Category: Protected – Watson’s Weekly

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 WAR NEWS…

ACTIONS – the US Navy seized an Iranian ship after it breached the blockade and Iran accused it of violating international law by doing it.

Both sides are boasting about having the upper hand, but the fact is that nothing’s changing and it’s all driving up shipping prices elsewhere as other routes are getting used.

CONSEQUENCES – concerns are increasing about the Hormuz disruption morphing from an energy crisis into a food crisis as falling fertiliser availability will hit crop yields and push food prices up.

Lufthansa has cancelled 20,000 flights between May and October in order to save on fuel costs and UK airlines are appealing for a jet fuel plan to cover the summer period.

Meanwhile, Trump’s war is pushing the UAE closer to alliances with China. The UAE is always walking a tightrope between keeping the US and China sweet but it sounds like it is leaning more towards China at the moment given what Trump is doing in the Gulf.

The bosses of HSBC, Barclays, Lloyds, NatWest and Santander were all asked to attend an emergency summit with Rachel Reeves this week to talk about the impact of the Iran war and how to limit it.

IN TRUMP THINGS…

We see that the main political fundraising group supporting Donald Trump, Maga Inc, has managed to put together an unprecedented sum of money – almost $350m – to help defend the Republicans’ control of Congress in the November midterm elections. The prospects aren’t looking great at the moment so this ridiculous amount of money could well come in handy!

IN INDIVIDUAL COUNTRY NEWS…

THE US – Labor Secretary Lori Chavez-DeRemer became the third cabinet member to leave the Trump administration within the last two months after Homeland Security Secretary Kristi Noem in March and Attorney General Pam Bondi in April.

Meanwhile, Trump’s nominee to be the next chairman of the Federal Reserve, Kevin Warsh, has said that be won’t be Trump’s “sock puppet” and promised to uphold the independence of America’s central bank. Well that’s reassuring…

CHINA – the country sent warships out to test “operational capabilities” at the same time that Japan joined the annual display of military strength by the US and Philippines in a large scale exercise. This is the first time Japan has joined this event and is evidence of the Japan PM’s punchier military stance. Tensions between China and Japan have been rising for months.

JAPAN – the country lifted the ban on lethal arms exports for the first time since WW2, effectively giving companies like Mitsubishi Heavy Industries and Kawasaki Heavy Industries the green light to become major suppliers of missiles, aircraft and ships.

SOUTH KOREA – the world’s 12th biggest economy is suffering acutely thanks to the ongoing situation in the Strait of Hormuz. The country imports 90% of its energy needs and 70% of its crude oil and 20% of its LNG usually come via the Gulf so measures have started to be put in place in preparation for shortages. It’s getting pretty dramatic and could be a sign of things to come elsewhere…

RUSSIA – a report by the Kremlin-aligned Centre for Macroeconomic Analysis and Short-Term Forecasting (CMASF) highlighted a potential banks crisis because it reckons that more than 10% of a banks’ loan books are unlikely to be repaid. This could become a problem because the Kremlin has been covering the costs of its war with Ukraine by pouring huge amounts of cash into Russian companies via its banks.

THE UK – inflation accelerated in March to 3.3% as the energy shock started to kick in while UK public sector borrowing came in above market forecasts for the month – and it could get worse because of the effects of the war. A bunch of economists, this time at the EY Item Club, reckon that Q2 and Q3 are going to see no GDP growth and potentially “flirt” with recession.

Starmer’s having a nightmare currently because that Mandelson thing reared its head again this week and it’s chipping away at his already vulnerable reputation.

The UK is looking to do deals with the EU on steel and EVs as part of the increasing alignment with Europe. Higher tariffs are due to kick in in July to stop the influx of cheap Chinese imports – but as things stand right now, we’ll be paying them as well unless we can come to some agreement!

There will be a ban on smartphones in schools in England “unless there is a legally justifiable reason for schools not to do so” and comes hot on the heels of the final draft of the tobacco and vapes bill that cleared the House of Lords on Monday this week.

IN COMMODITIES – the BP board got some knock-backs by investors at its AGM as they 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.

US oil refiners are benefiting from the Iran war thanks to high diesel and jet fuel prices in addition to plentiful supplies of cheap North American crude oil. The likes of Valero Energy, HF Sinclair, Marathon Petroleum and Phillips 66 are now operating close to full capacity in order to take full advantage.

There’s a big difference at the moment between the most-watched measure of oil prices (Brent Futures) and the price of what it costs right now (Brent Dated). Usually, they move largely in line with each other but at the moment, Brent Dated is much more expensive. It looks like the market is just assuming that things will calm down although right now prices are pretty crazy.

IN ENERGY NEWS…

Putin is going to shut down the Druzhba pipeline within days in a move that will put pressure on Europe. This is particularly bad for Germany because the pipeline supplies 17% of the crude oil processed by the PCK refinery in Germany which provides around 90% of the fuel used by Berlin’s cars.

The EU is now thinking about relaxing its opposition to Arctic oil and gas drilling as it faces increasing pressure on energy supplies.

Back in the UK, Reabold Resources has just been awarded a licence to carry out “gentle fracking” in the West Newton field near Hull, but instead of supplying about 10% of the UK’s annual needs, the company has opted instead to use the energy to “mine” bitcoin! How very dare they!

IN INVESTMENT NEWS…

M&A – Evoke, the British gambling company that owns William Hill and 888, is in takeover talks with US casino operator Bally’s Intralot. Bally’s has until 5pm on 18th May to put in a proper offer.

There’s speculation that Estée Lauder is going to buy Spanish beauty group Puig as it’s asked JP Morgan to structure a finance package.

SpaceX is to looking to buy code-editing start-up Cursor – in a deal potentially worth up to $60bn – as part of its overall effort to catch up with its AI rivals just months ahead of a much-anticipated IPO. It’s not a done deal yet, though.

DEMERGER – ABF announced that it will demerge Primark from its food business following 65 years of ownership, which will propel the apparel retailer into the FTSE100. The demerger will happen by the end of 2027 and is likely to be one of the biggest ever demergers in the FTSE100. This has always struck me as a very odd combination and it makes a lot of sense strategically IMO!

IN BUSINESS TRENDS…

UK business activity increased by more than expected in April, according to the latest PMI survey which monitors activity in the manufacturing and services sectors. It may have been boosted by companies bringing forward purchases in anticipation of war-related price hikes.

PREDICTION MARKETS – Polymarket is looking to raise $400m in its latest funding round, which would give it an implied valuation of up to $15bn. The platform has seen a huge rise in volumes recently. That being said, there was some bad press for the company this week as a US soldier faced serious charges for using classified information to make bets on the platform and France’s weather forecasting service, Météo-France, reported suspiciously-timed bets on the “Highest temperature on Paris” market.

PROFESSIONAL SERVICES – top British law firms are doing their best to hang on to their business with mainland China at a time when their US counterparts are all leaving, but little appears to have come from this so far while the UK is relaxing rules that were implemented after the 2008 financial crisis to ensure that staff were “fit and proper” and accountable for any failures. I guess that the regulator’s had enough time to see what works, what doesn’t and what hinders.

IN EMPLOYMENT TRENDS – Big Tech announced big cuts this week. Meta said that it would cut 10% of its workers and not fill 6,000 positions that had been planned and Microsoft offered 7% of its US staff voluntary redundancy for the first time – both of which were to keep expenditure in check to a certain extent whilst pouring vast sums of money into building AI capability.

Nike announced that it would cut 1,400 workers as part of a broader effort to streamline its global operations.

KPMG announced that it would cut 10% of US audit partners after a poor take-up of its voluntary retirement programme. The company said that this is because it wants to align the number of partners with the size of the audit business.

According to FT research, higher earners and the most experienced employees are adopting AI in their workflows much faster than lower earners and it also showed that men are more likely than women to use AI tools.

IN CONSUMER TRENDS…

IN THE UK – optimism in the UK economy hit its lowest point since the Winter of Discontent in 1978 which was the precursor to Margaret Thatcher’s Conservatives winning the general election, according to a poll by Ipsos. This plummet in confidence was also reflected in the latest GfK survey. The OECD said that taxes on UK workers had risen at the fastest rate in the developed world in the latest edition of its annual report while a report by IG Group found that more people are getting caught in the £100,000 tax trap, which is making people refuse bonuses, promotions and pay rises so they don’t fall over the tax cliff edge because they don’t want to lose their benefits. In one example, a parent in London with two kids under the age of three at nursery school would need to earn over £149,000 to keep the same level of disposable income after childcare as a parent in the same position earning £99,999. For those who do have some spare money knocking around, the government’s new campaign to get ordinary people investing kicked off this week with a CGI squirrel called “Savvy”. The timing is questionable given that we’re facing another cost-of-living crisis.

At the more affluent end of the scale, the annual Wealth Report from estate agency Knight Frank concluded that the UK is lagging the US and European countries in attracting the richest people following changes to non-dom status made by the chancellor. Separately, the latest numbers from the OBR showed that some of the most affluent neighbourhoods in London – including Mayfair and Knightsbridge – have seen substantial house price falls.

IN RETAIL NEWS…

Both Sainsbury’s and WH Smith are getting more cautious about the outlook as they voiced their concerns about effects from the Iran war.

IN CONSUMER GOODS NEWS…

Posh jacket brand Moncler put in a decent sales performance in Q1, outperforming expectations thanks to popularity in Asian markets. This is impressive given recent weaker performances from other luxury names like Hermès and LVMH.

L’Oréal announced decent results this week and said that it was because customers are seeking out “affordable luxury” in times of economic turmoil. Investors had been bracing themselves for fallout from the Iran war so this was a pleasant surprise for them.

AI –  Anthropic and Amazon agreed a $100bn AI infrastructure deal where Anthropic agreed to spend over $100bn on chips and computing power from Amazon in its bid to bulk up capacity to train and run its model Claude over the next decade. The race for chips and infrastructure continues to be relentless!

Anthropic is investigating allegations of unauthorised access to its widely feared Claude Mythos model. If it gets into the wrong hands, the consequences could be disastrous.

The head of the restructuring practice at elite law firm Sullivan & Cromwell had to apologise in writing to New York federal judge Martin Glenn on Saturday for a number of serious mistakes made in a court filing made on April 9th. The filing contained multiple “hallucinations” made by AI software.

CHIPS – Intel had a decent March quarter, beating market expectations thanks to rising demand for its CPUs, which it specialises in. It had been falling behind in the AI boom because demand had been centred on GPUs, but demand for AI agents is now kicking in – and they use CPUs. Intel also got a lift because Elon Musk said that his companies will use Intel’s latest tech in his “Terrafab” project.

SK Hynix reported another record quarter, seeing a fivefold jump in earnings! It has benefitted from AI being a “structural shift”.

HARDWARE – Apple’s CEO Tim Cook announced his successor, John Ternus, who will take over as CEO in September as he steps up to become executive chair. Cook has had an eventful 15 years in the hot seat and has grown it tenfold. Staying on as executive chair is good for the company given Cook’s diplomatic skills.

Musk’s SpaceX wants the Trump administration to push back against EU satellite businesses because he believes that the EU Space Act, a wide-ranging set of new rules governing space businesses, “would impose burdensome obligations on foreign operators” whilst simultaneously prioritising European companies. The irony is that he brought it on himself by going rogue on Ukraine, but hey…Amazon’s ambitions to rival Starlink were dented as a Blue Origin rocket was forced by the US FAA to halt operation of its flagship rocket and investigate why it did not deploy the satellite it was carrying in a launch on the weekend. Amazon might have to use rival SpaceX to launch its own satellites until this is solved.

HACKING – Chinese hackers are allegedly using devices that feed into the Internet of Things to create botnets that compromise military and civilian systems. One theory is that this is being done in order to hinder the US in response to a potential Chinese invasion of Taiwan.

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. Separately, Anthropic has agreed a deal with the law firm Freshfields to build specialist legal AI tools that could subsequently be sold to rival law firms. Anthropic will use Freshfields’ legal expertise to develop the tools while Freshfields will roll Claude out to all offices globally and get early access to future Anthropic models (except for Mythos).

EVs – in a sign of how far advanced the Chinese are, foreign carmakers are using Chinese tech to claw back market share in the China market! According to data from Shanghai consultancy Automobility, foreign carmakers’ market share in China has halved from 64% in 2020 to 32% currently – so drastic action clearly has to be taken! There’s still a way to go yet in China re market penetration of EVs because they are very popular in the big cities, but less so in other areas. Perhaps a reduction in range anxiety could help – and CATL has just announced that it has developed a battery that can charge in 6 minutes and go for an astonishing 1,500km!

Tesla announced a spending boost of $25bn this year as he wants to pour more into driverless taxis, trucks, robots and a massive new chip factory. The company’s Q1 profit rose by 17%, rebounding from poor Q1 performance last year. Its car sales staged a major comeback in Europe thanks to a combination of government subsidies and the sudden rise in fuel prices resulting from the war. Speculation that SpaceX and Tesla will eventually become one company continues to do the rounds. It strikes me that investors usually want to have neater exposure to clear and differentiated stories (which is why the demerger of ABF and Primark seems to be a popular idea) but they probably won’t mind a Musk “conglomerate” because they just want overall access to his genius, whatever form that may take. The risk there, of course, is that the fortunes of this mega-company will rest on the longevity and health of just one man as there doesn’t seem to be anyone who can take his place.

Back home, the government has promised to pass legislation this summer that will allow motorists to run power cables through a charging “gully” built into the pavement outside their home without having to go through the faff of getting planning permission. This could be good news for increased EV take-up in the UK.

IN REAL ESTATE – the latest survey from Rightmove shows that the UK property market is actually proving to be more robust than expected in the face of higher mortgage rates and weakening consumer confidence because average asking prices rose by 0.8% in April. That being said, Foxtons suffered a 35% drop in income from house sales thus far in 2026, so perhaps Rightmove’s stats are slightly delayed? Housebuilder Crest Nicholson saw a massive sell-off of its shares (they were down by 35%) on its profit warning announcement due to “macro uncertainty” prompted by the Iran war that has hit consumer confidence.

The active ingredient in Ozempic and Wegovy, semaglutide, is facing more patent expiries around the world. In India, it expired late last month and its generic medicine makers are producing like crazy to service a vast market. Domestic competition is likely to be fierce, so I would say that the real opportunities are going to be overseas (when the patent expires).

Boeing managed to deliver more plans over a quarter than Airbus for the first time since 2023 despite its reputation for dodgy quality. I would have thought that this was helped by state airlines from various countries putting in orders to suck up to Trump in trade terms. They will also have benefitted from rising defence spending.

My fave video of this week was the pizza sushi one (despite that annoying bloke commentating)!

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 WAR NEWS…

IN THE IRAN WAR…

The week started with stalemate and the president slagging off the Pope and then he decided to do a blockade of the blockade while the IMF warned of impending global recession if the war continued to drag on. Meanwhile, Iranian citizens and businesses continue to suffer under the ongoing internet blackout.

IN THE ISRAEL/LEBANON WAR…

Progress was made as both sides agreed to a 10-day ceasefire and a meeting at the White House.

IMPACT OF THE IRAN WAR…

Wall Street banks had a stellar Q1 thanks to all the market volatility as investors tried to buy low and sell high. They’ll probably benefit from higher-for-longer interest rates as well…

Australia’s petrol stations are starting to run dry as it is a major importer of oil and is suffering acutely from the closure of the Strait of Hormuz. Other countries in the region are also suffering – and it’s going to get worse.

The head of the IEA said that Europe only has six weeks’ supply of jet fuel left thanks to the Iran war – and airlines such as Lufthansa are now cancelling flights.

Medicines UK, the body that represents companies that make 85% of all NHS prescriptions, warned that the NHS could face drug shortages within a few weeks.

IN DEFENCE NEWS…

The Pentagon has already approached automakers including GM and Ford about using their facilities to make munitions and other defence equipment – so it’s not just the Germans who are looking into making this pivot.

Rheinmetall won a €300m order to supply the German military with kamikaze drones. This could increase to €2.39bn over the next seven years. It’s all part of Germany’s plans to spend €550bn on defence over the next four years.

British anti-drone tech start-up Cambridge Aerospace is going to send high-tech interceptor missiles to British Armed Forces and allies in the Gulf to bring down Iranian suicide drones. The company’s tech, called “Skyhammer” has been likened to Israel’s “Iron Dome” missile defence system.

IN TRUMP THINGS…

He was a busy boy this week dishing out the threats and insults. Not only did Trump slag off the Pope, he posted a picture of himself as “Jesus”, threatened to fire Fed chief Jay Powell and to rip up the trade deal that was agreed with Starmer in May. King Charles must really be looking forward to his impending trip stateside…

IN INDIVIDUAL COUNTRY NEWS…

THE US – it looks like JD Vance is toast as he had a disastrous trip abroad. He went to Hungary to support Orbán’s bid for re-election (he promptly lost the election by a large margin) and tried to conduct peace talks in Islamabad with Iran (which failed). Maybe Marco Rubio will leapfrog Vance in the Trump pecking order.

CHINA – exports rose in March but not by as much as the market was expecting. On the other hand, Q1 GDP outperformed market expectations thanks to exports, high-tech manufacturing and fiscal stimulus.

HUNGARY – PM Viktor Orbán lost the election after 16 years in office. The new PM, Péter Magyar, won a two-thirds majority that will enable his party to change the country’s constitution. He has stated his intention to build bridges with Europe in a departure from Orbán’s Euroscepticism. Magyar’s win should free up investment and cash from Brussels that will, in turn, ease financial reforms in the whole of Europe as Orbán’s Hungary often proved to be an obstacle.

THE UK – the economy showed a surprise growth rate of 0.5%, but this won’t have taken into account the effects of the war – so we’ve still got that to come! Starmer outlined plans to unveil a package of laws in the King’s Speech on May 13th that will include plans for digital ID, reforms to SEN, asylum changes and a bill that will outline the transition to low-carbon energy, among other things. He’s got to get through the May 7th elections first though – and Labour are expected to get a massive beating. Chancellor Reeves announced the broadening of support for energy-intensive businesses but the businesses themselves don’t think it’ll be enough.

COMMODITIES…

OIL – the IEA slashed forecasts for oil demand over the Strait of Hormuz closure, which its chief described as “the largest disruption in history”. Trump’s administration urged US oil bosses to increase drilling activity and chancellor Reeves is looking at ways to ramp up North Sea drilling. BP’s new boss outlined plans to return to the “pre-green” structure of yore – an upstream oil and gas production division and a downstream division focused on refining and distributing fuels and retail activities. BP’s trading business has done very well from surging oil prices over the quarter.

GAS – both UK and European gas prices have normalised despite the ongoing war in Iran because Asian countries are cutting demand whilst firing up their coal-fired power generation facilities.

SILVER – the latest World Silver Survey contends that silver prices are on the verge of another uplift following six consecutive years of production shortages and falling stockpiles. The deficit between demand and supply is expected to continue this year.

IN MARKETS NEWS…

The S&P 500 has bounced back strongly from the Iran shock, powered by tech, strong earnings and investor optimism about an Iran peace deal. Interestingly, investors have put over $111bn into US equity funds over the last month while European and Asian funds have seen net outflows. The most recent survey by Bank of America showed that global fund managers are increasing their allocations to US assets and tech whilst cutting exposure to Japanese and Eurozone assets. BlackRock’s stellar Q1 probably reflects this – its CEO said that this was “one of the strongest starts to a year in BlackRock’s history”.

It was interesting to see that the value of all Taiwan’s listed companies overtook all of the UK’s listed companies for the first time this week! It’s mainly due to the rise and rise of TSMC, though! This one company accounts for almost 40% of the entire value of Taiwan’s market!

IN DEALS…

It sounds like the deal pipeline is losing its lustre at the moment thanks not only to Iran war-related worries, but also concerns surrounding the impact of AI on companies.

IPOs – Autoglass owner Belron is getting closer to an Amsterdam flotation at a chunky valuation that would make it one of Europe’s biggest listings of the last few years.

M&A – the European Commission is planning the biggest relaxation of its rules on corporate mergers since the 2000s in order to take on the Chinese and Americans with European “champions”. The guidelines will be broadened and are designed to encourage “pro-competitive mergers that allow European players to grow and accelerate innovation and have the scale to be relevant players”.

Amazon agreed to buy satellite group Globalstar in a deal worth $11.6bn in a move that will close the gap with Musk’s Starlink. The Musk vs Bezos space race is on!

German news publisher Axel Springer won approval to takeover The Telegraph. The Telegraph has been in limbo for the last three years regarding ownership so hopefully this will draw a line under the whole thing and allow it to move forward with a bit more confidence!

IN INVESTMENT NEWS/TRENDS…

The Saudi Arabian sovereign wealth fund, the PIF, unveiled a new five-year strategy that will slim down its focus areas from 13 to 6, following a review of the previous plan. One area that could be cut is LIV golf but any industry that has seen a lot of Saudi money in recent years will be concerned if they’re not in one of the six focus areas.

IN BUSINESS NEWS/TRENDS…

UK BUSINESS SENTIMENT – Optimism among UK CFOs is the lowest since the Covid lockdown, according to Deloitte’s latest monthly survey. Unsurprisingly, it’s all to do with concerns surrounding the impact of the Iran war. In addition to this, wholesalers sent a letter to Rachel Reeves saying that rising costs of petrol and diesel are “causing major issues” and that they will “severely impact the long-term sustainability of the UK’s food and drink supply chain”.

CHINA’S OVERSEAS EXPANSION – it seems that things are coming together for another “China Shock” twenty years after the first one. That time was all about low-end manufacturing – but now it looks like Chinese companies are going to threaten high-end manufacturing as well. So far China has conquered EVs, solar panels, batteries and wind turbines – and there’s more to come! Another area that Chinese companies could shine is in weight-loss drugs. The pricing power that Novo Nordisk and Eli Lilly have enjoyed in this area is going to be short-lived as the active ingredient in Ozempic and Wegovy, Semaglutide, is beginning to lose patent protection in some key markets – and China has already got over 60 drugs in advanced testing. Chinese manufacturers have the scale to churn them out at a fraction of their list prices…

PREDICTIONS MARKETS – it turns out that the White House sent out an all-staff memo on March 24th, which was described as a “refresher” for employees, telling them not to use insider information to trade stocks or make bets. The likes of Polymarket and Kalshi have seen a number of dodgy bets recently, so I’m not sure how well this communication has worked…and then we saw that US broker Robinhood took action over prediction markets and excluded some because they encourage manipulation and insider trading. I keep saying it but I really think that prediction markets need to be regulated – and an audit trail needs to be enforced so that the people who make suspicious bets can be accurately identified.

IN EMPLOYMENT TRENDS…

Lots of big layoffs have been announced of late, including the likes of Oracle, Amazon and Block – but this week Snap said it would fire 16% of its staff. The BBC announced layoffs of about 9% of its employees as part of further cost-cutting measures, ahead of the arrival of its new Director-General, Matt Brittin.

IN CONSUMER TRENDS…

For all the problems that the Iran war is causing around the globe, rich people are still just about coping. Some of them are ditching Dubai and going to Zug in Switzerland and consoling themselves about the injustices of the world with buying Sanlorenzo superyachts and Cartier matchboxes that cost £235!

IN THE UK – research by the Resolution Foundation shows that UK households’ living standards are going to fall because of the energy price shock. Britons are already cutting back on foreign holidays, according to Barclaycard data, and the MD of Filippo Berio UK berated UK supermarkets for not passing on lower prices to customers.

IN REAL ESTATE NEWS…

UK SENTIMENT – both buyers and sellers are nervous because of the uncertainty of the war. First-time buyers in particular are pulling out and some sellers are saying that viewings have fallen considerably. Prices are being cut and chains are collapsing at a time of year where activity usually starts to pick up.

MORTGAGES – the Iran war has prompted rises in mortgage rates as lenders anticipate higher interest rates but borrowers are now seeking out shorter-term options including tracker loans and two-year fixed loans while some buyers are suspending their purchases.

IN REAL ESTATE NEWS…

Lidl announced that it’s going to start offering cheap mobile phone contracts in up to 30 countries later this year, in a challenge to the established telecom operators. The idea behind this is to increase customer loyalty and broaden its revenue streams. Lidl plans to offer services via its Lidl Plus app.

IN CONSUMER GOODS NEWS…

IN LUXURY – LVMH’s Q1 sales took at hit as shoppers and tourists in the Middle East region reined in spending, rival Kering didn’t perfom well either because of weakness at Gucci, its main brand. Kering’s CEO subsequently outlined a plan to double profitability that included store closures and the emphasis of other brands in its portfolio including Bottega Veneta and Balenciaga. Even the usually reliable Hermès performed badly.

IN CHOCOLATE – the world’s biggest chocolate maker, Barry Callebaut, had to cut its profit forecast thanks to falling cocoa prices, overcapacity and supply disruptions. The main issue here is that the company buys cocoa months in advance but sells chocolate at current market prices. This has the unfortunate consequence of meaning that when prices fall sharply, the company has to sell at a loss. Elsewhere, Mondelez-backed Israeli company Celleste Bio has succeeded in creating a dozen chocolate bars at Cadbury’s Bournville factory in Birmingham! This could be very interesting – and potentially reduce chocolate makers’ reliance on good harvests for cocoa beans.

