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 SOME OF THE MAIN THEMES OF THE WEEK…

• ON UKRAINE – Putin and Trump had a chat this week and Putin ordered a limited ceasefire for 30 days. He used this pause to allow western investors to sell some Russian shares and touted the attraction of investing in Russia for American companies if/when the war ends. European military powers are now working on a 5-10 year plan to replace the US in NATO but in the short term, PM Starmer is trying to get the “coalition of the willing” to talk about air and sea defence as well as getting boots on the ground. The US aired the possibility of taking control of Ukraine’s nuclear power plants but President Zelenskyy only really wants him to take control of the one that’s currently occupied by the Russians, Zaporizhzhia, which used to provide 20% of the country’s power pre-invasion. The idea is that American presence there would act as a deterrent to potentially hostile forces.
• IN GAZA – Israel resumed attacks by launching “extensive strikes” in Gaza which resulted in hundreds of casualties. Netanyahu said the strike was in response to Hamas’s “repeated refusal to release our hostages”. So much for peace…

IN OTHER MACRO NEWS…

• IN THE US – Investors are getting increasingly nervous about the negative effect of Trump’s economic policies and made their “biggest ever” cut to US equity holdings in March and made the biggest shift to European stocks since 1999. The Fed cut US growth forecasts and kept interest rates unchanged because of economic uncertainties and the OECD cut GDP growth forecasts for 12 of the G20 members for the same reason. Trump signed an executive order to block law firm Perkins Coie from working with the US government because it had acted against him in the past, Supreme Court Justice John Roberts made a rare statement to push back on Trump’s attack on American judges (Trump said one of them should be impeached) and some Gallup polls said that less than a third of under-30s in the US now trust the government. Musk is having a tough time at the moment as he had to halt Cybertruck deliveries because metal panels are falling off and Starlink users are leaving the service because of his political involvement. European countries are now looking to use other providers where they can because America can no longer be relied upon (certainly under this administration anyway!).
• IN CANADA – an election has been called for April 28th. Since Mark Carney became PM, a swift election has been expected as he will want to take advantage of the momentum he’s enjoyed so far. His Liberal party had been lagging behind until he took over from Trudeau but he is now just ahead of the Conservatives.
• IN ASIA – China unveiled a plan to “vigorously boost” weak consumption but didn’t give that much detail although data points on retail sales, factory output and new homes prices were all positive, so it would seem that things are potentially moving in the right direction. Meanwhile, the Bank of Japan decided to leave interest rates on hold at 0.5% due to the “high uncertainties” faced by Japan’s economy thanks to expected tariffs from the US.
• IN EUROPE – the European Commission is is launching an investigation into the aluminium market to protect the bloc’s aluminium industry from imports that were destined for the US but are now ending up in Europe. Germany’s parliament approved incoming chancellor Merz’s €1bn spending plan and this was subsequently approved by the country’s upper house on Friday. Turkey detained 37 dissidents and is looking for another 224 as President Erdoğan gets back to his old tricks of suppressing any critics.
• IN THE UK – UK manufacturing output fell in Q1 for the first time since 2016 and  88% of upper-tier local authorities are set to increase council tax by the maximum permissible amount, 4.99%, for the third year in a row. Council leaders say this is necessary after over a decade of funding cuts. In her wider mission to cut red tape, the chancellor is making moves to restrict the CMA’s scope for investigating mergers to facilitate economic growth, the Treasury is launching a review of the Financial Ombudsman Service and UK regulators are going to face twice-yearly reviews to ensure they are doing all they can to be “growth-friendly” and it looks like Reeves is going to slash public spending in her Spring Statement next week and not raise taxes. Meanwhile, the basket of goods used to determine inflation got its yearly revamp this week – VR headsets, yoga mats and pool sliders are in while local newspaper ads and oven-ready gammon joints are out.

IN DEFENCE NEWS…

• Trump’s recent actions have caused such a stir that even Switzerland is talking about a closer relationship with NATO (although he’s stopped short of expressing a wish to become a member). This in itself is shocking.
• Asian defence stocks hit record highs on Europe’s imminent rearmament, missile maker MBDA is seeing more interest from EU militaries seeking out non-US weapons but British company Qinetic had a disappointing trading update thanks to costs relating to its US defence business.
• The EU said that the US, UK and Turkey would be excluded from a €150bn rearmament fund unless they sign defence agreements with the bloc.

IN ENERGY NEWS…

• Green energy stocks in the S&P Global Clean Energy Transition Index have lost five years of gains as political support has just evaporated in the face of other priorities.

IN COMMODITIES NEWS…

• Gold breached $3,000 per troy ounce for the first time as nervous investors buy “safe” assets in the face of Trump-prompted uncertainty.

IN MARKETS NEWS…

• Global markets continued to weaken due to uncertainty prompted by Trump’s policies.
• Retail investors seem to be embarking on another meme-quest as retail investors are attacking hedge fund shorts in the defence sector. Reddit appears to be the forum of choice once more for would-be hedge-fund hunters…

IN BUSINESS TRENDS…

• Foreign management consultants are going to feel the pressure in Saudi Arabia as Riyadh is looking more closely at how it’s spending its money, particularly as the oil price has been weakening and the costs for its various massive projects are growing all the time.
• Revenues at US law firm Kirkland & Ellis hit impressive highs, echoing similar news last week  at Latham & Watkins, thanks to all the dealmaking in 2024. You do wonder whether all the Trump shenanigans are going to dampen the hype and expectation that had been building up about the flood of IPOs for this year. In the UK, A&O Shearman has now officially warned junior lawyers that their bonuses could at least partly depend on their office attendance record. RTO is most definitely back!
• EY announced a restructuring of its legal business that will involve a narrowing of focus on corporate law, company secretarial, tax litigation and immigration. TBH, this isn’t necessarily a “let’s-get-out-of-law” thing for all accountancy firms – EY has had a lot to deal with since the failure of its proposed splitting of the business into audit and consulting.
• The chief of Lloyd’s of London warned that US protectionism will mean higher insurance prices for longer across many lines of business.

IN CONSUMER TRENDS…

• US consumers are cutting spending and going to shops less. Research from RetailNext says footfall is dropping while the University of Michigan’s consumer sentiment index reflected a third consecutive month of decline.
• UK consumers are seeing wage growth stabilising, but it’s still quite tight out there as the higher minimum wage kicks in and the employment mix is changing.
• IN PROPERTY – there are more properties on the market now and the number buy-to-let firms is mushrooming as smaller landlords are registering themselves as companies to avoid paying higher rates of tax. First-time buyers are having to move further out of London because prices are getting crazier and as house prices outpace prices for flats, one-bed flats are getting increasingly out of reach for key workers across half of England.

IN EMPLOYMENT TRENDS…

• US companies continue to ditch references to DEI from their annual reports as they try to stay onside with Trump. Out of the 400 top companies in the S&P Index, 90% of those that have filed an annual report since Trump got elected have cut references to DEI to at least some degree.
• It seems that France’s job market is at a tipping point and many believe it will get worse from here. Corporate bankruptcies are on the up and lay-offs at major companies are occurring with more frequency.
• The Resolution Foundation think tank reckons that the recent 0.5% fall in employment over the year to January is of a magnitude “only seen during a recession”. I think there will be a few difficult months to come while the higher NICs and minimum wage kick in but it’s worth reminding ourselves that employment numbers (well, the ones coming from the ONS at least) are dodgy anyway because they’ve had to change the way they gather the numbers.

IN TECH NEWS…

• Google’s parent Alphabet is in talks to buy cyber-security group Wiz for $30bn, although some say that the price is high. Still, Wiz owners managed to get themselves a 10% break clause (this is massive – it’s normally 2-3%!), reflecting the high risk of this deal not going ahead for regulatory reasons.
• The European Commission has accused US tech companies Google and Apple of breaching rules in the Digital Markets Act, which means that they could be fined 10% of worldwide revenues. The Americans are not going to take this lying down…

IN AI NEWS…

• Chinese tech giant Baidu released two new AI models, one of which delivered “performance on a par with DeepSeek R1 at only half the price” and has “stronger understanding, planning, reflection and evolution capabilities”. Chinese tech companies seem to be flooding the market with powerful AI models and relying on the open source approach to catch-up with the closed-source models. If they reach parity in terms of utility, it will be much harder for closed-source models to monetise…
• Anthropic said that it would focus on business users to get more revenues – and its B2B business is now growing at twice the rate of its B2C business.
• Microsoft has joined up with Swiss start-up Inait to simulate brain reasoning, which means that AI can learn from real world experiences rather than just picking up on correlations in historic data.

IN CHIP NEWS…

• Softbank just expanded its AI portfolio by buying chip start-up Ampere Computing for $6.5bn. Ampere makes processors for cloud computing and data centre applications based on Arm’s technology.
• Nvidia unveiled a new generation of chip (the Vera Rubin superchip) and announced a partnership with GM to integrate AI into its cars, factories and robots. Nvidia also committed to spending around half a trillion dollars on chips and other electronics manufactured in the US over the next four years.
• Japanese semiconductor materials group JX Advanced Metals made its market debut in Japan’s biggest IPO since 2018 and raised $3bn.

IN OTHER TECH NEWS…

• X saw its valuation return to $44bn again in its latest funding round, the valuation that Musk bought it at back in 2022. Its valuation had dipped to a low of $10bn last year as advertisers ditched it. Its turnaround has coincided with Musk’s elevation to Trump’s chief BFF 😂.
• Data centre operator CoreWeave is looking to raise up to $2.7bn in an IPO in what could be the biggest US tech listing so far this year.

IN MEDIA NEWS…

• Spotify’s focus on profitability is paying off. It paid out record royalties last year but royalties as a percentage of overall revenues are falling because Spotify has been getting better at diversifying its revenue streams.
• French music streamer Deezer broke even for the first time ever. It now wants to launch new tech to provide a more personalised experience.
• Ofcom is looking to start enforcing new rules for social media groups, search engines and messaging apps as the Online Safety Act will be kicking in from next week.

IN RETAIL NEWS…

• Fast fashion retailer Forever 21 filed for bankruptcy in the US. A casualty from the onslaught of Shein and Temu…
• Ikea announced that it would be opening its Oxford Street store from 1st May. This is all part of the effort to move away from its out-of-town big box model. This opening has been hugely delayed but its arrival may help attract other tenants.
• Asda started a price war, hitting the share prices of Tesco, Sainsbury’s and M&S. Is the decision to cut prices just a sticking-plaster-over-a-gaping-wound solution for Asda losing its way for the last few years?? IMO it has lost its identity and needs to get one PDQ otherwise Aldi and Lidl will continue to steamroller it.

IN CONSUMER GOODS NEWS…

• Nike announced a Q4 sales drop as it continued to try and clear its inventory. A turnaround is in progress under a new CEO…

• IN TESLA NEWS – staff at the company’s German plant demanded better working conditions, 46,000 Cybertrucks were recalled because they were falling apart and Musk declared attacks on Tesla cars “violent terrorism”. Apparently, the Cybertruck has become the world’s most hated car.
• BYD unveiled new tech that can provide 400km of range in just five minutes, sending its share price to an all-time high! This underlines Chinese car makers’ technical superiority and puts huge amounts of pressure on everyone else to catch up…
• Audi announced that it would be cutting about 8% of its workforce by 2029 as it adapts to electrification. This is part of a broader push to save €1bn a year in costs…

• IN FINANCIALS – crypto exchange Kraken is on the verge of buying US retail futures trading platform NinjaTrader for $1.5bn as part of a broader effort to diversify its user base and the number of asset classes it offers. Deutsche Bank announced that it’d axe 2,000 jobs in its retail division in an ongoing effort to cut costs, Prudential’s profit was held back by a slowdown in China and M&G announced some robust results as previous cost-cutting is now bearing fruit.
• FedEx cut its outlook despite higher profits because of economic uncertainty.
• Heathrow Airport had to close due to a fire in a nearby electrical substation. Needless to say, this caused huge amounts of chaos…

For me, my favourite video this week was this interpretation of a children’s classic bedtime story!

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 SOME OF THE MAIN THEMES OF THE WEEK…

• ON UKRAINE – peace talks made some progress this week as Ukraine accepted a 30-day US-brokered ceasefire and is getting used to the idea that it’ll have to make some territorial concessions. The two sides are still pretty far apart on what they want and Putin’s in no hurry to do anything. Europe is still getting its 💩 together on defence as we’ve realised that America could just switch us off because we have become so reliant on their equipment. Europe has now come to realise that the US cannot be relied upon as an ally and we are now, belatedly, trying to do something about it in satellites, drones and fighter jets.
• ON TARIFFS – Trump continued his combative stance on tariffs towards India, Europe and Canada whilst imposing 25% imports taxes for steel and aluminium. Ontario fought back with US power exports although it then backed down after Trump made a counter-threat while Canada retaliated and Europe targeted middle-America with tariffs of its own.
• ON TRUMP – the president conceded that recession this year was a possibility and he also cut the US Education Department’s workforce in half as part of his ongoing cost-cutting drive.
• ON MUSK – Musk pushed for a meeting with Italian president Sergio Mattarella to salvage a $1.5bn deal with Starlink but fear not, he’s still managed to sign a 5-year deal worth £85,000 with the NHS to get GPs in remote areas access to the internet 🤣. He’s also managed to sign an important deal to enter the Indian market as well. Tesla is taking a right kicking as anti-Tesla campaigners in the US call for the brand to be boycotted and second hand models flood the market in the UK while hostility against the brand rises. Trump said he’d buy one to help his BFF out but speculation is increasing about Starlink being the next Musk company to get the anti-treatment. Elsewhere, it seems that Musk’s dramatic actions with DOGE haven’t actually made much of an impact so far (but it’s probably a bit early yet, plus some of his moves backfired – like the one where a judge ordered the government to rehire 24,000 employees at 19 federal agencies who had been fired!).

THEN IN INDIVIDUAL COUNTRY NEWS…

• IN THE US – economists reckon that the risk of a Trump-powered recession (a “Trumpcession”) is rising, Wall Street weakened to the extent that it is now in “correction” territory and the gold price hit new highs. Blackstone and Goldman Sachs CEOs tried to put a positive spin on Trump’s policies, CEOs also toed the line but then hedge funds have been selling out of US equities and cutting their borrowing. Investors are switching into “defensive” stocks while the world reacts and it’s looking likely that American consumers are going to be seeing bigger grocery and fuel bills. Meanwhile, inflation fell by more than expected in February although the figures don’t yet reflect the effect of tariffs. You do wonder whether this is the calm before the storm…
• IN CHINA – the National People’s Congress was held this week and China is bracing itself for a more hostile geopolitical environment whilst it also plans to boost investment in tech and measures to support the ailing economy.
• IN CANADA – former Bank of Canada and Bank of England governor Mark Carney replaced Justin Trudeau as party leader, therefore becoming PM by default. He’s expected to call an election sooner rather than later and was pretty feisty towards America, although he may live to regret that later.
• IN EUROPE – it seems that Trump’s actions are bringing the bloc together but defence needs to be a priority. Germany’s disgruntled Green party hinted that it could be a stick in the mud regarding the imminent vote on transforming the country’s finances but chancellor-in-waiting Friedrich Merz reckons he’ll be able to give them enough concessions to get behind him.
• IN THE UK – the government abolished NHS England, shut down the Payments Systems Regulator and imposed new targets on remaining regulators to prompt innovation. The government also announced a new Planning and Infrastructure Bill that should cut planning permission times for major projects in half.

IN CURRENCY NEWS…

• There’s talk that Trump’s shenanigans may give the euro the opportunity to dethrone the dollar as the world’s preferred reserve currency. Sanctions against Russia have prompted Russia and China in particular to wean themselves off the dollar while talk of greater unity in Europe could be good news for the euro. I think this is unlikely at this stage but the euro could certainly close the gap.
• Crypto prices fell as the excitement surrounding its strategic reserve plan fizzled out because there were fewer trading opportunities than had been hoped for, although the president’s thought to be $350m up thanks to the performance of his memecoin.

IN BUSINESS TRENDS…

• Data from the Food and Drink Federation shows that exports to the EU since Brexit were down 34%. Given that the EU accounts for 61.8% of exports and 75.6% of our imports in the food and drink sector, there is huge potential here if Starmer can do a deal with the EU in the current thawing of relations…
• Deliveroo made its first full-year profit in its 12 years of existence! Investors were disappointed about its margin expansion forecasts though. Still…
• US law firm Latham & Watkins hit $7bn in revenues thanks to the rise in dealmaking activity. Last year it worked on twice as many IPOs as any other law firm. More deals had been expected this year but if Trump’s shenanigans keep destabilising the market, companies may decide to sit out and wait…

IN EMPLOYMENT TRENDS…

• There’s been a lot of job-hopping going on among senior lawyers in London as US law firms continue to splash the cash to expand, according to legal recruiter Edwards Gibson. The companies hiring most aggressively have been Kirkland & Ellis and White & Case in addition to Clifford Chance.
• The latest KPMG/REC report says that companies are reining in their hiring plans because of the uncertain economic environment while the latest Insolvency Service data shows that businesses have actually made fewer people redundant over the last 12 months than in the year before despite sluggish economic growth.
• Accountants are getting brutal as PwC slashed partner numbers by record amounts and stopped one of its apprenticeship programmes in ongoing efforts to cut costs. Meanwhile, KPMG said it would be streamlining its operations to boost growth and prevent audit scandals.
• The FCA and PRA have decided to drop their new DEI rules for financial firms because they don’t want to add to their regulatory burden.
• The MAGA movement is dividing the working environment in America as the government’s actions are proving to be highly polarising. Until Trump’s measures are shown to be working, I would have thought this situation will get worse. TBH, it’s difficult to tell exactly how divisive it is because you never quite know how much the media is puffing this up.

IN CONSUMER TRENDS…

• Official figures showed that China’s consumer prices dropped for the first time in 13 months. This is good news, but this may at least partly be due to the lunar new year being early this year which may skew the figures a bit.
• UK house prices are now levelling off, according to the latest Halifax figures, as worries about the broader economy hit while the latest RICS survey points to the imminent stamp duty deadline as a reason because the April 1st deadline is just around the corner.
• The FCA is looking at launching an industry-wide compensation scheme to repay motorists who may have been mis-sold car loans automatically. The Supreme Court is due to make a decision next month as to whether customers have in fact been mis-sold car loans.
• There’s bad news for meat-lovers as demand for red meat is rising but there’s a cattle shortage in Europe and the UK. That means that steak prices are going to rise in restaurants and supermarkets, potentially by up to 40%! The situation has been blamed on economic uncertainty and changes in farming subsidies.

IN RETAIL NEWS…

• Valentine’s Day gave retailers a boost last month, according to the latest figures from the BRC. However, they’re still holding off buying big ticket items.
• John Lewis announced a boom in profits but decided not to pay out the staff bonus after a turbulent few years.
• There are just two buyers remaining in the bidding for WH Smith’s high street business – Alteri and Modella Capital – and it is hoped that a deal could be completed in April.
• Zara’s owner Inditex has seen a bit of a sales slowdown, which disappointed investors used to seeing consistently strong results, but apparently sales have been picking up again recently.
• Boohoo is now rebranding to become Debenhams Group having bought it out of administration in 2021. It has been seeing some progress with Debenhams as an online marketplace, so it’s going to lean into that, particularly as competition in fast fashion is getting particularly fierce.
• Over in the US, Dollar General sounded pretty positive about its prospects after axing 96 underperforming stores. It will open 590 new outlets this year and refresh existing ones. Although footfall dropped, the spend per customer increased. Given expected economic headwinds, this retailer could benefit from a cautious consumer.

