Wednesday 19/08/26

UAE suspends trade with Iran after saying it fired missiles at Gulf state (Financial Times, Nicolas Parasie) shows that the UAE suspended trade and commercial ties with Iran after it said that Iran fired two ballistic missiles towards it. Understandable. It was Iran’s first direct attack on the UAE since May and triggered an emergency phone alert to UAE residents. Iran denied involvement. Meanwhile, Donald Trump says deal reached with Canada and delays tariffs (Financial Times, Ilya Gridneff) shows that Trump has apparently struck a deal with Canada, meaning that his threat to impose 50% tariffs on a wide range of Canadian goods didn’t go ahead – but the deadline is being pushed back by three days. Let’s see whether a proper deal has actually been struck though or whether this is all a load of hot air…but then Soaring diesel prices rip across US economy (Financial Times, Myles McCormick and Jamie Smyth) shows that the pump price of diesel hit $5.47 a gallon yesterday, nearing its all-time high of $5.82 thanks to ongoing supply issues. This is bad news for industrial and agricultural America (given they use so much of it) and bad news for Trump ahead of the midterm elections.

Back home, UK borrowing costs near two-decade high (The Times, Jack Barnett) shows that borrowing costs for the government have reached their highest level since August 2007 thanks to rising fears about inflation and high levels of public borrowing. And as if that wasn’t enough for Burnham and chums to contend with, UK employers shed jobs as labour market weakens further (Financial Times, Sam Fleming) cites the latest numbers from the ONS which show that job losses in June were higher than expected while unemployment in Q2 was also higher than market consensus, standing at 4.9% verses expectations of 4.8%. Personal insolvencies jump 14% as household debt pressures mount (The Times, James Hurley) highlights the latest official stats which show that the number of individuals entering insolvency in England and Wales is on

the rise and was driven by an increase in Individual Voluntary Arrangements (IVAs), which is an alternative route to bankruptcy where debtors make an agreement with their creditors. Apart from December 2025, when a massive backlog of cases was cleared, the number of IVAs recorded in July hit their highest monthly number since November 2022. This clearly shows that many households are feeling financial pressures. * SO WHAT? * None of the above is painting a particularly great picture of what Burnham’s got to deal with. He’s got to improve everyone’s standard of living and create more jobs without borrowing too much to get it done. That is going to be a very tough ask – particularly in the current geopolitical climate!

In climate-related news, UK risks running out of gas by 2030s, ministers told (The Guardian, Jillian Ambrose) we see that Burnham and chums have another headache to deal with – that we might run out of gas in the 2030s unless the government takes “unprecedented” action to protect against a future supply shock, according to an official consultation report. The government is looking at the possibility of injecting direct financial support into our creaking gas infrastructure. * SO WHAT? * Again, this is something that the new government is going to have to address whilst also trying to oversee a successful transition to the use of renewable resources.

Then in Thames Water issues warning over reservoir levels (Daily Telegraph, Eir Nolsøe) we see that Thames Water has told customers to do what they can to cut water usage because reservoir levels are lower than normal due to the recent heatwaves. Its London reservoirs were 74% full at the end of last month at a time when they’re usually 87% full. Thames Water says that rainfall has been around 40% of the long term average since March but water demand has been 30% above the average for this time of year!

China eases limits on Nvidia H200 chips as AI race escalates (Financial Times, Zijing Wu) shows that China is relenting on American chip imports, which has helped Nvidia’s H200 sales to companies such as ByteDance and Tencent. Other groups may also be able to get their hands on the chips as Chinese regulators have told companies that they are OK to ship these processors to Hong Kong and use them there. The H200 chip is still at least two generations behind Nvidia’s current chips but it’s still in demand. The only thing about this, though, is that Hong Kong doesn’t have enough data centres to house them. All the while, Chinese chipmakers and model makers continue to narrow the gap with the US…

OpenAI says it will expand monitoring of model testing after hacking incident (Financial Times, Cristina Criddle) shows that the AI giant announced that it has overhauled the procedures it uses to test its models, devoting more resources to oversight following recent incidents where AI “agents” went rogue before going on a hacking spree. The company stated yesterday that it would tighten the testing and require stronger isolation of models during testing in order to block internet access. * SO WHAT? * I guess that OpenAI had to act quickly in order to show that it’s taking these threats seriously, particularly as it’s heading towards an IPO in the not-too-distant future.