PepsiCo announced in its quarterly statement that the cost of its food and drinks might have to increase as a result of disruption caused by the Iran war. I expect more consumer goods companies to say similar things…

IN LEISURE NEWS…

Richard Caring, the restauranteur, sold a majority stake in his hospitality company that owns Annabel’s and The Ivy to an Abu Dhabi sheikh. Given that he’s 77 and hospitality’s going down the toilet at the moment, you can’t blame him!

The next big thing for coffee chains could be ube, the purple yam that comes from the Philippines. Matcha drinks have ruled the roost among higher spending customers over the last decade, so perhaps it’s time for something else!

AI – Meta is developing a photo-realistic, AI-powered 3D version of Mark Zuckerberg that can interact in real time. The character is being trained on his mannerisms, tone and publicly available statements. Everyone’s getting excited about this but is there a real everyday use for this sort of thing??

OpenAI reiterated its commitment to the UK – after last week suspending its proposed Stargate UK datacentre project – by securing its first permanent London office in King’s Cross.

CHIPS – advanced chip-making equipment maker ASML raised its full-year sales forecast thanks to the ongoing AI boom powering demand.

HACKING – Anthropic’s Mythos model is still causing a major kerfuffle – now in the UK – because it is the first AI model to hack networks. OpenAI this week launched its own cybersecurity model, called GPT-5.4-Cyber, which is designed to autonomously find flaws or bugs in software, alerting professionals to fix the issue before bad actors find them.

BATTERIES – Chinese battery giant CATL, which has a 40% global market shares of EV batteries, is now making a splash in energy storage systems. Demand is being supported by increased volatility in energy markets because users can load up batteries when prices are cheap and then discharge them when prices are high. It certainly makes sense for CATL to diversify into areas that are driven by policy (which are more stable) than by consumer cycles (which are more volatile).

EVs – research by S&P Global Mobility showed that 20% of Tesla’s Cybertrucks were bought by other companies within Elon Musk’s business empire during Q4 last year! Without these purchases, Cybertruck registrations over Q4 would have more than halved! Wow!

DRIVERLESS – Uber is committing another $10bn into robotaxis as it transitions from a “gig economy” asset-light player to an asset-heavy fleet operator.

IN FINANCIALS – Wall Street’s “big six” banks had a stellar Q1 largely thanks to trading revenues that were powered by market volatility. They’ll also probably benefit from interest rates that’ll stay higher-for-longer due to the unstable geopolitical situation. Meanwhile, insurance companies are being sold off because of their exposure to private credit. Insurance companies’ investment portfolios have added more private credit assets in the last few years in order to boost performance over the longer term.

Chancellor Reeves gave Rolls-Royce £600m to help accelerate the development of Britain’s Small Modular Reactors (SMRs) on the island of Anglesey.

PwC announced that it would be doing an overhaul of its global consultancy business with a view to streamlining operations. It announced that it would merge its risk and consulting businesses.

My fave video of this week was the one with the Maltipoo! So cute!

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 WAR NEWS…

IN THE IRAN WAR…

The US and Iran agreed a two-week ceasefire just before the Trump-threatening-to-kill-a-whole-civilisation deadline hit. There are doubts as to whether this is going to hold, particularly as Israel is going off and doing its own thing…in the meantime, Iran struck Kuwait’s oil infrastructure, inflicting “severe material damage” and hit Saudi Arabia’s key east-west oil pipeline. Iran is demanding tolls for ships passing through the Strait, which isn’t going down well with Trump and the Gulf states.

IN THE UKRAINE WAR…

Ukraine’s drones have been busy attacking Russia’s energy export facilities, hampering Russia’s ability to fully benefit from current high oil prices. The two facilities that were attacked account for over 40% of Russia’s seaborne crude export capacity.

IN LEBANON…

Israel vowed to continue its war on Hezbollah despite the Iran ceasefire and subsequently launched a major attack hitting 100 targets in less than 10 minutes causing massive destruction and loss of life.

IRAN WAR IMPACT…

ON OIL – the chief of the IEA reckons that the impact of this war will be worse than the previous crises of 1973, 1979 and 2022 combined. He added that countries who will suffer most from higher oil and gas prices as well as inflation are developing nations.

Oil prices plunged and stocks climbed on news of the ceasefire, but that can change very quickly!

Exxon put a figure on the impact of the Iran war on Q1 earnings but even if this situation is resolved right now, it is likely to take months for things to get back to some semblance of normality.

The latest research from Kpler shows that US oil exports are on track to hit new highs thanks to strong demand from Asian customers. North sea oil prices also hit new highs thanks to a scramble in demand from European and Asian refineries.

ON SHIPPING – there was scepticism about whether the ceasefire would have any real effect and it turns out that shipowners are still reluctant to travel through the Strait of Hormuz and the chief of ADNOC said that the waterway was still effectively closed. There’s talk of ways of bypassing the Strait, but it’ll take ages, be really expensive and could fall flat if oil use falls over time, as it’s supposed to.

ON INVESTMENT – hedge funds have been building up a record number of short positions in European stocks and British retail investors sold down their holdings in equity funds in March – the worst outflow since November, which saw them sell out ahead of the Budget.

Turkey’s central bank has either loaned out or sold out of $20bn worth of gold bullion since the outbreak of the war in Iran, an outflow that accelerated into the end of March. Some commentators are saying that central banks have been selling down stocks in order to boost their currencies.

ON EXPATS – Official data shows that 10-15% of the pre-war long-term population of British residents in the UAE have left the country since the Iran war. At least some of them have been heading to Milan because “Italy has the best benefits: a flat tax and good quality of life”. As things stand currently, foreign residents can pay €300,000 a year on all overseas income.

ON TRAVEL – flight cancellations are going to get more prevalent, particularly in the UK domestic market, as smaller airlines face jet fuel prices that have risen by over 130% since the same time last year. This could even threaten the existence of smaller regional airports like Newquay.

Delta is cutting flights in the US and raising charges as it, like other US airlines, does not hedge fuel costs.

IN DEFENCE NEWS…

Britain has a defence spending bottleneck problem because Starmer’s made promises but the reality is that spending isn’t being unleashed. The good news is that, according to EY research, the UK economy could benefit from the increase in defence spending to the tune of £30bn a year…

There’s still talk about car/car parts makers potentially raking in the money from pivoting to making defence equipment. Germany’s oldest engine maker, Deutz, has done precisely this – and given the onslaught of superior Chinese EV offerings, I think that everyone’s going to have to at least consider this option.

IN TRUMP THINGS…

The ceasefire seems to be dividing the MAGA faithful into those who don’t believe Trump’s side quest aligns with America First values and those who are disappointed that he’s not following through on his threats.

In the meantime, Trump and Vance have showed their support to fellow dictator Orbán ahead of the Hungarian elections. Rival Péter Magyar is currently ahead in the polls.

IN INDIVIDUAL COUNTRY NEWS…

Vietnam swore in the head of its ruling Communist Party, To Lam, as president. He is the first Vietnamese leader to be elected by the Communist Party leadership to hold the positions of president and party leader at the same time, consolidating his power.

The UK said that it would not let the US military use British bases to attack Iran’s civilian infrastructure and there’s talk that Starmer’s increasing reluctance to follow Trump into the fire might boost his premiership, which has been flagging badly. Meanwhile, worries are growing about the possibility of the UK falling into stagflation as our private sector expanded at the slowest pace for six months while the price of materials used by the private sector increased at the quickest pace since February 2023!

IN ENERGY NEWS…

Solar farms in England, Wales and Scotland generated record levels of renewable energy on Monday and Tuesday this week, overtaking previous highs. Also, the government approved plans for the UK’s biggest solar farm to go ahead in Lincolnshire that is expected to power the equivalent of 180,000 homes per year when it gets to max capacity.

IN BUSINESS NEWS/TRENDS…

SMEs – this category of businesses is facing some major difficulties as the FSB says that about 7% of SMEs are going to face a doubling in their heating bills while the CBI warns that employment costs are already hitting businesses – and now the new statutory sick pay rules just came into force this week. This is part of the broader roll out of the Employment Rights Act.

PRIVATE EQUITY  – the latest data from Dealogic shows that the value of buyouts has dropped by a third over Q1 versus the preceding quarter due to rising concerns about AI’s impact on software businesses and war in the Middle East. Some firms are delaying the signing of any deals to see how things shake out.

PRIVATE CREDIT – some FT research showed that investors tried to pull $20bn from private credit funds over Q1, highlighting the growing strain on what has been a booming asset class.

IN INVESTMENT NEWS/TRENDS…

IPOs – everyone’s getting excited about the flotation of SpaceX and there are rumours – even before its IPO – that Tesla will merge with SpaceX. If this did happen, I would have thought it’ll happen after SpaceX’s flotation.

The Uzbekistan National Investment Fund announced this week that it’s looking to list in London and Tashkent by mid-May to give international investors the chance to get exposure to Uzbekistan’s economy. This could be great for LSEG’s pipeline.

M&A – Bill Ackman’s Pershing Square hedge fund has offered to buy Universal Music Group in a cash and shares deal worth €55bn.

Unilever bought US vitamin gummies brand Grüns as part of its plans to push further into wellness and beauty. It’s been shopping in the wellness aisle for a while now…

The Lex column made the interesting observation that although the value of M&A deals surged to $1bn over Q1, the number of deals lost momentum – and it’s the number of transactions that could indicate the direction of travel. Surely the Iran war is having/going to have a big impact on the number of deals, don’t you think?

IN CONSUMER TRENDS…

The increased take-up of weight-loss drugs is going to result in a rise in divorce rates, according to a study by academics in Sweden. Apparently, people who undergo rapid weight loss are twice as likely to divorce!

Petrol prices are unlikely to fall to pre-war levels any time soon because production has been interrupted and facilities need to be repaired and it’s not easy just to switch on refineries and other facilities.

IN RETAIL NEWS…

The latest figures from the BRC showed that UK retail footfall footfall bounced back in March but the recovery fell short of expectations as concerns surrounding the economic effects of the Iran war started to take hold.

Meanwhile, Lidl has now drawn level with the UK’s fourth biggest supermarket – Morrisons – in terms of market share and has plans to expand by opening 50 UK stores in the year ahead that will create almost 2,000 jobs.

IN CONSUMER GOODS NEWS…

GoPro announced that it would be cutting 23% of its workforce as part of its cost-reduction efforts on the journey back towards profitability. The axe will fall in Q2.

Constellation Brands announced Q4 revenues sliding thanks to falling alcohol consumption. The company said that consumers were being more careful about how they spent their money on alcohol over the last year and were being much more value oriented.

IN LEISURE NEWS…

GAMBLING – Three anonymous accounts on prediction platform Polymarket made $484,000 in profits by betting on the Iran ceasefire just hours before it was announced! Dodgy or just a coincidence? I think that the prediction market really needs to be regulated properly…

RESTAURANTS – the hospitality industry continues to suffer with independents particularly vulnerable to energy price rises because they cannot, like large groups including JD Wetherspoon and Greene King, hedge their energy prices. I mentioned the plight of the SMEs above…

IN TECH NEWS…

AI – Meta released a new model – Muse Spark – which it will use across its suite of products. Meta said that Reels, photos and posts are going to be part of the answers – which will also credit the content creators. Spark is a closed model.

Perplexity AI saw its revenues jump by 50% by shifting away from chatbot-style search engines into AI agents that can perform tasks on users’ behalf. It makes money from consumer and enterprise subscriptions.

OpenAI announced that it will put its flagship UK data centre project on indefinite hold because of high energy costs and regulatory uncertainty. The Stargate UK project was originally due to be built in north-east England in Q1 of 2026. Thousands of AI chips were due to be deployed via data centre start-up Nscale.

HACKING – US Treasury Secretary Scott Bessent brought together leaders of the Bank of America, Citigroup, Goldman Sachs, Morgan Stanley and Wells Fargo – in addition to Fed chief Jay Powell – to talk about cybersecurity risks highlighted by the new AI model from Anthropic which revealed a number of vulnerabilities. Anthropic’s model, Claude Mythos Preview, has already uncovered thousands of major vulnerabilities, including in “every major operating system and web browser”, some of which had not been found for decades.

CHIPS – LG Electronics reckons that it will see a Q1 earnings rebound thanks to increasing profitability in its home appliance, TV and vehicle component business and rival Samsung also has a positive outlook thanks to the “unprecedented supercycle” for memory chips from the AI boom.

Still, the AI investment boom could all come crashing down if China decides to blockade Taiwan in the same way that Iran has blockaded the Strait of Hormuz. US Treasury Secretary Scott Bessent said in Davos that “if that island were blockaded, that capacity were destroyed, it would be an economic apocalypse”.

IN EV NEWS…

Sales of used EVs are booming in the US, according to credit bureau Experian, thanks to rising petrol prices – and figures from the SMMT showed that UK drivers bought a record number of EVs last month in response to the spike in petrol prices.

The latest SMMT numbers also showed that Chinese carmakers have managed to double their UK market share of new cars sales in March versus March last year. 15% of new cars in the UK last month were Chinese brands!

IN CHARGING/BATTERY NEWS…

Property consultancy Knight Frank said that the UK will need 62,000 rapid chargers within the next four years, requiring 1,900 acres of land to be dedicated to charging points to meet demand for EV chargers. I’d take this with a massive pinch of salt because I think that better batteries are key to the success of EV take-up rather than expensive charging stations.

The UK government is looking to pour money into a new battery production plant in Somerset as part of its green ambitions. The factory will deliver batteries for Range Rovers and Jaguars from 2028.

IN REAL ESTATE – fears of stagflation, prompted by the effects of the Iran war, are denting confidence in the UK housing market. House prices fell in March as a result.

In commercial property news, JPMorgan got approval to build Canary Wharf’s tallest tower. This is good news for the area, which has seen its reputation dented a bit in the last few years as some long-time tenants have announced plans to move out prompting rumours that it was losing its attraction.

IN BANKS NEWS – the latest CBI survey showed that Britain’s financial services companies reported their strongest recovery in activity since December 1996 but then TheCityUK lobby group said that new rules from Brussels might hold back the ability of banks outside the EU to offer banking services to companies based within it. The new rules are to come into force at the end of this year.

The video that made me laugh the most this week was the Titanic one! Love it!

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 WAR NEWS…

This week’s TRUMP BOASTS included – the president saying that the US could “take the oil in Iran”. He also said that Tehran is “agreeing” to a US peace plan but then Iran said that its troops “are waiting or American soldiers to enter so they can set fire to their souls”. He then said that the war would end in “two or three weeks” .

This week’s TRUMP THREATS included – saying that he’d stop supplies of weapons for Ukraine unless Europe joined a Hormuz coalition and that  he would take the export hub of Kharg Island. He said that the US might pull out even if a peace deal is not reached and lashed out at France for not letting US warplanes fly over its territory.

RESPONSES included – Britain hosting talks with 35 countries for talks about the Strait of Hormuz. Iran escalating things by attacking a Kuwaiti power and water plant.

WHAT’S THE IMPACT OF ALL THIS? Oil prices have risen by 60% since the beginning of March – while gold fell by almost 15% over the same time period, meaning that the metal is on course to have its worst month since 2008.

The closure of the Strait of Hormuz means helium supplies, needed for chipmakers and healthcare, are being choked off. Fast fashion will suffer because of broken supply chains,  hospitality businesses will go belly-up due to rising costs and tourism in Cyprus and Turkey is getting pummelled. Thousands of flights to the region have been cancelled and many more could be; higher fertiliser, fuel, gas and shipping costs are going to hit grocery bills and some consumer goods companies have already put their prices up.

On a broader basis, the IMF warned that the Middle East conflict will result in higher prices and slower global growth, Eurozone borrowing costs are soaring, European companies are looking more vulnerable than ever because they currently have less capacity to deal with the Iran war fallout than they did before Russia’s invasion of Ukraine and Qatar is really suffering from the hit it took on its Ras Laffan LNG plant, which could mean that Qatar could sell off at least some of the  UK real estate and retail assets to raise money for reparations.

THOUGHTS ON THE WAR SO FAR…

China could be looking at the success that Iran is having with the Strait of Hormuz and do something similar in the Taiwan Strait. If China blockaded the Taiwan Strait it could “win” Taiwan without firing a shot and wreak more damage on the world’s economy by choking supply of chips to the world as Taiwan’s TSMC makes 90% of the world’s most advanced chips. Industries around the world would just grind to a halt. No one is going to want to take on China’s navy.

Starmer is keen to align more closely with the EU, although he’s been keen to point out that he would not be “choosing” between America and Europe. I often wonder how people would have voted in the Brexit referendum if they knew then what we know now!

Iran could potentially emerge from all this stronger and more dangerous than it was before because it has long threatened closing off the Strait of Hormuz but now that it’s done so for real and seen the havoc it causes, it could just do this whenever it feels like it. Funnily enough, Trump has, inadvertently it seems, empowered both China and Iran by forcing them to play their “aces”. Iran is playing its Strait of Hormuz ace now but last year, China forced the US to roll back its tariffs by making threats about the supply of rare earths.

Although Trump comes in for a lot of criticism for having no apparent plan re Iran it would be fair to say that Europe doesn’t either – but then again we didn’t go and invade Iran…

IN TRUMP THINGS…

The president’s popularity seems to be taking a bashing at the moment as “No Kings” demonstrations took place across the weekend and even his MAGA base is questioning the rationale regarding the war. He’s not addressing the affordability problem that he said he’d solve in his election campaign – and that could come back to bite him when it comes to the midterm elections – if they happen. There are rumours that he will cancel them…

A district court judge ordered the president to stop building his new $400m ballroom until Congress approves its completion. Trump didn’t like that.

It looks like King Charles is going to go ahead with his state visit to the US in April despite the president’s continued slagging off of Starmer and shaky relations with the UK. It would be Charles’ first official US tour as King and the first by a British monarch since 2007 and will mark “the 250th anniversary of American Independence”. Let’s hope he doesn’t get the Zelenskyy treatment…

IN INDIVIDUAL COUNTRY NEWS…

After having put in a decent Q1 performance, Chinese exporters are now looking forward to being able to grab more market share given their large oil reserves and domestic energy supplies while other manufacturers in other parts of the world face big energy price hikes.

In the UK, apparently Rachel Reeves is quietly pocketing £20m a day from taxes related to oil and gas. On the other hand, some argue that any gains will be more than offset by rises in the cost of government borrowing.

IN COMMODITIES NEWS…

OIL – we’re not going back to the era of $70 a barrel oil (last year’s average price) anytime soon because even if the war ends shortly, infrastructure will have to be built back up, ships will have to be rerouted and Iran will probably charge tolls for safe passage through the Strait, which will also add to the price. Insurance will no doubt be more expensive as well.

GOLD – there has been talk about gold losing its safe haven status because its price has weakened since the war. However, I think that it’s been sold off by investors who wanted to raise funds and crystalise some of that tremendous performance that gold has enjoyed over the last year or so. Given the likely continuation of an unstable geopolitical backdrop for the foreseeable future, I reckon it’ll come back.

COAL – Asia is now turning to coal as an energy source as it needs energy NOW and because it’s cheap and abundant. Coal producers including China and India are scrambling to access stockpiles while others are starting to fire up coal-fired power plants, shrugging off environmental concerns. Italy is now looking into keeping coal-fired power stations open for another decade…

IN INVESTMENT NEWS/TRENDS…

IPOs – SpaceX filed paperwork with the SEC to float in New York with a view to coming to market as early as June. Punchy, given that there’s a war on…

M&A – LSEG data showed that Q1 of 2026 has been the best ever quarterly performance for M&A with 22 transactions valued at $10bn or more being announced over this period. This beat Q4 of 2015 when there were 21 such deals. Interestingly, the number of smaller deals is down. There’s still a lot going on what with Estée Lauder in talks to buy Puig, Pernod Ricard looking to buy Brown Forman and Tilman Fertitta in talks with Caesar’s Entertainment. Unilever announced a whopping $66bn deal to combine its food division with McCormick.

Intel announced that it would be buying back the piece of an Irish semiconductor plant that it sold to Apollo Global Management two years ago for $11.2bn. It’s buying it back for $14bn now that it’s finances are on a better footing.

Amazon is in talks to buy $9bn satellite group Globalstar in order to close the gap with Starlink. It wants to boost its constellation of Low Earth Orbit satellites.

MONEY RAISING – OpenAI had another massive fund raising round and it’s now got an implied valuation of $852bn.

Wearable device maker Whoop had a funding round that gave it an implied valuation of $10bn. It’s hoping to do an IPO within the next two years. FWIW I reckon they should go for it sooner rather than later (markets/geopolitical situation notwithstanding) because I think they’re a one-trick pony – and an expensive one at that. I think that they can be undermined by so many other companies in terms of pricing!

IN BUSINESS NEWS/TRENDS…

PRIVATE CREDIT – distressed debt funds, such as Strategic Value Partners, are seeing the private credit downturn as the “greatest opportunity” since 2008. Investors are trying to get their money out of these vehicles and so funds are having to sell the debt at distressed prices. The US Treasury has called in domestic and international insurance regulators to talk about private credit risks after recent concerning developments, so this is being treated seriously!

BRITISH BUSINESSES – the left-leaning Institute for Public Policy and Research think tank published research which showed that British businesses invest the second-lowest amount in their economy among the G7 countries at the equivalent of 11.1% of GDP in 2023. Only Canada is worse! As if to prove the point, defence company execs have been warning the government that bureaucratic delays risk pushing cutting edge British defence tech companies abroad. Some may even go bust because of delays to the government’s military spending plans, as espoused in the 10-year Defence Investment Plan (DIP).

IN EMPLOYMENT TRENDS…

In an industry-wide survey of 20,000 hospitality businesses, two-thirds of respondents said that they plan to cut jobs and one in seven said that they’d be forced to close. According to the latest figures from the Institute of Directors, economic confidence has hit an all-time low. That being said, the Low Pay Commission did some analysis which showed that the chancellor’s decision to hike the UK minimum wage by 6.7% last spring hasn’t affected employment all that much. I suspect that the LPC is talking its own book here because everything else points to the opposite being true!

The AI spectre continues to hang over jobs. Shares In Future, the publisher of Marie Claire and a number of other titles, saw its share price bomb by 30% in trading this week because of a sharp drop in traffic from Google. The advent of Google’s AI overviews at the top of its research results has decimated click-through rates. Meanwhile, Oracle announced the rollout of job cuts this week across all business lines. The company’s share price has almost halved in the last six months as investors have taken fright about its massive financial commitments to AI datacentre build-outs.

IN CONSUMER TRENDS…

The Food and Drink Federation (FDF) is now warning that grocery shoppers could face average price rises of up to 10% by the end of this year thanks to the conflict in the Middle East. That being said, the CEO of Sainsbury’s said that he thinks food price rises won’t kick in until the summer. The price of coffee doesn’t look like it’ll come down anytime soon despite better harvest expectations, because surging fuel and freight costs are starting to push prices back up!

UK borrowers coming off five-year fixed mortgage rates look like facing a major shock when they come to renegotiating, according to industry body UK Finance. Also the Bank of England has warned that the Iran war could push up mortgage payments for 1.3m households.

IN RETAIL NEWS…

M&S is looking to crack America by making its womenswear available in 30 Nordstrom stores across the country. The collection will be a curated selection of over 60 of its bestselling items. M&S already sells food in the US via a partnership with Target, which sells over 30,000 bags of Percy Pigs every week!

Boohoo Group, which which changed its name last year to Debenhams Group, saw its share price rise by 3.81% after headline profits came in “comfortably ahead” of guidance and its positive outlook.

IN CONSUMER GOODS NEWS…

Nike’s share price tumbled thanks to an unexpected downbeat assessment of its prospects for 2026. It blamed tougher conditions in greater China and disruptions in Europe and the Middle East but this is a first mis-step under the “new/old” chief exec who came out of retirement to save Nike.

IN LEISURE NEWS…

Summer travel is likely to get more expensive as travellers are going to face fuel surcharges. Some airlines have already jacked up fares and baggage fees while routes are being cut back as they react to the massive rise in jet fuel prices.

IN TECH NEWS…

IN CHIPS – US memory chip companies – like Micron and Sandisk – were sold off this week thanks to new Google research which highlighted efficiency improvements which mean that fewer chips will be needed to power AI models.

IN SOCIAL MEDIA NEWS…

Ofcom research found that active social media use has dropped sharply as people are posting less frequently and getting more careful about their approach to online content. Some respondents said that they were becoming more selective about what and how they posted on social media and 43% of respondents were worried about how their online posts might give them problems in the future.

IN BATTERY NEWS…

Finnish start-up Donut Lab claims that it has created the first production-ready solid state battery (SSB) for EV production. It claims that its battery has double the density of a typical lithium iron phosphate (LFP) battery, can fully charge in five minutes, has a practically unlimited lifespan, is not affected by heat and cold (it’s good for anywhere between -30°C and 100ºC) and contains no rare earths, precious metals or flammable liquid electrolytes. Donut Lab even says it will be cheaper to produce than conventional lithium-ion batteries! Sounds great, no??