IN CONSUMER GOODS…

• Lego’s sales increased by 13% last year and it is looking to build up its digital games capability to tap into more “hybrid” digital and physical experiences.
• Puma reported poor performance for the first few months of this year, blaming geopolitical tensions and trade disputes. It is now pinning its hopes on sales of its Speedcat trainers. Sounds pretty flimsy to me but you never know!

• Meta’s bolstering the voice capabilities of its LLM Llama 4 in ongoing efforts to build something that generates revenues. The idea is to make conversations between humans and machines more natural.
• OpenAI struck a $12bn deal with cloud computing provider CoreWeave, who will supply the computing power needed to train and run OpenAI’s AI models.
• Amazon, Google and Meta are among a wider group of energy-intensive companies to appeal for governments and utilities companies to triple nuclear capacity by 2050. This came in the form of a joint statement co-ordinated by the World Nuclear Association.
• DeepSeek says that it is prioritising research over revenues to reach its ultimate aim of cracking artificial general intelligence (AGI). Will this mean that it will win the race to AGI while OpenAI gets distracted by the pursuit of profits??
• Saudi-owned Scopely bought Pokémon Go in a $3.5bn deal with Niantic, which is going to be focusing more on geospatial AI that will ultimately be used in products such as smart glasses and robots.

• VW is sticking with its decision to push US sales growth to mitigate weaker sales in China and Europe despite US tariffs. It was also interesting to note that it has not ruled out the possibility of getting involved in Europe’s push to rearm.
• Toyota is thinking about exporting from the UK to the US to get around the latter’s tariffs. This is unlikely to be as impactful as it sounds, though, because the UK makes smaller models that aren’t as popular in the US. It also unveiled three new EVs for the UK and European market.
• EV battery start-up Northvolt filed for bankruptcy in Sweden, ending what had been Europe’s big hope at upsetting Chinese dominance in EV batteries.

• IN PHARMACEUTICALS – Roche and Zealand Pharma struck a $5.3bn weight-loss drug deal which should accelerate the development this drug and others. Unfortunately, trial results for Novo Nordisk’s new obesity drug were disappointing. Whoever can develop the most effective drug should be able to benefit enormously from a huge addressable market in China.
• Lloyds of London estimates that the California wild fires will cost insurers £2.3bn, which is chunky in the scheme of things but not disastrous.
• Unilever said that it will hire influencers to drum up sales and get the company out of a rut as part of a recent overhaul by the new boss.

My fave video this week was a tricky one to decide, but in the end I think this incredible table tennis rally just edged it for me!

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.

This week was another emotional rollercoaster of war, tariffs – and now crypto…

IN SOME OF THE MAIN THEMES OF THE WEEK…

• ON UKRAINE – there was initial talk of a one-month truce, Trump continued to insult Zelenskyy and followed that up with suspending military aid. Zelenskyy said that Ukraine was ready to talk peace but then the US cut off intelligence sharing with them. European countries are looking at seizing frozen Russian assets and putting it towards defence spending and showed Zelenskyy a lot more support than the Americans did. Starmer’s diplomacy won plaudits at home and he continued with efforts to unify Europeans in a “coalition of the willing”.
• ON GAZA – Israel halted aid to Gaza and Trump said “I am sending Israel everything it needs to finish the job…This is your last warning” while Arab states endorsed an alternative post-war Gaza plan that didn’t involve kicking all Palestinians out of Gaza.
• ON TARIFFS – Trump started the week threatening to impose 25% tariffs on Mexico and Canada but then backtracked on them later in the week, giving them a one-month reprieve. Trump also gave carmakers a month’s extension on the tariffs, which is just as well given how complicated the tariffs will make things for carmakers. In doing all this, Trump will be lifting border taxes to their highest level since 1943 and US stocks fell as investors wavered. China reacted angrily to Trump’s new tariffs and the Bank of England’s governor warned that the UK could also suffer flack even though it looks like we might not be affected by them directly.
• ON DOGE – the administration started to amend recent layoffs in government departments and Trump himself got involved in holding back DOGE’s zealous wielding of the axe. DOGE’s next target could be management consultants as all federal agencies have been asked to list and justify existing consultancy contracts from ten companies by the end of the week!

IN REGIONAL/COUNTRY NEWS…

• IN THE US – Trump addressed Congress, boasted about his actions thus far and said that he was “just getting started”. He’s all about the optics of his actions and many supporters believe that “Trump is kicking ass” because “he’s actually doing what he promised he was going to do”. His approval ratings have only suffered slightly despite all his recent dramatic actions but US stocks have erased all of their post-election gains though. He pressured BlackRock to buy a 90% stake in two major ports on the Panama Canal, as part of a consortium, from current Hong Kong-based owner CK Hutchison. He did this because he believes that China has too much influence in the region. Meanwhile, Trump pulled the US out of the $45bn Just Energy Transition Partnership (JETP) global climate finance coalition launched in 2021 to help South Africa, Indonesia and Vietnam to wean themselves off fossil fuels and use more renewable energy.
• IN CHINA – the country is sticking with a 5% GDP growth target for the full year, a target set last year and apparently achieved (although many say that this was a bit dodgy given all the other indicators).
• IN EUROPE – Germany’s new chancellor-in-waiting Friedrich Merz made a historic move to relax the country’s strict borrowing rules that will allow it to fund its armed forces and give military assistance to Ukraine. Its borrowing costs will rise sharply as a consequence but the extra money will allow Germany to invest in crucial infrastructure while defence spending could rise from 2.1% of GDP in 2024 to 3.5% of GDP in 2027, which is significant given the size of Germany’s economy. Meanwhile, the ECB cut rates by 0.25 percentage points to 2.5% as inflation seems to be calming down (for now!). The bank did also cut its growth forecasts for this year though.
• IN THE UK – the overall gloomy mood continued as Reeves warned that the trade war could still harm the UK economy, the BCC downgraded its latest economic forecasts and official data showed that the UK is already falling behind on government targets to build homes.

IN COMMODITIES NEWS…

• IN OIL – oil prices fell to their lowest levels for three years after OPEC+ decided to increase production from April. Saudi Aramco is suffering from weaker oil prices and BP cut its CEO’s pay after the company missed its profit targets.
• IN GAS – Gas prices rose after hopes of a Ukraine peace deal were dashed and it was interesting to hear rumours about the potential restart of the Nord Stream 2 gas pipeline to Europe with the backing of US investors, something that would previously have been unthinkable until recently.

IN ENERGY…

• Europe’s biggest battery storage project went live in Scotland. Zenobe’s site at Blackhillock, between Inverness and Aberdeen, will absorb any surplus wind power to supply 200 megawatts of electricity, to be expanded to 300 megawatts by next year. That would mean it could power every home in Scotland! How brilliant is that!

IN CRYPTO…

• Cryptocurrencies got a boost as Trump unveiled a “crypto reserve”. XRP, cardano, solana, bitcoin and ethereum all strengthened on the news. Some say that if Trump used the stock market as a gauge of his popularity in his first stint at the presidency, he may use bitcoin as the gauge this time around.

IN BUSINESS TRENDS…

• European defence stocks boomed as arms makers expect orders to rise, and although the companies themselves say that they can step up into the void left by the US, America’s shift has highlighted gaps in our capabilities that need to be filled. Given the strong dollar and American corporate hunger, it was interesting to hear Starmer say that he wants to shield UK defence firms from takeover.
• Global vineyard values have fallen as consumers (especially younger ones) seem to be drinking less wine than they used to. In a shocking statistic from Nielsen, French Gen Zs consume about 50% as much wine per capita as older Millennials!

IN EMPLOYMENT TRENDS…

• The government continued with plans to increase workers’ rights in areas including unfair dismissal, zero-hours contracts and sick pay. This is great for employees but not so great for employers who will be more restricted and face more powerful unions. Although things aren’t too bad now, I’d argue that increased restrictions will amplify an economic downturn.
• UK businesses are continuing to cut jobs thanks to momentum slowing down, but it is interesting to note that the PMI survey only asks whether companies are cutting output or employment – not by how much. This means that observers could be overestimating the scale of a slowdown…

IN CONSUMER TRENDS…

• US consumers are a bit nonplussed about Trump’s actions on making America “affordable again”. They are delaying home improvement projects and just reining things in generally. Consumer spending accounts for over two thirds of US economic activity – and it dropped unexpectedly in January, the first fall since March 2023.
• UK consumer spending is weakening, according to the CBI but the latest BRC figures show that shop price inflation has been falling (which should be a boon for consumers). Having said that, food price inflation hit a five-month high. Elsewhere, Zoopla data shows that UK rental prices increased at their slowest annualised rate since July 2021 thanks to tenant demand calming down.

IN RETAIL NEWS…

• IN APPAREL – Prada edged closer to buying Versace for around €1.5bn but momentum for Deckers Brands (which owns the Hoka, Ugg and Teva brands), and other star-performers such as On and Birkenstock, appears to be slowing down in share price terms. This may be due to investors worrying about the impact of tariffs (a lot of footwear sold in the US is made in China, for instance) although underlying demand remains solid. Gap managed to beat market expectations as its rehabilitation continues…
• Asda was the only supermarket to see lower sales in February, as the misery following its worst Christmas since 2015 continues.
• ON THE HIGH STREET – Games Workshop posted results that came in ahead of expectations in its latest trading update and PE firm Sycamore Partners announced a deal to take Walgreens private, which I’d suggest doesn’t bode well for Boots in the UK (Walgreens owns it). Pepco Group put Poundland up for sale as part of Pepco’s drive to move away from FMCG and into higher margin clothing and general merchandise.

IN CONSUMER GOODS…

• Adidas lowered its profit forecasts for the year after a strong 2024. It remains cautiously optimistic about its prospects but obviously there’s the shadow of tariffs hanging over it.

IN LEISURE NEWS…

• China’s Mixue (a bubble tea chain) became the world’s biggest food and beverage chain by number of locations! It has outlets across Asia and Australia and has more than doubled the number of its locations to 45,000 stores in just three years.
• Greggs posted its worst sales growth since the pandemic as it seems that shoppers are cutting down on snacks.
• Flutter said it was bullish about its prospects in the US as it reckons it will triple its profits this year in the states in which it operates. This certainly justifies its decision to switch its primary listing from London to New York last year!

IN CHIPS NEWS…

• TSMC announced that it would spend at least $100bn over four years on the construction of five cutting-edge chip manufacturing facilities in the US but Taiwan’s government was keen to say that the most advanced tech will remain in Taiwan, the idea being that keeping it there ensures US commitment to defend it.

IN AI NEWS…

• There’s an increasing trend of AI companies using the “distillation” process that was used to such devastating effect by DeepSeek and even the likes of OpenAI, Microsoft and Meta are looking closely at it.
• Anthropic’s valuation tripled at its latest funding round just one week after it unveiled its latest SI model, Claude 3.7 Sonnet. The money will be used to develop new models and fund expansion into Asia and Europe.
• A US Federal Court blocked Musk’s request for an injunction to pause OpenAI’s transition to a for-profit company. The drama continues…

IN OTHER TECH NEWS…

• Eutelsat, the owner of OneWeb, is currently in talks with European governments about providing additional connectivity via satellite to Ukraine. The prospect of Musk switching off internet access via its Starlink satellites is clearly sharpening minds…
• Discord is in early stage talks with banks about an IPO.
• ITV’s share price boomed thanks to it announcing a more than doubling of profits. This has been courtesy of great results at its TV production division and cost-cutting.
• Microsoft announced that it will be shutting Skype down 14 years after it bought it for $8.5bn. I guess its days were numbered after the advent of Teams!

• EC president Ursula von der Leyen announced that European car makers will be given an extra two years to hit this year’s pollution target as part of a wider retreat on green deal climate policies. This will take some of the pressure off…
• BYD raised $5.6bn via a share placement on the Hong Kong stock exchange. It will use the money to boost its R&D and accelerate overseas expansion. This also signifies a revival for the Hong Kong exchange itself as this was its biggest deal for four years!

• The housing minister has promised to abolish the ancient leasehold system in England and Wales and make it easier for homeowners to jointly own the buildings that they live in. This has been in the offing for some time, so it’ll be good to see whether anything actually comes of this.

My fave video this week was undoubtedly the one with the cunning cat! Superb 😂!

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.

Talk about wars and tariffs continued to feature this week…

• ON UKRAINE – Zelenskyy offered to step down in exchange for a proper peace agreement and membership of NATO, the UN passed a US resolution appealing for a “swift end” to the war in Ukraine with more Russia-friendly wording that Moscow and Beijing supported. The EU and UK held talks about Europe-wide defence funding, with rumours of a “Rearmament Bank” being aired as a possibility. Ukraine agreed a minerals deal with the US as the week progressed and Putin ended the week on a hopeful note about the progress being made on a Ukraine ceasefire.
• ON TARIFFS – Trump threatened China with additional tariffs of 10% and we were also reminded that tariffs on Mexico and Canada are going to come into force next Tuesday (unless there’s some kind of last-minute deal). Vietnam could be next in Trump’s firing line as its has benefited from becoming the “plus one” in the corporate “China plus one” strategy. Trump is planning on imposing 25% tariffs on EU goods and the Kiel Institute, a German thinktank, believes that these tariffs will snuff out growth for the EU and send inflation through the roof. If you want to keep track of which tariffs are happening where and when, then I would strongly recommend that you look at this very useful table in the FT.

MEANWHILE…

• IN THE US – The US House of Representatives passed a budget resolution to cut taxes by $4.5tn and spending by $2tn by 217 votes to 215. Although this is non-binding, this does show the way things are going. Trump also announced a “gold card” visa scheme for rich people who can get “green card privileges plus” for $5m and a bit of vetting because these people will be “spending a lot of money and paying a lot of taxes and employing a lot of people”.
• IN EUROPE – Germany had an election and the incoming chancellor (Scholz lost, obviously) said that he wanted “independence” from the US as Trump was “largely indifferent” to Europe’s fate but this is going to put Germany’s industrial giants in a tricky position because they make most of their money from international trade.
• IN THE UK – Starmer was probably expecting a difficult meeting with Trump in the US but got the complete opposite. What a contrast with the tetchy meeting earlier in the week with Macron and then the absolute shocker that poor old President Zelenskyy had at the end of the week. UK and India relaunched trade talks that fizzled out at the end of last year and there was speculation about the timing of a Spring Statement and whether Reeves would hike taxes again, given her £10bn of headroom has gone. Starmer decided to decimate the aid budget and use the money to fund the biggest rearmament programme since the cold war. We’re now planning to raise defence spending from 2.3% of GDP to 2.5% of GDP. Perhaps somewhat bizarrely, given the generally gloomy newsflow recently, the Lloyds Banking Group’s business survey reflected confidence hitting a post-election high in February.

IN COMMODITIES NEWS…

• IN OIL – Trump cancelled Chevron’s oil licence in Venezuela, reversing Biden’s “concession agreement”. This is likely to make a huge dent in Venezuela’s GDP. Meanwhile, BP signed a major deal to redevelop Iraq’s oil and gas fields, harped on about being mistaken about its dabble with renewables and the CEO promised to more than double its market value within five years.
• IN GAS – Shell reckons that LNG demand will jump 60% by 2040 thanks to accelerating economic growth in Asia, the need to decarbonise heavy industry and transport as well as rising demand from the increasingly energy-thirsty tech sector.
• IN COBALT – DR Congo will stop exporting cobalt for four months in an effort to arrest its ongoing price slide. DRC is the world’s second biggest producer of cobalt. It is an important ingredient in EV batteries.

IN CRYPTO NEWS…

• Bitcoin’s value fell below $90,000, while other coins fell even further. Crypto companies have boosted their investment in sports to keep the momentum that Trump has given them and broaden their appeal. Meanwhile, hackers stole $1.5bn from the Bybit crypto exchange in the “biggest digital heist ever”.

CONSUMERS…

• …continue to face hurdles and household bills are set to rise from April thanks to an increase in the energy price cap announced this week by Ofgem.

IN RETAIL NEWS…

• Shein’s profits took a major hit last year thanks to a tricky final quarter and increased competition from Temu. This won’t be great for its valuation and may delay its much-anticipated IPO (because it’ll want to get the best valuation it can when it floats!).
• Amazon reckons that savings made by increased automation in its warehouses can be funnelled into its push in AI. Elsewhere, Amazon announced plans to charge for the new and improved version of Alexa for an extra $19.99 a month.
• TK Maxx’s owner, TJX, reckons that it’ll continue to see strong demand this year for its stable of discount retailers. Q4 profits were good and consumer worries about inflation are helping to power budget-friendly retailers such as T.J. Maxx, hence the positive outlook.
• Ocado announced that it would cut more than 500 research jobs as it streamlines its R&D workforce in the face of a tricky outlook for its automated grocery warehouse business. It is suffering badly from not having any “automated warehouse” wins.
• B&M announced a profit warning, the CEO “retired” and it is now bracing itself for a big hit from Reeves’s tax raid and minimum wage hike.

IN LEISURE & TRAVEL…

• Starbucks announced the biggest cull in its history. It will affect everyone apart from those working in-store, in warehousing and in roasting. I guess this is all part of the “new” CEO’s playbook to turn the company around.
• UK high street travel agents are enjoying a revival – powered by Gen Zs who don’t want the hassle of doing all that research online!
• Qantas reported rising profits and was confident enough to pay a dividend for the first time since 2019! Demand was good both domestically and internationally and net freight revenue was also up.
• Heathrow profits jumped by 31% in 2024, a record year for the airport, adding heft to the argument for a third runway.

IN “BIG PICTURE” TECH NEWS…

• Trump is thinking about imposing retaliatory taxes on countries that implement digital services taxes against American companies. These taxes are likely to hit many EU countries, the UK and Turkey the hardest.
• Research from UC Riverside and Caltech shows that the increasing use of data centres by Big Tech is resulting in air pollution that has increased public health costs by over $5.4bn in the last five years. Will Trump do anything about this? I doubt it!

IN CHIPS NEWS…

• Nvidia’s revenues jumped almost 80% over the last quarter due to booming AI chip sales and the outlook continues to be rosy.
• Huawei made a major breakthrough in yield (basically, it’s getting more efficient at making chips) so it’ll be able to produce more chips. It continues to close the gap on the Americans!
• IN AI NEWS…
• DeepSeek is spreading like wildfire around China thanks to the backing of the government and mass take-up from state bodies. This is likely to be both good and bad IMO. It’ll be good to accelerate its development but it could be bad if something goes wrong.
• In the UK, those in the creative industries protested about the UK’s plan to automatically opt material IN to train AI models by default while creatives want the default to be “opted out unless asked”. The uproar prompted debate among UK ministers and final plans will be made later on this year.
• The European Centre for Medium-range Weather Forecasts (ECMWF) announced the launch of a new AI-powered model whose powers of prediction have been vastly improved. Although AI is already used in meteorological offices around the world, this model can outperform traditional forecasting methods (by about 20%!) for up to 15 days in advance!

IN TECH HARDWARE NEWS…

• Indonesia lifted its iPhone ban after Apple agreed to invest $320m into south-east Asia’s biggest economy via a couple of new factories.
• Apple announced that it would invest $500bn in the US over the next four years, which would involve the creation of 20,000 new staff. This sounds good, but companies often do this when a new president comes to office in order to curry favour with them.
• Microsoft urged Trump to rethink tighter AI chip export controls because it could force allies – such as Israel, India and Singapore – to use Chinese tech instead.

