Wednesday 16/09/26

Trump’s Iran war has cost US $38bn and caused munitions ‘shortfall’ (Financial Times, Steff Chávez and Claire Jones) cites the latest findings of the defence department’s Inspector General and Congressional Budget Office which shows that Trump’s war is costing US taxpayers and severely denting the military’s ordnance stockpile. The Pentagon has already moved to expand production capacity but it’s going to take some time to return to normal levels. This is the first official acknowledgment from within the government, since the war started, that there’s a munition shortfall. This goes against what Trump and defence secretary Hegseth are saying. Also, the CBO (the lawmakers’ independent fiscal watchdog) estimated that the cost of the war so far stands at $38bn and that every month adds another $2bn-$3bn to the bill. American Businesses Have No Idea How to Set Prices Right Now (Wall Street Journal, Owen Tucker-Smith) shows that US businesses are having trouble budgeting because they don’t know how to take into account the high energy prices that have resulted from the Iran war – whether to treat them as a short-term one-off or whether they should be permanently factored in. Americans Have Spent $100 Billion More on Fuel During the Iran War (Wall Street Journal, David Uberti) highlights the impact on individuals, according to research by the Climate Solutions Lab at Brown University and US mulls diesel export ban as prices skyrocket (Daily Telegraph, Hans van Leeuwen) shows that the Senate majority leader, John Thune, is now considering drastic measures as a result. If the US decides to cut diesel exports, that’ll be bad for everyone and surely put even more upward pressure on inflation. I have no doubt that Trump and chums will swear blind that all of this is fake news, that there’s nothing to worry about for businesses and that the high oil prices are most definitely due to the Ukraine war rather than the war he started in Iran. All the while, Ten-year Treasury yield hits highest level since 2007 (Financial Times, Emily Herbert, Ian Smith and William Sandlund) shows that US borrowing costs have hit a new high thanks to these higher oil prices and expectations of an interest rate rise at the Fed meeting this week!

Landmark US crypto bill fails as Senate splits over Trump ethics concerns (Financial Times, Jill R Shah, Akila Quinio and Alex Rogers) highlights the failure of a key crypto regulation bill (the “Clarity Act”) to advance in the US Senate yesterday. * SO WHAT? * This is a major blow for the

crypto industry and Trump himself, who made more than $1bn from his crypto businesses last year. Bitcoin’s price fell by 3% after the vote – and it is now down 35% over the year.

Meanwhile, UK ‘actively’ exploring joining Canada-led global defence bank (Financial Times, Lucy Fisher, Ilya Gridneff and Jim Pickard) shows that there are moves afoot to join the Defence, Security and Resilience Bank (DSRB) initiative, which is interesting given that Starmer’s administration rejected it. * SO WHAT? * The idea is that joining the initiative could help the UK hit its defence spending target of 3% of GDP by 2030. A final decision has not yet been reached. The DSRB is modelled on the World Bank and aims to provide “long-term, low-cost financing” for defence initiatives. Thus far, major European powers including France and Germany have not signed up – but given the ongoing behaviour of Trump, I am sure that many are reconsidering their stance. That being said, there IS another option in this area that the UK DID actually sign up to – the Multilateral Defence Mechanism, or MDM, and the Netherlands, Poland and Finland have signed up to that. Officials have said that we’re still going to support the MDM, it’s just a question of whether we’re going to get involved in the DSRB as well.

New fertiliser exporters blunt food crisis fears (Financial Times, Peter Foster and Susannah Savage) heralds some good news for once for agriculture! Given the ongoing wars in the Middle East, dire predictions were being made about a global food crisis caused by fertiliser supplies not getting through the Strait of Hormuz. Although it’s true that urea imports from economies using the Strait fell by 85% versus prewar levels, it turns out that other economies have stepped in! Egypt and Nigeria have boosted their urea exports by 98% and 81% respectively over that period, according to the International Trade Centre. The US, Russia and China have also increased their provision as well. * SO WHAT? * Before the war, around a third of globally traded nitrogen fertilisers passed through the Strait of Hormuz along with about 50% of globally traded sulphur, a key ingredient needed to turn phosphorus rock into fertiliser. Although sourcing fertiliser was a problem initially, the problem now is that prices have shot up! The companies that have been benefiting include Abu Qir Fertilizers, MOPCO, Egyptian Basic Industries Corporation and Egyptian Fertilizers Company along with Dangote Fertilizer in Nigeria.