IN CHARGING NEWS…

EV charging companies are now warning that they could push prices up due to the fact that their energy bills have risen by 38,579% since 2022! ChargeUK, the industry body that represents charging station operators, is flagging network charges that are set by Ofgem and levied to finance the maintenance and expansion of Britain’s electricity grid. The massive rise in these charges happened because the way that they were calculated changed in 2023.

IN TRAD CARMAKER NEWS…

There’s scepticism that VW can successfully transition to being a defence manufacturer, a possibility that has been mooted recently. Car manufacturing and defence equipment manufacturing is very different so bridging the skills gap could be difficult. However, defence companies need more capacity and carmakers need to pivot into something more profitable so surely joint ventures should be pursued, don’t you think??

IN REAL ESTATE TRENDS – there’s a social media account on X and Instagram called LondonPriceDrop which documents London homes that have had to cut selling prices dramatically. It tracks properties that have appeared on Rightmove and tells you just how much owners lose on a sale. There are some massive cuts on there. Rising interest rates, eye-watering stamp-duty and the increasing reticence of overseas buyers is severely denting London’s status. Some people are reporting losses of 40-50% on property sales! Meanwhile, the latest Bank of England stats showed that mortgage approvals increased at a faster pace than predicted before the war in the Middle East started but then Zoopla data showed that the number of people looking to move home is now 13% down from where it was last year because would-be buyers are waiting to see what will happen with the war. Nationwide statistics showed that UK house prices increased at their fastest rate in almost 18 months in March – but this doesn’t include the impact of the war. In COMMERCIAL PROPERTY, BlackRock is potentially looking to have a new HQ at HSBC’s Canary Wharf tower, which is good news for the area.

IN PHARMACEUTICALS NEWS – the Trump administration is on the verge of imposing tariffs of 100% on some medicines as part of a push to compel drugmakers to make more in the US. The new tariffs will cover companies that haven’t already struck deals with the White House. Pfizer, AstraZeneca and Novo Nordisk are among the companies to have already struck deals. There was good news for Eli Lilly, which won FDA approval for the the pill version of its weight-loss drug, called Foundayo. Eli Lilly said that doctors will be able to write prescriptions for it straight away and shipments to patients will start on April 6th. This week, Eli Lilly also struck a $2bn deal with Insilico Medicine to sell a GLP-1 drug. Insilico uses AI for drug discovery and listed on the Hong Kong stock exchange in December.

My favourite video this week was the one that had a retro take on a Nirvana anthem!

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 WAR NEWS…

WHAT HAPPENED – Trump talked a good game about positive diplomatic developments to end the Iran war (but prepared to deploy some troops from the Army’s 82nd Airborne Division to the Middle East) and then extended the talks deadline following his most recent “or else” threat about him potentially bombing Iran’s key infrastructure. He said that the energy shock will be “short-lived”.

From Iran’s side, the country threatened to retaliate if the US/Israel attacked its power plants and then said that non-hostile ships were OK to travel up the Strait of Hormuz unmolested as the hard line leaders showed that they would not give in easily to US pressure.

All the while, Putin is thought to be making $760m a day from oil so it’s no wonder that he’s supplying drones to Iran, no doubt to make the war last longer!

WHAT WERE THE IMPLICATIONS?  Well the OECD reckons that US inflation will surge to 4.2%, largely because of the impact of rising energy prices and that the UK will suffer the biggest hit from the war among the G20 countries.

On a broader basis, the Iran war could derail the AI boom because of the high energy demands of datacentres and because the materials go into component parts for datacentres (like helium, for example) are facing bottlenecks. It could cause a food crisis as fertiliser shortages look likely and sulphur flows are being hit (bad for fertilisers but sulphur is also used for the processing of copper, cobalt and nickel – all of which are used in EV batteries). Oil and gas company deal-making has been put on hold because of the uncertainty (although some projects that are already underway are moving forward). The IEA reckons that the current Iran energy crisis is “worse than the 1970s and Ukraine war combined“ and while the repercussions are spreading around the world, it’s possible that Canada and Norway could come to the rescue.

On an individual company basis, EasyJet said that bookings were falling, Next warned that prices could rise (but they’re OK for the moment) and some global companies are thought to be re-evaluating their presence in the Middle East while Millennium, the hedge fund, is already moving some staff to Jersey.

IN TRUMP THINGS…

IMMIGRATION – Trump threatened to send ICE agents to US airports this week to ease long wait times caused by a partial government shutdown, which itself is being caused by Democrats refusing to fund the Department of Homeland Security in a protest against its heavy-handed immigration enforcement tactics. The impasse was eventually solved at the end of the week.

LEGAL ACTIONS – a US federal judge just blocked the Trump administration from punishing Anthropic for not allowing unfettered use of its tech in warfare, taking the company’s side in its assessment that the government’s designation of it as a “supply chain risk” could “cripple” Anthropic. He’s also getting bogged down by legal actions regarding his new tariffs.

THE NEXT TARGET – Trump seems to be gearing up for his next target to get the Venezuela treatment, Cuba, by cutting off its fuel supplies. The country was already in trouble. There’s a food shortage and if the power grid collapses, water supplies could be in trouble.

IN REGIONAL/INDIVIDUAL COUNTRY NEWS…

IN THE US – Lawmakers are pushing for “immediate action” by the US commerce department on the “large-scale diversion of advanced American AI chips to China” via south-east Asia. This could have a significant impact on Nvidia’s chip exports!

IN EUROPE…

IN ITALY – Meloni was defeated earlier in the week when she held a referendum on a governance overhaul for magistrates and judges. This is a set-back, but she’s achieved a lot in office thus far. Parliamentary elections must be held by December 2027.

IN DENMARK – the ruling party “won” the election but it was its worst performance since 1903 so Danish PM Mette Frederiksen will have to put a coalition together.

IN THE UK…

Inflation held steady at 3% – but this does not reflect the Iran war shock and is still considerably higher than the 2% target.

Some economists reckon that markets are wrong to predict interest rate rises this year. At the moment, markets are pricing in four interest rate increases by the end of 2026 but many economists reckon it will just stay where it is. Of course, this all depends on how long the war goes on for…

The government is now looking at ways to limit how high petrol prices can go as part of the whole cost-of-living thing but petrol station bosses vehemently rejected claims that they were scamming customers. Let’s face it, most of the price of petrol goes into the government’s pocket so this does look like a case of the pot calling the kettle black. Despite all the oil price drama, ministers continue to reject calls by the Offshore Energies UK industry group to boost North Sea oil and gas production. That being said, the government then banned Chinese wind turbine maker Ming Yang from building a £1.5bn factory in the Scottish Highlands over national security concerns!

An emergency ban is being put on crypto donations and a limit on donations from Britons living abroad of £100,000. This annual cap will be brought in pretty much immediately. The rationale is that the government wants to shut out foreign influence on UK politics.

Advisers are warning that HMRC is “unlikely to be lenient” on expats who’ve left Dubai. Britons could face major liabilities for both income tax and capital gains tax if they become UK tax residents.

IN BUSINESS NEWS/TRENDS…

PRIVATE CREDIT – it’s worth mentioning that the private credit segment has more than quadrupled in size since 2010 but a growing number of private credit companies have had to stop or restrict clients from taking money out of their funds – with Apollo Global Management being the latest to join that list this week.

While we’re on the subject of restricting redemptions, UBS decided to suspend withdrawals from its European real estate fund for up to three years after a recent jump in redemption requests as investors brace for economic fallout from the Iran war. I got a sense of déjà vu here as we last saw this gating of funds in the aftermath of the Truss-Kwarteng budget and Covid!

The European missile champion MBDA – which is jointly owned by Airbus, BAE Systems and Leonardo – has reported a boom in interest from Gulf nations who want to strengthen their air defences so it’s going to hike overall output by 40% this year. Staying with defence, VW is in talks with Rafael Advanced Defence Systems, Israel’s Iron Dome maker, about a deal that could result in a switch in production at one of the company’s factories from cars to missiles! If this works, this could set a precedent perhaps for other carmakers who have been having a tough few years falling behind the Chinese in EVs.

IN EMPLOYMENT TRENDS…

City investment manager Octopus Investments announced that it is looking to cut about 20% of its staff as it ramps up its spending on AI whilst also streamlining the business.

IN CONSUMER TRENDS…

The latest GfK household sentiment index shows that the Iran war is, unsurprisingly, having a negative effect on consumer confidence. It’s now fallen to its lowest level since April last year.

The government is now reviewing the current thresholds where parents get funded childcare. Eligible working families have been able to get 30 hours of funded childcare from the term after their child is nine months old until they start school but the thresholds have not changed since the Conservatives introduced them in 2017. Given the latest cost-of-living crisis, many people will be watching this very closely.

IN AI – the Siemens CEO said that Europe could risk “disaster” if it prioritised AI independence over building faster with existing tools. He’s probably right but I think they could try to do both at the same time!

It was a bit of a week for OpenAI! The company announced an end to the Disney deal and the Sora video app to concentrate on core areas and put its erotic chatbot plans on ice “indefinitely” while it announced plans to double its workforce in order to sell to businesses.

Arm shares got a major boost as it outlined a shift in strategy from designing chips for other companies to producing its own “AGI CPU” which could rival its customers’ offerings – including those of Nvidia, Google and Amazon. Investors took it well but I think that it could be a bit dangerous going down this route. One of the reasons behind its success is that it makes chips for others and isn’t a competitive threat. It’s effectively built itself up over the years to be the “Switzerland of chips” – but that’s going to be different now. Will it work??

IN HARDWARE – UK iPhone users will have to confirm that they are 18 or older in order to use all available services. This will be included in a software update. NB ID will be confirmed by various methods – but not by debit card.

Dyson said that it saw revenues fall last year thanks to Trump’s tariffs and weakening consumer confidence – but profits were actually up thanks to cost cuts that partly came from job losses.

IN SOCIAL MEDIA NEWS…

A New Mexico jury found Meta to be liable for failing to protect young people from online dangers and said that it had misled consumers about the safety of its platforms and putting kids in harm’s way. The jury ordered the maximum penalty for each violation – which came to $375m – but Meta made 160 times that in revenues for the most recent quarter.

Later on this week in a landmark legal case, this time in Los Angeles, the court decided that Meta and Google were indeed designed to be addictive to kids and that the companies failed to warn users about the dangers. Interestingly, Snap and TikTok had settled for undisclosed amounts before the trial.

Honda and Sony decided to ditch plans to jointly develop and launch an up-market EV, which would have been called Afeela. It was supposed to have gone on sale later this year and be built in Ohio. The two Japanese companies had formed a joint venture called Sony Honda Mobility but now this joint venture will be under review.

The government has decided to provide a new £1bn grant to help companies switch to electric trucks and vans. It will run until 2030 and means that companies could save up to £81,000 per lorry.

According to the latest stats from Autotrader, enquiries on its website for EVs have shot up as petrol prices have climbed. NB this is enquiries, not sales – and carmakers have said that they don’t expect huge sales because the price of electricity is going up as well!

PRICE TRENDS – the latest ONS data shows that London house prices fell for the sixth month in a row and at the fastest pace since February 2024.

The data also showed that the affordability of property has fallen much faster than property prices themselves. England’s housing is now at its most affordable since 2015!

MORTGAGE TRENDS – Borrowers can now get a five-year mortgage for less than a two-year mortgage as markets indicate that UK interest rates could go higher in the short term because of the Iran war. Mortgage lenders are having trouble pricing their mortgages given market volatility at the moment.

IN M&A NEWS – Poste Italiane launched €10.8bn bid for Telecom Italia, Singapore agreed to buy UK’s Access Self Storage for £1bn, Danone bought Huel in a €1bn deal, Estée Lauder confirmed that it’s in merger talks with Spanish beauty firm Puig but China is dragging its feet on approving the $2bn Manus sale to Meta because China’s regulators are looking at whether the acquisition violates Beijing’s investment rules.

European banks are now facing threats from the Iran war, AI and private credit – although banks with trading arms (like UBS and Barclays) could benefit from market volatility. How much they suffer all depends on how long the war goes on for!

The two-and-a-half year CMA investigation in the vet industry ended and there will be a clampdown on prescription fees and the ownership structure of practices among other things. It could have gone further but it now looks like the big groups are just going to get bigger…

My favourite video this week was the one with the cookie challenge! Brilliant!

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 WAR NEWS…

WHAT HAPPENED – Trump warned that NATO would face a “very bad future” if the allies refused to help him in Iran. He lashed out at Starmer (again), saying this time that “he doesn’t produce”, while the UK worked with others to de-escalate the crisis. Meanwhile, Iran successfully bombed the world’s biggest LNG facility in Qatar in response to an attack on Iran’s South Pars gas field. Apparently, Trump didn’t know that it was going to happen 🤔. Netanyahu then asserted that “this war is ending a lot faster than people think”.

WHAT WERE THE REACTIONS? Markets are reacting slightly less violently to Trump’s rantings because investors are losing belief in what he’s saying. Oil and gas prices jumped following the attack on the world’s biggest gas field.

On the domestic front, America’s spending on the war in one week exceeds what the Environmental Protection Agency, the Centers for Disease Control and Prevention and the National Cancer Institute get in a year. His director of the US National Counterterrorism Center resigned in protest at the Iran war saying that the country posed “no imminent threat to our nation”. The former army veteran posted his resignation letter on X saying that he “cannot support sending the next generation off to fight and die in a war that serves no benefit to the American people nor justifies the cost of American lives”.

On the international front, America’s biggest NATO allies rejected Trump’s demand for them to join the armada in Hormuz despite his threats. They are not willing to get involved in a war they didn’t start. Elsewhere, Australia’s central bank raised interest rates for the second month in a row in an attempt to head off a “material” risk to inflation from the Middle East war.

WHAT ARE THE IMPLICATIONS? Trump’s actions will have deep and lasting economic repercussions – and it’s great for Putin’s war effort. It’s already hitting tourism and business in the region. Airlines are drawing up contingency plans for what happens in the event of jet fuel shortages and China has ordered the restriction in exports of jet fuel, diesel and fertilisers.

Dubai’s tourism industry is getting decimated, British Airways has cancelled flights to and from there until the summer and the government is talking about relaxing the tax rules for expats to try and get them back again once this is all over.

Qatar’s gas industry has been set back for a number of years as some estimates suggest that it’ll take between three and five years to repair and cost about $20bn per year in lost revenues.

Turkey’s economy is likely to be hit particularly hard by the war because it’s a net-importer of oil and its economy was already looking pretty fragile before it all kicked off.

Back in the UK, factories are seeing a collapse in orders, farmers are facing huge price rises for fuel and fertilisers and Asda was the fastest operator to increase petrol prices.

IN TRUMP THINGS…

The president asked to postpone the summit he was supposed to be having with Xi Jinping, saying “I have a war going on”.

Trump praised visiting Japanese PM Takaichi’s “tremendous support” over the Iran war but I don’t think she can give him what he wants (warships in the Strait of Hormuz) because of Japan’s constitution.

Trump talked about having the “honour” of “taking Cuba in some form”, adding “Whether I free it, take it, I think I could do anything I want with it, if you want to know the truth”. So Cuba seems to be next on the list after a Venezuela/Iran warm-up.

IN REGIONAL/INDIVIDUAL COUNTRY NEWS…

IN THE US – the Fed left interest rates unchanged for now, but the prospect of higher inflation – and potential interest rate increases – looms large.

IN CHINA – factory output and retail sales increased at the start of the year, beating market expectations – but the National Bureau of Statistics warned that “geopolitical risks have continued to rise” and that some businesses are already facing “operational difficulties”.

IN THE UK – the Bank of England held interest rates unchanged but signalled that rate rises would be possible in the next few months to curb rising inflation. Economists are raising their inflation forecasts to take into account the rise in energy costs and the latest GDP numbers from the ONS made for depressing reading as they showed that UK economic growth ground to a standstill in January – when the Iran war was yet to break out! Britain faces a years-long energy shock because of the impact of the war on gas prices.

Meanwhile, the government is going to double tariffs on Chinese and other foreign steel to 50% in order to save its remaining plants from going under. Business secretary Peter Kyle said that the government wants 50% of steel used in the UK to be made domestically and 50% should be made in Wales.

IN COMMODITIES NEWS…

IN OIL – US oil groups including ExxonMobil and Chevron will get a significant windfall from the Gulf war but they also expressed concern about the oil flow bottleneck. Iran is also doing quite well as it’s thought to be earning over $140m a day from selling oil!

The IEA is considering releasing more of the oil reserves to keep oil prices reasonably under control but the US shale industry is still holding back from upping production despite the oil price spike.

IN INVESTMENT NEWS/TRENDS…

The Bank of America made a hugely dodgy move this week! It recommended clients to sell/short European companies that could be exposed to “private credit shocks”. Bank of America had circulated a list of 17 European financials stocks that had most exposure and they included the likes of Deutsche Bank, Aegon, Legal & General, Axa and Aviva. After those on the list complained, the recommendations were swiftly withdrawn with “factual inaccuracies” being blamed for the about-turn. This is ridiculous. In my opinion, either a) the analysts who put the report together are incompetent (I doubt it) or b) the names on the list threatened to withdraw all business from the bank and the higher-ups got the hairdryer treatment which filtered down to the ones who actually did the work. This absolutely should not be happening but good luck proving it…

IN INVESTMENT TRENDS…

Retail traders are are now putting a lot of bets on oil prices in the hope of making money from all the volatility.

There’s also an emerging trend of people using platforms like Polymarket and Kalshi to bet on short-term crypto movements.

IN IPOs – Drone tech developer Swarmer saw its share price boom by an incredible 520% on its US market debut this week! Swarmer’s software has been used by the Ukrainian military since 2024. This was the biggest debut gain since the rightwing media group Newsmax’s share price shot up by over 700% in its IPO in March last year!

IN BANKS NEWS – lenders are finding it harder to get insurance cover for mega datacentre projects because the amounts of money involved in these projects are so huge! This means that the Big Tech companies building them will have to hold a lot of the risk on their own balance sheets.

IN EMPLOYMENT TRENDS…

Various City economists are revising their unemployment estimates upwards as a result of the disruptive effect of the Iran war. The thinking is that employers are going to pass on rising energy costs to consumers, cut headcount and/or impose hiring freezes. Unemployment is already at 5.2%, its highest level for five years.

Fears about the effect of AI on jobs continues as HSBC is looking to cut 10% of its global workforce over the next three to five years, the idea being that AI will be able to do more of the administrative functions carried out in the middle and back offices. However, American fund management company Edward Jones pushed back against suggestions that AI will supersede certain aspects of investing. Users are already using chatbots to get financial advice but the CEO of Edward Jones maintains that AI will enhance its advisers’ capabilities and give them more time to do the actual advising rather than the admin.

The accountancy profession is in a bit of a dilemma at the moment. Applications are just now turning up as the overall unemployment situation is worsening but the decline in the number of top-tier grads looking to enter the profession over the years means that the potential partnership pipeline is being squeezed. The advent of AI could worsen the situation because there’s now talk that they will be taking fewer juniors, which will narrow the pipeline even more.

JPMorgan is now deploying tech to tally up junior bankers’ self-reported hours and their actual hours versus what they should be doing. This is being presented as a way to improve welfare and I think that although it’s probably a good way of tracking your own activity it will probably bring its own pressures.

IN CONSUMER TRENDS…

IN THE US – discount store operator Dollar Tree outlined a cautious outlook for the year thanks to tariff and freight cost uncertainty. Rival Dollar General had said something similar. Unsurprising really – but I guess the danger here is that people don’t just “trade down” to shop there – they just buy less stuff.

IN THE UK – Starmer is looking at ways to shield “working people” from some of the effects of the Iran war, namely by putting together an energy support package to take the edge off higher energy prices. He’s also looking to clamp down on any profiteering.

A study by Savills showed that housing costs have increased by a massive 41% over the last five years – and mortgage borrowers coming to the end of their fixed-rate deals are getting particularly badly hit by rising payments. Ouch.

There’s a growing trend of travellers opting to book cruises since the start of the Iran war as attacks on airports and flight disruptions have prompted a rethink of holiday plans.

IN RETAIL NEWS…

Chinese retailer JD.com is expanding in the UK via a platform called Joybuy. It’s positioning itself as a faster version of Amazon with its “Double 11” delivery service. This means that if you order by 11am, your package will arrive by 11pm with no extra charge for orders of £29 or more.

IN TECH NEWS…

IN AI DEVELOPMENTS – the Iran war is highlighting the rising dangers of the use of AI in warfare. It’s used to absorb and analyse all the intel from a myriad of sources and then spits out targets. AI was blamed on the missile strike on a girls’ school in southern Iran. There’s talk that autonomous weapons could face a ban in the same way that chemical and biological weapons do.

There’s talk that sovereign AI could be a major growth driver as countries seek out more independence in AI capability rather than just relying on the Americans all the time. It’s likely that this will present a huge opportunity to companies involved in AI infrastructure build-out.

French music streamer Deezer is fighting fraudsters on its platform who flood it with AI-generated music and then repeatedly listen to it to generate loyalty payments.

The UK government relented on its stance on AI firms using copyrighted material to train their models. The government had been planning to let AI companies use copyright-protected work without having to seek permission. Tech secretary Liz Kendall says that government has now backtracked on this and the creative industry is now breathing a collective sigh of relief.

PwC is going to offer alternatives to charging for their services by the hour. Instead, the company will convert some tax and consulting services into AI-powered automated tools that clients could use “without a PwC person in the loop”, which would be paid for via an annual subscription. The PwC One platform is the company’s AI platform that is launching today and will offer six automated services that will be added to in the coming months.

Australia’s biggest listed tech company, Atlassian, announced that it was cutting 10% of its workforce following a hiring freeze outside its AI and enterprise divisions. Atlassian has been caught up in the mass sell-off of software-as-a-service companies (aka “SaaS”) who are most threatened by AI. The fear is that clients could just use products like Anthropic’s Claude to develop their own software that does the same thing.

IN CHIP NEWS – Nvidia reckons that it’ll hit $1tn in AI chip revenues by 2027. It also announced that it is restarting production of the H200 chips that it sells to China. This is weird considering that Nvidia only recently announced that it was ceasing production of these chips!

IN SOFTWARE NEWS – Trustpilot’s shares boomed by 28% on strong results, upbeat outlook and share buyback announcement. This success has been down to the company’s switch towards LLMs as a way to get more eyeballs on its reviews. Click-throughs from AI search boomed by more than fifteen times year-on-year!

IN AUTOMOTIVE NEWS…

IN EV-RELATED NEWS – Tesla unveiled its first semi-truck, which garnered great reviews from its testers. Tesla’s Semi has a centred driving position, faster charging, a longer range and is around $100,000 cheaper than other battery-electric trucks.

Uber struck a $1.25bn deal with Rivian to buy up to 50,000 autonomous vehicles as part of a transition from human drivers to robotaxis. The deal will include an initial 10,000 robotaxi versions of its new R2 SUV with an option to buy more.

IN TRADITIONAL CAR NEWS – Bentley announced that it will be cutting 275 jobs in the UK among mainly office-based staff as it faces a “challenging global market environment”. While the company is still profitable, profits had taken a sizeable hit from Trump’s tariffs and weaker sales in China.

Rolls-Royce became the latest car marque to ditch its EV ambitions and continue to offer cars with these massive internal combustion engines because it says that many customers prefer the feel of a V12. It had announced plans five years ago to go 100% electric by 2030

IN REAL ESTATE NEWS – the price gap between the average asking price for first-time properties and bigger “second-stepper” homes across Great Britain hit its widest level on record. The average asking price for a two-bedder or smaller was £226,955 in March while a three/four-bedder was £345,857! This 52% gap is the highest it’s been since records began in 2001. Moneyfacts research concluded that “War in the Middle East has added almost £800 to a typical annual mortgage bill in just two weeks” while a report by Skipton Group showed that the average age of first time buyers is now 34 while just 6% of first-time buyers are under the age of 25.

Arizona brought criminal charges against Kalshi for allegedly operating a gambling business without a licence and offering illegal wagers on elections. This is the first time that criminal charges have been filed against Kalshi anywhere in the US but surely there will be a lot more!

EasyJet is encouraging passengers to book now or risk having to pay higher airfares this summer because of the likelihood of higher jet fuel prices being passed on. Fuel hedges are keeping a lid on things for the time being, but that’s not going to last indefinitely.

Britain’s biggest car park operator, National Car Parks, has fallen into administration thanks to a downturn in commuting and inner city shopping since the pandemic. The combination of higher rent and energy cost rises proved to be fatal.

My favourite video this week was the one with Eddie Hall dancing in the gym! I still don’t quite know whether it’s AI or not but I’m hoping that it is real!