IN MEDIA NEWS…

• WPP is losing ground to French rival Publicis as ad spending is down due to uncertainty over the impact of Trump’s economic policies as well as weakness in China, the UK and US. Separately, the company observed that advertisers are returning to X, presumably to keep Musk happy given his presence in Washington!

• Tesla sales in Europe fell by 45%, according to the latest pan-European data. This could be due to unfair comparatives versus the strong performance last year but it is also likely to be due to adverse consumer reaction to Musk’s rantings and far-right support.
• Lucid Group’s CEO was replaced on an interim basis by its COO as the company continues to try to stem its widening losses. It has had to rely heavily on its majority owner, Saudi Arabia’s PIF, for the finances to keep itself going.
• BMW paused the planned £600m upgrade to its Oxford Mini plant in reaction to continued poor EV demand. Somewhat ominously, the company has informed the government that it’s going to decline the grant it previously agreed to build the upgraded facility.
• Aston Martin announced a delay to the launch of its first EV. It was supposed to introduce it in 2027 but it looks like this will be pushed back to 2030. It also said that it would cut 5% of its global workforce in pursuit of profits. It’s just the latest car manufacturer to announce delayed EV plans.
• Stellantis unveiled a 70% fall in profits last year but was optimistic about the positive effect of a broader EV line-up, the production of its own batteries and team-up with China’s Leapmotor. That’s a lot of “jam tomorrow” right there!
• The latest stats from the SMMT showed that UK car manufacturing production numbers fell in January thanks to sluggish demand and the delayed rollout of a number of new models.

IN COMMERCIAL PROPERTY…

• Research from the British Property Federation showed that over 80% of commercial properties will be unlettable in their current state. Right now, 83% of commercial properties in England’s major cities have an EPC rating of C or worse where A is the most efficient and G is the least. Rental properties will have to be graded A or B by 2030! Will this mean smaller landlords will give up and sell out to larger ones who are better able to absorb the upgrade costs? Consolidation seems like a viable option…
• Hammerson says that shopping centres are making a comeback because the gap in the cost of selling goods online versus selling them in shops is narrowing thanks to falling shop rents and rising warehouse costs.

IN RESIDENTIAL PROPERTY…

• The latest data from Zoopla shows that house values have increased at three times the rate as those of flats since the beginning of the pandemic as would-be buyers were put off by concerns over cladding and service charges.
• Landsec, which is better known for its presence in office space, announced that it would shift its focus to rental housing! It will embark on selling off various assets to fund the creation of a “£2bn-plus residential platform”. *

• IN FINANCIALS – JP Morgan said it will be putting aside $50bn to make a push into private credit, the latest bank to announce such a move. Hiscox estimated its exposure to last month’s LA wild fires to be around $170m (versus industry-wide exposure of $40bn) and Man Group saw its share price rise thanks to rising profits. Elsewhere, Stripe has seen its valuation go north of $90bn thanks to a surge in demand from AI companies.
• KPMG has been given permission by Arizona’s Supreme Court to set up a law practice. This is a big step but there are some big restrictions. Even so, this could be something that other Big Four players decide to have a go at (in theory) so they can be a one-stop professional services shop!
• Dockworkers in the US just won a new labour deal hanging them a 62% pay rise and a guarantee against fully automated machinery at East Coast and Gulf Coast ports for the next six years. Trump said in the election campaign that he supported the union but I find it hard to believe he’ll be quite so chirpy if things don’t go so well over the next few years.
• IN DEI NEWS – BlackRock, a previously prominent supporter of DEI initiatives, is now distancing itself from it but a majority of Apple’s shareholders voted against a proposal calling for it to axe its DEI programme. This certainly makes it stand out versus its other Big Tech rivals!
• Anglo-Dutch food delivery giant Just Eat agreed to be taken over by investment group Prosus at a price that is less than a third of what it was worth at its pandemic peak. Prosus has a number of food delivery businesses in its stable so could bring some expertise to the party.
• Unilever’s CEO got ousted less than two years into the job as he failed to jolt the company out of its rut. The CFO has taken over so we’ll have to see whether he can do anything about it!
• The world’s biggest brewer, AB InBev, announced a strong Q3 performance as strong sales of its premium beers managed to offset weakness in the China market. It had also strong demand for its non-alcoholic beer.
• Rolls-Royce managed to hit turnaround targets two years early under its “new”(ish) boss. Profits and margins for 2024 were up and the company was confident enough to announce a chunky dividend for shareholders, a share buyback and upgraded mid-term targets!

My fave video this week was the terrifying snowboarding video! Failure does NOT look like a good prospect here!

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.

The Trump and Musk show keeps rolling on!

ON WARS…

• ON UKRAINE – Trump and Russia are deciding the outcome of the Ukraine war without Ukraine or the Europeans, who met in Paris to discuss what to do. Although PM Starmer offered to “put boots on the ground” and spend more on UK defence, Europeans couldn’t agree on such a course of action. Trump’s hurry to end the war gives Putin the upper hand and it looks like Trump is really looking to take over Ukraine’s economy, which is ironic because the whole access to Ukraine’s rare earths thing was Zelenskyy’s idea in the first place! Trump called Zelenskyy a “dictator”, voiced objections to referring to the invasion as “Russian aggression” in a G7 statement on Ukraine and JD Vance warned Europe to “step up in a big way” on rearmament.
• ON GAZA – US Secretary of State Marco Rubio supported the Israeli goal of “eradicating” Hamas, making the current ceasefire look vulnerable. Negotiations are continuing…

IN TRADE WARS…

• THE THREAT – Trump is looking at imposing a 25% tariff on imported cars, a level that he said would be a “starting point” and could go higher later if companies don’t relocate production to the US. This is in addition to all the other tariffs he’s already talked about so far!
• THE REACTION – China is already imposing new border controls and restricting the movement of tech used for processing critical minerals while the UK is looking at imposing retaliatory tariffs on American goods like whiskey, jeans and motorbikes.
• CONSEQUENCES – the reallocation of production away from China is likely to benefit countries like Vietnam, Malaysia and Singapore because they have invested in various industries over the last couple of decades.
• THE REASON – Trump needs the cash to reduce America’s biggest deficit since at least 1975! As things stand currently, debt is likely to grow twice as fast as the economy, according to projections by the Government Office of Accountability. Despite this, Trump wants to implement tax cuts (which will be expensive), which is probably another reason he’s so keen on reviewing public spending via DOGE. However, even Musk himself, who is currently its driving force, says that the actual savings could perhaps end up being half the $2tn target. Although the DOGE review will likely result in job losses as departments close down or downsize, this could be good news for companies such as Palantir, Coinbase, Lockheed Martin and Northrop Grumman who could benefit from a shake-up in how the Pentagon handles defence contracts.

IN NON-WAR/TARIFF NEWS…

• The Fed is getting cautious about further interest rate cuts, according to the latest FOMC minutes, so it looks like they’ll be looking at the effect of Trump’s policies before making any further moves.
• IN ARGENTINA – President Milei got into hot water for promoting a memecoin called $LIBRA on X on Friday night which shot up in value before tanking badly shortly after. He was accused of ethics violations but still managed to survive a senate vote on electoral reform, which must have been a relief!
• IN JAPAN – we saw that Japan’s GDP grew at an annualised 2.8% in the October-to-December 2024 period, which is way more than the market was expecting.
• IN AUSTRALIA – the Reserve Bank of Australia cut interest rates for the first time since November 2020 although its governor said that “We cannot declare victory on inflation yet”. It cut its cash rate by 0.25 percentage points to 4.10%.
• IN THE UK – the UK is looking tricky at the moment, what with the ONS figures showing sluggish productivity growth, insolvencies reaching a 16-year high and inflation edging higher. Chancellor Reeves is facing some tricky choices and may have to choose between raising taxes again, cutting spending and/or breaking her “iron-clad” fiscal rules in order to prompt growth. In the meantime, she seems to be copying the Americans as she’s just launched an audit on the UK’s 130 regulators with a view to scrapping some and making all of them prioritise growth. There was bad news for her on the car finance scandal as the Supreme Court judges rejected Reeves’s intervention and this means that the Treasury could get £5.5bn less in corporation tax because if lenders have to pay compensation, this can be offset against their tax bill.

IN ENERGY-RELATED NEWS…

• It sounds like Japan is on the verge of a major breakthrough in next-gen ultra-thin light and flexible solar panels that has the potential to make a dent in China’s dominance of renewable energy. This could be transformational because it could completely change supply chains and make them much less dependent on China.
• Europe is currently running low on gas and although it has been jolted into developing its own LNG capabilities on a more sustainable basis since Russia invaded Ukraine, the current energy mix is such that Russian gas supplies will still be very tempting in the event of the end of hostilities.
• MI5 is currently investigating the use of Chinese green tech in the UK and whether there is a potential future security threat.

IN BUSINESS TRENDS…

• DEFENCE – European defence shares including Rheinmettal, BAE Systems and Thales saw a lot of buying from investors as the the Stoxx Europe aerospace and defence index reached its highest point since the early 1990s! The CEO of Airbus called for Europe to “up its game” and invest more in defence as it could actually turn out to be a good thing in the long run.
• ESG – support for ESG investing continues to lose momentum as research from campaign group ShareAction found that out of 279 ESG shareholder resolutions put forward at AGM meetings in the UK, Europe and US, just 4 of them got majority support.
• “SPORTSWASHING” – the sporting arm of Saudi Arabia’s sovereign wealth fund, Surj Sports Investment, announced that it will be investing $1bn in DAZN and a new joint venture as the country deepens its presence in the global sports market. It will show Saudi and Saudi-based events across over 200 markets.

IN CONSUMER TRENDS…

• MORTGAGES – UK mortgage growth looks set to double, according to forecasts from the EY-Item Club, while Savills data shows that housing market debt is falling as older generations pay off their mortgages. At the other end of the scale, a report from Skipton Group showed that first-time buyers’ chances of owning their own home is getting harder by the day.
• SAVINGS – the latest GfK survey showed that UK households are now prioritising saving over spending due to pessimism over the economic outlook. Not great news for economic growth!

IN EMPLOYMENT TRENDS…

• UK firms are considering the biggest wave of layoffs in a decade thanks to the collapse in business confidence, according to the latest CIPD survey.
• Recruitment firm Hays reckons that the global jobs market is seeing its longest losing streak since the millennium. It said that demand for both temps and permanent staff has been sluggish, presumably as employers a) absorb the impact of Reeves’s Budget and b) the potential impact of Trump’s tariffs.
• Citi became the latest company to abandon DEI targets and will be changing the name of its DEI and Talent Management team to Talent Management and Engagement.

IN RETAIL…

• IN LUXURY – it seems that the luxury market in China has cooled down as a result of a sluggish economy and increasingly reluctant consumers. That being said, Hermès posted strong results for Q4 of 2024, citing strong performance in the Americas although revenues increased across all regions.
• Walmart’s sales fell short of target and its downbeat outlook disappointed investors although it did manage to report a strong holiday quarter.

IN LEISURE…

• Holiday companies are seeing stronger demand for long-haul destinations, with Kuoni and Thomas Cook both reporting decent momentum. Intercontinental Hotels Group (IHG) is doing well – and was so confident that it announced plans to return even more money to shareholders this year. This is a bit of a contrast to Tui’s loss of momentum last week.
• The hospitality industry is looking pretty nervous at the moment as it waits for the Budget changes to hit and a report from Savills suggests that the growth of “competitive socialising” (e.g. axe-throwing, tenpin bowling etc) could be reaching a peak.

IN AI NEWS…

• Musk rolled out the Grok-3 chatbot to Premium+ subscribers of X.
• Google announced that it has built an AI lab assistant that will help accelerate biomedical research. It will do this by identifying knowledge gaps and suggesting new ideas. Early test results of its efficacy have been promising.
• Alibaba announced a massive increase in AI investment over the next three years, which prompted a share price jump of 12%.
• Tencent made a notable change in the direction of its AI strategy as it announced this week that its social media and messaging app Weixin will use AI-powered search from DeepSeek in a move which signals that it’s willing to give up full in-house control to prioritise increased flexibility.

IN OTHER TECH DEVELOPMENTS…

• Lenovo doubled its profits thanks to the commercial PC replacement cycle kicking in as well as the release of several AI-powered PC models in China last May.
• Microsoft announced a major breakthrough in quantum computing as it unveiled a new chip which generates new particles that exist in a “topological” state – something that has only been a theoretical concept until now.
• Meta cut staff stock awards as it prepares to spend big on AI this year. It remains to be seen as to whether all this spending is going to pay off!

IN MEDIA…

• Amazon now has full “creative control” over the James Bond franchise after drawn-out discussions with Barbara Broccoli and Michael G Wilson. This could be an absolute goldmine if done right…
• Spotify announced the launch of a new “Music Pro” premium service for an extra $6 a month that will offer higher quality audio, early access to concert tickets and increased functionality, such as a “DJ” option for streaming.

IN BATTERIES NEWS…

• Northvolt sold its industrial battery unit to Swedish truckmaker Scania. This just goes to show how far the once-promising Northvolt has fallen.
• CATL and VW announced a new EV battery collaboration deal. I guess for VW this is a case of “if you can’t beat ’em, join ’em!”.

IN EV NEWS…

• Rivian posted its first ever gross profit but it may face headwinds this year given Trump’s anti-EV stance.
• Nikola, the maker of hydrogen fuel and battery-powered trucks which was once valued at over $30bn, filed for bankruptcy protection in the US leaving over $1bn in liabilities. What a disaster it has been!
• Tesla is seeing growing numbers of protests at various locations in the US as owners reject Musk’s increasing association with Trump.

IN OTHER AUTOMOTIVE NEWS…

• Mercedes has continued to see sliding demand for EVs, so it will now include more combustion engine models than EVs in its new product range in order to help boost margins.

• IN MINING – Anglo American announced another writedown of De Beers (the second in two years) which will make it more difficult to sell the business, BHP’s profits fell thanks to a major drop in iron ore prices and Glencore’s profits fell to their lowest level in four years thanks to weakening coal prices. Meanwhile, Rio Tinto’s profits looked quite strong but underlying earnings fell short of market expectations as weaker iron ore demand from China hit.
• HSBC announced an 8% reduction in headcount as part of a wider plan to cut costs. It also pushed back its net-zero targets by 20 years.
• Thames Water managed to get access to a £3bn emergency debt package that should give it a few months of breathing room as it tries to find new investors that will help it cut its debt pile and allow it to carry out proper maintenance.

My fave video this week was the one with the incredible mini ninja-warrior! An amazing performance!

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.

It’s the Trump and Musk show all over again this week!

ON WARS…

• ON UKRAINE – Trump moved to end the Ukraine war by having a 90 min phone call with Putin. It sounds like Putin’s getting a lot of concessions from Trump which delighted markets but annoyed Europeans and Ukranians alike, because no-one else got a look-in.
• ON ISRAEL/HAMAS – Trump warned that all Israeli hostages should be released by Saturday or fighting would resume.
• ON TAIWAN – US Navy Admiral Paparo warned that China’s military manoeuvres near Taiwan could very easily turn into an actual invasion. Tensions continue…
• ON DEFENCE SPENDING – Trump said in an interview that he is looking to make big cuts to the defence budget as Musk’s DOGE shakes things up.
• IN OTHER US MACRO NEWS – inflation picked up in January – and that’s before any of Trump’s inflationary policies have had a chance to take effect! Trump also decided to halt the enforcement of the law banning the bribery of foreign officials under the 1977 Foreign Corrupt Practices Act (FCPA), justifying it by saying that “it’s going to mean a lot more business for America”. If he’s right and everyone does this anyway, prices of bribing officials will surely go up now that America is officially “back in the game”.
• IN TRUMP/MUSK BRO-MANCE NEWS – The Terrible Twins launched a large-scale plan to cut out swathes of the federal workforce in order to cut costs and boost efficiency. Musk said at the World Governments Summit that “I think we do need to delete entire agencies, as opposed to leave part of them behind”. There was a really good article about how each of Musk’s six companies will benefit/suffer from Musk’s closeness to Trump: X and SpaceX should benefit the most, xAI could benefit (but policies will benefit rivals too), Starlink has already suffered a bit of a backlash from Musk’s involvement in politics, as has Tesla. It’s not clear yet to what extent it will benefit Neuralink and The Boring Company.
• IN TARIFF NEWS – Trump announced 25% tariffs on steel and aluminium imports, with no exceptions. He conceded that “prices could go up” in the short term but Canada, Mexico and the EU talked about retaliating with tariffs of their own while the new British ambassador to the US said that we should make the most of Brexit and tout ourselves as being “not Europe”.

IN ENERGY, GAS & OIL NEWS…

• IN ENERGY NEWS – According to research from the Centre for Research on Energy and Clean Air and Global energy monitor, China built coal-fired power plants with 94.5GW of capacity over the course of 2024, which is the most it’s added since 2015! China accounts for around 30% of global greenhouse gas emissions, making it the world’s biggest emitter.
• IN GAS NEWS – European gas prices hit a two-year high thanks to cold weather and strong demand from Asia, necessitating more withdrawals from storage facilities that had already been running lower than normal.
• IN OIL NEWS – Activist investor Elliott Investment Management has built up a stake in BP, so it’s no doubt going to agitate for change, but BP suddenly promised a “new direction” after its profits dropped by a third. Details on the turnaround plan will be revealed at an investor day on February 26th. Meanwhile, Chevron announced that it would cut up to 20% of its global headcount by the end of next year as part of wider plans to cut $3bn in costs by the end of 2026.
• IN GOLD NEWS – the gold price breached $2,900 an ounce this week for the first time ever, meaning that it has risen by more than $1,000 an ounce since October 2023! This is probably a reflection of how investors feel about an uncertain world at the moment!

IN BUSINESS TRENDS…

• A report by EY-Parthenon UK chief execs showed that a whopping 82% of chief execs expressed optimism about the business landscape for the next 12 months! The vast majority of leaders thought that profits and income would also rise, all of which seems to run counter to many other indicators we’ve been seeing recently, but hey let’s hope this is a sign of things to come!
• Investment in data centres may face some tricky situations as the likes of Blackstone, Bain Capital, Warburg Pincus and General Athletic have poured billions of dollars into data centres in Malaysia that serve ByteDance, which could get awkward with tightening sanctions from the US!

IN EMPLOYMENT TRENDS…

• UK recruiters continue to be downbeat about the job market, according to the latest monthly survey by KPMG and REC. They say that they are seeing the most difficult conditions on the British jobs market since the pandemic as employers’ confidence got shot to pieces by Reeves’s Budget.
• DEI continues to fade as we now see that Walt Disney has become the latest company to ditch its “diversity and inclusion” policy to be replaced by a new “talent strategy” metric in its executive pay scheme.
• Office attendance is becoming increasingly important as a performance metric as the balance of power shifts towards employers in a loosening jobs market.

IN OFFICES…

• US firms have been buying up central London offices at the bottom of the market, according to data from CoStar. The West End appears to have been a “target-rich environment” as Blackstone, Realty Income, Oval Real Estate and Global Holdings have been buying mainly from East Asian investors.

IN STUDENT ACCOMMODATION…

• Private developers seem to be piling into the UK student housing sector despite falling numbers of international students and ongoing financial issues in the higher education sector. They like the high rests and property density.

IN RESIDENTIAL PROPERTY…

• New property listings are rising as mortgage rates fall, according to the latest RICS survey. Real estate agents are seeing the broadest influx of property coming to market since the pandemic!
• The number of first-time buyers increased by 19% in 2024, according to the latest research from Halifax. I expect we’ll see a lot more action as we approach the stamp duty deadline in April!
• The UK’s biggest housebuilder, Barratt Redrow, upgraded its profit guidance thanks to “solid customer demand” over recent months. They were also pretty positive about the outlook as well!
• Applications from local authorities across England put applications in for over 100 sites to become “new towns” as part of the government’s commitment to build more housing. PM Starmer believes that this will be Britain’s biggest housebuilding programme for over fifty years!