Further to all the AI Armageddon debate that’s raging on at the moment, Nvidia and Meta bosses reject efforts to co-ordinate AI slowdown (Financial Times, Michael Acton) shows that at least two high-profile tech bros are pushing back, saying that companies can self-police. Nvidia’s chief took it further and said that there was no need for new US laws or regulations on AI safety, something that Zuck agreed with. Could AI really wipe out humanity – six experts spell out the risks (The Guardian, Robert Booth, Dan Milmo and Aisha Down) digs into whether we really could all be wiped out. Sceptics say that assertions of AI taking over the internet within a year are far-fetched. Then there’s the thing about humanity being wiped out by the development of bioweapons or crashing the global financial system along with concerns that AI could set off nuclear weapons. Can the US and China work together on AI risks? (Financial Times, Eleanor Olcott, Joe Leahy, Zijing Wu and Demetri Sevastopulo) suggests that the two leaders in AI agree that there are dangers, but neither side wants to back down. * SO WHAT? * The fact is that it is extremely difficult to actually quantify the risks. The accelerationists could be right – but then so could the slowdown-seekers. It feels to me like the only way something like this is ever going to work is if EVERYONE works together with the same goal. I mean, look at what happened in Covid when we came up with a vaccine in less than a year! That, to me, is an example of what can be achieved when everyone is on the same page with a common goal and no agenda. Sadly, I don’t think that the same thing is going to happen with AI – although I really believe that it should. The thing, to me, that’s most shocking about Amodei, Musk and Altman’s rare agreement is that it’s within their interest NOT to be regulated while the latest push-back from Nvidia and Meta comes from a large slice of self-interest IMO.

OpenAI weighs funding round at $1.2tn valuation before IPO (Financial Times, George Steer and George Hammond) shows that OpenAI has been airing the idea of another private funding round at a $1.2tn valuation before it proceeds with its much-anticipated IPO. It is hoping to make the most from its latest AI model. Nothing’s finalised yet, but it’s interesting that such talks are going on!

In news on the day-to-day use of the technology, AI is exciting audit firms — maybe too much (Financial Times, John Gapper) shows that accountancy firms are embracing the use of AI and they’re finding it to be particularly useful in large company audits because all transactions can be scanned rather than auditors pulling out a few in order to review them more closely. * SO WHAT? * AI can definitely help with the workload of auditors and improve audit standards following a

number of high profile failures over the years. On the flipside, using AI doesn’t protect firms that are using it because the auditors still have to explain the reasoning and justify their actions. Also, it’s possible that over-use will result in human deskilling as much of the work that was traditionally carried out by juniors is being taken over by AI. There’s still a long way to go!

Then in Chinese restaurant chains put AI on the menu (Financial Times, Lex) we see AI being used in restaurants to reduce food waste and labour costs. The article cites the case of China’s biggest chain of hotpot restaurants, Haidilao, which uses AI to boost table turnover by analysing video footage to track diners in over 1,200 restaurants. Robots help to deliver dishes from the kitchen to tables and the automation of certain repetitive food prep tasks along with intelligent systems managing inventory all help restaurants to generate more revenue per site and reduce food waste. Yum China, which owns KFC and Pizza Hut in China also uses AI in its daily operations – it has AI digital assistants to help managers with scheduling, inventory and food safety issues. The tech is also being used to select new restaurant sites, when to restock and how to optimise food supply deliveries. * SO WHAT? * This sounds interesting, but I’d argue that only big companies are able to do this because the kit is expensive. Also, while it is a novelty now, I do wonder whether having more humans in the loop is going to be more valued as time goes on – we’re already seeing some major American fast-food chains upping their efforts in their service offerings. In terms of scheduling and optimising the logistics side of things, I don’t doubt that AI can really help with the running of restaurants – but I’d say the automation of what goes on in the kitchen and how the food is delivered to the table of the diners is something that, I think, doesn’t need to be interfered with too much.