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 WAR NEWS…

WHAT HAPPENED – Mojtaba Khamenei, son of the deceased former supreme leader, replaced his father as supreme leader. This was interpreted as meaning that there would be “more of the same” in terms of the way the country is run and he remained steadfast in keeping the Strait of Hormuz shut. Iranian exiles called for regime change but in the meantime Iran attacked desalination plants in addition to Big Tech offices and data centres in surrounding Gulf states.

HOW DID THE MARKETS REACT? Stocks fell, oil prices boomed and power prices in Europe were all over the place, depending on when investors thought that the war was going to be over and who/what had been bombed.

WHAT ARE THE IMPLICATIONS? The war could scupper the global economic recovery as it’s already causing doubts about the direction of interest rates and pushing up prices of important goods such as fertiliser. It’s causing India’s “Goldilocks” economy to wobble and taking the shine off Dubai as a haven in a difficult region. Asian stocks got sold down because Korea and Japan are particularly vulnerable to high oil prices given that they’re big importers for their energy-intensive industries.

Russia’s loving all this because Trump’s fuelling Putin’s war machine by pushing oil prices up (Trump’s even relaxed sanctions to facilitate buying!) – and India and China are buying it because they are so reliant on oil imports.

Commentators are saying that this is the “largest supply disruption in the history of oil markets”. It’s already disrupted events companies, like Informa, and travel companies, like Tui – although events have been postponed rather than cancelled and holidays to the region have been redirected to places like the Caribbean. Airlines that don’t hedge their fuel costs (the Big Four in the US and a lot of Chinese airlines) will suffer, particularly if the war drags on for a long time. Shipping giant Maersk has now suspended all operations at the Port of Salalah in Oman after drones attacked storage facilities there. This port is one of the Middle East’s key shipping and logistics hubs.

The latest official figures from the US Energy Department show that US petrol prices rose by 19% over the last two weeks while diesel prices saw a 28% hike over the same time period and there’s a risk that this war will have long-lasting repercussions on the global economy particularly because there doesn’t appear to be a proper “post-war” plan in place.

IN TRUMP THINGS…

The president’s strategy in Venezuela isn’t working in Iran, particularly as he didn’t get to choose the next leader.

New investigations were launched into EU countries and others – including the UK and Canada – so that the administration could find more excuses/loopholes to justify lifting to tariffs where they were before the Supreme Court spoiled the party. Meanwhile, on tariffs, there are efforts afoot by Costco customers to claw back tariff costs because of the Supreme Court’s decision.

IN REGIONAL/INDIVIDUAL COUNTRY NEWS…

IN THE AMERICAS…

THE US – US inflation was steady in February but the Iran effect probably isn’t included in this. Investors have been cutting their bets on any Fed rate cuts but the Fed is also looking at loosening restrictions on Wall Street banks in order to encourage lending and claw back market share from private credit groups. This doesn’t look like a good idea right now because of all the instability…

CANADA – the PM Mark Carney announced plans to invest most of a $25.7bn fund earmarked for defence spending into “forward operating bases” in the Arctic to assist Canadian armed forces in defending the Arctic “without the help of allies”. Sounds like a good idea!

IN ASIA…

CHINA – China’s exports boomed by 21.8% in the first two months of this year, which shows that all of America’s attempts to restrict its exports just didn’t work. Meanwhile, there was also good news about China’s consumer prices rebounding last month as they rose at their steepest pace in over three years thanks to lunar new year celebrations and booming oil prices, according to the latest data from the National Bureau of Statistics. This is good because China has been suffering from deflationary pressures for over three years because of sluggish consumer demand.

IN EUROPE…

UK – Rachel Reeves said that UK inflation is likely to rise because of the war, which makes it more likely that the Bank of England will keep interest rates unchanged for the year. Areas of the economy that are most likely to suffer include supermarkets with petrol forecourt operations (like Asda and Sainsbury’s), retailers across fashion, DIY and electronics (because they’ll have to hold more inventory), airlines (because of rising fuel prices, longer routes and falling demand) and manufacturing (because of higher energy prices). It might be mixed for banks (because although they can make more money with higher interest rates but loan defaults also rise) but it will be good for oil majors (like BP and Shell) and defence companies (like BAE Systems). In real estate it might not be great for landlords – like British Land and Land Securities – but it could be good for warehouse operators like Segro (because companies will probably want to carry more inventory to cushion against supply chain shocks).

Our gas supplies are looking vulnerable and the chancellor pledged to protect households from higher energy bills (although we don’t know where the money’s going to come from). The government should also consider unlocking investment in the North Sea in order to help with any future shocks…

COMMODITIES…

OIL – oil prices have shot up and although there’s been some volatility at the higher price levels depending on Trump’s pronouncements about the war, everyone’s speculating about how far north prices could go. Some are saying that they will breach the previous peak of $145.29 reached in July 2008 and hit $150 a barrel. The IEA then ordered the biggest ever release of stockpiled oil to take the edge off the rising oil price but the question is will it really bring down fuel costs?? It all depends on how long the war goes on for. Saudi Aramco, the Saudi Arabian state oil firm, warned about the “catastrophic consequences” of a prolonged blockage, so pressure is mounting to get this done.

GAS – this is actually a bigger problem than oil because of Qatar’s recent shutdown of its LNG facilities. There are no global gas reserves à la IEA for LNG, so everyone is highly exposed to higher gas prices. Europe and Asia are competing for limited LNG supplies and although the UK doesn’t import that much, everyone’s competing for the existing supply so we’ll be impacted by higher prices.

IN ENERGY NEWS…

Tesla has been given the all-clear by Ofgem to become a household energy supplier in Britain. It will be able to supply electricity to households and businesses up and down the country.

IN INVESTMENT NEWS/TRENDS…

TRENDS – Investors are looking at ways to minimise exposure to an energy shock and they are now looking to buy back into American Big Tech names. Tech has actually been the best performing S&P 500 sector since the war began.

M&A – Samsung has said that it’s actively looking to do AI deals so they can integrate the tech into their smartphones to eat away at Apple’s lead in the global market. Samsung has recently added Perplexity AI to its mobile operating system.

BUSINESS TRENDS…

The way we do business may have to change permanently from the “just-in-time” approach to a “just-in-case” mindset where companies will have to keep inventory in order to be able to absorb any supply shocks, which means that warehousing demand will rise (its already doing that according to Cushman & Wakefield). Companies will have to have multiple supply chains in order to minimise vulnerability to external events.

In private credit, BlackRock is now limiting redemptions, as is Cliffwater, but a Goldman banker got caught out when he said that some people were “just glad there’s something to talk about that isn’t software exposures and private credit…and this is at least a distraction from that”. I think that this highlights two things: firstly, that this is how people speak in these circles – they are just concentrating on the financial implications and secondly, that there is still concern out there about private credit markets.

Revolut finally got the go-ahead to become a proper UK bank after the Prudential Regulation Authority awarded it a full banking licence after years of delays. Revolut will shortly start to offer current accounts to a small number of new customers. It first applied to be a bank in 2021

IN EMPLOYMENT TRENDS…

Nvidia’s boss continues to maintain that AI won’t take everyone’s job and advised everyone that if you don’t have a PhD in computer science there will be plenty of jobs for electricians, pipe-fitters, steelworkers, network technicians, installers and operators.

Meanwhile, Oracle said that AI efficiencies from AI coding tools will justify upcoming layoffs while Australia’s biggest listed tech company, Atlassian will cut its workforce by 10% to adapt to the AI threat.

IN THE US – the latest Labor Department’s Bureau of Labor Statistics showed that American employers surprised on the downside. Economists had expected the employment rate to improve, not get worse. Weakness was pretty much across the board.

IN THE UK – separate reports from BDO and from KPMG/REC showed that the jobs market is suffering due to economic uncertainty and higher unemployment costs while agency recruiter Robert Walters painted a dire picture of the current situation and future prospects in hiring. The company’s boss said that Britain’s jobs market is in the “longest downturn” that recruiters have ever seen. Perhaps we can get some inspiration from the Dutch who stagger the minimum wage for workers aged 15 to 21. This incentivises companies to employ younger, less experienced staff. So far, the UK government has been going in the opposite direction in trying to narrow the gap between the youth rate and the adult minimum wage.

IN CONSUMER TRENDS…

IN THE US – petrol prices have shot up by 20% since Trump launched attacks on Iran. The White House maintains that the current price disruptions are only short-term. This could become problematic if the situation hasn’t changed by the midterm elections.

IN THE UK – the oil price nightmare means that households are going to have to brace themselves for higher utility bills.

IN RETAIL NEWS…

John Lewis paid its first annual staff bonus for four years thanks to decent performance in profits. At the moment, its stores aren’t yet suffering any Iran fallout in terms of higher bills or the flow of products.

IN TECH NEWS…

Anthropic is now suing the Pentagon and other federal agencies over the latter’s branding of the company as a “supply chain risk”. Anthropic says that this will knock billions of dollars off their revenues for this year. This designation usually applies to Chinese and Russian vendors. On the plus side, Microsoft announced that it would be integrating Anthropic’s Cowork and Claude models into the new version of its “Copilot” virtual assistant.

AI is transforming modern warfare as AI systems suck in all the intel from drones, satellites and other sensors and come up with strike options faster than humans can. By way of illustration, in the last campaign against Isis, the coalition hit about 2,000 targets in the first six months of the campaign in Iraq and Syria. The same number of strikes occurred in just two days in the campaign in Iran! The US Department of Defense has, for the past two years, been integrating AI tech within its operations.

IN AUTOMOTIVE NEWS…

Carmakers don’t think that the current oil price spike is going to help EV sales because although petrol prices are rising, so are electricity prices! The original ZEV mandate projections have proven to be woefully wrong and need revisiting!

In the meantime, Chinese carmakers continue to gain momentum and the SMMT reckons that they will be on course to account for 20% of new vehicles on our roads as early as next year!

IN EV NEWS – Rivian is on the verge of launching a new vehicle – the R2 – and a lot is riding on it. Lucid is launching three new vehicles. Lousy timing given current circumstances and sentiment!

IN TRADITIONAL CARMAKER NEWS – VW announced that it’s going to cut 50,000 jobs in Germany by 2030 and they will fall across the group, including the Audi and Porsche brands. Ouch.

The Middle East war is having a stifling effect on a residential property market that had been showing signs of recovery. Nearly 500 mortgage deals were withdrawn by UK lenders in two days and the average deal tops 5% now as a result.

Then again, at the top end of the market, activity might pick up because rich people from the Middle East could buy London assets as a way of getting their money out.

Research from Zoopla showed that the competition among tenants for rental properties is at its lowest level since before the pandemic thanks to more young people living with their parents and an increase in first-time buyers

My favourite video this week was the metal cover version of Raye’s smash hit Where is My Husband!

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 WAR NEWS…

WHAT HAPPENED – it all kicked off over the weekend as the US and Israel attacked Iran. Supreme leader Ayatollah Ali Khamenei, was killed on the weekend along with several senior officials. At the beginning of the week Trump said that he wouldn’t take part in rebuilding the nation but by the end of the week he said that he wanted to be “involved” in choosing the new leader, “like with Delcy [Rodriguez] in Venezuela”.

Iran executed Khamenei’s retaliation plan by bombing other countries in the region to ratchet up the pressure to make Trump stop. The attacks were hard on Iranians but expats and holiday-makers in Dubai tried to get out (and those who had booked to go to Dubai cancelled en masse) as the Gulf’s reputation as an area of stability in an otherwise volatile Middle East was now under attack.

WHAT WAS THE INTERNATIONAL REACTION? China was angered by the attack, which is not surprising given that it imports up to 75% of its oil. It will now have to find alternative sources (like Russia) – but at the same time as everyone else! Starmer initially refused to co-operate with the US and allow the use of its airbases which annoyed Trump – but he soon relented.

Airlines are having to cope with way more disruptions than have occurred in previous Middle East conflicts and Europe-to-Asia travel is getting more difficult because of the narrow corridor that planes can now fly in because of all the bombing.

WHAT’S THE GLOBAL IMPACT?  Oil prices shot up because the Strait of Hormuz suddenly got very dangerous – which is potentially great news for Russia because it’s bound to get more orders for its oil. It will be able to sell more of it – and at inflated prices. The Strait is the world’s most important oil trade route and insurers have been cancelling policies covering ships moving through that chokepoint. Trump offered to protect shipping going through the Strait but insurance costs still boomed by a factor of 12. The US won’t be immune either because Trump has not replenished his Strategic Petroleum Reserve and US shale producers have said that they can’t make up the shortfall. Asia’s big manufacturing economies are very vulnerable because they import a lot of oil.

Gas prices also rose as supplies from Qatar got knocked out – and the LNG price spike could be more problematic than the higher oil price because there aren’t so many strategic reserves of gas.

WHAT IMPACT WILL THIS HAVE ON HOUSEHOLD FINANCES? US petrol prices have already surged and a higher-for-longer oil price will potentially push inflation higher, which is bad news for the cost-of-living.

IN DEFENCE NEWS…

France offered to move some of its nuclear deterrent to other allied European countries for the first time as part of efforts to deepen co-operation. This is “the most important revision to France’s nuclear doctrine in a generation” as it is a major step forward for Europe to take responsibility for its own defence.

IN TRUMP THINGS…

TRUMP vs AI – Anthropic got booted out of Pentagon contracts for not being willing to bend to let the government do whatever it wanted with its tech and was swiftly replaced by OpenAI, which then hastily negotiated some contract alterations that meant that “the AI system shall not be intentionally used for domestic surveillance of US persons and nationals”. Anthropic said it would sue the Trump administration labelling it a supply chain risk – although it said that this designation won’t have much of an impact on its business – but it kept negotiations going with the government anyway.

TRUMP vs LAWYERS – the government initially dropped its appeal to enforce punitive executive orders on the likes of Jenner & Block, Perkins Coie, WilmerHale and Susman Godfrey who managed to successfully challenge Trump on the executive orders he slapped on the top law firms early on in this term’s presidency. However, the Department of Justice changed its mind and is appealing again. At the end of the week, a group of twenty-four US states then filed a lawsuit against the Trump administration following the recent Supreme Court decision outlawing Trump’s tariffs.

TRUMP vs ALLIES – Trump threatened to cut trade with “terrible” Spain because it didn’t let the US use Spanish military bases to attack Iran.

TRUMP vs IMMIGRATION – the president fired controversial homeland security secretary Kristi Noem, who presided over the whole Minnesota nightmare has been booted. Someone clearly had to take the fall for the handling of mass deportations.

TRUMP THE SAVIOUR – Trump told AI companies that they needed “PR” help to address rising resistance against the building of datacentres for AI but given that they don’t generate many jobs and suck up resources, he needs to get involved in the PR otherwise he’s going to suffer come the midterms at the end of the year.

IN REGIONAL/COUNTRY NEWS…

IN ASIA

CHINA – the country set its lowest GDP target for the year of 4.5-5%, its lowest range since the 1990s! This was blamed on the rise of geopolitical risks, slowing global economic momentum, the stubbornly difficult domestic property market and weak household sentiment.

IN EUROPE

The European Commission offered to include some of its “like-minded” partners in its “Made in Europe” manufacturing targets in order to crowd out competition from China. Nissan said that it would shut its Sunderland plant down if it’s not fully included in this.

IN THE UK – the OBR warned that the UK economy could suffer a “very significant” hit from the Iran war and the Resolution Foundation said that the war “could wipe out growth in UK living standards”. Ministers are thought to be discussing ways of minimising the impact of rising energy prices on household bills.

Other than that, the chancellor announced a largely uneventful Spring Statement, but all the forecasts will surely be wrong given that the Iran war only just started. Meanwhile, there was a surprise jump in UK grocery price inflation, which isn’t great for consumers.

IN CRYPTO…

Bitcoin and crypto stocks rallied a bit on Trump making supportive noises on Truth Social. Coinbase, Robinhood, Gemini, Bullish, Circle, Strategy and Galaxy all put in strong performances as a result.

IN INVESTMENT NEWS/TRENDS…

HALO – AI-resistant HALO (Heavy Asset, Low Obsolescence) stocks are driving the UK and EU markets to record levels. Goldman Sachs classifies them as ones that have both substantial physical capital and evergreen economic relevance.

PRIVATE CREDIT – retail investors continue to shun private credit funds after Blue Owl stopped redemptions recently and Blue Owl’s share price has now fallen below its 2021 listing price. Blackstone’s flagship private credit fund saw big outflows in Q1 and the AI/tech sell-off is is hitting private credit badly because they invested heavily into it.

IPOs – Loveholidays looks like it’s going to postpone its IPO because of the war in Iran. It was supposed to be the London Stock Exchange’s first big listing of 2026.

M&A – The latest numbers from the ONS showed that the total value of foreign takeovers of British companies hit its highest level for four years in the final quarter of 2025, mainly thanks to Doordash buying Deliveroo, KKR buying Spectris and Athora Holding buying Pension Insurance Corporation Group.

All3Media Banijay Entertainment are going to merge to form an $8bn TV production group that will generate about €4.4bn a year in revenues and over €690bn in earnings.

BrewDog’s retail investors, who invested over £75m in BrewDog via crowdfunding between 2009 and 2021, are going to get zero after US brewery and cannabis producer Tilray struck a £33m deal to buy all of BrewDog’s brands. Ouch.

IN BUSINESS NEWS/TRENDS…

PREDICTION MARKETS – Trump insiders are thought to be “profiting from the war” as there were some questionable trading patterns very close to the US strike in Iran. I think that this kind of betting is sooooo wide open to abuse because you can bet on so many things that are difficult to monitor – but it continues to gain momentum! DraftKings is trying to fight back by integrating its prediction markets platform into its core app but British gambling companies, such as Flutter, are still reeling from the onslaught of Polymarket and Kalshi.

IN SENTIMENT – the latest IoD survey showed that executives are feeling pretty downbeat thanks to ongoing higher employment costs, a worsening late payments crisis and increased geopolitical volatility. Separately, research from accountancy firm Lubbock Fine showed that small businesses are increasingly trying to cut their growth in order to stay under the £90,000 VAT threshold. In order to do this, some SMEs are cutting opening hours, closing on quiet days or shifting to a four-day week. Some are engaging in “business splitting” where owners separate operations into different entities to cut turnover. Not great for economic growth!

IN EMPLOYMENT TRENDS…

IN SOUTH KOREA – the country is letting in rising numbers of foreign low-skilled workers – many of whom come from Bangladesh or the Philippines – due to a shrinking work population and the world’s lowest fertility rate.

IN AMERICA – Morgan Stanley is going to cut around 3% of its workforce across investment banking, trading, wealth management and investment management businesses. This is despite the bank reporting record annual revenues that were up a healthy 14% versus the previous year. AI wasn’t mentioned here and I’d say that investment banks tend to do this from time to time to keep everyone on their toes…

IN THE UK – Britain’s unemployment rate is now worse than Italy’s for only the second time in thirty years! Data from the Bank of England says that that businesses have had their longest streak of job cuts since the pandemic and this trend seemed to be echoed by recruitment firm PageGroup which saw its share price tank by 20% on news that it had seen a 60% fall in profits! The company blamed the “tougher” trading conditions in the UK and observed that companies in Britain were “deferring hiring decisions and candidates [were] cautious about accepting offers”. Another study by the Institute for Fiscal Studies pointed out that employers face a 40% rise in costs under the government’s proposals to ditch the youth rate of the minimum wage. The government is against “discriminatory age bands” but the fact of the matter is that doing this is going to mean that employers won’t employ those extra people at a time where jobs are getting increasingly scarce.

IN CONSUMER TRENDS…

IN JAPAN – Japanese retailers like Uniqlo, Muji and Don Quijote are trying to adapt to not having Chinese visitors as they’ve kept away from Japan ever since PM Takaichi made some blunt remarks a few months ago about how Japan would react if China invaded Taiwan (Japan would treat an attack on Taiwan as an attack on Japan).

IN THE UK – the latest BRC figures showed that shop prices slowed down thanks to discounting in fashion, health and beauty. This is good news for the consumer for now, but the Iran war could potentially push global inflation up again.

IN RETAIL NEWS…

John Lewis is thinking about buying back some of its supermarkets with its £1.5bn cash pile. This sounds like a confident move to me and reflects a wider turnaround at the company!

Modella Capital, the private equity firm that bought WH Smith’s high street business (now called TG Jones) is looking at shutting down 80 stores. It’s spent £14m on refurbishing the chain since it bought it last year. FWIW, I think that £14m is a paltry sum, renaming the chain TG Jones shows a complete lack of care (have you seen the corporate BS explanation behind the naming 🤣?!?) – which suggests to me that the whole deal was all about asset stripping and selling off the stores right from the off.

IN CASUAL DINING NEWS…

Greggs saw profits slump and sales slow down against the backdrop of a “challenging” market with squeezes on disposable income and fragile consumer confidence.

IN TECH NEWS…

IN AI – DeepSeek was due to release its long-awaited V4 “multimodal” model this week. It will be able to generate pictures, videos and text. I didn’t hear anything subsequent to this, however!

IN CHIPS – Nvidia has now stopped production of chips intended for the Chinese market – the H200 chips – and has instead reallocated manufacturing capacity at TSMC to making the next-gen Vera Rubin hardware.

IN MEDIA NEWS…

News Corp and Meta just signed a deal that will allow Meta to use News Corp’s content from the US and UK.

IN AUTOMOTIVE NEWS…

According to the latest figures from the SMMT, new car registrations for February were the highest in over 20 years but the take-up of EVs was less resounding. The market share of new EVs contracted for the second month in a row.

IN EV NEWS – BYD’s February sales fell at their steepest rate for five years as decent overseas sales could not make up for weakness in its domestic market. On the plus side, the company released a new EV battery that can be fully charged in nine minutes! The battery can get to 70% of capacity from 10% in five minutes and is the second-gen of what the company calls its “blade battery” that’s thinner and lighter than other batteries. BYD also released a new 1,500-kilowatt charging station, called a “flash charging station”.

IN DRIVERLESS NEWS – Admiral and Aviva, the UK’s two biggest car insurers, both reckon that the insurance market will continue to grow for the next 20-odd years despite the threat from autonomous vehicles.

Bank of England figures showed that UK mortgage approvals fell to their lowest level in 2 years while the latest Nationwide numbers show that UK house prices rose in February. We can’t really get excited though because we don’t yet know what effect the Iran war will have.

London landlords are evicting tenants ahead of the introduction of the new Renters Rights Act that will be implemented in May that will give renters protections against unjustified dispossessions.

Vacancy rates are continuing to climb in student accommodation thanks to cost-of-living pressures, increasingly burdensome student loans and tighter student visa policies. Unite Group, Britain’s biggest student housing provider, is suffering as a result.

Although Vistry painted a dour picture of the outlook and saw its share price hitting depths it’s not seen since the 2016 Brexit vote, things might be about to get better for UK home builders due to streamlined legislation, improved affordability and potential help for buyers to come from the government.

I had two favourite videos of the week this week! I liked the one about the carbonara for the sheer inventiveness and the one with the dog that used The Force to retrieve a ball!

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 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 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 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 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 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 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.

My favourite video of the week is the one with the baguette rules! I must say that I did not know all of those!

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.

TRUMP THINGS…

THREATS – Trump gave Iran an ultimatum: strike a deal in 15 days or “bad things will happen”! The US has now built up its biggest military presence in the Middle East since the 2003 Iraq invasion. All of this has rattled oil markets, pushing Brent crude to a six-month high amid fears that conflict could disrupt supplies or even lead to the closure of the Strait of Hormuz. Critics argue Trump needs Congressional approval for war but he appears unconcerned.

Donald Trump announced plans to roll back tariffs on metal and aluminium goods of up to 50% that he introduced last summer.

RETRIBUTION – the president escalated an assault on the US Consumer Financial Protection Bureau, arguing that regulatory burdens have reduced credit availability and cost Americans billions. The CFPB, created after the 2008 financial crisis to protect consumers, has been accused of pursuing a radical agenda.

The pro-Trump director of the National Economic Council said that New York Fed economists should be “disciplined” for publishing study on tariffs which suggests that US businesses and consumers are bearing the brunt of tariffs – and not the corporates, as Trump keeps saying. Kevin Hassett labelled the study an embarrassment and said that “It’s I think the worst paper I’ve ever seen in the history of the Federal Reserve system”. He maintains that it failed to include the full effect of the tariffs. What a drama queen.

CRYPTO – The Trump family hosted a glitzy crypto-themed Mar-a-Lago party promoting World Liberty Financial (WLF) and the future of crypto. Despite bitcoin’s sell-off, enthusiasm remained high. WLF has applied for a US banking licence to ease access to the traditional financial system as it builds broader infrastructure.

IN REGIONAL/COUNTRY NEWS…

IN THE AMERICAS

CANADA – Canada is planning to allocate 70% of defence spending domestically, up from 50%, as part of a push to raise military spending to 5% of GDP over the next decade. Long-standing procurement cooperation with the US is fraying amid Trump tensions. Ottawa is also seeking closer ties with the EU, UK and Indo-Pacific partners.