IN AI NEWS…

• President Macron announced a €109bn investment in AI in France over the next few years at the AI Action Summit in Paris event. This is a considerable amount of money, but it’s still way less than the $500bn being put into Stargate and the $300bn that Google, Amazon, Microsoft and Meta put into AI this year alone!
• A consortium led by Elon Musk put in a cheeky offer of $100bn to buy the non-profit part of OpenAI. Musk subsequently said that he’d drop the bid if its board abandoned its plans to transition to becoming a for-profit company.

IN CHIP NEWS…

• China’s leading maker of memory chips, CXMT, is continuing to take global market share from the like of South Korea’s Samsung and SK Hynix as well as America’s Micron. It seems that CXMT and DeepSeek are spearheading Chinese efforts to cut dependence on foreign tech in AI.
• Arm announced plans to launch its own AI chip later this year after Meta stepped up to be one of its first customers. This could certainly make things interesting given Arm’s reputation.

IN OTHER TECH NEWS…

• TikTok returned to US app stores this week, which would suggest that the Trump administration green-lit it. Meanwhile, Musk dismissed rumours that he’d buy TikTok. No-one 100% believes him, so we’ll just have to see how this actually works out…
• SoftBank posted a quarterly loss for the three months to December, falling short of market expectations. This was mainly due to losses at its Vision Funds and forex impact as the dollar strengthened versus the yen.

IN CONSUMER-RELATED NEWS…

• UK used EV sales hit a record last year thanks to massive depreciation but there’s a nasty surprise looming over the horizon – when higher rates of VED come in, meaning that EV drivers will have to pay road tax for the first time, depending on the age of the car concerned.
• UK consumers are spending more on health foods, according to the latest Barclays spending data. Food supplements, vitamins and high-protein foods have been seeing stronger sales (but I guess this is the beginning of the year!).
• It seems that consumers are still spending on beer, though, according to Heineken, which saw its annual numbers outperform market expectations.
• Demand for summer holidays is slowing down, according to Tui, prompting investors to worry about whether holiday demand across Europe is running out of steam.

IN RETAIL NEWS…

• IN LUXURY – Kering saw sales crater as the troubled parent company of Gucci continues to suffer. Its Q4 numbers fell short of expectations, but it’s going to find the going difficult as it’s also currently looking for a new creative director. On the other hand, EssilorLuxottica, the parent company of Ray-Ban (and loads of others!), announced strong Q4 numbers due to solid performance from North America and China.
• WH Smith is looking vulnerable as at least of half of WH Smith’s 500 high street stores could close under a new owner. Offers for the stores are expected in the next few weeks.

• IN CHINA – Chinese battery giant CATL is applying for a secondary listing in Hong Kong, which will be great news for the territory. Meanwhile, speculation is increasing that two state-owned car makers – Dongfeng and Chongqing Changan – could get together.
• The Honda/Nissan deal is now dead but Foxconn has confirmed interest in potentially buying Renault’s stake in Nissan.
• Tesla is talking about potentially opening an Oxford Street showroom to prompt better sales, but TBH I think he’d be better off making fewer political rants (that would also be FREE!).
• Porsche is looking to cut 1,900 jobs in its German factories by 2029 thanks to sluggish demand for its electric models. The outlook is tricky because its profit margins are way less than the company’s long-term target and heavy investment in trad vehicles and hybrids will add to costs.

My fave video this week was the one with that ridiculously difficult-looking foot-race! The people doing that race are incredible IMO!

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 and Musk continued to make waves this week!

ON THE INTERNATIONAL FRONT…

• TARIFF IMPACT – Trump’s threats to jack up taxes on Canadian, Mexican and Chinese imports boosted the dollar initially but then Trump relented on the tariffs with Mexico and Canada. Maybe Trump has turned to tariffs because sanctions haven’t worked but he’s probably sowing the seeds of an anti-American movement where countries will be more inclined to partner up with each other to wean themselves off reliance on the US because it is now becoming a liability. Xi Jinping must be loving all this because China could well present itself as an alternative partner.  Tariffs could force the Fed to delay interest rate cuts, deepen Chinese inflation, limit growth across Europe and indirectly hit the UK by dampening global trading volumes and raising borrowing costs.
• TARIFF REACTIONS – the US Chamber of Commerce said that the tariffs “will only raise prices for American families”, a patriotic “Buy Canada” campaign launched in response to Trump’s threats (Starlink’s £55m contract with Ontario was ripped up!)and while markets braced for impact on his initial threats, there was a relief rally after Trump gave Canada and Mexico another month before the tariffs come into force. The Chinese government responded by unveiling its own retaliatory tariffs and opened an anti-trust investigation of Google, China’s exporters stepped up offshoring and the UK got ready to retaliate if it came under fire.
• GAZA STRIP “TAKEOVER” – Trump suggested a “take over” of the Gaza Strip and force 2.2m Palestinians to leave the enclave permanently to resettle in countries such as Egypt and Jordan but the world condemned the suggestion, which made Trump make marginally more conciliatory noises.
• ENDING THE UKRAINE WAR – Trump offered continued military support for Ukraine in exchange for access to rare earths, because they are essential ingredients for a number of everyday and high tech products.

ON THE DOMESTIC FRONT…

• DE MINIMIS SHUTDOWN – Trump decided to shut down the “de minimis” loophole which allows shipments under $800 to avoid taxes, something that’s likely to hit the likes of Shein and Temu in particular.
• CLOSING THE PRIVATE EQUITY LOOPHOLE – Trump is looking to close the tax loophole on private equity and hedge fund profits, something that’s been hotly debated for the last two decades. Both Biden and Trump have tried and failed to close this loophole in the past.
• DOGE SHENANIGANS – Musk’s Department Of Government Efficiency (“DOGE”) got given access to the Treasury system and said it would cancel trillions of dollars worth of grants every year. Musk gleefully said that he would put USAID “into the wood chipper”, but DOGE was then barred from accessing US Treasury payments data (although this may only be temporary).

IN EUROPE…

• The EU is looking to change its own “de minimis” rule and tighten current restrictions that allow parcels worth under £125 exemption from customs duties. The UK was urged to do the same.

IN THE UK…

• Starmer went to the European Council of EU Leaders at the beginning of the week in Brussels as part of process of re-engagement with Europe. He was pushed to “choose” between closer relations with Brussels or Washington, but he didn’t commit – although he did talk about a security and defence pact.
• Back home, the OBR slashed its GDP growth forecasts for the UK to take into account the shock caused by Reeves’s Budget, the Bank of England cut interest rates and the FTSE100 hit a new high as a result.

IN OIL NEWS…

• Vitol, the world’s biggest independent energy trader, said that global demand for oil won’t drop until at least 2040! This stands in stark contrast to what the IEA is saying – it reckons “peak oil” will be reached in 2029.
• Shell’s boss questioned Reeves’s opinion of sustainable aviation fuel (SAF) being a “game-changer”, saying that it is hardly used at the moment (in the scheme of things) and costs way more than traditional fuel, so isn’t really all that practical.

IN ENERGY NEWS…

• According to some satellite photos, it looks like China could be making big advances in nuclear fusion because it seems to have built a massive laser nuclear fusion research centre. If this is the case, it looks like it’s 50% bigger than its US equivalent!
• The world’s biggest offshore wind developer, Ørsted, announced that it would cut its planned investments in renewable energy to 2030 by a chunky 25%, less than a week after it replaced its CEO.
• Back home, PM Starmer pledged to amend the planning system to accelerate the delivery of new nuclear power stations in England and Wales.

IN BUSINESS TRENDS…

• India is looking forward to a bumper year for IPOs despite slowing economic growth. Last year was a big one for listings and it looks like retail investors will power 2025 as well despite many international investors getting cold feet (because of fat valuations).
• Green investments from oil companies continue to get hit as Norwegian oil firm Equinor is pushing for the opening of a massive new oilfield, called Rosebank, off Shetland whilst also halving its investments in low-carbon energy.

IN EMPLOYMENT TRENDS…

• The latest S&P Global PMI survey highlighted Britain’s biggest fall in employment – apart from the pandemic shock – since the financial crisis. Reeves’s Budget continues to hit sentiment and recruitment but some economists have suggested that the PMI could be overstating the scale of the job cuts as the survey tends to be more sensitive to business sentiment.

IN AI NEWS…

• Last week was clearly a big one for DeepSeek! However, other Chinese AI companies that could also have a big impact include Alibaba Cloud, Zhipu, MoonshotAI, ByteDance and Tencent.
• OpenAI launched a new “deep research” tool that find, analyse and synthesise vast amounts of online resources to create a “comprehensive report”. It will become available as a button in ChatGPT. It will be available in the US for users of its “pro” tier (this costs $200 a month) and is not available in the UK and Europe.
• Anthropic made a major “jailbreak” advance which prevents users from obtaining harmful content from its models. It acts as a protective layer on the top of LLMs capable of monitoring both inputs and outputs for harmful content.

IN TECH SOFTWARE NEWS…

• Alphabet’s shares took a hit as Google’s cloud business fell short of expectations. Meanwhile Google has gone back on its pledge not to make weapons using AI and is now of the opinion that free countries should be able to use the tech for national security.
• Microsoft poached three former DeepMind staff who had been working on NotebookLLM’s podcast-generating feature. I suspect that we’ll see lots of poaching going as companies look to make monetisable apps.
• Data analytics company Palantir shares boomed on a positive outlook and potential under Trump’s administration that is cracking down on costs – because it needs data to make its decisions. Palantir supplies software to governments and companies to collect, analyse and interpret big data sets.

IN TECH HARDWARE NEWS…

• Qualcomm and Arm got a boost in quarterly sales thanks to improving smartphone demand. Despite this success, the share prices of both companies fell, but their respective share prices have been strong over the last year and this presented a high note on which to take at least some profits off the table.
• Sonos announced that it would be cutting headcount by 12% as it aims to improve its core experience and deliver new products. It is expected that the impact of this will be biggest in its Q2 earnings

IN MEDIA NEWS…

• Disney posted quarterly results that beat market expectations thanks to a strong performance by its Disney Entertainment division, which includes film, TV and streaming.
• Spotify announced its first annual profit thanks to a surge in premium subscriber numbers. This is its first annual profit after 16 years in existence!

• Tesla sales have fallen across Europe, perhaps in reaction to Musk’s increasingly erratic political rants.
• Ferrari announced a big rise in quarterly profits as well as plans to unveil its first EV in October. Its profits were pumped up by customers spending a ton of money on personalisation options!
• VW said that it will launch a €20,000 EV to take on the Chinese (called the ID.1), but it isn’t going to go into production until 2027 so perhaps too little, too late??
• It looked increasingly likely this week that the proposed $58bn merger of Honda and Nissan was going to collapse. Honda proposed that Nissan should be turned into a fully-owned subsidiary, something that Nissan is unlikely to agree to.
• Porsche announced that it would expand its model line-up but also said that its going to be spending a lot of money on vehicle development and battery operations.
• Car dealership Vertu said that it expected more discounting of EVs to continue in 2025 as manufacturers battle to hit stricter EV sales targets, in line with the Zero Emission Vehicle (ZEV) mandate.

IN ONLINE RETAILER NEWS…

• Amazon’s sales outlook fell short of expectations and it announced plans to ramp up AI infrastructure spending. Revenues from its cloud division were decent by as strong as the market had been expecting (this seems to be a recurring theme at the moment, doesn’t it!).
• Temu looks likely to weather the “de minimis” thing because its prices are still so much lower than everyone else – but it’s also been preparing for turbulence in the US market by diversifying operations into other countries.
• Two major credit insurers have reinstated cover for Asos clothing suppliers, reflecting renewed confidence in Asos’s financial stability. This is welcome news for the e-tailer which had cover withdrawn in 2023, due to the lack of faith in Asos’s financials.

IN OTHER RETAILER NEWS…

• M&S’s fashion boss, Richard Price, has stepped down. This is tricky because he’s the one who’s had a lot to do with the retailer’s high profile turnaround. He’s being replaced with the former CEO of Boohoo who’s had, let’s face it, a chequered career. Let’s hope he doesn’t muck it all up.

IN CONSUMER GOODS NEWS…

• Diageo scrapped its mid-term guidance thanks to uncertainty about the impact of new tariffs and ongoing weakness in the spirits market.
• Pernod Ricard lowered its guidance thanks to a weaker outlook in China and uncertainty over US tariffs. This comes hot on the heels of Diageo announcing the ditching of its mid-term sales targets thanks to tariff-related economic uncertainty.
• Barbie maker Mattel is considering raising its prices given the likely disruption to its business coming from incoming tariffs in Mexico and China.
• Estée Lauder doubled planned job cuts as ongoing China weakness forced their hand. Their Q2 numbers were disappointing and the outlook was downbeat.

• AstraZeneca reported a chunky revenue rise and it sounded positive about its China operations. Its full-year results were good and it sounded positive about its prospects for this year.
• GSK saw enough growth in HIV, oncology and specialty medicines to give it enough confidence to upgrade its long-term sales outlook.
• Novo Nordisk sounded confident despite the potential impact of Trump’s tariffs, safe in the knowledge that its Wegovy weight-loss drug sales had almost doubled!
• Eli Lilly was upbeat about its prospects for the year following two difficult quarters. Demand for its diabetes and weight-loss treatments Mounjaro and Zepbound are driving the optimism!

• IN FINANCIALS – Citigroup committed to hybrid working, going against the Wall Street “return-to-office” trend. It is sticking with the current model where most employees are allowed to work remotely for two days a week. Vanguard announced that it would be cutting fees, putting pressure on its rivals!
• Serco won a big recruitment contract for UK armed forces worth up to £1.5bn over the course of seven years, the first time that hiring for all of the forces will be under the control of one privatised service. It looks like Serco has whipped the contract from under the nose of Capita, which currently has it.
• Crest Nicholson reported a big loss for the year as its problems continue. It warned investors yesterday that it is getting close to breaching banking covenants unless things don’t improve in the coming months.

My fave video this week was the puppy reaction! It’s a magical moment for sure!

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 THE US – the Fed left interest rates unchanged, defying pressure from Trump, which annoyed him greatly. US GDP growth fell short of expectations and Trump ditched plans to freeze billions of dollars in federal domestic funding just one day after he announced it after massive backlash. Trump made a number of outbursts this week – suggesting the “clean out” of Gaza and ridiculing Denmark’s efforts to protect Greenland, among other things – while Mexico and Canada made efforts to placate him and Google Maps moved to rename the Gulf of Mexico as the Gulf of America. Concerns about a deepening of trade wars boosted hopes of Hong Kong listings while markets reacted to the possibility of less-strict tariffs on Chinese imports.
• IN CHINA – manufacturing output dropped ahead of the Lunar New Year holiday and news emerged of a massive military command centre being built in Beijing.
• IN EUROPE – the ECB cut interest rates as eurozone growth stalled and the EU committed to renew sanctions against Russia.
• IN THE UK – chancellor Reeves continues to push for growth with moves to enable companies to free up access to pension fund surpluses, that could be worth up to £100bn, putting her support behind a third runway at Heathrow and  the revival of a plan to encourage an Oxford/Cambridge-centric answer to Silicon Valley but business confidence has taken a real battering from Reeves’s Budget, according to various surveys. Meanwhile, the Bank of England warned against relaxing mortgage limits, something that the government is trying to push as a way of getting more people on the housing ladder.

IN ENERGY NEWS…

• The UK is on course to miss 2030 solar and wind power targets, according to research from Cornwall Insight, although the Department for Energy Security and Net Zero dismissed these forecasts and reiterated its belief that “clean power by 2030 is achievable”.
• A new UK nuclear power station will go on line in 2035, according to EDF. However, previous form would suggest that EDF is not particularly accurate when it comes to predicting timetables!

IN COMMODITIES…

• Gold hit a record high as investors loaded up on fears of the impact of US trade tariffs.

IN CRYPTO…

• Hedge fund Elliott Management warned about the dangers of the White House’s pro-crypto administration and that excessive support could actually jeopardise the dollar’s position as the world’s reserve currency.

Let’s face it, this week was all about the bombshell that DeepSeek dropped, potentially turning the way we’ve thought about AI forever!

IN DEEPSEEK NEWS…

• Chinese start-up DeepSeek launched its R1 model which shocked the world because it had pretty much the same capability of ChatGPT-4o but was made at a tiny fraction of the cost (less than $6m vs OpenAI’s annual budget of over $5bn!) and in double-quick time (two months!). $1bn was wiped off US stocks and China chalked up a significant victory versus America – and the rest of the world. A “large-scale malicious attack” hit DeepSeek which prompted it to limit registrations, although it got back to normal again not too long after. OpenAI said it had evidence that DeepSeek used its model in a common practice called “distillation” where a smaller model absorbs the knowledge out of a larger model and it threatened “aggressive countermeasures” to limit its use. The AI ecosystem will no doubt change (perhaps Starmer’s plans to boost the number of data centres in Britain may get less frenetic) because of DeepSeek’s impact and although Nvidia saw a $600m slump, it still remains a smart AI play. Microsoft’s boss reckons that DeepSeek’s model will boost demand for AI and we see that OpenAI was not put off in chasing a $300bn valuation in its latest funding round. Interestingly, Apple was touted as a company that could do well from the DeepSeek shock because DeepSeek’s success shows that the company could potentially catch up to rivals on AI after all, following a relatively slow start in this area.

IN CHIP-RELATED NEWS…

• Intel’s sales slipped as it continues efforts to turn performance around.
• Samsung sounded a downbeat note about its future although its Q4 performance was pretty good.
• ASML, which makes chip-making machinery, saw its shares rebound on strong orders.

IN SOCIAL MEDIA…

• Meta reported decent Q4 numbers although advertisers have become noticeably twitchy regarding social media’s shift towards “free-speech” and away from censorship.

IN OTHER TECH NEWS…

• Although Microsoft actually had a strong Q4 overall, investors were disappointed about cloud sales and it is suffering from capacity constraints that are expected to continue this year. Still, an independent panel acting for the CMA reckons that the company is stifling competition in the cloud services market. The CMA will publish its final decision on August 4th.
• Apple had mixed news as it beat income forecasts on the one hand, but iPhone sales in China fell short of expectations on the other.

IN ADVERTISING NEWS…

• Amazon announced plans to increase ad-spending on X a year after it pulled a lot of its advertising when it expressed concerns about hate speech on the platform.
• Influencer start-up ShopMy raised $77.5m as it leans into the growth area of influencer marketing. Research firm eMarketer believes that spending on influencer marketing will grow 14.2% year-on-year in 2025, which is more than social media advertising or digital advertising.

IN STREAMING NEWS…

• Universal announced that it had come to an agreement with Spotify for recorded music and publishing in the US and other countries. A cloud had been hanging over this, so its removal boosted Universal’s share price.

IN INDIVIDUAL CAR COMPANY NEWS…

• Tesla had a mixed Q4 as automotive revenues were weaker while energy storage products put in a stronger performance. It was interesting to see that a survey of motorists in electrifying.com showed that almost 60% of respondents said that Musk’s rantings were putting them off buying a Tesla. Meanwhile, Tesla is taking the EU to court over tariffs on EVs made in China…
• GM announced a loss in Q4 thanks to restructuring costs while a reshuffling of production is likely in order to combat Trump’s incoming tariffs.