In social media news, US states accuse Meta of covering up research on teen social media addiction in pivotal trial (The Guardian, Dara Kerr) we see that lawyers representing 29 US states have accused the social media giant of hiding research which showed that Instagram was addictive for teenagers. The trial is expected to last six to eight weeks and the lawsuit itself alleges that Meta regularly collected data on kids under the age of 13 without parental permission, violating federal and state laws. Meta denies all allegations. Reel-ing it in: Meta is paying influencers to promote teen accounts (The Guardian, Johana Bhuiyan) cites a new report by the Tech Transparency Project, a digital advocacy group, which shows that whenever talk of a teen ban surfaced, Meta started to recruit lifestyle, parenting and mental health content creators to push back and say that the platform already had sufficient parental and other safety

controls in place. * SO WHAT? * It certainly feels like the pressure is building on Meta at the moment. Their legal teams are going to be stretched to their limits but I guess that we’re just going to have to wait until the courts do their thing.

Elsewhere, Apple’s $100bn services business starts to feel the cost of antitrust attacks (Financial Times, Michael Acton) shows that the company reported services revenues and margins below market expectations this month and went as far as saying that it “may not earn any commission at all” when purchases are made via alternative payment systems. It seems that all the antitrust actions regarding their all-powerful App Store are now taking their toll and chipping away at Apple’s high margin services business. * SO WHAT? * A report by Sensor Tower backs this up, showing that US consumer spending via the App Store fell by 6% in Q2 versus 9% growth a year earlier. Other research by Appfigures suggests that the company’s US commission revenue has dropped by 18% this year. Given that the “services” division is so lucrative – not to mention an area that Apple has been keen to grow over the years – this is a blow but I guess that the good times couldn’t last forever. Apple is just going to have to adapt…

Then in Disney sues Trump administration over ‘retaliatory’ ABC licence review (Financial Times, Peter Wells, Daniel Thomas and Ella Lee) we see that Walt Disney has taken the brave step of suing the FCC media watchdog for launching a “retaliatory campaign” against its ABC TV networks over the content of its broadcasts. The FCC ordered a full review in April of all broadcast TV stations owned by Disney over alleged violations of rules including “unlawful discrimination”. Disney contends that the Trump administration is using the FCC to wage “a retaliatory campaign against ABC for a single reason: it disapproves of what ABC broadcasts”. Trump keeps pushing the FCC to take away ABC’s licences – something that has particular punch considering that Trump appointed the regulator’s chief! * SO WHAT? * Trump is not afraid of attacking media outlets that don’t see the world the way he does but I think it requires courage to take on his administration. Even the BBC is currently fighting a $10bn defamation lawsuit brought by Trump. 

Counterfeiting claims threaten to take the shine off Shein (Financial Times, Lex) takes a closer look at Shein and the consequences of its propensity to copy others’ work (allegedly). Shein has faced loads of accusations of copying over the years (it has been the subject over over 100 copyright lawsuits in US courts along since the start of 2023!) and complainants have ranged from individual designers to major corporations. The company has largely weathered this well, although the European Commission fined Alibaba’s AliExpress €550m for breaching the Digital Services Act, something that Shein is also being investigated for. * SO WHAT? * The company is making moves towards a Hong Kong listing and although its share price has come down a long way since its peak I would suggest that there is still risk in buying Shein in the IPO given litigation risk and how corporates and non-Chinese regulators love to hate it.