Canada’s Liberal Party got closer to majority as another Conservative MP defected to Carney’s party. He currently relies on opposition support but faces a challenging year ahead, including a USMCA review and ongoing US tariffs on key exports, so getting an actual majority would be really good for him.

ASIA

JAPAN – Japan announced $36 Billion in US energy and manufacturing projects following Trump’s October visit. With further diplomatic visits ahead, Japan appears keen to maintain favourable relations.

EUROPE

Rumours surfaced about Christine Lagarde leaving the ECB before the end of her 8-year term in order to get her successor chosen by Europhiles Macron and Merz rather than a Eurosceptic. Spain may field a candidate.

SWITZERLAND – the Franc’s relentless rise (because it’s a “safe haven” currency) continues to alarm Swiss companies. It’s now at levels against the dollar not seen since 2015. With exports accounting for over 70% of GDP, an “expensive” currency could become a serious problem.

THE UK

UK inflation fell to 3%, its lowest level since March last year, increasing expectations of a Bank of England rate cut. Lower petrol, air fares and food prices helped, with the 2% target still in sight for this year.

Starmer cancelled plans to delay 30 local council elections in England became his latest U-turn after legal advice warned delays would be unlawful. Elections will go ahead in May, presumably much to Reform UK’s delight.

He also said that Britain needs to “go faster” on defence spending in order to hit the target of 3% of GDP, up from 2.3% in 2024, although how he’s planning to finance this remains vague.

IN COMMODITIES…

OIL – Repsol said that it wants to triple Venezuelan oil output in the next three years after securing a permit from the US to go ahead. Other oil majors have been quite reticent so far about operating in Venezuela so Repsol’s enthusiasm may encourage broader re-engagement.

GOLD – Soaring gold prices are forcing vaults to cut their insurance cover. This means that bullion is having to be relocated, which is proving to be a boon for specialist transport services.

IN BUSINESS NEWS/TRENDS…

US companies are raising prices once more after holding off for months despite last year’s tariffs. Many of them delayed increases or offered discounts but January typically brings price resets and this year’s rises have been steeper than usual, according to UBS. If everyday essentials like groceries keep squeezing household budgets, even a hefty campaign war chest may struggle to distract voters from affordability concerns.

Prediction betting platforms such as Polymarket and Kalshi are shaking up traditional gambling by allowing bets on crypto, politics and other events alongside sport. Investors fear market share erosion, sending shares in Flutter and Entain down sharply this year.

IN INVESTMENT NEWS…

EU cross-border banking deals have hit their highest level since the 2008 crisis. With the sector still fragmented, further consolidation looks likely.

Hapag-Lloyd made an all-cash off to buy Israeli Rival Zim for $4.2bn. This should boost shipping its existing capacity, pending approvals.

eBay bought Depop, highlighting eBay’s eagerness to attract younger users. Given that 90% of Depop’s audience is under 34, this looks like a good move. It will also help Depop compete more effectively with Vinted.

IN FINANCIALS NEWS…

Bank of America announced that it would commit $25bn to private credit lending, becoming the latest Wall Street bank to push into a fast-growing sector despite rising scrutiny and liquidity concerns.

UK bank bosses announced plans to set up a domestic payments system to rival Visa and Mastercard by 2030. Given Trump’s unpredictability and the UK’s extreme reliance on these two companies (around 95% of UK car transactions are made via payments systems owned by the two companies), this sounds like a sensible idea!

Klarna’s share price took a 27% dive thanks to rising loan costs. It seems to me that the more it tries to be like everyone else the less appealing it becomes.

It was a bad week for jobs market news. UK unemployment rate hit a five-year high of 5.2% while wage growth cooled. Youth unemployment is particularly grim, with the 16 to 24 rate hitting 16.1% in the three months to December. This is even higher than the EU’s 15% jobless rate for the same demographic! Over time, measures such as the national living wage, higher employer national insurance contributions, the Employment Rights Act and pensions auto-enrolment have combined to make hiring young staff less attractive.

The Labour government has been blamed for jacking up employer costs at a sensitive time but momentum was already fading before Labour took office. Recent job losses have been concentrated in lower-paid sectors such as retail and hospitality, areas heavily staffed by younger workers. When costs rise these are the first roles to go.

The mood among employers is gloomy. According to a CIPD survey, 37% of employers plan to reduce permanent hiring due to the Employment Rights Act, with 75% expecting higher costs. Critics argue the legislation may backfire by pushing firms toward temporary staff.

The mood among employees isn’t that much better either. The broader job market remains difficult because mid-career professionals are now getting displaced by AI with nothing to fall back on so some white-collar workers have decided to take action and ditch their jobs in favour of retraining in AI-proof trades. Given that 40% of graduates are underemployed (i.e. doing a job where a degree is not required) and graduate roles attract around 140 applications each these days, it is understandable that alternatives look appealing. The fact that PwC graduate job applications have surged by 35% emphasises the intense competition that everyone is facing.

City law firm Mishcon de Reya now uses an AI chatbot to interview graduates for first-round interviews, allowing candidates to expand verbally rather than complete lengthy forms. Transcripts are reviewed by early careers teams.

Some firms are really pushing the use of AI among their staff. Accenture is now going to the extent of tracking AI engagement and using the data as part of promotion decisions. However, a KPMG partner overstepped the line because he used AI tools to pass an internal AI course and got fined!

Goldman Sachs decided to drop its diversity commitments amid shifting political winds. Given Trump’s hostility to DEI, the move is unsurprising, though you do hope that companies will still do the decent thing even without formal criteria.

The news for students and grads was mixed this week. On the one hand, a group of UCL students won £21mn from the university over Covid disruption in watershed UK settlement, so you would have thought there will be similar actions in other universities. On the other hand, the thresholds where student loan payments kick in is going to be lowered, which will catch out a number of UK nationals living abroad, meaning higher monthly repayments. For some, bills may double, adding further strain for graduates. The irony of all this is that the government’s actions are actually punishing the students who actually need the money the most, leaving the more affluent unscathed.

IN CONSUMER TRENDS…

IN THE US – there’s growing resistance to Trump’s AI infrastructure obsession – even in the MAGA heartlands – because people don’t want massive data centres consuming water and electricity in their communities. Polls suggest around 60% of his voters are worried about rapid AI development and almost 80% think it needs more regulation. Dozens of projects have already been delayed in Republican states due to local resistance.

Trump is also feeling pushback with regard to ICE and immigration. A warehouse owner in Hutchins, Texas refused to sell the warehouse to the Department of Homeland Security for use as a migrant detention centre. Although alternative sites have been secured, the episode shows that resistance to immigration policies exists and could grow if activists coordinate more effectively.

IN THE UK – household debt is rising thanks to a borrowing binge fuelling the fastest rise in debt levels for the past seven months, led particularly by 18 to 24 year olds. Sentiment appears fragile, with confidence in big purchases at a 10-month low.

Given the rise in household debt, it is worth noting that there has been strong growth in credit card lending, with major banks reporting double-digit increases and outstanding debt hitting a record £78bn. Pessimists see strain, optimists see spending confidence.

Maybe everyone is splashing out on gig tickets! Live Nation reported strong ticket sales but there is a looming antitrust case that could force a Ticketmaster divestment if regulators prevail.

IN RETAIL NEWS…

Topshop returned to high street in John Lewis stores, marking a revival aimed at attracting younger shoppers.

John Lewis announced a 6.9% pay rise for shop floor staff that would imply improving fortunes, although bonuses remain uncertain.

Amazon overtook Walmart to become America’s biggest company by revenue after its remarkable transformation.

IN TECH NEWS…

IN AI – Amazon’s Andy Jassy is putting $200bn into AI infrastructure spending to keep AWS ahead of rivals as rivals have been catching up recently. AWS generates over 60% of Amazon’s profits but analysts think Microsoft could overtake it within three years! The AI arms race is expensive but the prize is enormous.

Nvidia and OpenAI decided to ditch the $100bn deal they “sort of” made in favour of Nvidia throwing $30bn into the pot at OpenAI’s latest funding round. Given how the original agreement triggered waves of cross-investment across the sector, this scaling back could suggest growing investor nerves about the tangled web of AI financings.

Perplexity has decided to ditch advertising because it thinks that ads adversely affect user trust. Having been an early mover into ads and shopping features, Perplexity is now prioritising subscription revenue and answer accuracy. Good on them!

Somewhat surprisingly, Japan’s largest toilet maker is emerging as an undervalued AI play! Toto’s advanced ceramics division produces electrostatic chucks used in Nand chip manufacturing. With AI driving chip demand, this previously overlooked business is becoming more central.

Raspberry Pi shares surged in meme-stock fashion as some people got excited that its micro-computer devices can run OpenClaw software, which helps users perform everyday tasks.

A British researcher is raising $1bn for his AI start-up, called Ineffable Intelligence, that builds self-learning AI systems. Success would be a real boon for the UK’s AI standing.

Hyundai is accelerating robotics deployment in its US factories and targeting driverless taxis in Las Vegas in a bid to catch up with the likes of Tesla and others. Fortunately, it has manufacturing expertise and hard won data in its corner.

IN CHIPS – Nvidia secured a multibillion-dollar Meta deal despite Meta also developing in-house alternatives. Nvidia reports earnings next week.

SOCIAL MEDIA NEWS

Starmer is looking to bring AI chatbots within the scope of the  Online Safety Act following the recent deepfake scandal. Breaches could result in massive fines.

The UK is to require tech firms to remove abusive images within 48 hours as part of the newer tightening of laws with companies facing severe penalties or service blocks. This feels long overdue.

Among all this, Donald Trump is looking to help Britons bypass online safety laws by launching freedom.org, which will essentially act like a VPN. With most affected firms being American, Washington’s opposition is unsurprising but it is incredible to think that, by doing this, Trump is unashamedly trying to sabotage laws that are being put in place for good reason and that aren’t in his jurisdiction.

Meta is cutting staff stock awards for a second straight year, highlighting the prioritisation of finances which are increasingly being diverted into attracting AI talent and building datacentres. Employee complaints look somewhat tone deaf given the tough tech jobs market.

IN AUTOMOTIVE NEWS – Carmakers have taken a $65bn hit overall as the pace of the electric transition is far slower than they had anticipated. Ford and Stellantis are among those cutting targets and trimming model line-ups as demand remains sluggish and regulatory backing weakens. Trump’s lack of enthusiasm for EVs has not helped sentiment.

US carmakers are getting increasingly concerned about the prospect of Chinese rivals gaining foothold in America, particularly after Trump said he would “love” Chinese manufacturers to build plants in the US. Geely has hinted at entering the US market within three years. US manufacturers are torn between partnering with Chinese players or defending market share against them.

Back in Europe, Brussels is planning to enforce rules that EVs must be 70% made in the EU to qualify for state support as part of a broader effort to protect the bloc’s €2.6tn manufacturing base. In theory this supports local industry but implementation may raise costs, potentially making EVs less attractive and boosting cheaper Chinese imports unless paired with tighter trade protections.

VW is aiming to cut costs by 20% by 2028 as part of an aggressive restructuring. VW has fallen down the rankings in China after once dominating as a foreign brand. Weak domestic demand and heavy investment in China leave it vulnerable, particularly if European rules restrict Chinese-built imports into Europe. There is a risk of being squeezed from both sides!

A study by the Fraunhofer Institute showed that Plug-in Hybrid Electric Vehicles (PHEVs) use three times more fuel than manufacturers claim. While this calls into question their green credentials, consumers may still favour hybrids for balancing fuel savings with reduced charging anxiety.

IN REAL ESTATE – in the US, the Federal Reserve is set to loosen capital requirements in order to boost mortgage lending. Banks’ market share has fallen from 60% before 2008 to 35% in 2023 as tighter post-crisis rules pushed them out. Relaxation could increase competition and borrower choice as specialist lenders have grown market share over that time.

In the UK, Rightmove data shows that house prices have levelled off after a strong start to year. With the Budget behind us and rate cuts likely, momentum could build from here. That being said, ONS data showed that inner London house prices saw their biggest annual drop since 2008 although suburban areas held steadier. There’s potentially good news for renters as there are signs that the exodus of landlords fleeing the buy-to-let market may be bottoming out. Greater rental supply would help ease pressure on soaring rents!

Uber said that it would launch in 7 new European markets in food delivery. Austria, Denmark, Finland, Norway, the Czech Republic, Greece and Romania are part of plans to expand its European footprint.

BrewDog has put itself up for sale as losses are piling up. AlixPartners has been appointed to explore the options and co-founder James Watt, who retains a 21% stake, may consider an offer.

Rheinmetall won approval for expanding munitions production in Italy after years of wrangling with local authorities. This saga reflects planning challenges faced by defence companies looking to expand production capacity!

Nestlé plans to exit the ice cream business as the company slims down under its new chief. The business will be streamlined into four core divisions while the ice cream division will be up for sale.

My favourite video of the week is the one with the clever designs! Check out that desk/chair thingy at the end!!! How clever is that??

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 WAR NEWS…

• UKRAINE – Zelenskyy is planning presidential elections and a referendum to coincide with a potential peace agreement with Russia as the Trump administration pressures Kyiv to decide the presidency and the end of the war by May 15th. Failure to do so could result in the withdrawal of proposed US security guarantees. Trump is presumably keen to showcase peace progress ahead of November’s midterms. Officials say the announcement of the elections and referendum will come on February 24th, the fourth anniversary of Russia’s invasion.

IN TRUMP THINGS…

• TARIFFS – the US House of Representatives voted to terminate the national state of emergency that Trump invoked in February last year to empower him to slap tariffs on Canadian imports. Notably, six Republicans crossed party lines to join the Democrats on this despite threats from Trump that dissenters would face electoral consequences. Polls show most Americans oppose the tariffs. This raises the likelihood that other tariffs could be challenged.
• Federal Reserve research shows that US businesses and consumers (not the foreign companies exporting goods to America!) paid around 90% of tariff costs in 2025! Foreign exporters did actually absorb more costs as the year wore on, though. White House officials argued that inflation fell and corporate profits rose despite the higher tariffs. Some economists expect delayed inflation effects as pre-tariff stockpiles run down, while others think the worst has passed.
• TAIWAN – the US and Taiwan signed a trade agreement that cut tariffs on Taiwan to 15% in return for a $250bn commitment to US semiconductor investment.
• CLIMATE – Trump scrapped the legal basis which US climate regulation has relied upon since 2009, marking Trump’s biggest rollback of environmental policy so far! He argues that the legislation was “the legal foundation for the green new scam – one of the greatest scams in history”, held industry back and pushed prices up for consumers.
• IMMIGRATION – Trump’s border tsar ended the Minnesota immigration crackdown after Operation Metro Surge caused outrage and two deaths. Although over 4,000 arrests were made, polls suggest most Americans felt federal deployments in cities went too far, underscoring political sensitivity in the year of the midterms.

IN REGIONAL/COUNTRY NEWS…

THE AMERICAS

• THE US – Although received wisdom suggests that America is lost to the world now, at least while under Trump’s stewardship, it’s still possible that relations could normalise. There have been recent signs of push-back against his policies both internationally and domestically, from Davos speeches urging unity among middle powers to protests against immigration enforcement and criticism from Republicans and business leaders. For the next few years at least, though, countries will no doubt endeavour to reduce reliance on the US.
• Epstein repercussions continued as lawmakers urged commerce secretary Howard Lutnick to step down over previously undisclosed links to Epstein. Although interactions appear to have been limited, his denial raises political risk.

ASIA

• CHINA – China stepped up activities near Taiwan as fighter jets manoeuvred close to Taiwanese aircraft and fired flares, reflecting heightened tensions.
• China is keen to open up new shipping routes- a Polar Silk Road – in the Arctic. It’s been producing powerful new icebreakers to help its presence there. Western concern is rising over Chinese and Russian activity.
• JAPAN – Japanese stocks boomed after Sanae Takaichi’s landslide election victory delivered a two-thirds lower-house supermajority, boosting expectations of stimulus and corporate investment. The feelgood pushed major indices to record highs.
• Takaichi is considering constitutional reform, potentially revisiting pacifist Article 9 which forbids Japan from having an army, navy and air force (although it does have a “Self Defence Force”). This will be hugely challenging, even with her supermajority, but China’s sabre-rattling in the region might tip the balance. If – and it’s a big if – she manages to change Article 9, it could have a major impact on defence spending (i.e. if will go up a lot).

EUROPE

• SWITZERLAND – Switzerland will vote on capping population at 10m by 2050 amid strong support from the Swiss People’s Party. Rapid population growth and high foreign residency are driving concerns about infrastructure, environment and housing.

THE UK

• Starmer faced a tricky week following Epstein-related fallout and the resignation of his chief of staff and head of comms. Starmer defied calls to quit and managed to get cabinet backing (eventually!), which helped to stabilise markets and calm fears. Expectations of higher taxes and stricter labour laws under a more left-leaning leadership is a worry for businesses.
• The UK economy grew just 0.1% in the final quarter of 2025 but I think that even this was quite an achievement given how late the Budget was! Early signs of renewed consumption suggest cautious optimism…

IN COMMODITIES…

• OIL – BP decided to stop share buy-backs due to weakened annual profits. It became the first big oil company to suspend share buy-backs but all of them have delivered lacklustre performances over the past year, so BP’s move could prompt similar action across the sector.
• SILVER – Retail traders kept buying silver despite price plunges that erased most of the gains made this year. Investors poured about $430m into the largest silver ETF last week alone! This behaviour suggests investors are chasing a meme-style rebound…
• NICKEL – The nickel price jumped as Indonesia slashed production quotas at the world’s biggest mine in order to tighten supply and support the price. Authorities have been trying to counter years of oversupply that pushed prices from above $100,000 per tonne in 2022 to below $20,000 for the past eighteen months. Nickel remains crucial for stainless steel and EV batteries, so supply discipline matters.

IN MARKET & INVESTMENT TRENDS…

• IN MARKETS – we saw the emergence of Wall Street’s “anything-but-tech” trade as investors rotated away from expensive tech company shares and into supermarkets, energy companies and manufacturers. Funds focused on non-tech companies attracted $62bn in the last five weeks alone, exceeding inflows for all of 2025! Investors are getting increasingly worried about AI capex.
• THE SECTOR SELL-OFFS – the share prices of US brokerages including Charles Schwab, Morgan Stanley and Raymond James weakened following the launch of a new AI-powered tax planning tool from fintech Altruist. That was then followed by plummeting share prices of UK wealth managers including St James’s Place, AJ Bell, Quilter and Aberdeen, alongside Switzerland’s Julius Baer and France’s Amundi who also tanked for the same reason.
• Companies behind price comparison sites including MoneySupermarket and Go Compare also fell following the launch of an AI-powered tool from Insurify that offers personalised insurance quotes. Markets currently assume new AI tools will quickly disrupt incumbents, although real-world effectiveness may vary.
• Property services companies including Savills, British Land, CBRE and others also fell on fears that labour-intensive models face AI disruption. I believe that such sweeping declines may create buying opportunities because disruption will differ widely across firms with established reputations and resilient niches.
• IN IPOs – banks pushed for faster European IPOs to reduce market risk, with bookbuilding periods shrinking to about five days on average and sometimes just three. Shorter timelines reflect concern that sudden political shocks could derail valuations mid-process. Strong current valuations encourage urgency in bringing listings to market.
• Broker Clear Street’s postponed IPO illustrates this risk, as volatile markets and weak demand halted plans to raise up to $1.1bn. Companies hoping to float may need to act quickly before favourable conditions disappear.
• IN M&A – NatWest agreed to buy wealth manager Evelyn Partners for £2.7bn after outbidding Barclays, marking NatWest’s largest deal since the financial crisis bailout. The acquisition strengthens NatWest’s wealth management presence and diversifies income away from interest rate sensitivity, complementing its ownership of Coutts and adding roughly £69bn in client assets.
• Schroders agreed to a £9.9bn takeover by US manager Nuveen. The combined group will nearly double Nuveen’s size and rank among the world’s largest active managers. Strategically the deal fits because Nuveen is strong in US and private markets while Schroders brings complementary capabilities and brand value.

IN FUNDING/MONEY-RAISING…

• Anthropic raised $30bn at a $350bn valuation, giving the young AI company major resources to compete with leading tech giants despite being founded only in 2021!
• A 25-year-old founder raised $220mn for AI chip start-up Olix, targeting faster and cheaper chips focused on inference demand. Success could strengthen the UK’s AI ecosystem if American Big Tech doesn’t swoop in to buy it!
• British self-driving start-up Wayve is meanwhile pursuing funding that could value it near $9bn. Its technology differs from rivals by learning roads without detailed prior mapping, supporting the expected rollout of driverless taxis in the UK.

IN BUSINESS TRENDS…

• Investors – and companies – are getting jumpy about AI start-ups who disrupt the business of big companies that splice and dice information for distribution to customers. This is why we’ve seen whole sectors sold off one by one over the last two weeks!

IN EMPLOYMENT TRENDS…

• IN THE US – job creation beat forecasts with 130,000 new roles in January but then projections for 2025’s overall numbers were sharply downgraded, making last year one of the weakest for employment growth outside the financial crisis and Covid. This stronger-than-expected data may reduce pressure on the Federal Reserve to cut interest rates in the short term.
• Concerns about “AI-washing” are also growing as companies attribute layoffs to artificial intelligence rather than tariffs, pandemic over-hiring or profit pressures. While AI will eventually reshape many roles, widespread immediate replacement seems unlikely despite political convenience in blaming technology.
• IN THE UK – UK unemployment increased to about 5.1% but surveys suggest hiring declines may be stabilising and some freezes are being lifted now that Budget uncertainty has passed. This improvement could still be fragile if political instability returns and clouds the economic outlook.
• Barclays replaced most of a London copywriting team with staff in India, who will be supported by AI. The move reflects cost management rather than pure automation, forming part of a broader £2bn savings plan – but it is interesting and maybe others will consider taking similar action…

IN CONSUMER TRENDS…

• IN HOSPITALITY – research by CoStar shows that the world’s most expensive hotels have been able to charge record prices in defiance of the luxury slowdown, showing that affluent travellers continued spending heavily last year. Hoteliers are therefore prioritising richer customers who are less sensitive to economic swings, creating a widening divide between ultra-luxury venues and the broader hospitality market, particularly in the US.
• IN FOOD CONSUMPTION – the rising use of weight-loss jabs has resulted in sugar prices crashing to their lowest levels in five-years. The jabs suppress appetite and cravings for sweet things, which in turn is hitting demand for sugar. It could even worsen from here as pill versions of these drugs become cheaper and more widely available. 
• IN TRAVEL – Europeans are shunning the US as travel to the Emirates and Asia is proving to be more popular. Immigration concerns and stricter border scrutiny are contributing factors to weakening long-haul demand to America. Tui said that Western European visits to the US fell 4% year on year in December, yet Tui still delivered its strongest first quarter in over a decade, driven partly by cruise demand.
• IN THE UK – the latest BRC figures show that retail spending bounced back after a weak December but retail volumes are still below pre-pandemic levels, suggesting discounts may be required to sustain momentum.

IN REAL ESTATE…

• The property market in England and Wales is showing tentative signs of recovery, according to the latest RICS survey. Buyer inquiries, agreed sales and prices are all on the up and optimism about the outlook is better than its been at any time since December 2024!
• However, research from the Building Societies Association suggests UK would-be first-time buyers are being overly pessimistic as many have not explored mortgage options – and are subsequently discovering they could buy sooner than expected. Perceived inaccessibility is delaying life decisions such as marriage, children and business creation. Efforts to promote low-deposit mortgages may help, though changing attitudes will take time.

IN RETAIL NEWS…

• Tesco bought Amazon Fresh shops to support expansion of more than 70 new Express convenience stores by 2027, adding to its existing network of over 2,000 outlets. Rival supermarkets are pursuing similar strategies, squeezing smaller convenience store competitors lacking scale and buying power.
• Ocado is planning to cut around 1,000 jobs as it seeks cost savings following warehouse closures by overseas partners and a share price fall exceeding 40% in six months.

IN CONSUMER GOODS…

• L’Oréal reported improving beauty demand in the US and China during late 2025, signalling recovery after post-pandemic weakness although results slightly missed expectations. The rebound reinforces what other luxury names has been saying.
• Mattel shares cratered after poor holiday sales forced discounting and drove an unexpected profit decline, reflecting tariff exposure due to overseas manufacturing. This doesn’t appear to be an “industry” thing because Hasbro actually put in a decent performance over the same time period! However, both are downbeat about the outlook as they expect consumers to be thrifty against an uncertain economic backdrop.
• Kraft Heinz has made the dramatic decision to reverse out of its plans to split the business, with its new CEO instead pursuing organic turnaround following investor scepticism toward the proposed break-up. Weak quarterly results and reversal of strategy suggest deeper structural challenges across the combined business.
• Heineken is planning to cut about 6,000 jobs over two years as global beer demand weakens and profit growth expectations fall, echoing similar pressures across the alcohol industry.
• Oatly is barred from using the word “milk” for plant-based products in the UK after a supreme court ruling, marking another setback for a sector already facing slowing momentum.