IN BROADER INDUSTRY NEWS…

• UK car production fell to its lowest level since 1954 as the industry retools to EV production.
• UK ministers are looking at potentially guaranteeing EV loans to encourage more people to buy as this could help reduce monthly payments.
• British car parts firm Dowlais was on the receiving end of a £1.2bn takeover offer from US firm Axle and Manufacturing. Dowlais supplies 90% of the world’s carmakers and employs about 30,000 people around the globe.

IN CONSUMER NEWS…

• UK consumers continue to face hurdles as water bills are set to rocket and Savills reckons Reeves’s proposals to relax mortgage lending rules will mean higher prices for first-time buyers but, on the plus side, Rightmove says rents in the UK are starting to fall, the latest BRC data says that UK shop prices are falling.
• In terms of consumer behaviour, shoplifting has reached historic highs despite high-street brands spending record amounts of money to prevent it and weight-loss jabs are having another side-effect – people are drinking less, something that is not good for booze sellers like Majestic as well as pubs, bars and nightclubs.

IN RETAIL…

• LUXURY seems to be bouncing back as LVMH saw decent sales growth, Puig Brands reported a strong Q4 ahead of its full year results due out next month and Mulberry announced that it would be focusing more on the US and UK markets while scaling back its China efforts.
• ON THE HIGH STREET – Oxford Street got some bad news as Microsoft announced it would be closing its flagship London store next month, six years after it opened and John Lewis announced a profit warning after it reported a disappointing Christmas.
• Halfords announced some decent numbers thanks to better-than-expected trading over the peak Christmas period and a more optimistic outlook on cost savings.
• Lakeland was put up for sale by its founding family as it cited the prohibitive costs of the chancellor’s Budget.
• WH Smith put its high street stores up for sale although it will keep its cash-cow airports and train stations business and it’s already attracted interest.
• H&M missed quarterly targets and announced a bit of a streamlining of its brands but it continues to fall further behind arch-rival Inditex.
• Starbucks saw profits and sales drop over the quarter but the CEO remains quite upbeat about the chain’s prospects thanks to early positive signs emerging as a result of new measures being put in place.
• IN SUPERMARKETS – Asda decided to ditch price-matching Aldi and Lidl’s prices in favour of a broader “Rollback” campaign while Morrisons became the latest retailer to warn that it will have to double-down on cost-cutting plans following the Budget.

IN LEISURE NEWS…

• Ryanair profits rebounded thanks to stronger-than-expected Christmas demand.
• Wizz Air announced a profit warning as engine problems meant more planes were grounded.

IN BANKS NEWS…

• Deutsche Bank’s profits collapsed by a whopping 92% as the broader economy continues to dive.
• HSBC announced that it would exit investment banking in the UK and Europe and focus instead on Asia and the Middle East. This is a big deal, but then again, HSBC has a reputation for doing things like this from time to time.
• Lloyds Banking Group said that it would cut 136 branches as analogue banking continues its terminal decline.
• Barclays became the latest bank to tighten its WFH requirements and asked most of its 85,000 employees to come to the office for an additional day (although most of its client-facing staff come in five days a week now anyway).

IN OTHER FINANCIAL NEWS…

• We heard that Trump’s Truth Social platform has plans to launch a financial services business, called Truth.Fi, that will put up to $250m into crypto and other assets. Talk about conflicts of interest!!!
• Wealth manager St James’s Place saw its assets under management hit a new all-time high as turnaround efforts seem to be bearing fruit.

• Boeing just posted its biggest loss since 2020 as the repercussions from its safety/quality control crisis continue to affect the plane maker.

My fave video this week was undoubtedly the one about “the Dutch Giant” going shopping! What an amazing sight!

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 TRUMP INAUGURATION NEWS – WHAT TRUMP DID: the returning president promised to prioritise America, criticised “the establishment”, attacked immigrants, moved to expand oil and gas exploration, scrapped the EV mandate, endorsed a plan to colonise Mars and made a bunch of wild promises like renaming the Gulf of Mexico to Gulf of America, Alaska’s Denali to Mount McKinley and “take back” the Panama Canal. He also withdrew America from the WHO and the Paris Climate Accord, which seemed to embolden Argentina’s president Milei, who is now seriously considering Argentina’s withdrawal from the latter. Trump also withdrew support for the global minimum corporate tax rate of 15% that had been put together by the OECD, endorsed by Biden and adopted by the EU last year. He’s slapping neighbours Canada and Mexico with extra tariffs that will be coming into force on February 1st and gave Putin an ultimatum – to sort a Ukraine deal soon or face more sanctions (although you do wonder how much more he can do!). He also put pressure on Fed chief Jay Powell to cut interest rates and called on OPEC to cut oil prices. Wall Street Bankers are getting excited at the prospect of “a bonfire of regulations”, which is likely to unleash a barrage of dealmaking, the prospect of which helped to push up US stock markets.
• IN ASIA – six Chinese state authorities are “encouraging” state-owned insurers to allocate at least 30% of new premium income every year to Chinese shares and mutual fund managers will also be “encouraged” to boost their holdings by 10% per year over the next three years. This should boost share prices for at least the short term but I think that it may encourage a skewing of the market as insurers buy into the same “safe” stocks. Meanwhile, the Bank of Japan raised interest rates from 0.25% to “around” 0.5%, its highest level for 17 years!
• IN THE UK – Goldman Sachs analysts reckon that there will be six interest rate cuts by the Bank of England by the middle of next year taking it down to 3.25% as it tries to play a part in encouraging economic growth. Pressure is continuing to build for rate cuts as the latest ONS figures showed that sales volumes fell in December. There was a lot of gloomy newsflow on the economy as the latest Lloyds Bank UK sector tracker showed that 11 out of 14 sectors experienced a fall in output and the employment market continues to display many signs of slowdown to the extent that UK ministers are already looking at potential compromises on the upcoming workers’ rights bill because there’s a danger that it could kill the delicate first shoots of economic recovery before they’ve had a chance to get established. Chancellor Reeves tried to show willing on the economic growth front by backing plans for looser limits on mortgage lending, she put her support behind plans for a third runway at Heathrow (even going as far as saying that growth trumps net zero) and looked to intervene in the car finance mis-selling case to protect lenders. Even if that comes to nothing, the fact that the government has been prepared to intervene definitely shows that they are serious about financial deregulation.

IN ENERGY NEWS…

• WIND – Ørsted announced another writedown on its US offshore wind business although the official line is still that it remained “committed to the US market for the long term”. Meanwhile, wind power collapsed to less than 1% of electricity generated in the UK as there was hardly any wind! Renewables, though desirable, just aren’t going to provide the amount of electricity that we’re going to need. Which is why we are looking more at…
• NUCLEAR – Given that Trump is going to want to really go for it with AI, and that he doesn’t believe in wind power, it’s perhaps unsurprising to find that there’s going to be a renaissance in nuclear power. The Palisades plant on the shores of Lake Michigan is going to be the first recommissioning ever attempted in America, but it is not likely to be the last! It could potentially be back online as soon as this autumn.
• CARBON CREDITS – For those that know they’re not going to be able to be green enough with their power consumption, perhaps Microsoft is showing the way forward by doing a deal with Brazilian start-up Re.green where it will buy 3.5m carbon credits to offset at least some of its expected greenhouse gas emissions. I guess this is like when all the car companies bought credits from Tesla to offset their own emission targets!

IN COMMODITIES NEWS…

• It looks like China may be reaching “peak coal” as advances in renewables mean that analysts believe that they could meet all new electricity demand needs in 2025. This is great news for the environment in China, but it could be bad news for other countries as Chinese coal producers might flood overseas with its product as its wares will have to go somewhere!
• Cocoa prices continue to boom (they’ve tripled over the last year!) as extreme weather has hit harvests. There have been three consecutive seasons of global cocoa deficits. Not great for chocolate lovers – particularly when many consumers are feeling the pinch!

IN CRYPTO NEWS…

• Trump’s crypto venture World Liberty Financial raised a whopping $1bn by selling 21bn tokens (which was above target). It said that it would make another 5bn available due to massive demand.
• Memecoins $TRUMP and $MELANIA did incredibly well with $TRUMP at one point becoming the world’s third most valuable memecoin after Dogecoin and Shiba Inu! $MELANIA’s performance still wasn’t quite enough to overtake the value of $FARTCOIN.
• Crypto execs got frustrated by the launch and subsequent success of the $TRUMP and $MELANIA memecoins because they all get lumped into cryptocurrency and dents the credibility that they crave, trivialising crypto as a whole. They also pointed out the massive conflicts of interest and the fact that there are zero protections for investors.

IN BUSINESS TRENDS…

• There’s good news for shipping as the Houthi rebels have promised shipowners, insurers and authorities that they would lift sanctions on ships that were not registered in Israel or wholly owned by Israeli individuals or entities. I wouldn’t expect shipping to return immediately, given that the rebels don’t exactly inspire trust, but this is a sign that perhaps supply channels could start to get back to normal.

IN INVESTMENT TRENDS…

• ETF investment went bananas last year, obliterating the previous high reached in 2021! Trump’s victory sent interest sky high as investors sought out a piece of the (Trump) action with an expected booming stock market.
• It looks like the call of New York continues to attract listing candidates! eToro has decided that it wants to list there rather than London and Monzo is thinking about it as well. I think this trend is going to be a tough one to reverse!
• Investors are returning to buying retail assets once more thanks to cheap prices and a recovery in popularity, according to property group CBRE. It was pretty amazing to see that UK institutional investors, real estate investment trusts and sovereign wealth made up 70% of activity because they are seen as being longer term investors rather than the opportunistic ones who’ve dabble in the last few years.
• PwC’s annual survey of global chief execs showed that Britain has overtaken Germany to become the most attractive place to do business in Europe. This is notable because it’s the first time the UK has been placed so highly since PwC started the survey almost thirty years ago!

IN AI NEWS…

• A major AI infrastructure project in the US, called Stargate, was announced by SoftBank and OpenAI. The plan is to start with putting $100bn into some Big Tech infrastructure projects rising to $500bn over the next four years. Musk questioned whether they really did have the finances in place and then we learned that the Stargate project is actually going to serve OpenAI exclusively!
• There were some really interesting articles talking about how AI is being used in drug discovery, in efforts to extend human life by a decade and in the provision of legal services – currently by companies putting together contracts, although there’s clear scope for pre-deal due diligence in the future.
• Meanwhile, Chinese AI start-ups including DeepSeek, Moonshot and 01.ai are closing the gap with global AI giants. They are making particularly impressive gains in efficiency because US sanctions on tech exports mean that China has been busy innovating to develop its models, taking a “mixture-of-experts” approach that trains models on smaller amounts of specific data. This means that the results can still be powerful despite using reduced computing resources.

IN CHIPS NEWS…

• ByteDance announced plans to spend $12bn on AI chips in 2025, although about 60% of their domestic semiconductor orders have to go to Chinese suppliers including Huawei and Cambricon, with the reset going to Nvidia.
• Huawei is making concerted efforts to take a bigger share of the Chinese market by concentrating on “inference” tasks (tasks where LLMs generate a response to a prompt) while Nvidia’s chips concentrate on training the LLMs. Huawei is betting on inference being a better source of future demand, particularly if model training slows down.

IN HARDWARE NEWS…

• Samsung unveiled a new AI-powered smartphone, the S25. Samsung was first to market with an AI-powered phone, the S24, in January last year. Apple followed this by launching its AI smartphone in October last year, so Samsung’s latest phone puts its nose back ahead.

IN SOCIAL MEDIA NEWS…

• TikTok got banned and then un-banned but in the lead-up to the ban, China’s RedNote saw a massive influx of “TikTok refugees” although I’d expect that to be short-lived.
• Musk complained that China still bans X while Trump has given TikTok a reprieve in a rare instance of him criticising China. Perhaps he got emboldened by his new proximity to the President.
• Meta tried to reassure advertisers about their new fact-checking policies, but it remains to be seen as to whether advertisers believe them. In the meantime, surely Bluesky should make some mileage…

IN MEDIA…

• Netflix jacked up subscription prices in the US, announced a 44% increase in subscriber numbers for Q4 and raised its 2025 revenue guidance.
• CNN announced plans to cut its headcount by 6% as it redirects its efforts towards digital growth ahead of the expected launch of a streaming service. Will these efforts prove to be too little too late, though?

IN CAR NEWS…

• Trump ordered his administration to ditch EV mandates, pull back on regulations on automotive pollution and fuel-economy standards and he will consider the elimination of unfair subsidies that prioritise EVs over other technologies. It looks like he’s set to kill off an entire industry!
• European makers are worried about what 2025 has in store despite 160 new models due to be launched! European industry body ACEA reckons that its members could be forced to pay €16bn in fines in 2025 for not hitting EV sales targets if the rules don’t change. As if to illustrate what the industry is up against, German EV sales fell by over a third last month thanks to the withdrawal of government tax breaks. It’s not looking good…
• Polestar is looking for new suppliers after the US imposed a ban on Chinese software in EVs. Geely-backed Polestar is going to have to find non-Chinese suppliers in order to at least have some chance of a future in the US thanks to a US government ban on Chinese software in new high-tech vehicles.
• Stellantis announced US investments worth over $5bn in order to strengthen its US manufacturing footprint (and to suck up to the new administration, no doubt!).

IN CHARGING…

• Charging firm Pod Point, said that proposed changes to relax sales quotas may slow sales down even more, particularly in the private EV market.

IN RETAIL…

• It seems that spending on luxury goods in the US is on the rise, optimism in this area is rising and Lacoste announced plans to make an “aggressive” push there that will involve the opening of new stores and concessions in “big box” retailers.

IN CONSUMER GOODS…

• Adidas managed to post a better-than-expected annual performance thanks to the popularity of retro trainers such as the Samba and Gazelle. On the other hand, Puma’s 2024 profits fell short of expectations thanks to rising costs and underwhelming sales growth. It hopes to remedy this by launching a cost-savings programme.
• Premier Foods had a decent Christmas as sales of its branded products did well and it now expects full-year profits to be towards the top end of expectations.

RE THE CONSUMERS THEMSELVES…

• The latest GfK confidence index hit its lowest point since December 2023 thanks to pessimism about the UK’s economic prospects and rising concerns about personal finances over the coming year. That being said, the shops and restaurants in Battersea Power Station bucked the gloom by reporting higher footfall and sales versus the previous year. This sounds like the exception rather than the rule, though!
• In terms of wages, research from Nationwide which shows that solid earnings growth over the last year has made purchasing a home for first-time buyers slightly more affordable. However, affordability is still tricky on historical comparisons.
• Disposable income is still being squeezed, though, as research by Hamptons estate agents show that the under-45s have seen a collective £3.5bn rise in rent in just two years as landlords have passed high mortgage costs directly on to tenants. Ouch.

IN RETAIL…

• IN SUPERMARKETS – Waitrose urged chancellor Reeves to stop the tax raid on farmers, saying that it is imperative that they help them plan for the future and Sainsbury’s announced that it would cut 3,000 jobs by shutting down hot food counters and cafes along with some senior management roles.
• Waterstones announced a quadrupling of profits thanks to more workers returning to work (reading books on the commute?). It said it would open dozens of new bookshops in the UK this year and even intimated that it could have an IPO.

IN LEISURE…

• HOSPITALITY – industry body UKHospitality warned that its members could face a double whammy in April as they estimate that businesses will “incur £1bn costs from employer NICs on 774,000 more workers” in addition to business rates more than doubling from April.
• PUBS – Marston’s announced a “solid” quarterly performance with particularly strong trading over Christmas, echoing the experience of rivals Mitchells & Butlers. Wetherspoons also announced a decent first half performance but is bracing itself for big cost rises in April.
• TRAVEL – EasyJet managed to halve losses thanks to a boost in Christmas travel and lower fuel costs and it looks like demand in Easter is shaping up nicely.

• IN REAL ESTATE – the world’s biggest industrial property developer Prologis said it has seen an acceleration in warehouse leasing since Trump won in November. In the UK, Tritax Big Box REIT just splashed £70m on buying 74 acres of land between Heathrow and Slough in order to build a massive three-storey data centre. This will be its first ever data centre and be the the UK’s largest! IN RESIDENTIAL, Riyadh’s property boom is pushing locals out and in the UK, Rightmove has reported a busy start to 2025. Average prices are rising and the number of sales agreed has already gone up!
• IN FINANCIALS – Santander is rumoured to be considering an exit from the UK to focus on more profitable markets elsewhere while analysis from LCH Investments shows that hedge fund managers are absolutely raking it in thanks to the fees they charge! Top performers included DE Shaw, Millenium Management and Citadel – and they also have some of the highest charges.
• IN INDUSTRIALS – Boeing warned on Q4 revenues and profits as their nightmare continues, factories in the UK saw the biggest slump in orders since Covid hit according to the CBI’s latest survey and Rolls-Royce announced that it had just signed an eight-year deal worth £9bn to power new UK submarines.
• A large study just showed that popular weight-loss drugs reduce the risk of Alzheimer’s, something that will be music to the ears of Eli Lilly and Novo Nordisk!
• Trainline shares plummeted in trading this week on the announcement that the government would launch a state-backed rival. This has been announced before and subsequently canned and so I am very sceptical as to whether this really will see the light of day.

The prize for this week’s most impressive video goes to the guy on the monkey bars! This is an absolutely astounding feat!!!

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 – global leaders voiced concerns of conflict risk for 2025 ahead of next week’s World Economic Forum and then there was talk of a potential ceasefire between Hamas and Israel, which could ultimately precipitate the normalisation of relations between Israel and Saudi Arabia.
• IN THE US – inflation ticked up in December, meaning that it remains above the Fed’s target of 2% – and Goldman Sachs’s chief David Solomon voiced cautious optimism about the US economy with business-friendly policies providing a boost on the one hand while inflationary policies could prove to be a drag on the other. Ahead of Trump’s inauguration, economists seem bearish while investors are more bullish on his impact on the US economy while emerging markets could get trickier because the products that would have been exported to America could be dumped elsewhere. Meanwhile, California’s governor said that the wild fires could prove to be the costliest disaster in US history. Other countries seem to be emphasising their US fan credentials – like Poland, which is spending more of its GDP on defence and Mexico, which has promised to shrink its trade deficit with China.
• IN CHINA – China somehow managed to hit its full-year GDP growth target of 5% despite pretty much all of the data in the final quarter of last year suggesting otherwise (but then again not many people actually believe these official figures anyway – and that’s not just a discrimination thing, it’s widely known in financial/investment banking circles).
• IN SOUTH KOREA – South Korea’s President Yoon Suk Yeol was finally arrested by the police after a six-hour standoff, the first time a sitting president has been arrested in South Korea’s history. More instability at a particularly tricky time for the country – and region!
• IN EUROPE – Germany’s nightmare continued as its economy shrank for the second successive year and it faced a meat and dairy export ban thanks to a foot-and-mouth outbreak. Meanwhile, France’s new PM opened up the possibility of ditching Macron’s pension reform and Spain suggested the imposition of a 100% tax on homes bought in the country by non-EU residents in an effort to slow down price rises that are pushing home ownership out of the reach of locals.
• IN THE UK – GDP growth was less-than-expected (but at least there was growth!) but there was an unexpected drop in inflation, which should give the under-fire chancellor Reeves a bit of breathing room as she’s faced criticism for steering the economy towards stagflation, with suggestions that she might have to roll out an emergency Budget. In gloomier news, UK goods exports hit their lowest level for three years, Surrey councillors appealed for the government to write off Woking’s £1bn debt and now councils face a massive price hike in what they’ll have to pay to get audited.

