR and M&S last year. * SO WHAT? * It seems that management consultants are now recruiting once more following two years of gloomy headlines about headcount reductions across the sector.

Then in Prediction markets are booming. But is the party about to stop? (The Times, Danny Fortson) we see that prediction markets could soon become victims of their own success.

Polymarket and Kalshi are the stars of this industry that allows punters to bet on pretty much anything. However, America’s Commodity Futures Trading Commission (CFTC) is now conducting a consumer protection investigation into Polymarket. The industry is currently regulated by the CFTC, which is the regulator for options and derivatives trading. However, while the companies themselves say that they are not gambling operations, the vast majority of people think that it is. This classification difference means that Polymarket and Kalshi have bigger markets because prediction markets are currently legal at 18 while you can’t gamble until you’re 21 in the US. * SO WHAT? * Minnesota is imposing a ban on prediction markets starting next month and, back in April, senators across the board banned themselves and their staff from using both of these platforms – so it seems that pressure on this industry is building. I personally think that this market is absolutely rife with possibilities to benefit from manipulation and should therefore be regulated much more harshly to protect people from themselves. In the meantime, the bets will keep rolling in and gambling companies like Flutter and Entain will continue to see the likes of Kalshi and Polymarket eating their lunch…

Companies stop spending after being ‘taxed out of existence’ (The Times, Jack Barnett) cites the latest research from the BCC which shows that willingness to embark on big projects has hit its lowest level since the end of the pandemic because companies are being “taxed out of existence”. * SO WHAT? * The cumulative effect of tax increases and rising operating costs have put the mockers on capital spending. There are concerns that the next Burnham government will be a classic tax-and-spend administration and that they’ll try and get even more money from businesses but of course, that remains to be seen. TBF to Burnham, he’s not had that much time to get the detail of his policies together.

Why OpenAI and Anthropic may struggle to float (Financial Times, John Thornhill) highlights the challenges faced by cutting edge AI models as the current period of growth may be coming to an end in the near future as investors get increasingly interested in how they can generate cash – particularly as rivals like SpaceX, Microsoft and Google have other highly cash-generative businesses to fall back on. Arguably, we’ve already seen early signs of reticence as trading of SpaceX’s bonds following its massive $25bn debt offering has been relatively muted. OpenAI and Anthropic will have to address fears surrounding the sustainability of their business models – which burn cash at an astonishing rate – the evolution of collaborators including Microsoft, Alphabet and Amazon becoming competitors and the potential commoditisation of frontier AI models. * SO WHAT? * Right now, Anthropic seems to have the edge over OpenAI with business customers, particularly in areas like law and science. However, it’s being held back by its entanglements with the US government while OpenAI is trying to get in the administration’s good books by offering them a 5% slice of the pie. However, the pressure will continue to ratchet up over time – so it’ll be interesting to see how their prospective IPOs fare…

UK regulator warns of ‘arms race’ to keep up with AI use in financial services (Financial Times, Martin Arnold) cites the FCA as saying that regulators are constantly having to up their game as more people use AI to help them make personal finance decisions. The FCA wants more powers to keep up with all the changes and want UK authorities to consider whether the likes of ChatGPT, Claude, Gemini and other LLMs should be regulated by them. * SO WHAT? * Although AI can be great with the personalisation of advice – and the democratisation of finance more generally – there’s huge scope for bias, tricky pricing and manipulation. Recent research carried out by an ED at the FCA found that 20% of UK adults were already OK with the idea of using AI models to

make financial decisions for them despite the models not being regulated – meaning that there’s no safety net for when things go wrong.

AI lawyers could save you thousands (Daily Telegraph, Louis Goss) takes a look at the rise of Garfield AI, the completely automated AI law firm that specialises in fighting claims worth up to £10,000 – and the future of law in general. Last month, Garfield AI won its first court case and big firms have been making staff cuts due to the ability of AI to go through huge volumes of data. * SO WHAT? * Law firms have thus far been insulated from many technological innovations due to the complexity of the work and have continued to be able to charge high fees. It’s these high fees that have locked many out of using legal services but Garfield AI is one of the pioneers changing all that. Yes, there have been some high profile cases of hallucinations but for the moment, at least, having humans in the loop is the way to go.

European space deal to create SpaceX rival draws antitrust claims (Financial Times, Brabara Moens and Laura Pitel) highlights dissent in the ranks as the CEO of leading German satellite group OHB is pushing back on the proposed merger of the space businesses of Airbus, Leonardo and Thales. He argued that this would be anticompetitive and lead to increased costs for taxpayers. Airbus, Leonardo and Thales agreed to merge their space divisions back in October in a deal codenamed Bromo and the venture is about to file for formal antitrust clearance with European competition authorities. * SO WHAT? * Given the mood music regarding Musk and SpaceX at the moment, I think it’s unusual to hear a European company railing against the creation of a much-needed European champion. Maybe OHB is getting FOMO about Bromo… 

In a quick scoot around some of today’s other interesting stories, Uber stalls European food delivery push as it pursues Delivery Hero takeover (Financial Times, Kieran Smith) shows that Uber’s decided to reprioritise and focus on its pursuit of Delivery Hero rather than its recently-stated desire to expand in seven countries this year. Its €10bn bid for the Berlin-based company was rejected in May.

Meanwhile, EasyJet reaches outline agreement on £5.5bn takeover by Castlelake (Financial Times, Peter Campbell and Camilla Hodgson) shows that the two sides have come to an initial agreement on a takeover after much drama and Next preparing bid for Harvey Nichols (Daily Telegraph, Christopher Jasper) highlights an ambitious move by the high street apparel retailer on the posh department store, although it’s in the very early stages.

In other news, EV Batteries Are Defying Expectations After Hundreds of Thousands of Miles (Wall Street Journal, Ellie Davis) shows that EV batteries are proving to be much more robust than originally thought (which I think should be great for second hand values) while A Trucking Startup Aims to Challenge Tesla. Now, Paychecks Are Missing—And So Is a Truck (Wall Street Journal, Paul Berger) takes a look at what’s actually going on at Chinese electric truck start-up Windrose Technology. It is currently racking up debt, is facing a lawsuit and is under scrutiny from US safety regulators. Hmmm. Is this going to be like Nicola all over again??

I get asked quite a lot about what my favourite films, TV shows and books are (mainly because people want another way to get their “commercial awareness” fix) and although The Founder is more of a big firm origin story, I actually find it inspiring to think how something so big grew from something so small! For me, my favourite scene – if you’ve not watched it – is how the real founders of McDonald’s came up with their “Speedee Service System” which formed the basis of the fast food industry ever since! It is quite something!