How a pesky Jordan copycat dribbled around Nike in China (Financial Times, Thomas Hale) is an interesting article about a Chinese sportswear company called Qiaodan has managed to get away with ripping off the Jordan trademark (allegedly). Despite this being so blatant – “Qiaodan” is the Chinese rendering of Nike’s Jordan brand and the logo itself is of a basketball player dribbling – the company has chugged on quite happily over the last 26 years during which time it’s been in a legal dispute with Michael Jordan himself. Despite everything, Qiaodan was ultimately found to have infringed just an element of Jordan’s previous name rights. The store is now a major nationwide retailer. Other Chinese brands including Anta Sports (which now owns a hefty chunk of Puma), 361 Degrees and XTEP have been growing and taking on the likes of Nike, Adidas, On, Hoka and Salomon. Nike continues to have its lunch eaten in China as its sales fell by 17% in the June quarter in its eighth consecutive quarterly decline. It’s like EVs all over again…

Then in Ikea to take on eBay and Vinted with UK online secondhand site (The Guardian, Sarah Butler) we see that Ikea is planning on launching its own secondhand selling site in the UK, meaning that shoppers who are on its membership scheme will be able to connect directly to one another to trade pre-owned Ikea items locally. It’s expected to launch in the next few months. * SO WHAT? * This sounds like an interesting idea and will no doubt boost the company’s eco-credentials. However, I wouldn’t have thought that the other sites are going to be too concerned about this given that Ikea is providing a very niche service whereas the others sell everything.

M&S named fastest-growing grocer in Britain (Daily Telegraph, Tom Haynes) cites the latest figures from Worldpanel which show that food sales at M&S in the 12 weeks to August 10th were way ahead of what it did in the same period last year and way ahead of its rivals. At the other end of the scale, Asda continues to suffer as chairman Allan Leighton’s efforts to reignite its performance like he did once before, fall flat. Asda has had zero sales growth since March 2024. * SO WHAT? * As I’ve said before, I wonder whether Asda and Morrisons will get together, do that whole “synergies” thing, streamline the businesses and have some kind of plan. It feels to me like the way they’re going now, they’re heading into terminal decline with no convincing strategy to guide them.

In consumer goods news, Guinness owner cuts 2,000 jobs as ‘Drastic Dave’ drives turnaround (Daily Telegraph, Tom Haynes) shows that the CEO of Guinness cut almost 2,000 jobs last year as part of broader cost-cutting measures designed to spark a turnaround. The next move is to double Guinness’s capacity…

In a quick scoot around some of today’s other interesting stories, This chart says the stock market is ready to crash (Daily Telegraph, Chris Price) highlights reflections on the Shiller price-to-earnings ratio chart (aka “the Shiller PE ratio” chart) that we’re due a market crash. The chart is seen as a predictor of crashes and the last time it got this high, August 2000, we saw the bursting of the dotcom bubble. Despite this, Fund managers set for global ‘boom’ as stocks hit five-year high (The Times, Tom Howard) cites the closely-watched monthly Bank of America survey of fund managers which shows that their allocation to equities has hit its highest level since November 2021. They have been bullish on the global stockmarket for over a year and done really well out of it despite what’s going on in the Middle East. Meanwhile, Short sellers reap $2bn profit as modular nuclear reactor stocks tumble (Financial Times, Ramsay Hodgson) highlights the success of shorts on NuScale Power, Nano Nuclear and Oklo, which have worked worked really well! They boomed last year as investors got swept up in the nuclear energy hype but ultimately they are all lossmaking and have hardly any revenue.

Elsewhere, Chinese humanoid robot maker surges 600% in trading debut (Financial Times, William Sandlund) shows that Unitree’s much-anticipated market debut went extremely well, booming by over 600% on its first day of trading in Shanghai! The excitement died down a bit and the share price ended up by “just” 578%. It’ll be interesting to see whether retail investors continue to pile in to this…

Then in Mike Ashley tightens grip on Hugo Boss after takeover bid (Daily Telegraph, Tom Haynes) we see that Frasers Group has taken another nibble at Hugo Boss shares and now has almost 50% of the struggling German fashion brand. Frasers Group started building its stake in the company in 2020 and took it up to 30% earlier on this year. It looks to me like he’s going to buy this company – but the question is, is he actually going to do anything with it?? Frasers Group now has so many brands – now including Harvey Nichols – but I always get a bit disappointed when Ashley sticks his nose in because he doesn’t always do anything with the brands he buys…

This mum is really putting on an impressive show for her kid! Not surprising considering she used to be one of Lady Gaga’s dancers!