IN OIL NEWS…

• BP announced that it would be cutting 4,700 permanent jobs and 3,000 contractor jobs (about 5% of its global workforce) in a wider effort to cut costs by at least $2bn by the end of 2026.

IN ENERGY-RELATED NEWS…

• China is surging ahead in renewable energy capacity, according to IEA forecasts, which is probably just as well given that it’s the world’s biggest greenhouse gas emitter (it accounts for about 30% of global carbon emissions!).
• Energy consultancy firm Enverus reckons that the AI boom will necessitate a surge in new US gas power plants to keep up with the projected rise in energy demand, a phenomenon that Barclays also echoes in its research and it could also prompt water shortages given the amount of water these data centres need to cool down.
• IN NUCLEAR – Rolls-Royce continues to fight three North American competitors to win orders for a fleet of SMRs from the UK government while UK ministers pledge a record £410m on supporting UK nuclear fusion energy.

IN BUSINESS TRENDS…

• The defence industry is getting ready for a tech shake-up under Trump, who they fear might be more inclined to disrupt the “established order” and give newer players a go. For instance, his previous meddling with the Air Force One contract resulted in Boeing suffering heavy losses!
• IN IPOs – Silicon Valley start-ups might shun IPOs in 2025 because there are more ways to access proper finance these days – something that Goldman Sachs’s chief David Soloman echoed (bearing in mind that his company has just set up a separate private credit business!). Back in the UK, the IPO pipeline is looking pretty good what with the likes of Ebury, Zopa, ClearScore, Parameta, Shawbrook, Metlen Energy & Metals, Air Baltic and, of course, Shein all at least considering a London listing. However, the London “exodus” appears to be continuing what with both EG Group and eToro both eyeing a stateside listing.
• IN LUXURY – there are signs that the luxury sector may have turned a corner as Richemont’s quarterly sales beat expectations, sending its share price sharply higher. This comes after a year of relative sluggishness due to weaker demand from Chinese consumers.

IN EMPLOYMENT TRENDS…

• Reeves’s Budget where she raised national insurance contributions for employers, seems to have backfired badly in that it appears to have killed jobs growth as fewer companies are hiring, according to a report by the BCC. The latest research from REC says that the number of advertised jobs in the UK has now fallen to pre-pandemic levels while both Hays and PageGroup have been suffering a notable drop in fees from the slowdown in hiring.

IN INVESTMENT TRENDS…

• Private equity firms are continuing to plough money into the UK’s consumer law firms. The trend seems to be about investors buying up small practices and rolling them into bigger groups by using automation and technology to streamline their back-office functions in particular.
• Pension funds are now dabbling in crypto after last year’s massive bitcoin rally (and the prospect of bitcoin bros getting the keys to the White House!) as the asset class edges closer to the mainstream.
• Environmental investing took another hit as BlackRock, the world’s biggest investment group, decided to pull out of the voluntary Net Zero Asset Managers (NZAM), prompting the latter to suspend its operations.

IN REGULATION NEWS…

• Apple’s class action kicked off in the UK where it’s being taken to task over its “excessive and unfair” charges of up to 30% on software downloaded from its App Store.
• The European Commission is going to conduct a review of where it’s at re ongoing investigations into Apple, Google and Meta with a mind to potentially watering down or changing the remit of the probes. All decisions and fines will be suspended pending the review’s completion.
• Google is being investigated by the UK watchdog, the CMA, over the impact of its search and advertising practices. It wants to see whether Google is restricting competitors from market access and if it is showing signs of “potential exploitative conduct” by collecting consumers’ data without informed consent.

IN AI NEWS…

• Mistral signed a deal with Agence France-Presse to use thousands of its articles as source material for its chatbot (“Le Chat”!). This follows a recent deal signed by Google with Associated Press.
• OpenAI hired Adebayo Ogunlesi, a billionaire investor and major Wall Street dealmaker, to its board this week. Ogunlesi is a biiiiiig hitter and having him on board is a real sign of intent and potential indicator of where OpenAI is going to go. His presence will no doubt help with future funding rounds as well!
• The US has decided to blacklist China’s answer to OpenAI, Zhipu, which is developing LLMs for AI. Some say that this will strengthen Zhipu’s position domestically as the Chinese government will be more likely to give it a helping hand.
• UK AI start-up Synthesia hit a $2bn valuation at its latest funding round. It makes AI models that replicate humans and the company said that it’d use the money raised to make its avatars even better!
• PM Starmer pledged to make a huge increase in government-owned AI computing power over the next five years by building a new supercomputer in a bid to put the UK at the cutting edge of AI. His “AI Opportunities Action Plan” outlines 50 recommendations to make Britain an “AI maker” rather than an “AI taker” and will involve the creation of special “AI growth zones” with better access to power and other resources. There is scepticism about how far we can realistically take this, though, as access to capital in the UK is more limited than it is in the US – and AI development sucks up a lot of cash!

IN TECH HARDWARE…

• The US has now implemented additional US export controls on high-end chips to China, putting in place a tiered system that allows differing levels of access to different countries.
• Intel announced that it would be selling off its venture capital business, Intel Capital, in a broader bid to cut costs. It’ll still keep a stake in the business but the move would mean that it would be free to swell its coffers with non-Intel money.
• TSMC looks like it can weather the storm of all the geopolitical tensions going on right now as it is sitting pretty at the centre of the global AI supply chain. It also unveiled a strong set of Q4 results and continues to attract global interest.
• Apple lost its smartphone crown in China last year, being overtaken by local makers Vivo and Huawei. Apple’s shipments to China continue to fall.
• Nintendo’s release of the Switch 2, the follow-up to its wildly successful Switch after eight years, underwhelmed as the company failed to provide any details about price, launch date or specifications. The company said that it’d provide more details in April with a view to release sometime this year.

IN SOCIAL MEDIA NEWS…

• A looming TikTok ban is creating tension at the moment, with rumours flying around that backroom deals could be done to sell it to Elon Musk and Donald Trump said to be considering a delay on the ban. Panicked Americans are flocking to Chinese rival RedNote (called “Xiaohongshu” in China), powering it to #1 in US app stores earlier this week. This seems somewhat ironic because surely RedNote is an even bigger potential security risk to user data – but an interesting consequence of the take-up of RedNote is that lots of Chinese are “meeting” Americans online for the first time given that Google, Facebook and WhatsApp are blocked and social media operates under very tight restrictions.
• Zuckerberg announced that he would be culling the bottom 5% of performers (about 3,600 staff). TBH, such practices aren’t uncommon in big American companies, but it seems to me that Zuck is sending out a signal…
• Meta’s move towards “free speech” is freaking out advertisers due to the watering down of its content moderation policies and child protection experts are getting increasingly concerned about X’s dumbing down of safeguards against abuse despite Musk’s vocal attacks about grooming gangs on his platform.

IN CONSUMER TRENDS…

• Americans are leasing EVs in rising numbers as it’s a cheap way of getting a better EV, with the $7,500 federal subsidy making deals even sweeter. Interestingly, around 45% of EV transactions in Q3 of 2024 were in the form of leases versus 2% for the wider industry.
• Boomers and saggy-faced Ozempic users are behind the surge in popularity of injectable aesthetic treatments, according to Swiss dermatology group Galderama. Given the huge take-up of weight loss drugs, I would have thought that this trend is going to continue!
• A tick tock of a different kind is trending at the moment – non-smart watches are becoming increasingly popular among Gen-Zs as they favour “retro” digital watches and top end timepieces from Rolex while using their phones to keep track of time. Interestingly, after almost ten years since the advent of Apple’s Watch, smart watch demand is now falling.
• UK mortgage defaults have been on the rise for the longest consecutive stretch since 2007 – and it could get worse from here because around 700,000 households are scheduled to remortgage at higher rates in 2025. We’re not out of the woods yet…

IN RETAIL NEWS…

• GROCERY – Asda announced the cull of 13 regional managers as part of a shake-up following its worst Christmas performance since 2015. Ocado Retail, on the other hand, celebrated “record” Christmas sales.
• DEPARTMENT STORES – Fortnum & Mason experienced strong profits and sales last year, to prove that this category of retailer isn’t entirely dead after all!
• ON THE HIGH STREET – homewares retailer Dunelm posted a “solid” performance over Christmas but is concerned about rising costs resulting from Reeves’s Budget and Games Workshop’s success continued as sales boomed over the six months to December 1st but JD Sports cut its annual profit forecasts, blaming “volatile market conditions”. This marked its second profit warning in two months. Ouch…

IN LEISURE…

• IN TRAVEL – EasyJet’s new CEO said that the company will be pushing mini-package holidays as a growth driver, transforming the humble “city break”.
• PUBS – Mitchells & Butlers reported a strong quarter and a successful Christmas while Heineken (which owns Murphy’s, a popular Irish stout) benefited from the rationing of Guinness (owned by Diageo) over the festive season.
• Deliveroo sounded a promising note, announcing that its year-end profits would be coming in at the top end of guidance thanks to tie-ups with more retailers. It sounds like it will “deliver” on expectations 🤦‍♂️!

IN CHINA…

• Indebted developer Country Garden said that it had lost a whopping $24bn in 2023 in its hugely-delayed results. Trading in the shares of what used to be one of China’s biggest developers has been suspended since March last year. This isn’t going to help sentiment in the embattled real estate sector.

IN UK HOUSEBUILDER NEWS…

• Big housebuilders are getting increasingly positive and have praised Labour’s planning reforms.
• Taylor Wimpey said that its profits are proceeding according to plan but it expects building costs to rise.
• Persimmon announced that it had beaten its homebuilding targets last year – to the extent that it decided to upgrade its profit forecasts.

IN SALES TRENDS…

• The latest RICS survey showed that the property market ended on a high last year with the majority of estate agents reporting rising volumes and more buyer inquiries.
• Research from Hamptons showed that sellers in England and Wales made less than £100,000 in profit on the sale of their homes last year. This represents a return of “just” 40%, which is the lowest return for a decade after peaking out in 2022 and may be a turn-off for potential sellers.

• IN FINANCIALS – JP Morgan and Goldman Sachs saw booming profits over Q4 thanks to the acceleration of deal activity, rising demand for financing and decent trading revenues. Goldman Sachs announced plans to build a new unit to expand its financing business as competition with private credit funds ratchets up. The new division will be called Capital Solutions Group and will be made up of specialists in private equity, private credit and leveraged buyouts. Meanwhile, the CIO of one of the world’s biggest charitable foundations, the Wellcome Trust, said that there are “accidents waiting to happen” in private credit because of looser lending standards that could come back to bite in the event of a recession and/or interest rates staying higher for longer. Also, infamous short-selling giant-killer Hindenburg Research announced that it would be shutting down, heralding the end of an era.
• IN AUTOMOTIVE NEWS – European car makers are pushing for a “grand bargain” with Donald Trump in order to avoid a trade war as over 20% of the EU’s car exports go to the US. The industry’s trade body is also calling for a de-escalation of hostilities with China. GM signed a deal with Norway’s Vianode for the supply of anode graphite, a key material for EV batteries and Mercedes-Benz posted a disappointing performance for 2024, blaming adverse market conditions in China, the introduction of new models and sluggish EV demand.
• IN PHARMACEUTICALS – GSK put in an offer to buy US cancer drug firm IDRx for up to $1.15bn in order to address a “major gap in the current standard of care” in relation to gastrointestinal cancers. Also we saw that Moderna’s share price tanked by a massive 22% on news that its sales forecasts fell short of investor expectations. Sales of its Covid jabs continue to fall while it continues to invest in other inoculations…

Given that I am a big fan of their videos and I like their music, I’m going to have to say that my favourite video of the week was the one of OK Go and their quite frankly mesmerising offering that was shot using 64 phones!

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.

The Assad regime fell in dramatic fashion, the ECB cut interest rates and China signalled an easing of monetary policy…

• IN WAR NEWS – Assad’s regime in Syria was defeated and Bashar al-Assad himself (and his family) popped up in Moscow after fleeing the country. The rebels who liberated the country tried to consolidate control but a number of nations (including the UK) suspended asylum claims from Syrian refugees.
• IN ASIA – China is sticking with its year-end GDP growth target of 5% despite its trade numbers being disappointing and inflation undershooting market consensus although the Politburo said that it would be implementing “more proactive fiscal policies” to jolt the country out of its economic rut. Lawyers and accountants are getting ready for a fees bonanza in expectation of more tariffs on Chinese imports but the Chinese have got some pretty serious firepower themselves in terms of retaliation. The South Korean president faced an investigation for treason relating to his sudden implementation of martial law but remained defiant, saying he’d fight to the end – although it turned out that he was impeached this weekend anyway.
• IN EUROPE – the ECB cut interest rates by 0.25 percentage points and it’s now 3%. This was widely expected. Meanwhile Spanish PM Pedro Sánchez is faced with the tricky task of passing a budget for Q1 next year whilst members of his inner circle are facing allegations of corruption.
• IN THE UK – PM Starmer held talks with the president of the EC this week and they scheduled a meeting with all EU leaders on February 3rd to talk about defence co-operation. The post-Budget economic gloom was echoed by research from BDO that showed business confidence had fallen sharply and business leaders continued to warn chancellor Reeves about the negative impact of her Budget tax rises. Already difficult decisions are going to be even harder to make with dodgy employment figures from the ONS and a survey by Indeed showed that hiring is falling more sharply in the UK than in other major economies although a survey of small businesses by KPMG showed that a whopping 92% of small businesses were confident about the outlook for their companies over the coming year, something that was echoed in a separate survey by Aviva.
• IN THE US – inflation rose slightly last month versus September and the market is now pricing in a 98% likelihood of a 0.25 percentage point cut at the Fed’s meeting next week. Talking of Fed-related things, Trump said that he wouldn’t remove current Fed chief Jerome Powell before his term in office is up in 2026.

IN ENERGY NEWS…

• Renewable electricity from wind, solar and hydropower is set to overtake the amount of power generated by fossil fuels for the first time ever, according to analysis by Ember, a think-tank. These renewables will account for about 37% of the electricity we have generated this year versus 35% from fossil fuels. It sounds like we’re making progress towards the government’s target of having “95% clean power by 2030”.
• Meanwhile, BP is spinning off its offshore wind business into a joint venture with Japanese power company Jera. The new business, called Jera Nex BP, will become the world’s fourth biggest wind-generating company after Orsted, Iberdrola and RWE.
• Ministers are looking at weakening the rights of communities to block clean-power projects in order to speed up processes. This is not going to be popular and will definitely test the resolve (and probably popularity) of the government.

IN RESIDENTIAL PROPERTY…

• The average house price hit £300,000, according to figures from the Halifax which means that only 10% of earners can afford to buy a home in England. That being said, the latest RICS survey showed that estate agents were generally optimistic about the market next year although they are worried about the possibility of another market downturn thanks to recent rises in mortgage rates and wavering consumer and business confidence. A report from Rightmove concluded that the London market is set for a decent 2025 after a lean few years as more RTO is kicking in and estate agents are now reporting that they now have more homes for sale now than in any December for the last ten years!
• Rent inflation is slowing down, according to data from Zoopla but students are getting priced out of London as rents are rising faster than loans.
• New UK planning rules were set out this week that are designed to speed up the decision process in order to meet house-building targets. The government is aiming to build 300,000 new homes per year – something that has not been achieved since 1969!

IN COMMERCIAL PROPERTY…

• A bid by US private equity firm Blackstone to buy the “Can of Ham” for about £300m has failed as no-one could agree on a price. This was being closely monitored by many as a test of market appetite for major commercial properties – and it failed on this occasion!

IN TECH NEWS…

• China is launching an antitrust probe into Nvidia for suspected violations of China’s anti-monopoly law. Annoying though this might be, Nvidia can weather this China storm as it has almost complete dominance in high-end AI chips – and China makes up just 15% of its revenues.
• SpaceX is now valued at a massive $350bn, which now means it’s more valuable than ByteDance, the parent of TikTok! Given SpaceX’s dominance in satellites (and other areas with absolutely massive barriers to entry!) and Musk’s proximity to the White House you would have thought it will continue to go from strength to strength.
• The European Commission is now investigating Meta and Google regarding a secret ads deal that targeted teens. Staying with Google, the company is teaming up with Samsung to make smart glasses and VR headsets while its YouTube platform is raising prices for its streaming in the US thanks to rising prices for content.
• AI content-scraping rules are continuing to cause friction as the Copyright Alliance, a US cross-media industry body that represents big companies emphasised its “strong opposition to the introduction of AI exceptions” to copyright rules just days ahead of the UK government’s launch of a consultation into AI and creative industries. The concern here is that the government might go soft in its bid to encourage the development of AI by allowing algorithms to scrape content from publishers and artists unless they “opt out”.
• TikTok owner ByteDance’s appeal to the US Court of Appeals failed, which means that TikTok could get banned in America. Trump could now be TikTok’s only hope!

IN MEDIA NEWS…

• Warner Bros is looking at splitting its TV and streaming/studios business, which many are interpreting as a precursor to an out-and-out break-up. This is part of a company-wider restructuring and was well-received by investors. Meanwhile Sky’s parent Comcast struck a deal with Warner Bros Discovery, thus averting the sudden disappearance of content.
• Advertising revenues look set to hit $1bn for the first time this year, according to research by GroupM in what could be a positive sign for the global economy.
• Omnicom and Interpublic look set to combine in a £23bn megamerger that would make the combined group bigger than WPP, the current #1. It will probably result in big lay-offs as there is a lot of overlap. There are, however, concerns over whether the deal will actually be any good for creativity or innovation.

IN TARIFFS NEWS…

• Trump’s threatened import tariffs are likely to hit the US auto industry as a lot of the parts of US-made cars are made outside the country. Just 32% of the F-150 pickup truck’s parts are made in the US or Canada, for instance!). This will increase manufacturing costs and at least some of these costs are going to be passed on to the customer, meaning that inflation is likely to rise and, if the rises are too steep, customers just won’t buy the cars.

IN INDIVIDUAL COMPANY NEWS…

• GM announced that it is giving up on robotaxis and will instead use the knowledge it has gained thus far on driver assistance systems. This leaves Waymo and Tesla as the only Western players with scale in the game. This was unsurprising in that GM’s investors have been focused on financial performance whereas Waymo has a deep-pocketed parent in Alphabet and Tesla has Musk – money-raiser-supreme and Trump’s BFF, so the latter two have more leeway than GM.
• The Abu Dhabi Investment Authority-managed CYVN Holdings has now bought McLaren Holdings. McLaren has been a money pit for ages so we’ll see whether things improve under new ownership…

IN CAR FINANCING…

• Bank shares jumped after news that the Supreme Court is allowing an appeal against the recent Court of Appeal ruling on car finance mis-selling, which struck fear into the hearts of a number of the big players. Close Brothers and Lloyds Banking Group had a relief rally and the hearing is due to take place between January and April next year.
• Claims management companies are getting their ducks in a row (e.g. Bott and Co, Courmacs Legal and The Claims Guys are among those who could benefit) following last month’s judgment on car finance mis-selling and will be targeting the potential £25-£30bn of compensation that could potentially be on offer.

IN CONSUMER TRENDS…

• Energy bills are likely to rise to £1,762 under the April price cap, according to the latest research from Cornwall Insight, the energy consultancy. This is the time when Ofgem next updates the price cap and is going up because of higher LNG demand from Asia through the summer and Britain’s increased reliance on LNG imports.
• Shopping bills are also set to rise as veg prices are soaring – and the price of Christmas dinner is set to be 6.5% higher than it was last year or 3.4% higher, depending on which report you read! The main upshot, though, is that prices are higher this year.