IN TECH NEWS…

• Co-founders of Elon Musk’s xAI continue to depart as internal tensions rise, with research and safety leader Jimmy Ba becoming the latest to leave. Half of the original founders have now left and the sale of xAI to SpaceX has added further strain. Although this instability is concerning, Musk’s reputation will still attract new talent.
• IN AI – French start-up Mistral has seen revenues surging twentyfold to over $400mn as European governments and businesses seek non-US AI alternatives. Its strategy of operating independent data centres rather than relying on American hyperscalers highlights Europe’s push for technological autonomy.
• IN HARDWARE – Apple is facing renewed political friction with the Trump administration amid accusations of promoting biased media content. The dispute reflects broader tensions between Trump and major tech groups over perceived ideological control of information.
• Apple and Google have meanwhile agreed with the UK competition regulator to reform app store practices by avoiding preferential treatment for their own services and limiting the use of third-party data. Additional developer access to operating system features has also been promised. The softer regulatory approach compared with the EU has disappointed some critics who wanted them to take a tougher line.

IN SOCIAL MEDIA NEWS…

• European governments are increasingly attempting to restrict children’s access to social media as France, Spain, Greece, the Netherlands and Denmark are all currently some way towards implementing some kind of social media ban for younger people while the UK parliament is giving it some serious consideration. Stronger age verification at operating system or app-store level may be necessary alongside tighter controls on circumvention tools like VPNs.
• Russia blocked WhatsApp and is instead promoting a state-aligned messaging alternative designed for surveillance, following earlier action against Facebook, Instagram and YouTube. The move reflects broader efforts to monitor dissent and control information flows.

IN STREAMING…

• Spotify has tripled profits and added record users despite global price rises, demonstrating strong demand and pricing power. Recent US price increases were not yet reflected in results, suggesting that there could be further potential upside.
• Pinterest shares have fallen sharply after warning of weaker advertising demand as retailers cut marketing spend to protect margins from tariffs. If such behaviour spreads, dissatisfaction with trade policy could grow.

• Ferrari reassured investors with stronger-than-expected results and confident forecasts alongside plans to launch six new models this year, easing prior concerns about sustainability of performance.
• Ford is continuing to struggle with EV-related losses, reporting a large annual deficit and outlining expectations that its EV division is going to remain unprofitable for several years. Tariffs and supply disruptions have compounded difficulties although traditional vehicle demand is actually pretty robust. Meanwhile, Ford has now been overtaken in sales by China’s BYD, highlighting shifting global competitive dynamics.

• Hims & Hers has abandoned plans to sell a cheaper copy of Novo Nordisk’s weight-loss drug following regulatory scrutiny, removing a potential legal conflict and benefiting the original manufacturer, Novo Nordisk.
• AstraZeneca, meanwhile, is outperforming industry peers through particularly strong drug development success rates and a robust research pipeline, allowing it to trade at a valuation premium while avoiding the acquisition pressures faced by rivals confronting patent expiries and higher debt.

My favourite video of the week is the one with the barcode musicians – how did they even think of this??

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 DEFENCE NEWS…

• The expiry of the New Start treaty this week marks a sobering moment because it ends more than fifty years of nuclear arms control efforts between the US and Russia that began in 1972. Landmark agreements such as the 1991 Start I treaty introduced inspections, while New Start itself was signed in 2010, extended in 2021 and effectively collapsed after Russia’s invasion of Ukraine. Although Putin has floated the idea of both sides voluntarily sticking to limits but Trump is pushing for a new “modernised” treaty. This is a big deal because the US and Russia together hold around 86% of the world’s nuclear weapons, and although China’s growing arsenal explains Trump’s desire to include Beijing.
• EU members approved British companies’ participation in procurement tied to a €90bn Ukraine loan, of which €60bn will fund military equipment and €30bn budget support. This is positive both for UK defence firms and for Ukraine’s flexibility in sourcing equipment.
• Meanwhile, analysis of Trump’s rhetoric over Greenland and the Arctic suggests that US pressure on allies and adversaries alike may actually benefit China by making it appear the more stable superpower and a hedge for middle powers, even though China’s direct Arctic access remains geographically constrained.

TARIFFS

• Trump signalled tariff cuts on India to 18% after Modi reportedly agreed to halt purchases of Russian oil, alongside promises that India would remove trade barriers and buy over $500bn of US goods. However, analysts are sceptical about this because discounted Russian supplies now make up about a third of its imports versus just 2% before the Ukraine invasion. Untangling this dependence will be extremely difficult, and shifting volumes elsewhere could also create strategic complications for China.

TRUMP THINGS…

• STOCKPILING KEY MATERIALS – the US plans a $12bn critical minerals stockpile funded largely through the US Export-Import Bank (aka “Exim”) to counter China’s dominance and protect domestic manufacturers from supply shocks. Additional moves such as a $9bn copper-focused mining investment in the DRC underline Washington’s determination to secure raw materials although meaningful impact will take time.
• IMMIGRATION – Trump’s immigration crackdown is driving major government spending ($35bn so far!), boosting contractors involved in border security, detention and deportation. Companies such as Palantir are also benefiting from strong US government demand, even as European customers show reluctance to rely on American data tools. With tons of domestic work in the pipeline, Palantir’s probably not going to care too much though!
• CHEAPER MEDICINES – the launch of the TrumpRx direct-to-consumer drug platform aims to cut costs and bypass intermediaries although actual savings depend heavily on price comparisons because some medicines may still be cheaper via traditional prescriptions.
• PREPARATION FOR THE MIDTERMS – Trump and chums have amassed a huge $429mn campaign war chest ahead of midterm elections, far exceeding Democratic resources and likely to be channelled toward loyal candidates. Major donations from tech and crypto figures underline the financial firepower gathering behind the coming political battle.

IN REGION/COUNTRY NEWS…

• MARKETS – Tech stocks had a bruising week with a fresh sell-off triggered by disappointing results from AMD, dragging the wider US sector lower. Arm’s CEO described the downturn as “micro-hysteria”, suggesting that confusion about AI’s real impact on coding and workplace tools is exaggerating the reaction rather than being a sign of lasting structural weakness.
• THE US – Trump signed legislation ending the partial US government shutdown so that most federal operations will get funding until the end of September. However, negotiations over Department of Homeland Security funding remain heated, particularly surrounding immigration enforcement.
• JAPAN – Trump publicly endorsed Japan’s prime minister Sanae Takaichi ahead of this weekend’s general election. Polls suggest that Takaichi will win.
• FRANCE – France’s prime minister survived a no-confidence vote and pushed through a long-delayed budget after months of compromise. Although France’s deficit is expected to fall from about 5.4% currently to 5%, it’s still well above the EU’s 3% target, now pushed out to 2029. Even so, simply getting parliamentary approval will buy Macron valuable political breathing space after repeated crises.
• THE UK – the Bank of England held interest rates unchanged at 3.75% despite weaker growth expectations. Governor Andrew Bailey signalled that inflation could fall to around 2% by spring whilst also hinting at potential future cuts.
• This week has been dominated, however, by the impact of the latest release of the Epstein files. PM Starmer faced a massive backlash his appointment of Lord Mandelson as US ambassador despite warnings linked to Epstein, fuelling leadership speculation and raising the risk of renewed UK economic uncertainty if a successor pursues heavier tax-and-spend policies. Although a lack of clear challengers offers temporary protection, markets have already reacted – sterling weakened against both the dollar and euro amid fears of higher borrowing and fading hopes of political calm before May’s regional elections. One rare positive came as Trump softened criticism of the UK’s Chagos Islands deal, easing a bit of tension.

IN COMMODITIES NEWS…

• OIL – Oil prices fell sharply as easing US-Iran tensions improved the diplomatic outlook, reducing immediate supply fears.
• PRECIOUS METALS – Gold and silver declined after last week’s rally, partly reflecting investor profit-taking and reassurance from the nomination of Fed chair Kevin Warsh, viewed as a steady, conservative choice. Price fluctuation has real-world consequences: London jewellers were flooded with second-hand metal as consumers cashed in, some even melting stock to cover costs. Also, Pandora is now thinking about shifting from silver toward platinum as wild price swings threaten sales, though such a move could raise prices significantly and illustrates how commodity volatility is rippling through businesses.

IN ENERGY…

• Europe’s gas storage has dropped to its lowest seasonal level since 2022, pushing prices to a ten-month high and increasing the likelihood of higher utility bills across the region.

CRYPTO NEWS…

• Bitcoin fell below $65,000, erasing more than a quarter of its value this year and wiping out the entire Trump-era surge from last year’s peak near $125,000.
• Crypto weakness has hit major bitcoin players like Strategy and Gemini in addition to Britain’s biggest bitcoin hoarder, The Smarter Web Company, while Tether has scaled back fundraising ambitions significantly after investor resistance.
• Meanwhile, it turns out that a senior UAE figure poured a whopping $500m into Trump-linked crypto assets, highlighting ongoing concerns about Trump’s lack of concern regarding conflicts of interest.

IN BUSINESS TRENDS…

• AD PRICES & SHIFTING MARKETING DYNAMICS – Super Bowl advertising slots have reached record highs, with some brands paying over $10m for 30 seconds as NBCUniversal said that hit had sold out earlier than usual. The TV advertising market has been strong in the last six months, with particularly strong demand from tech and pharmaceutical firm clients.
• ANTI-AMERICAN SENTIMENT RE BRANDS – American brands are losing their appeal internationally amid backlash linked to tariffs and political tensions. Surveys show widespread willingness across Europe to avoid US products while governments and organisations are experimenting with domestic alternatives to American technology. If consumers don’t buy, there’s not much politicians can do about it.
• CAR INDUSTRY PANIC AT THE CHINESE INFLUX – Warnings from suppliers highlight how a surge of cheap and technologically superior Chinese electric vehicles could wipe out Western suppliers and even entire industrial ecosystems if left unchecked. Europe appears especially vulnerable given strong consumer demand for cheaper EVs and rising Chinese market share, suggesting aggressive export pushes into the UK and EU are likely as Chinese domestic demand weakens.
• TRADE DISRUPTION & COST PRESSURES – Trump’s tariff uncertainty is already reshaping behaviour, with a notable share of British factories cutting or halting US exports and others reducing reliance on the market. At the same time, CIPS data points to rising consumer prices driven by higher shipping costs, although I’d argue that this clashes with expectations of shipping overcapacity, easing Middle East tensions and relatively weak oil prices.
• SIGNS OF UK RESILIENCE – UK manufacturing has shown surprising strength, with January delivering one of the best PMI readings since Labour took power! New export orders rose for the first time in four years and optimism hit pre-autumn-budget highs. Combined with stronger retail sales and unexpected GDP growth late last year, the data hints that economic conditions may be less gloomy than headlines suggest.
• CHANGING DRINKING HABITS – independent UK breweries are closing at the fastest rate in half a century thanks to tax pressures and shifting consumer behaviour, particularly the drop in alcohol consumption among younger people.
• CHANGING EATING HABITS – the surge in high-protein foods is reshaping product development across retail and consumer goods, allowing companies to charge big premiums and boosting demand for ingredients like whey, that used to be seen as an undesirable by-product of cheese production!

IN INVESTMENT NEWS/TRENDS…

• INVESTMENT FLOWS – data from global funds network Calastone showed that geopolitical tensions such as Greenland threats has driven continued outflows from UK equity funds, though the pace has moderated compared with pre-Budget selling.
• M&A – SpaceX bought xAI, creating a private company with the unprecedented valuation of $1.25tn. Musk wants to launch data centres in space, put factories on the moon and colonise Mars. The deal challenges traditional valuation logic and reinforces the idea that investors are effectively backing Musk’s vision of the future rather than current fundamentals.
• Devon Energy’s $21.5bn acquisition of Coterra signalled the continued consolidation in US shale.
• Zurich Insurance finally had its takeover bid for Beazley accepted.
• Rio Tinto and Glencore decided to abandon a potential mining mega-merger after failing to agree terms.
• IN FUNDING – AI voice firm ElevenLabs reached an $11bn valuation after a major fundraise, emphasising ongoing investor eagerness to throw money at AI.

IN EMPLOYMENT TRENDS…

• IN THE US – US job cuts climbed to their highest January level since 2009 while job openings fell to a five-year low and unemployment insurance claims spiked late in the month, all of which suggests a softening labour market and rising expectations of higher unemployment. This creates a potential policy dilemma for the Federal Reserve, which only last week said that it thought that the jobs market was stabilising and held rates steady. The publication of an all-important jobs report was postponed again due to delays caused by the government shutdown, meaning that the Fed is flying blind, to an extent.
• IN THE UK – London’s graduates are feeling the strain of a tough jobs market, London’s unemployment rate is the highest in the country at 7.2% but youth unemployment (of 16-to-24 year olds) is even worse – being close to 20% in the three months to September 2025! Competition for graduate roles has increased dramatically, with around 140 applicants per graduate role versus 38 two decades ago. Graduate hiring has never been easy, meaning success increasingly depends on clear self-assessment, targeted applications and avoiding scattergun approaches.
• The employment landscape in hospitality is also pretty grim with pubs and restaurants experiencing the longest run of job losses since the financial crisis, something that hasn’t been helped by the tax increases on employers.
• That being said, a survey by Incomes Data Research showed that most businesses anticipate stable or rising wages this year, largely reflecting inflation pressures. This is not especially encouraging, but nor is it disastrous.

IN CONSUMER TRENDS…

• IN THE US – affluent consumers continue to spend freely, boosting American Express through spending on dining out and shopping – reflected in strong demand for their premium cards, while lower-income households are becoming more cautious even about everyday essentials. Food and drink companies are already seeing weaker performances as a result of economic anxiety and weak sentiment. Figures from the Conference Board published last week showed that consumer confidence has fallen to a decade low and reflects persistent affordability pressures for middle and lower income groups.
• IN THE UK – restaurants have had to resort to heavy discounts to tempt increasingly cautious diners in January, squeezing already thin margins. Despite this, there are tentative signs that confidence among households and businesses may be improving. Given that consumer spending drives roughly 60% of GDP, falling interest rates, looser mortgage rules, easing inflation and gradually improving sentiment could support a recovery in 2026 – assuming no fresh shocks!

RETAIL NEWS

• Ikea is reshaping its China strategy by closing large stores and expanding into smaller city-centre locations and boosting its online channels.
• Tesco has overtaken Asda as Britain’s cheapest supermarket, adding pressure to Asda’s failing turnaround efforts and raising doubts about leadership stability if performance fails to improve.

IN REAL ESTATE…

• UK house prices rose by 1% in the year to January following a pre-Budget slowdown although it’s not clear yet whether this is a trend or a blip.
• Santander announced that it will offer a 98% mortgage for first-time buyers – but the conditions are very restrictive. Still, it’s an interesting move all the same!
• Rental demand has dropped to its lowest January level since 2019, according to Zoopla data, as buying becomes more attainable and immigration slows, hinting at early structural changes in the housing market, although it is still too soon to draw firm conclusions.

IN TECH NEWS…

• IN AI – the latest International AI Safety Report highlights rapid but uneven progress in AI capability alongside growing risks. Deepfakes are becoming more convincing and widespread, AI companions are increasing emotional dependence among users and safeguards are being introduced to prevent biological or chemical misuse.
• Markets reacted strongly to fears that AI could disrupt software, analytics and legal services after Anthropic launched productivity tools capable of automating legal work. Shares in major data-driven firms fell and UK-listed RELX dropped heavily, reflecting concern that disruption in law could spread to consulting and finance. However, the sell-off may be overly broad because large organisations typically adopt new technologies slowly due to legal, regulatory and security risks.
• In terms of spending, Google plans to double AI spending to $185bn while maintaining strong advertising and cloud revenues. Amazon also unsettled investors with plans for spending up to $200bn in AI infrastructure! No wonder investors are getting increasingly jumpy as Big Tech’s combined AI investment approaches an eye-watering $660bn. Such enormous expenditure will inevitably lead to increased pressure to deliver tangible returns.
• Anthropic launched its new Claude Opus 4.6 model, reinforcing its focus on enterprise customers.
• IN CHIPS – Nvidia’s AI chip sales to China are stuck in a bottleneck pending US approval showing just how geopolitical friction continues to affect semiconductor supply. AMD reported strong datacentre-driven sales but it still saw its shares sold off due to sector-wide AI bubble fears.
• IN SATELLITES – SpaceX’s move to block unauthorised Russian military use of Starlink highlights both the strategic importance of satellite infrastructure and the huge influence private tech leaders can wield in geopolitical conflicts.

IN MEDIA NEWS…

• Disney reported strong recent performance but warned that falling visitor numbers to US theme parks could hurt the outlook, a proper concern given that experiences generate most operating profit and depend heavily on travel demand.

IN SOCIAL MEDIA NEWS…

• Spain plans to ban social media access for under-16s, joining France and Australia in tightening protections for young users and pushing for stronger age verification. With the UK considering similar steps, momentum is clearly building toward stricter regulation of online platforms and their societal impact.

• IN THE UK – Chinese carmaker Chery is preparing to launch a fourth brand in the UK as part of a broader push to gain market share, with initial production in China but hopes of eventually engaging in manufacturing over here. Fellow Chinese EV group Leapmotor is also expanding rapidly with ambitions to become the next BYD although it is avoiding European production for now due to high energy and labour costs.
• The EV market in Britain is weakening, with January market share of new cars slipping below 21% – a level that is way short of government targets. Tesla’s sales have been particularly bad. High prices, uncertainty over a future pay-per-mile tax, possible delays to petrol and diesel phase-out deadlines and tighter household finances are all dampening demand.
• In the US, Ford’s January sales fell and EV production cuts continued after multibillion-dollar losses, highlighting both consumer affordability pressures and the difficulty of sustaining large EV investments when broader demand is weak.
• Insurance group Lemonade reckons that autonomous driving could eventually lower premiums significantly after analysing Tesla safety data, though widespread driverless adoption still appears many years away despite the hype.

IN LAW – Competition for elite legal talent remains fierce, illustrated by Paul Weiss poaching senior dealmakers amid strong global M&A activity. On the flipside, the company’s chair Brad Karp resigned because of his relationship with Epstein. In the UK, Justice Secretary David Lammy’s proposed plans to capture interest earned on client accounts could remove a major income source for property-focused firms, threatening jobs and even firm survival if implemented.

IN PHARMACEUTICALS – Novo Nordisk delivered strong recent sales but warned revenue could fall as competition intensifies in obesity treatments, making pricing more challenging despite potential support from its Wegovy pill.

My favourite video of the week was the beatboxer one! This guy is amazing!

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 WAR-RELATED NEWS…

• Trump piled the pressure on Tehran, saying that “time is  running out” to reach some sort of agreement or face the threat of US intervention. Trump talked ominously about a “massive Armada” heading towards Iran, moving with “great power, enthusiasm and purpose”.

IN DEFENCE NEWS…

• There’s growing unease in the UK government about how dependent Britain remains on American defence infrastructure. The Europeans are also having the same misgivings and an imminent decision to build next-generation military satellites will no doubt reflect this.
• NATO secretary-general Mark Rutte argued that a fully independent European defence system is basically unrealistic, saying that replacing the Americans would require defence spending closer to 10% of GDP, far above the agreed target of 5% by 2035. It is hard to tell whether he genuinely believes this or whether he is trying to keep Trump sweet.

IN TRADE NEWS…

• The EU and India signed free trade agreement this week after nearly twenty years of stop-start negotiations. Tariffs will fall to zero across a wide range of industrial products, from steel and chemicals to machinery and pharmaceuticals.
• PM Starmer went to Beijing on his first trip there as PM, the first such visit in eight years. With Trump becoming ever more unpredictable, the UK needs alternative trading partners but Trump didn’t like it.

IN TARIFFS NEWS…

• Trump threatened 100% tariffs on Canada if it agreed a trade deal with China. He doesn’t want China going a deal with Canada to use it as a back door into the US market.
• Trump threatened to raise tariffs on South Korea to 25%, venting his frustration over what he sees as slow implementation of last year’s trade deal. There was some confusion on the Korean side because the “deal” was not even  a formal treaty. This underlines the flimsy nature of Trump’s agreements, many of which could yet be ruled illegal by the Supreme Court.

IN TRUMP THINGS…

• IMMIGRATION – Trump faced a growing backlash against his immigration crackdown following the shooting of another protester in Minneapolis. He then backed off slightly as the outrage grew and sent Tom Homan to Minnesota to calm things down. Meanwhile, companies including Palantir and Deloitte and are benefiting hugely from ICE and CBP spending which surged after Trump’s “big beautiful bill”. Contracts have also gone to non-US firms like G4S and Smiths Detection.
• PANAMA – Panama’s top court gave Trump what he wanted, kicking Hong Kong’s CK Hutchison out of its canal ports, leaving an opening for greater US influence. The Panama Canal is a hugely important trade route that connects the Pacific and Caribbean, hence Trump’s interest.
• VENEZUELA – the US Treasury department removed restrictions that had stopped American firms from buying and selling Venezuelan oil in a key step towards doing business in the country.

IN MARKETS…

• Gold hit various news highs this week while the dollar generally tumbled and the Swiss franc soared. Trump said he was unconcerned by dollar weakness but it was interesting to see that Tether, the world’s biggest stablecoin company on one of the world’s biggest holders of gold, has benefitted enormously from the skyrocketing value of its stash, which is roughly equivalent to the amount that Qatar’s central bank holds!
• Big Tech’s dominance continued – and because it makes up over 40% of the S&P500, it drags everything up or down with it! Warnings about an AI bubble keep on growing, but markets ignore them. In the end, I think that circular deals could either be tech’s saviour or precipitate a massive downfall.
• Indonesian stocks fell on concerns that the  MSCI is considering downgrading its status from emerging market to frontier market. Meanwhile, emerging markets such as Turkey, Brazil, Korea have put in a stellar performance so far in 2026 as investors hunt upside away from Big Tech risk.

IN REGIONAL/INDIVIDUAL COUNTRY NEWS

THE AMERICAS…

• THE US – the Fed held interest rates on hold despite ongoing Trump pressure. This came after three consecutive cuts going into the end of last year. Trump wants cuts because they tend to lift markets, stimulate the economy and, by extension, make him look good.
• Democrats threatened a federal shutdown over immigration raids. They said that they’d withdraw support for funding the Department of Homeland Security unless ICE agents are reined in.
• CANADA – US state department officials met far-right separatists from oil-rich Alberta. The Alberta Prosperity Project was seeking a $500bn credit facility to finance the province if an independence referendum passes. Washington denies involvement.

ASIA…

• JAPAN – some people are getting worried about PM Takaichi’s stimulus plans. Given that Japan’s debt already stands at a huge 230% of the economy, it is understandable – but it does have extremely low borrowing costs.

THE MIDDLE EAST…

• It looks like Saudi Arabia is going to scale back Neom megaproject following a year-long review. The Line, the linear city that was meant to be the centrepiece, is expected to be dramatically scaled back and Neom may pivot into a data centre hub. The project will still be massive, but you do wonder what this means for the armies of consultants, builders and architects who have poured into the project and whether Riyadh will lean more on local talent.

EUROPE…

• THE UK – Labour’s National Executive Committee blocked Greater Manchester’s mayor, Andy Burnham, from standing as a parliamentary candidate, effectively heading off what might have turned into an eventual leadership challenge. No doubt Starmer will be relieved.

IN COMMODITIES…

• IN OIL – Canada’s efforts to push further into Asian markets seem to be working well as it pumped record volumes to reduce reliance on the US.
• GAS – US natural gas prices hit their highest level in 3 years as winter storm Fern prompted stronger heating and power demand at a time where production was restricted.
• GOLD – Gold had its best trading week since the 2008 financial crisis and surged even further this week. Silver and platinum also hit record highs. The weaker dollar was also instrumental here because gold is priced in dollars, meaning it becomes cheaper for non-dollar buyers who can, in theory, buy more of it.
• RARE EARTHS – Meanwhile, the Trump administration is planning to invest $1.6bn into rare earths group USA Rare Earth in a bid to bolster the supply of key minerals. This will be the Trump administration’s biggest investment in the sector so far.

IN ENERGY…

• The UK is joining nine other European countries to build a 100GW offshore wind power grid in the North Sea, aiming to turn it into a “clean energy reservoir” linked by high-voltage subsea cables. It sounds like a real step forward, so fingers crossed it actually works.
• There was some comment this week that data centres are not yet the main driver of US utility bill increases, but that may not last. If AI keeps scaling, power demand could become a serious pinch point that needs dealing with now so the future does not involve AI running out of power. Other countries will have to confront the same issue.

IN INVESTMENT NEWS/TRENDS…

• IN IPOs – European IPOs have had their best ever start to a year what with ammo maker Czechoslovak Group raising €3.8bn in Amsterdam and shares jumping 31% on debut recently. Other defence groups such as KNDS and Vincorion could follow and UK candidates include Waterstones, RAC, AS Watson and CK Hutchison’s European telecoms business.
• IN FUNDING – Nvidia, Amazon and Microsoft are involved in talks about a $100bn funding round for OpenAI, which implies a $750bn valuation. Amazon may even invest $50bn on its own in this round!
• On a somewhat smaller scale, UK AI start-up Synthesia’s latest funding round, where it successfully raised $200m, gave the company an implied valuation of $4bn. This is almost double its valuation from a year ago! UK rivals like ElevenLabs are also raising money. I hope that successful UK start-ups will be able to grow rather than just get cherry-picked by Big American tech companies.