Apple Finally Built a Smarter Siri. It Still Hasn’t Caught Up in the AI Race. (Wall Street Journal, Rolfe Winkler) extols the virtues of an improved Siri on Apple’s new smartphone software, which was released on Monday. It now works like an actual chatbot but rivals are not resting on their laurels and there is a vast array of new AI assistants that are even more capable and can act like a personal secretary. Conclusion – Apple’s offering has improved, but it’s still behind the cutting edge of its competition when it comes to being the promised “intelligent personal hub”.

UK employment and wage growth slows (The Times, Mehreen Khan) cites the latest numbers from the ONS which make for depressing reading as unemployment rose and wage growth fell to its slowest pace in six years. That being said, public sector pay increased by 6.3% over the quarter thanks to the NHS pay awards this year. * SO WHAT? * The UK jobs market has been cooling for a while now but I guess that businesses are waiting to see what Burnham’s going to come up with in the Budget next month before they make any proper moves…

Meanwhile, UK bosses must ‘sit down’ with staff if they reject WFH requests (Financial Times, Delphine Strauss, Jim Pickard and Ashley Armstrong) shows that there are government plans afoot to make UK employers give staff a face-to-face explanation if they refuse a request to work

from home. * SO WHAT? * Put bluntly, this is great for workers and probably another pain for employers. The Employment Rights Act stops short of giving employees an absolute right to flexible working and employers can still refuse if there are legitimate business reasons.

KPMG to cut another 200 jobs in UK advisory business (Financial Times, Ellesheva Kissin) highlights more job cuts at the accountancy firm’s advisory business. It actually includes staff working on AI! This equates to about 4% of the company’s advisory workforce. It seems that KPMG is still focusing on “right-sizing” following a protracted slowdown in demand for professional services.

In a quick scoot around some of today’s other interesting stories, Jaguar Land Rover targets Nato military budgets with revamped Defender (Financial Times, Kana Inagaki) shows that JLR is in the mix for a new MoD contract, with a new version of its Defender, along with competition from the likes of Grenadier, Ford, GM and Babcock International. They could do with winning this contract given all the layoffs they’ve announced recently…

Then in Nissan to invest £170mn to build a new hybrid SUV at Sunderland plant (Financial Times, Kana Inagaki) we see that the Japanese carmaker announced plans for its Sunderland plant. Nissan is one of the biggest automotive employers in the UK. * SO WHAT? * This will be a great boost for the UK’s automotive industry which has come under a lot of fire over the last year or two courtesy of US tariffs, rising energy costs and intensifying competition from Chinese rivals.

Tesco’s dominance slips as rivals gain ground (Daily Telegraph, Tom Haynes and Louis Goss) cites the latest figures from NielsenIQ which show that Tesco lost market share over the summer,

while M&S made big strides and Lidl made “lidl” ones. Worldpanel figures showed that food price inflation rose for the first time in six months. We are in for a tough time given ongoing wars, the cost-of-living crisis and the effects of El Niño (and we might not be able to cheer ourselves up at Christmas because there might not be any sprouts!).

Hyrox’s new owners hope to turn burpees into billions (Financial Times, Lex) follows on from news last week about L Catterton buying a controlling stake in Hyrox. There are high hopes (there’s talk about Hyrox being in the Olympics within ten years) but I think this is going to require a Herculean effort, although early signs are positive given partnerships with Puma, Nike and Adidas. * SO WHAT? * Hyrox is in a crowded field that abounds with fads (Peloton, anyone?) so it’s too early to tell whether it’s going to leap to higher plains or burn out. That viral video of a competitor battling on (to win, I think) with excrement pouring down their legs during a competition on the weekend isn’t going to do popularity any favours (particularly if Hyrox doesn’t renew its hygiene policies at events!).

My eldest likes sleeping. Well, to be honest, I think we all do! When I was growing up, my dad used to find it “hilarious” throwing the dog on me to wake me up in the morning (he knew she would lick my face until I got up). I like this lady’s approach though, so I might give her tactic a go…