IN RETAIL NEWS…

• Inditex, Zara’s parent, had a rare mis-step as it missed market expectations for revenues thanks to increased competition from low-cost clothing retailers, poor weather and thrifty customers. On the plus side, it said that its autumn-winter collections were going down well with shoppers.
• Tesco is thriving but Asda’s losing ground, according to the latest market share figures. Everyone will be looking at January numbers to see how Christmas has gone so that they can gauge how the consumer will react going forward.
• Wallgreens Alliance Boots is in talks with US PE firm Sycamore Partners about a potential takeover, something that is bound to spark interest in Boots’s fate in the UK. It’s not clear now whether WAB will be gobbled up whole or whether it would be open to being broken up. If WAB goes private, it will be able to do its revamping jiggery-pokery away from prying investor eyes but it’s got a ton of debt and a lot of problems that need solving.
• Moonpig posted losses thanks to a write-down of its “experiences” business which it bought two and a half years ago. At the moment this makes up about 10% of Moonpig’s business but I think it may have to wait for consumers to feel a bit more flush before that division takes off.
• Currys warned of incoming price rises as it was left reeling from the Budget changes although it did actually manage to post decent sales. Let’s see what Christmas brings to this retailer!
• It looks like the FCA is dragging its feet a bit with the proposed Shein listing in Q1 as it is checking supply chain issues and weighing up the company’s much-mentioned legal risks.

IN THE US…

• Costco managed to show strong earnings in Q1 – but it was quite interesting to see that they they did well from customers loading up on goods at both the highest and lowest price points! An example of this was in meat where it saw the biggest increase in sales for more expensive cuts as well as the cheaper ones.

IN LEISURE NEWS…

• Tui reported solid annual profits but reckons that momentum will slow down over the next year thanks to still-high inflation and the shift of Easter holidays into Q3. Overall, it sounds like the company is being cautiously optimistic versus, say, the positive vibes we got recently from On The Beach.

• IN M&A RELATED NEWS, Nippon Life has offered to buy Resolution Life for $8.2bm in order to find growth outside its stodgy domestic business. Rivals such as Dai-Ichi Life and Sumitomo Life are also on the overseas acquisition trail for the same reason and it looks likely to continue. Meanwhile, the proposed Kroger-Albertsons merge was blocked as the FTC’s decision not to let it go ahead was upheld.
• IN FINANCIALS – US asset manager AllianceBernstein is suing Switzerland over its decision to wipe out $17bn of debt when the state enabled the takeover of Credit Suisse by UBS last year. Elsewhere, HSBC is reviewing the retail banking business outside the UK and Hong Kong as part of wider plans to streamline the business.
• RE LISTING COMINGS-AND-GOINGS – industrial equipment hire firm Ashtead is thinking about moving its primary listing from London to New York but given that the firm made 98% of its operating profits in the US last year, it’s hardly surprising! On the plus side, Canal+ looks set to list on the LSE this side of Christmas but although it would be big enough to enter the FTSE100, it won’t be included because it is domiciled in France.
• The recent Mastercard settlement moves the UK closer to the prospect of more class actions because although the amount of money that was finally settled upon (£200m) was way less than what they had been going for (£14bn), the mechanics of how to “do” class action lawsuits now exists.

Of course the videos I highlighted this week of Rhod Gilbert were brilliant (in my opinion, of course!) but I have to say hats off to this woman doing that fiendishly tricky assault course!

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.

Both France and South Korea saw huge political turmoil and Trump took credit for bitcoin breaching $100,000 while Equinor and Shell merged their UK oil and gas assets…

• IN FRANCE – PM Barnier lost a no-confidence vote over his Budget measures and then resigned, but will stay on in his post until a successor is found.
• IN GERMANY – the imminent wave of industrial job cuts is going to hang over the upcoming election as steelmaker Thyssenkrupp is cutting 11,000 jobs, Bosch is cutting 3,800, Shaeffler 2,800 and Ford is shedding 2,900. There is a very real possibility that a disgruntled electorate could eschew the main parties and vote for the AfD (far right) or BSW (far left), which could potentially divide the EU.
• IN SOUTH KOREA – president Yoon Suk Yeol tried to impose martial law, but then had to call for the military to stand down while the government stood ready to stabilise the markets.
• IN AUSTRALIA – weaker-than-expected GDP growth numbers were published for Q3, which means that an early interest rate cut is more likely – and this sent the Aussie dollar down versus the US dollar (because a lower interest rate makes it less attractive for speculators).
• IN THE UK – the OECD raised UK GDP growth forecasts for next year, making us one of the best-performing economies of the G7 while PM Starmer announced six milestones that he wanted his government to be judged by and the Bank of England complained about the ongoing problems with having unreliable unemployment data. In the meantime, Berenberg analysts reckoned that the recent NICs rise could actually lead to 150,000 job losses rather than the 50,000 estimated by the OBR.

IN MARKETS NEWS…

• IN THE UK – the regulator made positive noises about Shein, so it looks like it’s smoothing the way for that bumper IPO in Q1 next year and UK dealmaking continues to gather pace. The value of M&A involving UK companies has hit $306.3bn so far this year – a 57% increase versus the same period last year! This is way more than the value of deals that have been done since the beginning of the year in Europe. British caterer Compass has said that it is on the prowl for deals in Europe despite already having spent a total of $1.7bn on acquisitions in the region over the past year.
• IN THE US – investors have poured $140m into US stock funds after the Trump election victory as they are betting that he’s going to boost US stocks by unleashing a boatload of reforms and tax cuts. The monthly inflow for November saw the biggest influx since records began in 2000!

IN COMMODITIES NEWS…

• Equinor and Shell decided to merge their UK oil and gas assets. Some say this is to get synergies, others say that it’s a precursor to selling out.
• Cocoa prices have jumped hugely due to bad harvests and the recent respite is unlikely to last long thanks to structural challenges. This could obviously have an effect on inflation ultimately as higher-for-longer prices will no doubt be passed on to customers.

IN CRYPTO NEWS…

• Bitcoin hit $100,000, a more than 50% increase since Trump won the election in November! A more pro-crypto candidate is likely to be the next leader of the SEC, so investor hopes are high.
• Other crypto assets like MOO DENG, PNUT and CHILLGUY have benefited from the bitcoin boom as speculators increasingly bet on a Trump administration being more crypto-friendly.

IN BUSINESS & TRADE TRENDS…

• The latest monthly Lloyds Bank Business Barometer shows that although companies are concerned about the overall state of the UK economy, they are actually more positive about their own trading prospects!
• China’s ties with Saudi Arabia have been buoyed by the kingdom’s increasing demand for green tech. This is interesting because bilateral trade has been almost exclusively China buying Saudi oil until now.
• China continues to fight back against US sanctions and this time it’s banned the export of several minerals and metals used in chip manufacturing and military applications to the US in its latest push-back of sanctions coming the other way. This move came after the US imposed more export controls to slow down China’s ability to develop AI for its military.

IN ENERGY NEWS…

• EDF has decided to extend the life of four ageing nuclear power plants by more than a decade over their planned lifespan to plug the gap caused by Hinkley Point delays.

IN BATTERIES…

• The troubled European battery maker Northvolt looks like it’ll struggle to find a buyer given that carmakers are having their own problems to deal with and existing battery makers are now facing overcapacity, so they’re not likely to be interested in buying.

WITH REGARD TO CAR SALES…

• The UK government is considering various options at the moment for easing the transition to electrification, including reducing the financial penalties for carmakers not hitting targets and introducing cheaper loans to help encourage people to buy EVs. Meanwhile, EV brands are offering big discounts to shift EVs and hit targets at the same time as rationing the sale of petrol-powered cars.

IN NEWS ON INDIVIDUAL CAR COMPANIES…

• Stellantis’s CEO, Carlos Tavares, “resigned” abruptly. No reasons were given and the company’s share price slid, meaning that it’s now down 60% versus the record high in March.
• GM took a $5bn hit on its China business which will involve shutting plants down and offering a more limited vehicle line-up. It also decided to offload its stake in a Michigan EV battery plant to its Korean partner, LG Energy Solution, in another example of a big automobile company reining things in on the EV front.
• Jaguar released its new EV, which split opinion. I think it looks like a car that would be driven by a pimp but maybe my mind will change at some point! At least it’s daring to be different!
• Tesla sales fell in China while those of Chinese rival BYD boomed over November. Will BYD just pull away in the China market??

IN RETAIL NEWS…

• IN THE US – Americans decided to shop Black Friday online as stats showed that sales were up on Friday. Online sales hit new highs while store footfall was lower. Apparel retailer American Eagle saw its shares dive as it cut its outlook due to consumers reining in spending on non-essential items while Calvin Klein’s owner, PVH, also announced a downbeat forecast.
• IN THE UK – the latest BRC report said that retail spending was falling. In terms of individual retail news, M&S said it would return to the Spanish market 23 years after it withdrew – and it also got its way to knock down and rebuild its flagship Marble Arch store, thanks to getting approval from housing secretary Angela Rayner. Games Workshop gained entry to the FTSE100 while Frasers Group dropped out, with the latter adding to the gloom by issuing a profit warning.

IN LEISURE…

• Claridge’s owner, Maybourne, said that it’s planning to increase the number of hotels it owns as it surfs the luxury travel boom.
• On The Beach had a great year and reinstated the dividend as a result. It currently has high hopes for next summer!

IN AI NEWS…

• Musk announced plans to expand xAI’s Colossus AI supercomputer tenfold in order to close the gap and edge ahead of more established rivals including Google, OpenAI and Anthropic.
• OpenAI said that it wants to get 1bn users in its next phase of growth. It aims to get there by releasing new AI products, building its own data centres and partnering with Apple. It’s also looking at monetisation via potentially putting advertising on ChatGPT.

IN CHIP NEWS…

• Intel’s boss “stepped down” as his turnaround strategy has failed to deliver and the giant potentially faces the prospect of being broken up. Qualcomm has already expressed an interest in buying all or part of Intel.
• China continues to wean itself off foreign chips as four government-backed industry associations which represent the majority of China’s chip demand have made a concerted effort this week to urge member companies to rethink American purchases that they describe as “no longer safe or reliable”.

IN MEDIA NEWS…

• Disney hiked its dividend by a chunky 33%, having had a successful year. Last month, it announced that its streaming business and studio gained momentum over the latest quarter while its cable business and theme parks lost momentum.

IT SEEMS THAT M&A ACTIVITY CONTINUES TO GAIN MOMENTUM…

• Thames Water has received bids from Covalis Capital, which could include the involvement of France’s Suez. At the moment, the thinking behind this bid would be to sell off some of Thames Water’s assets and then do an IPO for the remaining business.
• The Vodafone/Three merger got approval from the CMA after both parties agreed to investing £11bn in upgrading the enlarged group’s network. The merger is expected to complete in H1 next year.
• Aviva raised its offer for Direct Line from the original 250p per share to 261p per share. No comment from either side so far…

• IN REAL ESTATE – UK house prices have boomed at their fastest pace in two years, according to the latest Nationwide house price index but London’s market seems to be going sideways if you take a long term view. This relative sluggishness has been due to the effect of higher interest rates, the reduced attraction of buying for investment and property prices still being too high for many first-time buyers.
• Airbus is axing about 500 jobs in the UK as it has decided to shrink its space division which just can’t compete with SpaceX.
• BlackRock, the world’s biggest money manager, has decided to go even deeper into private credit by purchasing investment firm HPS for $12bn. HPS is a major player in private credit, a massive growth area in finance particularly over the last few years.

My favourite “AND FINALLY” video this week was, of course, the original carrot-in-a-box game although here’s a follow-up to it as well 👍

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.

There was an Israel-Lebanon ceasefire, US retailers went early for Black Friday and Australia implemented a social media ban for kids…

• IN WAR NEWS – an Israel-Lebanon ceasefire began earlier in the week after the US brokered a deal while it looks like Europe getting more likely to release funds that will allow the purchase of defence products from outside the EU, which should be good news for defence companies in the US, UK and Israel (among others) who may see more orders as a result.
• IN US NEWS – Trump threatened to slap tariffs on imports from China, Canada and Mexico. If he follows through on his pre-election threats with China, it could actually be quite damaging to the Chinese while Mexico reacted by dithering over a new BYD plant that was supposed to break ground in Mexico this week. Meanwhile, we saw the minutes of the most recent Fed rate-setting meeting and it seems that they are likely to be taking a cautious approach to further interest rate cuts (i.e. unlikely to make another 0.5 percentage point cut like they did before).
• IN UK NEWS – PM Starmer was invited to meet EU leaders in February to discuss European security, whilst at home, he announced the imminent launch of an online “dashboard” so that the public could keep track of how the government was doing on its policy promises but the government is still in defensive mode as chancellor Reeves said of her Budget that “We had no alternative”. The CBI warned that UK businesses are reining in growth plans as they react to the Budget and both the BRC and CBI have published reports that show both business and consumer confidence has fallen since its announcement. Agriculture has been hit badly by the Budget. The Tax Policy Associates think tank concluded that the government’s policies had hit “farmers harder than tax avoiders” and farm equipment suppliers have already seen a drop-off in business. Meanwhile, the non-dom exodus is accelerating thanks to a new concession which incentivises them to leave in the current tax year.

IN COMMODITIES NEWS…

• Orange juice prices continue to hit record highs (they’ve gone up by 150% in just two years!) thanks to the impact of devastating hurricanes in Florida and droughts in Brazil. Consumers won’t notice the price spike yet because it can take anything between seven months and a year for prices to filter through.

IN MARKET TRENDS NEWS…

• Inflows to actively managed funds (where humans take investment decisions) have overtaken inflows to passive funds (where algos take the decisions) for the first time in 20 months, according to Morningstar data.
• It is interesting to see that, despite the imminent prospect of RFK Jnr becoming the US’s top health official, Odyssey Therapeutics and Aktis Oncology (both biotechs) are pressing ahead with flotation plans in the next few months. It’s a bit controversial because RFK Jnr looks likely to make the life of biotechs and pharma companies more difficult.
• Gloom turned up a notch in London as Just Eat Takeaway announced that it would quit the LSE and keep its primary listing in Amsterdam, adding to the ongoing hand-wringing about the exodus of companies from London. On the other hand, some say that the IPO market in London is set to improve with listings of Canal+ and Shein in prospect while analysts at Goldman Sachs, BlackRock and JP Morgan Asset Management reckon that the UK will outperform Europe because they think that the UK will be less affected by Trump’s tariffs than Europe will.

IN BUSINESS TRENDS…

• German exporters are still reeling from the prospect of a Trump presidency and economists are already trying to guess the magnitude of the impact on its economy and particularly on its automotive industry.
• Back home, FT analysis shows that professional services have been a major driver of UK GDP this year with a growth rate that is triple that of the overall UK economy.

OVERALL…

• Share prices of carmakers that supply the US market from Mexico – including GM, Nissan, Stellantis and Daimler Truck – fell as investors reacted to Trump’s threats of tariffs.
• In the UK, ministers are considering an extension of the petrol-EV deadline for full hybrids as a concession to manufacturers who are concerned about having to hit unrealistic EV sales targets.
• UK car production slowed down for the eighth consecutive month, according to the latest numbers from the SMMT. The industry continues to struggle with the switch to EVs.

IN INDIVIDUAL COMPANY NEWS…

• Stellantis announced that it’ll close its Luton factory and shift production to its Ellesmere plant. The company blamed the UK’s economic conditions and the government’s continued clinging onto its zero-emission vehicle (ZEV) mandate.
• Aston Martin announced its second profit warning in two months but also announced plans to raise £210m to help its ongoing electrification efforts. When will the nightmare stop??
• German car parts supplier Schaeffler announced major cuts to its labour force across Europe and the closure of its plant in Sheffield. Demand for its clutches is falling thanks to the move to EVs and automatic transmission.

AS FAR AS CONSUMERS ARE CONCERNED…

• Research from jobsite Adzuna showed that there were signs of recovery in the second half of the year as salaries rose at their fastest rate in three years.
• Separate research showed that the increasing incidence of companies requiring RTO is prompting more employees to seek jobs elsewhere.

IN RETAIL NEWS…

• IN THE US – retailers are making Black Friday stretch longer to try to stimulate sales and are injecting the FOMO by saying that customers need to act now before Trump’s punchy tariff regime kicks in. IN INDIVIDUAL US RETAILER NEWS, Tapestry (Coach, Kate Spade, Stuart Weitzman) decided to ditch its plans to buy Capri Holdings (Versace, Jimmy Choo, Michael Kors), which Tapestry investors were relieved by – but left Capri vulnerable. There was a mixed bag in department stores as Macy’s had to delay its results because of $150m fraud but then Nordstrom announced that it would raise its year-end sales outlook as it experiences positive momentum. Meanwhile, Urban Outfitters put in a stronger-than-expected performance as its brands Anthropologie and Free People did well and it was upbeat about the upcoming holiday season.
• IN THE UK – retailers are getting more cautious about Christmas and warn that inflation could be a drag for UK shoppers while retail footfall drops. West End landlord Shaftsbury said that its retailers and restaurant tenants are paying higher rents going into the holiday season, which sounds like a good sign!
• IN SUPERMARKETS NEWS – veteran retailer Alan Leighton returned to Asda at the ripe old age of 71 as chairman to turn its fortunes around (as he did before, over 20 years ago!). Morrisons is scaling back its use of Ocado and will instead supply customers from its own network in addition to one of Ocado’s warehouses on the outskirts of Birmingham. Morrisons will still use Ocado’s tech when it delivers online orders from its own shops. Aldi and Lidl look like they’ll get a boost thanks to the government’s overhaul of the business rates system because their store estate generally has smaller stores than many of their rivals, meaning that their rates bill will be less.
• TikTok is forecasting its best Christmas sales ever as its livestream shopping feature seems to be finally taking off after being launched in the UK back in 2021!
• Kingfisher (which owns B&Q) saw its shares take a hit after it downgraded its full-year forecasts blaming the new tax changes in the Budget. Unfortunately, it also reported a slowdown in trading over the latest quarter.
• AO World warned that prices are going to have to rise after the recent Budget thanks to increase to its overheads. That being said, AO World performed well enough in the first half to increase its annual earnings forecasts and is bullish about consumer sentiment.
• Halfords is thinking about raising prices at its 550 Autocentre garages to pay for increased costs resulting from the Budget. Meanwhile, the company left its full-year guidance untouched.
• Dr Martens saw its share price rise despite falling into loss, but investors seemed to be cheered by cost reductions being on track and the progress being made in its US business.
• Pets at Home cut its annual profit outlook due to weakening demand for accessories and treats but it’s in the middle of efforts to become a “unified petcare platform” by integrating its retail, grooming and veterinary services via a new app.
• Ingka Group, the biggest franchisee of Ikea, said that new trade tariffs could make selling its wares at low prices “more difficult”. It’s particularly tricky given that the US is Ikea’s second biggest market after Germany.

IN LEISURE NEWS…

• The government is poised to announce a £100m levy on gambling companies to finance research, education and the treatment of the consequences of gambling. The levy is due to come into force in April. This is going to hurt!
• Mitchells & Butlers (which owns Havester and Toby Carvery) said it will take a £100m hit from tax changes and is the latest hospitality business to warn of a Budget-powered hit. It is, however, quite upbeat about market expectations for the coming year.
• Posh bakery Gail’s is up for sale as current owners Risk Capital Partners and Bain Capital are looking for a partial or full sale of the business.
• Meanwhile, Starbucks has been outclassed by local rivals in China, particularly Luckin Coffee and Cotti. It’s now looking at the possibility of bringing in a local partner.