IN BANKS NEWS…

• Deutsche Bank, ING and Nordea in Europe and Lloyds Banking Group in the UK all posted strong results and the prospects are good given the potential for more lending.
• Santander is making more cuts in preparation for its £2.6bn takeover of TSB. 12% of its branches are to close further 44 branches as it gears up for the takeover. Once the deal completes, the enlarged group would become the UK’s third largest bank by personal account deposits. Closures were inevitable given the sheer amount of overlap of the two businesses.

EMPLOYMENT TRENDS

• It is taking unemployed Americans longer to find new roles than at any point in four years, with about 26% of 7.5m jobseekers searching for over six months. That kind of data will weigh on Fed decision-making as officials juggle growth and inflation priorities.
• Amazon cut about 4% of its workforce as office workloads shift towards AI. That being said, warehouse workers were spared this round.
• Amazon, UPS, Dow, Nike, Home Depot and others are set to lay off at least 52,000 workers as the jobs market cools. Companies say that this is right-sizing for an AI future after a few years of heavy hiring.
• 27% of UK workers fear AI replacing their jobs while a third of UK graduates say that poor health is stopping them from working. There’s been a 46% jump in graduates out of work and claiming benefits since 2019. As if to reinforce this, Lloyds Banking’s boss warned that bankers need to ‘reskill themselves’ to survive AI boom. There’s an argument to say that when there’s a profound new tech revolution, some jobs become obsolete but others take their place. In AI’s case, for some jobs at least the boring bits will disappear, leaving the main high margin bits to the humans. This could mean that humans will have the capacity to carry out more tasks faster. Having said that, there was some interesting research from Morgan Stanley which suggested that AI will cost the UK more jobs than it creates. Can the UK can retrain quickly enough to avoid major job losses.

CONSUMER TRENDS

• IN THE US – Visa posted higher Q1 revenue and profit thanks to strong consumer spending over the holiday period. On the flipside of that, Becle, maker of Jose Cuervo, said that anxiety and insecurity are driving Hispanic consumers to rein in spending on tequila. It echoes the weakness Constellation Brands has already seen in Modelo beer sales among Hispanic consumers who are staying home more to avoid ICE raids. What a terrible state of affairs.
• IN THE UK – BRC data showed monthly shop price inflation rising again in January, driven by higher meat, fish and fruit prices. That is disappointing because many had thought shop price inflation had peaked and it adds to the gloom after last week’s data showing UK inflation rising for the first time in five months over Christmas.
• Data from TutorCruncher data showed that there’s boom going on in private tutoring as parents try to get children into decent state and grammar schools. Lessons costing over £60 an hour in subjects like maths, English and languages are up 56% since 2022 and 27% since 2023, fuelled by the decision to impose VAT on school fees from January last year. That being said, the Tutor’s Association suggests the biggest surge is among high net worth families, with less dramatic impact across the wider tutoring market.

RETAIL NEWS

• ONS data showed that retail sales rose unexpectedly in December, the crucial final month of the year. Overall, food spending was strong but discretionary spending remained underwhelming.
• IN SUPERMARKETS – Morrisons said it would continue to strengthen its middle-aisle bargain offering as the new CEO introduced its own middle aisle in November, aping its German discounter rivals. It started poorly, but the offer seems to be improving. If Morrisons pulls this off, it could materially strengthen its proposition because a former Aldi UK chief says middle-aisle sales at Aldi account for 10-15% of sales and deliver higher margins than groceries.
• Asda’s gloom continues as it ranked poorly in the latest UK customer satisfaction index, coming in at second from bottom ahead of only Co-Op. Chairman Allan Leighton must surely be starting to sweat as the company he joined to save just over a year ago seems to be going nowhere.
• Ocado faced another setback as Canadian partner Sobeys announced the closure of a robotic warehouse after disappointing online grocery growth. This comes less than three months after Kroger scrapped three US warehouses.

CONSUMER GOODS

• Footwear group On is looking to push beyond sports shoes into broader lifestyle positioning, aiming to become more of a lifestyle brand such as Lululemon.
• Anta Sports announced that it would be buying a 29.06% stake from the Pinault family, putting to bed months of speculation and becoming Puma’s biggest shareholder as Puma works through an overhaul. Anta wants to grow outside China and the deal could provide Puma with a potential path to strengthen its position in India and China. Anta already owns brands including Fila and Jack Wolfskin.
• Deckers’ Q3 sales were up thanks to strong demand for Hoka running shoes. Demand is rising globally and the company expects this trend to continue.
• Luxury groups are leaning into the US, aiming to capture growth from wealthy consumers. Richemont has already benefited from US exposure, with strong demand for Cartier and Van Cleef jewellery. LVMH had a strong Q4, beating expectations and adding to the sense of a luxury recovery and it also saw decent performance from watches and jewellery.

LEISURE NEWS

Hospitality businesses in Devon and Cornwall are bracing for a rough ride from the chancellor’s tax rises, with business rates looking like the real kicker as they are set to double over the next three years.

• IN COFFEE/PUBS/RESTAURANTS – Starbucks posted growth in same-store sales across all regions in the last quarter, suggesting the turnaround effort is starting to gain traction under CEO Brian Niccol, who has been in the top job for about 16 months. Caffè Nero hit record turnover last year despite a tricky trading environment thanks to new products including a matcha range. This is particularly impressive given other chains are struggling.
• Pubs are going to get £100mn a year support package from the Treasury after industry pressure ramped up. Although this was welcomed by the pub industry, trade bodies say it does not go far enough and does not cover other struggling corners of hospitality. None of this will be relevant for the Revel Collective, formerly Revolution Bar Group, as the chain has filed for administration after years of tough trading. And as if this wasn’t bad enough, there are rumblings about new alcohol labelling rules that will involve explicit labelling on beer, wines and spirits warning against cancer and other health risks. Clearly this isn’t going to do wonders for demand…

TECH NEWS

• AI – Anthropic’s chief warned that ‘Humanity needs to wake up’ to dangers of AI, adding to the growing chorus of voices cautioning about the future impact of AI, as Anthropic’s boss Dario Amodei published a 20,000 word essay on what happens if development is left unchecked. It is sobering to hear one of AI’s architects saying current safeguards are insufficient but the awkward question remains, but who actually has the ability to rein it in?
• DeepMind’s chief Demis Hassabis said that AI investment looks ‘bubble-like’ even as he argued that Google’s scale and tech leave it well positioned if weakness appears. That contrasts with the Davos vibe last week where Nvidia and Microsoft leaders said bubble fears were overdone.
• South Korea has launched new AI rules that some see as the most comprehensive in the world. They require the labelling of AI-generated content, require human risk assessments and documentation for “high impact AI” used in areas like medical diagnosis, hiring and loan approvals and demand safety reports for the most powerful models. The fines look paltry at up to £15,000 and there is at least a year before penalties kick in, so the rules feel strict on paper but soft in practice. Still, this is the most comprehensive AI legislation to be fully enforced by a country.
• Abu Dhabi’s Mohamed bin Zayed University of Artificial Intelligence launched K2 Think, an open AI model that independent researchers say compares well with top open models from the US and China and was trained very cheaply. This is an important milestone given Abu Dhabi’s huge spending on AI infrastructure.
• CHIPS – the AI chip boom is spreading into other areas as demand surges and supply stays tight. Data storage name SanDisk has seen its share price nearly doubling since the start of January and up almost 1,100% since August last year, while Micron, Western Digital and SK Hynix have tripled over the same period! These names may be doing brilliantly in the build-up phase, but this isn’t going to last forever.
• In the meantime, Sandisk reported strong results as its revenues boomed thanks to AI demand while Samsung Electronics and SK Hynix warned confirmed that demand for AI chips is currently outstripping supply. Even Texas Instruments is saying that it’s going to post earnings growth in the current quarter – a quarter that is traditionally weak – as its exposure to datacentre expansion is powering demand.
• DATACENTRES – There’s a growing movement to to ban datacenters in parts of the US, with lawmakers in Georgia, Maryland and Oklahoma looking at state-wide moratoriums because consumers feel datacentres get tax breaks while household utility bills rise. Georgia is leading the push and the obvious question is whether moves like this could slow the AI build-out.
• Nvidia announced a $2bn investment in CoreWeave aimed at speeding CoreWeave’s build-out of specialised datacentres by 2030. Nvidia first invested in 2023 and it now owns over 11% of the company. CoreWeave is seen as a barometer of AI excitement…
• HARDWARE – Apple had a fantastic quarter powered by strong iPhone sales over the holiday period. It also saw a much-needed rebound in China. There are still rumblings about how long the boom can last and Apple’s sluggishness on AI, so it was interesting to see Apple buying Israeli start-up Q.AI for close to $2bn, its second biggest ever acquisition after Beats in 2014. Q.AI has tech that can analyse facial expressions to understand “silent speech” and patents suggest uses in headphones or glasses, so it will be fascinating to see how Apple deploys it.
• SOFTWARE – The French government has decided to ditch Zoom and Microsoft Teams across all state services in favour of the French equivalent Visio, citing security and pushing “technological sovereignty”. The European parliament has also backed the idea of reducing reliance on foreign providers across chips, cloud, software and AI systems.
• Microsoft shares took a hit despite quarterly sales expectations coming in above expectations because investors are still worried that massive AI capex will not translate into profits. The pressure on Big Tech to prove that huge spending turns into fat profits is ratcheting up fast.

MEDIA NEWS

IN SOCIAL MEDIA

• The European Commission wants to classify WhatsApp Channels as a Very Large Online Platform under the Digital Services Act, meaning tougher obligations to protect users from illegal and harmful content. Meta has until mid-May to comply.
• Meta posted strong revenues but narrowing profits as capex rose further on AI infrastructure. Fortunately, chunky advertising income is funding massive datacentre build-outs.
• TikTok US suffered a blackout in the US that it blamed on a data centre power failure. There were rumours that it was to suppress criticism of Trump and ICE. Subsequently, California’s Democrat governor launched an investigation into such allegations.

AUTOMOTIVE NEWS

• TRENDS – EVs outsold petrol cars in Europe for the first time ever as companies like BYD keep pushing deeper into the Continent. This is happening even with the recent chat about relaxing petrol car deadlines.
• UK car output at its lowest in 70 years, according to the latest SMMT figures. That said, it arguably leaves the door wide open for a Chinese manufacturer to come in and revive production. The UK is one of the few markets where Chinese EV makers cannot simply be taxed out and demand is clearly there at the right price point.
• TRAD CARMAKERS – GM is expecting stronger-than-expected cashflows this year and promising to return more cash to shareholders through a 20% dividend hike and a $6bn share buyback. I think that this is a bold call given the tariff backdrop, the cost of its retreat from EVs and the fact that cars are big ticket items at a time when consumers are feeling the pinch.
• IN EV MAKERS – Tesla scrapped the Model S and Model X and announced that it would invest $2bn into xAI as part of a pivot towards AI and robotics, alongside reporting its first ever annual revenue decline.

• IN PHARMACEUTICALS – AstraZeneca announced that it would invest £11bn in China after rowing back on UK expansion. It’s going to expand manufacturing and R&D in China and spread its wings after pulling back on UK plans.
• The MHRA found that there is a small risk of severe inflammation of the pancreas for people using GLP-1 weight-loss drugs. This isn’t great but the upside is that the symptoms are hard to miss, so it should be relatively easy to spot.
• Investment in Europe’s chemicals sector plummeted by over 80% in 2025, according to a European Chemical Industry Council report showing investment collapsing and plant closures doubling. The danger is that Europe will become increasingly reliant on China for raw materials needed across automotive, healthcare and defence if the investment drought continues.
• Ministers announced measures to be implemented after an investigation into the UK veterinary sector, with proposals focused on pricing and clearer information for pet owners. Given that the CMA found that vet fees have risen at nearly double the rate of inflation and that 60% of UK households own a pet, something clearly needs to be done! A final report is to be published in February or March this year.
• Boeing reported its highest quarterly revenue since 2018, suggesting the company’s fortunes may finally be turning after years of blowback from serious quality control problems.
• UPS announced plans to cut up to 30,000 jobs – or 6% of its global workforce – and shut down facilities as Amazon shipments fell. Amazon has been its biggest customer. UPS stressed that Amazon is not its most profitable customer and it will keep pushing into areas like healthcare logistics.
• Carvana shares dropped by 14% after report by short seller Gotham published a brutal report on it, suggesting that sister company DriveTime Automotive’s cash burn is dodgy. Carvana narrowly avoided bankruptcy in 2022, then became profitable in 2023, so with short sellers circling again, get the popcorn ready because this could get spicy.
• About 24 Waymo robotaxis are now training on London streets, learning things like zebra crossings ahead of a public rollout planned for the last quarter of this year. It would be the first time Waymo rolls out outside the US, so London is about to become a pretty high-profile test case.
• The pay gap between partners of mid-tier firms and those of Big Four firms narrowed thanks to mid-tier firms winning more higher margin work that used to go to the biggies. Meanwhile, pay for KPMG partners overtook that of PwC to become the second-best paid in the Big Four. The broader takeaway is that corporate advisers, whether investment banks, law firms or accountants, tend to thrive in uncertainty and given all the disruption since Trump returned to power, it would not be surprising if they did well last year and could do even better this year if hopes of a 2026 IPO and M&A bonanza actually land.

My favourite video of the week was the one with the new ultra-rapid shoelace tying technique! Yes, I probably need to get out more…

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.

WHAT HAPPENED AT DAVOS…

• Davos 2026 was being cast as a potential last-chance saloon for the existing global order, with some hoping the annual gathering of world leaders might provide space for diplomacy to break the current impasse. Treasury secretary Scott Bessent brushed off European concerns as “hysteria”, while Emmanuel Macron attempted to rally European leaders by warning against accepting a global order dictated by those with “the biggest voice or the biggest teeth”.
• UK-US tensions escalated further as Trump attacked Keir Starmer over the UK’s deal to transfer sovereignty of the Chagos Islands, including a UK-US air base, to Mauritius. Trump branded the deal an act of “weakness” and “stupidity”, despite the fact that his own administration had previously endorsed it. The intervention appeared less about policy and more about stirring, reinforcing expectations that Trump would use Davos to spread confusion and “flood the zone” in order to distract from weakening support at home.
• RE GREENLAND – Greenland then became the focal point of geopolitical tension. Scott Bessent argued that Europe is too weak to guarantee Greenland’s security and that they wouldn’t be able to come to a co-ordinated decision regarding Greenland. European leaders pushed back, with UK parties – including Nigel Farage – uniting to condemn Trump’s tariff threats.
• Commentators warned that Europe must not appease Trump over Greenland, arguing that backing down would risk the disintegration of the Western alliance and signal weakness to China and Russia. Recent crises – from Covid to Ukraine and now Trump – have exposed the fragility and imbalance of Western dependencies on China, Russia and the US.
• Denmark sent additional troops to Greenland, adding to the small existing force. There was debate as to whether Europe should deploy its never-used Anti-Coercion Instrument – the so-called “big bazooka” to push back against Trump’s threats but analysis suggests that weaponising Europe’s holdings of US assets would be impractical and potentially more damaging to Europe than America.
• Eventually, Trump backed away from his threats to use force to seize Greenland but the episode has crystallised global mistrust of the US. Canadian prime minister Mark Carney responded with a widely praised speech calling for new alliances among “middle powers” in a post-US-led world. Despite the easing of immediate threats, Trump’s vague rhetoric inspires little confidence and his repeated confusion between Greenland and Iceland raised eyebrows. EU leaders greeted the climbdown with caution, remaining deeply wary of where the transatlantic relationship is heading next.
• Markets reacted in predictably volatile fashion this week, waxing and waning to the beat of Trump’s drum. Fear prompted the resurfacing of the “sell America” trade of 2025, European defence stocks continued to surge and markets slid while precious metal prices boomed but that was followed by recovery thanks to the TACO trade.
• Trump’s antics appear, at least temporarily, to have united Europe, though it remains to be seen whether that resolve endures or whether Trump will try to fracture it with selective sweeteners – a dynamic that could also complicate UK politics given Farage’s admiration for Trump.

OTHER TRUMP THINGS…

• REGARDING THE MEDIA – Trump’s war with the media appears to be paying off. Major outlets have softened their stance amid lawsuits and pressure, while Trump floods the zone with controversy and communicates directly with supporters via Truth Social, aiming to dominate a confused information landscape.
• THE LATEST ON TRUMP’S COURT CASES – the Supreme Court looks sceptical of Trump’s attempt to sack Fed governor Lisa Cook, even as Treasury secretary Scott Bessent attacked Jay Powell for defending her.
• REGARDING HIS BANK BALANCE – Trump continues to fudge ethical lines, buying a ton of bonds in Netflix and Warner Bros just days after he said that he’d “be involved” in a potential merger between the two companies. He also launched five ETFs that are linked to Truth Social! Each one has a theme that encapsulates Trump-themes – American-based companies, real estate in Republican states, energy production and infrastructure, security and defence and tech – including bitcoin.
• REGARDING VENEZUELA – even Chevron is wary of Trump’s Venezuela ambitions given the gaping chasm between Trump’s impatient demands and shareholder demands for longer term returns.

HOW DID THE MARKETS REACT TO ALL THIS?

• They reacted positively after Trump appeared to dial down his threats over Greenland, triggering a rebound in sentiment.
• Some observers suggest that emerging markets are currently a better gauge of investor mood than gold, with money flowing out of the US and into higher-risk markets as investors bet that Trump’s antics are unlikely to crash the global economy. The rationale is that US growth will continue to feed through into global demand – and that will benefit exporting economies while America’s vast investment in AI will continue to provide a major boost to chipmakers such as TSMC and Samsung.

MEANWHILE…

• The collapse of the $TRUMP memecoin — down 94% over the past year — highlighted the fading of the memecoin frenzy, although it has still outperformed the even steeper decline in his wife’s token!
• South Korea’s KOSPI stock market punched through a record 5,000, driven by soaring chip stocks and an incredible 20% rise this month alone!

IN REGION/ INDIVIDUAL COUNTRY NEWS

IN ASIA…

• IN CHINA – the country managed to hit its 5% GDP growth target in 2025, despite Trump’s best efforts to slow it down via tariffs, thanks to its strong export performance offsetting a weak domestic economy. There’s a looming demographic time bomb, though, as the country recorded just 7.92 million births last year – the lowest number since records began in 1949! This marks the fourth consecutive year of population decline.
• IN JAPAN – Prime Minister Sanae Takaichi decided to take a gamble by calling an election just three months into her premiership. She is clearly trying to capitalise on her current momentum ahead of the February 8th vote in the hope of securing a stronger lower-house majority and a firmer mandate to push through her agenda.

UK

• Inflation ticked up for the first time in five months, rising to 3.4% in December. While this is thought to be a temporary and unwelcome blip, it came in above expectations and slightly reduces the likelihood of an imminent interest rate cut by the Bank of England.
• On the plus side (for the Treasury at least!), government borrowing fell sharply to £11.6bn, well below forecasts and far lower than the previous year. Stronger tax receipts, which have been driven by higher National Insurance contributions and wage growth, suggest fiscal drag is doing its job as more people are pulled into higher tax brackets!
• Meanwhile, the Labour government is under pressure over a series of costly policy U-turns totalling around £8.2bn, according to the left-leaning Resolution Foundation think tank. Reversals on sickness benefits, winter fuel payments, business rates for hospitality and digital IDs have created uncertainty that it argues is undermining business confidence and investment, complicating Labour’s promise to boost growth.
• Rachel Reeves has also ruled out extending business-rates relief promised to pubs to hotels and restaurants, despite pressure from the hospitality sector, which warned that closures could accelerate sharply this year.
• The government is also trying to keep tech firms anchored in the UK, highlighted by a £25m investment in software platform Kraken via the British Business Bank in its largest direct investment so far . The hope is that it will eventually list in London.
• Reeves boasted about a “golden age” for UK capital markets following regulatory and tax tweaks but optimism is tempered by a thin IPO pipeline and the risk of renewed uncertainty from Trump.

COMMODITIES

• In Venezuela, lawmakers backed oil-sector reforms that would allow private companies access to an industry monopolised by the state for the last 25 years. Although this looks good in theory, there are doubts about how robust this will be in the event of a new government coming to power and deciding to ditch it all. That’s why so many oil companies are reluctant to commit the massive amount of funds needed to drag Venezuela’s creaking oil sector up to standard
• Brazil is leveraging its vast rare-earth reserves in talks with both the US and EU, putting it in a strong strategic position as Western economies seek alternatives to sourcing from China.
• Although gold has had a well-publicised boom over the last year, silver prices have tripled in a year amid tight supply and heightened geopolitical anxiety. In many ways, silver is actually a decent bet because although it’s a precious metal like gold, it also has more industrial uses.

ENERGY

• Trump’s leverage over European energy security has become increasingly clear, with US LNG now accounting for a majority of EU imports and a large share of the UK’s gas supply. Any disruption could quickly push bills higher.
• Miliband’s new £15bn programme aimed at tackling fuel poverty will direct energy subsidies towards solar, batteries and heat pumps, de-emphasising insulation initiatives.
• In nuclear energy news, the life of the Sizewell B nuclear plant is going to be extended from 2035 to 2055 to help plug looming capacity gaps.

IN INVESTMENT TRENDS NEWS…

• IN IPOs – at one end of the scale, SpaceX is laying the groundwork for a potentially historic IPO having been in discussions with Bank of America, Goldman Sachs, JPMorgan Chase and Morgan Stanley – and is said to be targeting a staggering $800bn valuation! At the other end, Waterstones is considering a London listing.
• Elsewhere, India looks set for another bumper year for IPOs, with Mukesh Ambani’s Reliance Jio expected to headline what could become the country’s largest-ever stock market listing. Over $20bn was raised through Indian flotations last but some say this  could reach $27bn in 2026! Demand from retail investors is particularly strong.
• IN M&A – Zurich Insurance went public with a £7.7bn takeover bid for UK insurer Beazley, its fifth approach in roughly a year. Beazley’s shares jumped 42% on the announcement, while rivals Hiscox and Lancashire also rose on expectations of wider consolidation but Beazley’s board rejected the bid, saying that it undervalued the company.
• GSK agreed to buy Californian biotech firm RAPT for $2.2bn, thereby adding a promising food allergy drug to its pipeline. The deal reflects a broader trend of consolidation across pharmaceuticals and biotech driven by fragmented markets and looming patent expiries.

IN BUSINESS TRENDS…

• The defence industry remains a hot area. European defence firms such as Renk and Exosens have seen their share prices almost triple in a year, while the sector is already up 15% in 2026. With Czechoslovak Group preparing a flotation valued at up to €30bn, momentum shows little sign of fading amid geopolitical tensions. That backdrop is also pushing industrial shifts, with Renault teaming up with a French defence group to manufacture drones for Ukraine at government urging. Meanwhile, defence experts warn that the UK has spent little additional money on conventional forces despite bold rhetoric, raising concerns about readiness and capability.
• Trump’s Greenland-related tariff threats put the frighteners on Britain’s car industry and even if the tariffs don’t go ahead, this aggressive stance will very much concentrate the minds of other manufacturers and other sectors who have come to rely too much on the US over the years. They will surely have to wean themselves off the US over the longer term.

TECH NEWS

• IN AI – the IMF mentioned the risk and repercussions of the AI bubble bursting in its latest World Economic Outlook report. This is stating the obvious but I guess this just puts an official stamp on it. It also upgraded its 2026 global growth forecasts in its report, noting that the world economy has proved more resilient than expected so far.
• In the UK, MPs are pressing regulators to stop sleepwalking into AI-related financial risks and are calling for stress tests to assess how markets would cope with an AI-driven shock.
• In Davos, with JPMorgan boss Jamie Dimon argued that the AI rollout may need to slow down unless governments do more to support displaced workers, otherwise there could be civil unrest. He cautioned that technology could advance faster than society can absorb, risking unrest unless retraining, relocation support and early retirement schemes are put in place. Nvidia’s Jensen Huang took a more positive stance, highlighting job creation, but I’d say that his argument becomes more tenuous once the build-out phase is completed.
• Microsoft chief Satya Nadella suggested that the AI boom could falter unless adoption spreads more widely across industries and into developing economies. With so much capital riding on AI, broader usage is essential to justify the scale of investment and reduce the risk of speculative excess.
• In China, ByteDance is emerging as a serious challenger in the corporate cloud market. Its Volcano Engine platform is rapidly gaining traction through aggressive pricing and an expanded sales force, putting pressure on incumbents such as Alibaba, Tencent and Huawei. It has already become China’s second-largest AI infrastructure and software provider, though execution will be critical as it pushes deeper into enterprise services.
• Silicon Valley start-up Logical Intelligence claimed a breakthrough with its new “energy-based” reasoning model, Kona. Designed to solve problems more accurately while using less power than larger models, it targets high-stakes industries such as robotics, manufacturing and energy.
• The funding frenzy continued with UK-based AI voice company ElevenLabs reportedly in talks that could value it at $11bn, potentially making it one of Europe’s most valuable start-ups. Whether it remains independent or attracts a US suitor remains an open question.
• Legal drama also flared as Elon Musk sued OpenAI and Microsoft for $134bn, claiming entitlement to “wrongful gains” made possible by his early backing but I think this is just noise, but it is worth mentioning.
• IN CHIPS – Nvidia faced fresh complications after suppliers halted production of parts for its H200 chips following Chinese officials blocking shipments, an unexpected snag given that the chips only just gained US approval for the China market!
• Japan’s Kioxia is thriving as data centre demand lifted margins for its NAND flash chips, pushing its share price sharply higher.
• Intel slipped back into losses, disappointing investors with weak guidance and a lack of clarity on customers for its next-generation chips.
• IN HARDWARE – Apple is reportedly developing an “AI pin” that could launch next year, joining a crowded and experimental market. While wearables are gaining traction – particularly through Meta’s Ray-Ban tie-up – questions around privacy, usability and whether a single device can truly replace others remain unresolved. Apple’s habit of entering late but dominating categories keeps expectations high.
• IN SATELLITES – Starlink is emerging as a serious threat to UK broadband incumbents. With prices now undercutting BT and Virgin Media, and an IPO likely to provide vast funding, Musk’s satellite network could upend a poorly loved market. For consumers this is good news; for incumbents, it’s a warning to adapt quickly or risk being left behind.

IN MEDIA NEWS

• The BBC has agreed to make bespoke content specifically for YouTube, rather than simply posting clips and trailers from existing programmes. It will produce a mix of entertainment, news and sport for the platform, starting with coverage of the Winter Olympics next month, while also making the content available on iPlayer and BBC Sounds. This means that UK viewers without a TV licence will still be able to consume some BBC output via YouTube, inevitably raising questions about whether this is another small step towards the eventual erosion of the licence-fee model.
• IN STREAMING – Netflix beat market expectations in Q4 as subscriber numbers climbed above 325 million, helping it post strong sales. It also announced an improved $82.7bn all-cash bid for Warner Bros Discovery’s studio and streaming assets.

IN SOCIAL MEDIA NEWS…

• The seemingly never-ending TikTok issue in America has now been resolved! TikTok will set up a new US-based data security unit under a deal brokered by Trump’s team, with a consortium of American investors taking an 80% stake in the joint venture. However, ByteDance retains direct control of TikTok’s core US business lines which basically hands Beijing a major win, lifting a long-standing cloud over TikTok’s growth.
• In the UK, an Australia-style ban on social media for under-16s is edging closer after the House of Lords forced the government to move faster than planned. Supporters cite risks such as sextortion, cyberbullying and addiction, while sceptics question the evidence base. From a parental perspective, however, a ban feels like a sensible precaution that offers support rather than endless delay in the face of clear harms.

RETAIL NEWS

IN CONSUMER-RELATED NEWS…

• UK consumer confidence has risen slightly but remains firmly negative, extending a bleak run of pessimism that has now lasted since January 2016 😱!
• The jobs market is also showing strain, with employment falling again and wage growth is slowing, particularly in retail and hospitality.

IN RETAIL…

• IN SUPERMARKETS – Morrisons’ losses deepened to £381m as higher borrowing costs collided with weak consumer spending. It’s more exposed than most of its rivals to pensioners and lower-income shoppers, who are especially sensitive to price pressures.
• IN APPAREL – Next bought Russell & Bromley’s brand, IP and just three flagship stores for £3.8m after the chain fell into administration, with more than 400 jobs now at risk as most outlets are to close. It is the latest in a series of distressed high-street names snapped up by Next, including Cath Kidston, Joules and FatFace.
• IN GENERAL RETAIL – B&M cut its profit forecast and The Works reported falling sales after a disappointing festive period, reinforcing how patchy consumer demand can be over the most important quarter of the year for retailers.
• IN LEISURE NEWS…
  Independent coffee shops are increasingly leaving high-street chains behind. Younger, higher-spending customers are gravitating towards niche operators, putting pressure on Costa, Starbucks and Pret. That shift was underlined by Coca-Cola abandoning attempts to sell Costa, while players such as Black Sheep Coffee and matcha specialist Blank Street continue to expand rapidly.
• JD Wetherspoon warned that profits will undershoot expectations after being hit by higher energy bills, wage costs, repairs and business rates. Relief from the government cannot come soon enough for the pub sector, which remains under intense cost pressure.

IN CONSUMER GOODS…

• Spirits makers are grappling with the largest inventory glut in more than a decade, with around $22bn of unsold stock weighing on balance sheets! Companies including Diageo, Pernod Ricard and Rémy Cointreau are now facing higher debt burdens and the risk of price wars as they try to clear excess supply built up during Covid.
• At Carlsberg, core beer brands fell below half of total sales for the first time ever as consumers drink more moderately. While the group has minimal US exposure, global sentiment still matters for beer consumption.

• IN REAL ESTATE – Rightmove said that asking prices for homes increased by £10,000 in January, the biggest month-on-month jump (from December to January) for over ten years!
• A report from the Home Builders Federation (HBF) concluded that at least 1.5m people have been excluded from home ownership because of the lack of affordability for first-time buyers while a report from Nationwide said that although there has been a “continued improvement in affordability” over the course of 2025 thanks to higher wages, stagnant house prices and cheaper mortgage rates. That being said, many first-time buyers are still having to rely on the Bank of Mum and Dad (BoMAD).
• Meanwhile, the latest ONS data showed that house prices in the capital fell at their sharpest pace since the global financial crisis in November amid property tax and affordability concerns ahead of the Budget last year. The biggest falls came in the most expensive boroughs.
• IN AUTOMOTIVE NEWS – VW announced better-than-expected cash flow amid efforts to cut costs to take on Chinese competition. The company also cut investment plans.
• Chinese EV makers, especially BYD, continue to outperform international rivals and there’s more to come as Nio, Aion and Zeekr are set to launch in the UK this year.
• Germany will include Chinese auto marques in its EV support scheme, which means that Germans will be able to get incentives from all manufacturers. This is great for EVs and consumers – but you wonder whether this could be a nail in the coffin for German automotive manufacturing!
• IN FINANCE – JP Morgan boosted long-serving chief exec Jamie Dimon’s pay to $43m but there was a bit of a dampener on that as Trump then sued Jamie Dimon and JPMorgan Chase for allegedly de-banking him in the wake of the Capital riots when he lost the election to Biden.
• Ford and GM got permission to set up banking units, a move that will help them to provide automotive financing products throughout the US, generally via their dealer network.
• SocGen announced plans to cut 1,800 jobs in France by the end of 2027 via natural attrition rather than via redundancy. It currently employs about 40,000.
• Scottish asset manager Aberdeen saw outflows triple last year thanks to customers withdrawing money in the lead-up to the Budget late last year. It’s not the only one that saw a spike in outflows but the question is whether their outflows were worse than everyone else’s!

My favourite video this week is the one with that champagne song. I know this will divide the room 😁. My wife and kids think I have no taste – I just say that my music tastes are “eclectic” 🤔. What do you think??

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 WAR NEWS…

• IN IRAN – tensions rose over the weekend as Donald Trump signalled that the US was considering military operations in Iran. He said he was prepared to “rescue” Iranians and would hit the country “very hard where it hurts”. Unrest inside Iran continued to intensify despite a harsh security crackdown. Iran’s president said the government was open to listening to concerns but blamed “rioters”, the US and Israel for stoking unrest. These protests represent the biggest domestic challenge to Iran’s Islamic regime in years. US military intervention would be far more complex in Iran than in Venezuela so diplomacy is seen as the most likely way forward. By the end of the week, it seemed that tensions had “de-escalated”, according to governments in the region.
• IN VENEZUELA – Trump has vowed to cut off Cuba’s oil supply from Venezuela unless Havana strikes a deal with him. He also threatened to block ExxonMobil from operating there after its CEO described the country as “uninvestable”. Trump wants western oil companies to invest at least $100bn to rebuild Venezuela’s oil sector. On the other hand, SLB, the world’s largest oilfield services company, looks set to benefit first, with talks under way to expand operations alongside Chevron and others. Also, the first Venezuelan crude sale went to Vitol, whose senior trader donated heavily to Trump’s campaign. We also saw that opposition leader María Corina Machado handed Trump her Nobel Peace Prize medal but won no concessions, as he continues to deal with Maduro’s government – and not her. There’s a lot of scepticism from oil companies about getting on board Trump’s oil gravy train given the failure of previous American interventions elsewhere and the long term reliability of any deals signed now.

IN TARIFF NEWS…

• Trump announced a 25% tariff on countries doing business with Iran. This is likely to hit China, India, Turkey and Pakistan particularly badly.
• The White House also unveiled tariffs taking a 25% cut of Nvidia and AMD chip sales in China in the latest example of Trump’s highly transactional approach.

IN TRADE NEWS…

• Maersk decided to resume shipping through the Red Sea and Suez Canal. This suggests confidence that the Gaza ceasefire will hold. The move could speed up global trade but may also expose shipping overcapacity and put pressure on freight rates.

IN TRUMP THINGS…

• RE TRUMP’S ASSAULT ON THE DEFENCE INDUSTRY – investors have been left uneasy about Trump’s suggestion that defence companies should be barred from paying dividends or buying back shares and instead be forced to reinvest in production. Thus far, he hasn’t provided any real detail on how performance would be judged or penalties enforced. Trump’s focus on defence giants perhaps reflects concerns that the US could run out of key missiles within days of a war with China. Maybe that’s why he said last week that he wanted to increase US defence spending by 50% by 2027. Meanwhile, the Pentagon announced a $1bn investment in the missile motor unit of defence group L3 Harris, aimed at boosting supplies for systems such as Patriots, Tomahawks and THAADs. That unit will be spun off in an IPO expected in the second half of 2026.
• RE GREENLAND – tensions continued. Britain is in talks with Nato allies about increasing its Arctic presence, while NATO’s silence on Trump’s Greenland threats has rattled European allies. Talks between the US, Denmark and Greenland subsequently took place for the first time since Trump floated the idea of buying Greenland in 2019. While there was “fundamental disagreement” and no breakthroughs, the three sides agreed to form a working group and agreed to meet within weeks. Meanwhile, several Nato countries – including Germany, the UK and France – have committed to providing more permanent troop deployments in Greenland, officially framed as solidarity with Denmark rather than a response to Trump. Troop numbers appear to be more of a token effort at this stage.
• RE IMMIGRATION – the administration is sending hundreds more federal agents to Minnesota to deal with protests following the killing of an American citizen by an ICE agent. And while we’re on the subject of immigration, the US will pause immigrant visa processing for nationals of 75 countries, including Russia and Iran, from January 21st. The move is ostensibly designed to limit applicants deemed likely to rely on welfare and applies to immigrant visas only. Entering the US continues to get harder.
• RE TRUMP’S PURSUIT OF JAY POWELL – prosecutors launched the criminal investigation into Federal Reserve chair Jay Powell over the $2.5bn renovation of the Fed’s headquarters. To me, much of this — from Venezuela to Greenland to Powell — feels like distraction amid weakening poll numbers. The probe has united Fed officials, alarmed even senior Republicans, and drawn criticism over threats to central bank independence, with echoes of the inflationary mistakes of the 1970s. Global central bankers have rallied behind Powell, praising his integrity. The unnecessary drama continues…
• RE ENERGY – the administration is pushing a plan that would force big tech companies to fund their own power plants via long-term contracts. It’s another sign that Trump is wary of the strain data centres place on power grids and the political fallout from rising household utility bills.

IN REGIONAL / INDIVIDUAL COUNTRY NEWS

GLOBALLY – it seems that the world is increasingly scrambling to decouple from the US. Attempts to placate Trump have proven unreliable, forcing countries to rethink trade and security relationships. There is no precedent for a dominant power voluntarily retreating from leadership and the uncertainty is driving some remarkable shifts. South Korea, Germany, Australia, Poland and Canada are openly discussing nuclear weapons, the UK is exploring a “reset” with Europe, and Canada is reprioritising ties with China given that nearly 75% of its exports go to the US. Europe has struck a free trade deal with Mercosur, China wants to join the Trans-Pacific trading bloc and central banks are buying more gold, reducing demand for dollars. Over time, countries may decide Trump appeasement simply isn’t worth it, gradually weakening America’s global influence as alternatives emerge although that’s going to take a very long time.

THE AMERICAS

• CANADA – Canada’s prime minister met Xi Jinping in Beijing this week to repair ties, marking the first such visit since 2017. With Trump’s hostility towards Canada growing, Mark Carney is seeking to deepen relations with China as part of a plan to double exports to non-US markets over the next decade.

ASIA

• CHINA – China’s trade surplus hit a record $1.2tn in 2025, smashing expectations as exports boomed despite Trump’s trade war. For the first time, the surplus breached $1tn as China diverted exports that would have gone to the US to Europe and south-east Asia instead. This helped it to expand its global manufacturing market share. Although China’s export strength is impressive, weak domestic demand is still a concern.
• JAPAN – stocks surged to record highs after PM Takaichi hinted at holding a snap election. Investors piled into the “Takaichi trade”, betting on further stimulus that weakens the yen and boosts equities despite Japan’s debt-to-GDP ratio standing at a whopping 232%! Takaichi is seeking a stronger mandate to push through policy, taking advantage of her popularity among the electorate.

IN EUROPE

• The EU wants to secure a so-called “Farage clause” in Brexit reset talks, which would require the UK to compensate the bloc if a future government reneges on any agreement. While controversial, it cuts both ways and negotiations are ongoing.
• IN RUSSIA – concerns that lower oil prices will cripple Russia may be overstated. Despite pressure on revenues, Russia’s low debt-to-GDP ratio (just below 20%) and manageable annual spending deficit (about 3.5%) give it room to cope in the short term, particularly after years of adapting to sanctions.

IN THE UK

• UK borrowing costs fell to their lowest level since December 2024, easing pressure on public finances and putting Reeves on track to reduce the deficit below 2% by 2029-30. The economy also grew by a better-than-expected 0.3% in November in a rare piece of good news! Labour revived plans for Northern Powerhouse Rail with a £45bn pledge, though scepticism remains over delivery.
• Starmer has backed away from mandatory digital IDs for workers, allowing alternative forms of identification. It adds to a growing list of U-turns that risk undermining government credibility. Talking of which, Reeves also hinted that recent pubs-related tax U-turns could be extended to other hospitality firms in yet another example of the government backing down! The business rates system also came under fire for being fundamentally flawed, discouraging investment and expansion.
• Concerns were raised about the UK’s over-reliance on Chinese clean-energy supply chains, potentially putting 90,000 jobs at risk, though diversification would be costly and slow. On a brighter note, contracts for eight new offshore wind farms were awarded, boosting net-zero ambitions.

IN COMMODITIES NEWS…

• OIL – Trump’s move to control Venezuelan oil is worrying OPEC, potentially shifting power to buyers and capping prices, although some producers may benefit as China looks elsewhere to source its oil.
• GOLD & OTHER METALS – gold surged to record highs above $4,600 as investors sought safety amid Trump’s attacks on the Fed. Silver, copper and tin also hit new peaks – a rare simultaneous rally reflecting mounting global uncertainty.

IN BUSINESS TRENDS…

• UK business sentiment ended 2025 on a weak footing. A BDO survey showed confidence dropping sharply to its lowest level in almost five years, while the latest KPMG-REC data contradicted Starmer’s upbeat claim that people were about to feel richer again. Both permanent and temporary hiring fell in December. Manufacturers are also sounding the alarm – a Make UK survey found that 90% of firms expect employment costs to rise this year and 66% anticipate higher energy bills. That being said, although the unemployment rate rose to 5.1% in the three months to October – the highest rate in almost four years – the number of economically active people increased by 643,000 in the first nine months of 2025 compared with a rise of just 280,000 in unemployment. This suggests an increase in labour supply, which could be an early positive signal. So maybe things aren’t all bad??
• It looks like the vegan boom is collapsing. What began in the mid-to-late 2010s – most memorably with Greggs’ vegan sausage roll in 2019 – is clearly losing momentum. NIQ data shows fewer households buying plant-based meat alternatives, as flexitarians drift back towards animal protein. Supermarkets and restaurants have been reining things in and veganism seems to have lost its mass appeal.

INVESTMENT NEWS / TRENDS…

• IN IPO NEWS – Czechoslovak Group – one of Europe’s largest ammunition makers – is preparing for a potential €30bn listing in Amsterdam, which will be a useful test of investor appetite for defence stocks.
• IN M&A NEWS – Netflix is reportedly considering upgrading its $72bn bid for Warner Bros Discovery’s studios and HBO Max into an all-cash offer while Paramount Skydance continues to push its own proposal.
• Elsewhere, OpenAI has agreed a $10bn infrastructure deal with chip start-up Cerebras to secure computing power through to 2028 as it looks to diversify its hardware supply. Coca-Cola has meanwhile abandoned plans to sell Costa Coffee after failing to secure its £2bn asking price, highlighting how tough conditions remain in the crowded coffee market.

IN EMPLOYMENT TRENDS…

• Germany’s defence sector continues to hire aggressively, led by firms such as Airbus and Rheinmetall, while drone specialist Helsing has expanded headcount dramatically. However, hopes that displaced automotive workers would move across at scale have yet to materialise in a meaningful way.
• McKinsey is trialling the use of its AI chatbot, Lilli, in graduate recruitment, testing candidates on how effectively they can work with AI. I think that this is a sign of where hiring is heading. Surely using AI effectively in the workplace will be a key skill to have!
• Meanwhile, Sadiq Khan has warned that AI could drive “mass unemployment” in London, particularly in white-collar and entry-level roles. Some believe that the fears are overblown. My view is that the impact will be significant but gradual – and in many areas could actually increase the value of human-first services.
• Anthropic’s new Claude Cowork chatbot shows how vulnerable remote “laptop jobs” may be, as AI tools increasingly replicate routine white-collar tasks.

IN FINANCE NEWS…

• BANKS – US credit card stocks fell after Donald Trump called for a 10% cap on interest rates, well below the current average of around 20%. Capital One and American Express were among those hit after Trump said the cap should run for a year from January 20th. Banks warn that such a move would restrict credit availability, particularly for lower-income borrowers, while Lex suggests Trump may be applying pressure to force banks to justify high rates rather than actually imposing the cap, which would be hugely disruptive.
• JPMorgan reported weaker Q4 profits due to a charge linked to taking over Apple’s credit card programme and softer investment-banking fees, although strong trading revenues took the edge of some of this. Even so, JPMorgan’s share price has doubled over two years and capital markets activity remains strong. Having said that, Goldman Sachs and Morgan Stanley bucked the trend with strong Q4 results as dealmaking surged.
• ASSET MANAGERS – Meanwhile, BlackRock beat profit forecasts, lifted its dividend and expanded buybacks as assets hit a record $14tn on strong inflows.

IN TECH NEWS…

• AI – Microsoft has warned that China is winning the AI race outside the West. Brad Smith said Chinese AI firms are overtaking US rivals in attracting users across Asia, Africa and parts of central Europe, helped by lower-cost “open” models and generous state subsidies. DeepSeek, in particular, is gaining traction in emerging markets and is expected to launch a new model before the lunar new year. The AI industry is increasingly splitting into two camps: open-model players such as DeepSeek and tightly controlled ecosystems like OpenAI, Google and Anthropic.
• Competition for users is clearly intensifying. OpenAI is expected to run another Super Bowl advert, following its debut paid campaign last year, as part of a wider push to attract users. With 60-second slots costing around $16m, it underlines how AI companies are increasingly turning to traditional advertising as rivalry heats up.
• Regulatory pressure is also rising. The UK government is set to criminalise the creation of sexualised non-consensual AI images, while Ofcom will gain new powers to act against platforms hosting such content. Adding to the controversy, xAI is being sued by the mother of one of Elon Musk’s children over alleged fake sexual images created without consent. Oh the irony!
• Meanwhile, Google is pushing personalisation. Its Gemini chatbot will start using emails, search data and YouTube history to deliver more tailored responses, initially for US premium users before wider rollout. While this raises privacy concerns, many users may welcome better answers if data is handled securely.
• AI hype remains strong. German customer-service AI start-up Parloa raised $350m, tripling its valuation to $3bn, with major clients already on board. Customer service is emerging as one of the first AI use cases delivering clear financial benefits.
• HARDWARE – Apple has chosen to sit out the AI model arms race and instead position itself as kingmaker by partnering with Google’s Gemini to improve Siri. This potentially sidelines OpenAI, which has been working with Apple in its “Apple Intelligence” projects.
• SOFTWARE – Alphabet hit a $4tn valuation on AI optimism after news that Gemini will power parts of Siri, highlighting how central AI has become to big tech valuations.

IN MEDIA & SOCIAL MEDIA…

• IN MEDIA –YouTube has overtaken the BBC in audience size for the first time, raising fresh questions about the viability of the licence fee and the BBC’s future funding model. The BBC is also seeking to have Donald Trump’s $10bn lawsuit thrown out.
• IN ADVERTISING – Google is rolling out personalised shopping ads within its AI tools, marking a shift away from traditional sponsored search.
• IN SOCIAL MEDIA – calls are growing louder for tougher rules on children and social media, while X has scaled back Grok’s controversial image features after a backlash. Musk insists the problem lies with users but the controversy may have stoked his notoriety!

IN RETAIL NEWS…

• UK retail had a pretty underwhelming “golden quarter”. Food retailers such as Tesco, M&S and Sainsbury’s performed well, but fashion and general merchandise struggled badly amid heavy discounting, weaker footfall and fierce competition. Only a handful of names, like Next, emerged as clear winners, while others such as Primark and Argos disappointed. Claire’s Accessories and LK Bennett could even disappear.
• In the US, Abercrombie and Urban Outfitters posted decent year-end sales but still saw their share prices fall because the numbers came in below market expectations. Investors remain cautious about how consumers will behave in the months ahead.
• JD Sports is planning to let shoppers make one-click purchases via AI platforms such as ChatGPT and Microsoft Copilot, initially in the US. This feels like a sign of where retail is heading as more companies look to monetise chatbot-led shopping journeys.
• M&S continues to look like it’s doing many things right after recovering from last year’s cyber attack and intense competition. It feels as though the retailer is back on track and potentially stronger for having navigated recent challenges.
• There was rare good news for department stores with Fortnum & Mason reporting bumper profits as shoppers splurged on “affordable treats” over Christmas.
• LUXURY – European luxury groups are facing stiffer competition in their biggest markets as local brands gain ground in both the US and China. Chinese labels and American brands like Ralph Lauren and Coach are performing well, forcing European houses to rethink pricing, refresh products and better appeal to Gen Z shoppers.
• Russell & Bromley’s owners are considering selling the business after struggling to fund a turnaround, raising the prospect of high-street closures.

IN LEISURE NEWS…

• AIRLINES – Delta expects earnings to jump by around 20% as it focuses on premium and corporate travel, though rivals are chasing the same customers. Boeing has also beaten Airbus on order numbers for the first time this decade despite all the former’s well-documented quality control issues!
• PUBS – the government’s latest Budget U-turn may help pubs, but profitability remains dire. Ultimately, pubs need customers through the door. Stonegate is restructuring to cut costs, which looks like a sensible move in tough trading conditions.

• IN REAL ESTATE – UK estate agents are feeling more optimistic about home sales than at any point since October 2024, according to the latest RICS survey. Falling interest-rate expectations and the fading of Budget-related uncertainty are expected to lift buyer confidence and support housing activity this year. There is also debate about the effect an unintended side effect of spending heavily on weight-loss drugs – that it could adversely affect how much mortgage applicants can borrow! Some brokers warn that £200–£300 per month on such medication may be treated as a committed outgoing in mortgage affordability checks, potentially reducing a first-time buyer’s borrowing capacity by up to £20,000! Definitely food for thought.
• IN AUTOMOTIVE NEWS – the automotive industry is pushing back against plans to introduce a per-mile tax on EVs from 2028. AutoTrader reckons that it could deter nearly half of potential buyers, particularly those from lower-income households, at a time when EVs still carry a price premium over petrol cars. McLaren has received a $2bn cash injection from its Abu Dhabi owner, strengthening its position after cutting inventory and tackling quality issues. With backing in place, expansion beyond supercars now looks likely.
• IN PHARMACEUTICALS – Pharma dealmaking is expected to accelerate as patents covering around 12% of industry revenues near expiry. Merck’s talks to buy Revolution Medicines underline the trend. Meanwhile, AbbVie struck a $100bn investment deal with the Trump administration in exchange for pricing and tariff concessions – a sign that big-ticket political bargains may become more common.

My favourite video of the week was the one with the competitive firefighter! He made something very difficult look very easy!