IN LEISURE…

• EasyJet has been bounced back from the nightmare of Covid and is now targeting profit of £1bn as its CEO steps down after seven (turbulent!) years in charge. Still, it has – like rival Ryanair – decided that it will cut domestic flights after Reeves’s tax raid, which will affect Scotland the most.

IN A SNAPSHOT OF THE OVERALL MARKET RIGHT NOW…

• The UK property sector is currently being hit by a combo of inflation fears, higher borrowing costs, the UK Budget and Trump effect.
• UK housebuilding has fallen to an 8-year low, further underlining the challenge that’s facing the government in making a sizeable dent in the housing shortfall.
• Nationwide is taking market share in mortgages from banks thanks to more competitive pricing on home loans and flexibility towards stretched borrowers.
• Knight Frank downgraded its forecasts for house prices and sales in the UK but Zoopla’s latest research forecasts that sales and prices will pick up the pace over the next four months as buyers try to beat the stamp duty deadline, which is due to end next April. First-time buyers will be particularly keen to get involved.

IN AI NEWS…

• OpenAI’s text-to-video AI tool Sora was briefly leaked by some artists who had been testing the new model. A number of testers have since complained to OpenAI for taking advantage of “hundreds of artists [who] provide unpaid labour through bug testing, feedback and experimental work” when testing AI models.
• Apple is facing AI difficulties in China as foreign companies are being warned that they will be faced with a “difficult and long process” to get approval from authorities unless they partner with local groups. The company wants to roll Apple Intelligence out to its devices sold in China.
• Meanwhile, Europe’s Mistral – which is now Europe’s most valuable start-up – is boosting its US expansion in an effort to compete with Silicon Valley rivals for AI employees. One of the three co-founders is also considering relocating from Paris to its new office in Palo Alto, California.

IN HARDWARE NEWS…

• Dell and HP posted downbeat outlooks thanks to a slowdown in PC upgrades overall. There are hopes, however, for an increase in demand for AI capabilities that may provide the catalyst needed for consumers to replace what they (probably) bought under lockdown.
• Huawei is about to launch a new flagship smartphone, the Mate 70, that can run its own apps on its proprietary operating system. This is a great achievement and narrows that gap with Western counterparts.
• The world’s biggest memory chip maker, Samsung, had its second big management shake-up of the world’s biggest memory chip maker this year! Various management changes have been made at the top of the company in order to address growing concerns about its technological competitiveness, particularly in AI memory chips and AI hardware.

IN SOCIAL MEDIA NEWS…

• Meta continues to lose ground to Bluesky while users abandon X. Amazingly, Meta’s Threads had 5x the number of daily active users in the US than Bluesky before the November 5th election – but it now has only 1.5x more users!
• X’s backers look like they’ll be even as they were granted 25% of the shares in xAI when they lent Musk the money to buy the platform – and although the platform’s performance hasn’t been stellar, xAI’s has! The question is whether they’ll sell out or hang on for the (probably volatile!) ride. Talking of X, Reddit overtook the platform to become the UK’s fifth most popular social media platform in the UK, according to Ofcom.
• Meanwhile, Australia just implemented a ban on children under the age of 16 using social media sites. This ban was one of over 30 bills passed into law overnight – but it has caused a lot of controversy given how quickly it has been pushed through and relative lack of debate. The question is – will other countries follow suit??

ELSEWHERE…

• CrowdStrike is bouncing back from its horror show in Q3 where it was responsible for one of the worst computer outages ever – but it managed to raise its fiscal year outlook and announced higher revenues!

IN MEDIA…

• Research from media consultancy Omdia shows that music industry revenues shot up by 10% last year, an increase of 25% since 2021 and double the revenues in 2014! Digital channels are now more valuable than broadcast and radio channels for music publishers and songwriters

• Direct Line rejected a £3.3bn takeover offer from Aviva – the second takeover offer it’s received this year! Aviva then changed tack and approached shareholders directly to get them to back their bid. The two businesses are actually quite a good fit, so we’ll just have to see how this goes…
• The world’s biggest catering group, Compass Group, announced that it has decided to slim down its global footprint and withdraw from nine countries to focus on those with decent growth opportunities.

My favourite “AND FINALLY” video this week was, of course, the one with Alan Partridge copying what I do on long car journeys 😁!

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.

It’s been another eventful week as war escalated, Trump’s appointments created a stir and the UK government continued to cop some flack…

• IN WAR NEWS – Russia targeted Ukraine energy sites in a major missile and drone attack, Putin announced that he’d restrict exports of enriched uranium to the US (which is serious because US nuclear power plant operators rely on Russia for over 25% of their supplies of the material) and the G20 watered down support for Ukraine as it upped the pressure for peace talks.
• IN THE US – Trump made some appointments including a new heads for the FCC, US health, energy secretary and the newly-formed Department of Government Efficiency. Fears of the impact of his presidency are rattling those who could be in his crosshairs – like Vietnam (for having a big trade surplus with the US) and individual companies (like Hasbro) that use a lot of non-US suppliers. US companies are stockpiling supplies from China to get ahead of the tariffs – and while fears of global shipping activity falling off a cliff because of Trump look overdone you could also argue that concerns about his policies’ immediate impact are also too pessimistic because there are a lot of factors that could take the edge off them (e.g. a stronger dollar making imports “cheaper”, deregulation could cut prices and lower taxes, that his belligerent dialogue could lead to better deals for the US etc).
• IN HONG KONG – 45 pro-democracy activists were sentenced for anywhere up to ten years in prison for conspiracy to commit subversion over an opposition primary election in 2020. Hong Kong’s assimilation into mainland China continues…
• IN INDIA – charges are being brought by the US Department of Justice and the SEC against the founder of India’s powerful Adani Group conglomerate, Gautam Adani. He has been accused of involvement in a $265m bribery scheme. This is bound to put some strain on the US-India relationship given the closeness of PM Modi and Adani.
• IN THE UK – inflation rose to 2.3% in October, up from 1.7% in September and above market expectations of 2.2%. It’s expected that this will delay/slow down interest rate cuts. Starmer managed to have a meeting with Xi Jinping at the G20 summit and they agreed to more meetings in the future but the new Business Secretary voiced concerns about being “exposed” in the even of a global trade war – although if push came to shove, he said that he’d be inclined to side with the Europeans. Business leaders continued to react negatively to recent government policies and the Budget as UK farmers protested about tax changes and retailers warned of the hit, ultimately affecting jobs – something that the governor of the Bank of England agreed with. Restructuring specialists Begbies Traynor said that it expects more companies to be pushed to the brink because of the Budget changes. Labour market data continues to be dodgy, making the Bank of England’s job of deciding interest rates more difficult, and public sector pay rises have fuelled an unexpected rise in government borrowing. On the plus side, the latest GfK findings show that UK consumer confidence is recovering from the pre-Budget jitters although reports from S&P and Goldman Sachs say that this consumer confidence hit will be a drag on wage growth.

IN MARKETS NEWS…

• Trading assets at US banks have now breached the $1tn level for the first time since the financial crisis thanks to a particularly strong Q3. Interestingly, assets are now at their highest level since Q1 of 2008, according to BankRegData.
• Vanguard announced that it will let retail shareholders vote by proxy on management issues affecting companies that they hold. This is an interesting development because it means that those who thought that Vanguard put too much emphasis on ESG and not enough on profits will be able to get their say.
• The UK’s Competition and Markets Authority (CMA) said that it’s going to change the way that it looks at mergers and put emphasis on behavioural rather than structural remedies. This came shortly after PM Starmer told them to prioritise growth, investment and innovation as he promised to cut needless bureaucracy.

IN COMMODITIES NEWS…

• BP approved a $7bn gas project in Indonesia in a bet on growing demand for gas in the region. Production is expected to start in 2028 and it will be BP’s first ever carbon capture, utilisation and storage project – so maybe it hasn’t abandoned its climate initiatives altogether!
• Although gold initially had its worst weekly fall in over three years, the analysts at Goldman Sachs reckon it could get to $3,000 an ounce under Trump thanks to investors seeking a safe haven from likely trade tensions, the heightening of political risks and his inflationary policies.
• Meanwhile, the CEO of Albemarle, the world’s biggest lithium producer, has called it and said that it will be impossible to build a commercially viable supply chain in North America and Europe that can completely cut out Chinese suppliers. Will governments step in to help or will this be another industry that is lost to the Chinese?

IN CRYPTO NEWS…

• Trump Media and Technology Group is in advanced talks to buy Bakkt, a crypto trading venue that is currently owned by Intercontinental Exchange. Bakkt’s share price shot up by 162% on the news!
• Bitcoin got closer to $100,000 this week! Since Donny T won the election, its value has risen by almost 40% as the one-crypto-sceptic has transformed into a fully-fledged crypto-bro!
• Current SEC chief – and arch-crypto sceptic – announced that he would quit at noon on January 20th, when Trump officially becomes president. Gensler was appointed by Biden and locked horns with the crypto industry suing the likes of Coinbase, Kraken and Binance during his time in office.

IN BATTERY NEWS…

• It’s curtains for Northvolt as it filed for Chapter 11 bankruptcy protection in the US. It will operate as normal for the time being.

IN CAR NEWS…

• Ford decided to cut 4,000 jobs in Europe in response to a slowdown in EV sales, becoming the latest company to take similar actions.
• Carmakers were getting hopeful that the government would be more flexible to help carmakers hit EV targets, but this proved to be just a dream as the government decided to stick to its guns.
• Meanwhile, Auto Trader, the SMMT and ChargeUK – with the blessing of the Department for Transport – are joining forces to put together a campaign to counter all the negativity surrounding buying an EV.

IN SELF-DRIVING NEWS…

• Tesla’s share price boomed on news that Trump is looking at easing regulations for self-driving vehicles. This could help bring forward the commercialisation of self-driving vehicles – which will be pretty sweet for Musk!

IN FINANCING NEWS…

• Moody’s came out with an estimate of what it reckoned the car finance mis-selling scandal could cost lenders in terms of compensation – £30bn. For scale, the PPI scandal resulted in a compensation bill of £50bn!
• Santander UK has set aside £295m to put towards compensation for its part in the scandal, if it comes to that.
• In the end, it looks like the FCA is planning to allow lenders more time to respond to car finance complaints but a final decision on this will be made on 19th December.

IN RETAIL NEWS…

• IN LUXURY – after the slowdown of Chinese consumer momentum it looks like the big luxury names need to be looking at growing in the US market as, at the moment, luxury spend hovers at around 0.4% of GDP while Europe and Japan spend about 0.6% and South Korea about 0.8%. This would imply that there’s lots of upside – and progress may be accelerated by a strong dollar making goods for Americans comparatively “cheaper”. The LVMH-owned make-up retailer Sephora announced plans for 20 stores in the UK (versus the six it currently has) as its re-entry into the UK market has gone well (it gave up in the UK back in 2005). Meanwhile, the new boss of the troubled Mulberry has announced a turnaround plan of sorts. It’s hardly original (streamline the business and cutting prices) but it’s too early to tell whether this is going to work.

IN ONLINE RETAIL…

• Shein announced that it was aiming to do an IPO on the London Stock Exchange in Q1 of 2025, some welcome good news for the embattled exchange.
• Temu owner PDD posted its slowest revenue growth in over two years thanks to tougher competition and worries about the potential negative impact of Trump’s tariff regime.
• Tensions rose at Boohoo as Frasers Group, which holds a 27% stake in the online apparel retailer called for co-founder Mahmud Kamani’s full resignation because they say that he is holding back efforts to turn the company’s fortunes around.

IN TRADITIONAL RETAILER NEWS…

• JD Sports had a profit warning thanks to disappointing US and UK sales, but it’s unclear yet if this is JD Sports-specific or whether it’s a wider problem.
• HMV said it would suspend store openings, saying that recent Budget changes have made it too risky to invest.
• Lidl also complained about the extra costs that the Budget changes will incur, but it added that it saw a big uptick in sales over the past year and swung into profit after posting a loss in the previous year.
• Over in the US, Walmart saw robust sales over the most recent quarter thanks to consumers buying groceries, home goods and toys – enough to prompt the company to hike its sales and profit forecasts for the year.

IN LEISURE NEWS…

• Merlin Entertainments (which owns Legoland, Alton Towers and Thorpe Park) and Mojang Studios, the creator of Minecraft signed an agreement to invest £85m in two Minecraft attractions in the UK and US sometime between 2026 and 2027.
• BrewDog had to shut down its two flagship Mumbai bars, leaving them with just two bars in India after they made a real fanfare about entering the market in 2021. Foreign rivals have also experienced difficulty in the market because of “excessive” regulatory action and the confusing rules across India’s states and territories.

IN TECH NEWS…

• The US Department of Justice is talking about forcing Google to sell its Chrome internet browser due to it having an “illegal monopoly” in search. Google has until April to present remedy proposals to avoid such dramatic action.
• Apple has proposed building a factory in Indonesia in a bid to reverse the ban of iPhone 16 sales. The ban came into force when it was deemed by the government that the current involvement of local resources just wasn’t enough.
• Chinese smartphone makers – including Realme, Honor, Oppo and Xiaomi- are preparing to expand their market share in Europe as there is a lot of room for upside! Meanwhile, big Chinese tech companies in the US are poaching staff from rival groups to catch up with AI. This sounds like a loophole that Trump needs to plug if he’s serious about not letting the Chinese get hold of the most advanced tech.
• Nvidia’s sales boomed once more following a bit of a hiccup in August. Its fortunes have become such a big deal now that the mood of the whole market seems to shift in synch with how things are going for the company!
• Palo Alto’s share price dropped by 5% despite it publishing Q1 results that came in above forecasts and raising its full-year revenue guidance. Maybe investors are just locking in profits from a share prices that has increased by 33% year to date.
• Sage’s share price boomed by a chunky 20% after it announced a big increase in annual profits and a £400m share buyback. It did particularly well in North America, its fastest growing market.
• ProRata.ai signed up some UK publishers including DMG Media to its platform that pays content creators on a per usage basis. It gets money from subscriptions and allocates 50% of the revenues to its licensing partners.
• IN SOCIAL MEDIA NEWS…
• Large numbers of users – both individuals and corporates – have been leaving X since Trump won as it being increasingly seen to be an unfettered right-wing mouthpiece for Musk (and Trump). Bluesky seems to be benefiting the most from users migrating to its platform, which is more like Twitter of old.
• Reddit continues to do well and swung into profit in October. Its share price has quadrupled since its March flotation. Will the party continue??

IN MEDIA NEWS…

• Associated Press announced that it would cut 8% of its staff via layoffs and buyouts as it is the latest outlet to suffer from digitisation and the evolution of the way people consume media.
• Comcast is on the verge of spinning off its cable TV networks (which include CNBC, MSNBC, E! and USA Network) to let it focus on its entertainment and sports assets that feed into the “new” (ish) world of streaming. Is this another nail in the coffin for cable??

IN RESIDENTIAL PROPERTY NEWS…

• UK mortgages have been creeping up following news that inflation has again risen above the Bank of England’s 2% target.
• UK house prices cooled for the second month in a row, according to Rightmove. Having said that, it reckons that the market will bounce back in 2025.
• Research from Savills predicts that rents will rise by almost 20% over the next five years, something that is mainly due to an ongoing lack of supply of rental properties vs rental demand.
• Crest Nicholson warned of lower profits but there was some good news in that the “new” CEO hasn’t found any more skeletons in the cupboard. Maybe this is a sign of its fortunes bottoming out?

IN COMMERCIAL PROPERTY NEWS…

• British Land managed to become profitable over the summer as it seems that things are finally turning around for the retail sector after a very rough few years. British Land’s retail parks are now performing well and its rents and property valuations are now on the up.

• US budget carrier Spirit Airlines filed for Chapter 11 bankruptcy this week, becoming the biggest US passenger airline to go bankrupt in over ten years! It was denied a chance to consolidate with rival JetBlue Airways last year leaving it having to compete against the giants.
• Tokyo Metro won the contract to run London’s Elizabeth Line from May 2025. Much joy, given how brilliant Tokyo’s trains run – but it’ll be interesting to see if they can wield their magic over here!
• Unilever decided to suspend the sale of its ice cream business after buyers just didn’t fancy it. It will now look to spin the business off into an IPO.

My favourite “AND FINALLY” video this week was the one about Russell Crow telling us what was really going on in one of his most iconic scenes!

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 THE US – Trump secured control of Congress as he’s got a majority in both the House of Representatives and the Senate, so he’s pretty much going to be free to push his own agenda. Headline inflation was up slightly in October from the previous month, although core monthly and annual inflation stayed flat. Even so, the market is pricing in a 0.25 percentage point cut at the next Fed meeting in December while Fed chief Jay Powell says there’s no hurry to make drastic cuts, although he says that there’s still a lot to do to get inflation back to the bank’s 2% target. IN ONGOING REACTION TO TRUMP, Taiwan is talking about making big US defence purchases to show it’s serious about doing what it can to keep the US defensive umbrella, Brussels is freeing up billions of euros for defence and security from the EU budget, which might be good to counter any shortfall from Trump. The clean energy industry putting projects on hold at a time when financing is drying up and German energy company RWE has  decided to rein in its aggressive push into renewables. although this might actually work out well for our own renewable industry because it could ease up supply chains if the US decides to refocus. There are concerns about the continued viability of the global minimum rate of corporation tax and what Musk’s elevation could mean for AI. A Trump presidency proved to be a boon for the media sector in his first term as media outlets saw a rise in subscribers while cable networks saw an increase in views. On the flipside, Wall Street bonuses are expected to boom, bitcoin continued to hit new highs, as did Dogecoin. In Europe, the euro is weakening on rising concerns about the damage Trump’s tariffs will cause to European exporters, it’s thought that a deepening US-China trade war could hit UK exports badly and although Trump’s victory isn’t going to be great for the UK, it may not be as bad for us as it will be for the Europeans, although we could still be hit indirectly.
    • IN CHINA – the country is bracing itself for a deepening trade war with the US and its latest economic stimulus package disappointed investors.
    • IN EUROPE – Spain is outperforming its neighbours in terms of its economy thanks to a more relaxed approach to immigration, the ongoing strength of its tourism industry and inward investment from overseas, particularly from high value-added sectors. It was also interesting to hear that trading restrictions between the UK and EU might get easier next year as the Trade and Co-operation Agreement (TCA) between the two parties is due to be reviewed.
    • IN THE UK – the reaction to this government’s first Budget is continuing to manifest itself. Hospitality sector bosses says that the rise in employer NICs will force businesses to close and  British agriculture could see yet more drama (in addition to the recent IHT bombshell) as it looks like farmers that own a lot of land could make a killing by carpeting at least some of it with solar panels (they’ll get way more for it under government plans for renewables). In an interesting turn, Labour has lost 40% of the council seats it has defended since the election with the Conservatives being the main beneficiaries as its popularity has suffered in the intervening months. Meanwhile, chancellor Reeves announced plans to consolidate local government retirement schemes into 8 “megafunds”. This isn’t as extreme as previous speculation that there would be an even more dramatic consolidation into one mahusive fund but it will bring to a close the role of councils in administering their money. Separately, the HMRC got a surprise £700m windfall thanks to a successful appeal against the EC regarding state aid. A number of big UK companies could be in line for a payout…

IN ENERGY NEWS…

• • • There was an exciting development in nuclear fusion – a New Zealand start-up called OpenStar said that it had created plasma for way less than it normally costs in conventional reactors. It’s using a new reactor design to do this. Plasma is needed for the nuclear fusion process (hydrogen isotopes bang into each other inside a plasma and fuse together, releasing loads of energy)
    • Japan is on the verge of an energy storage boom as household interest for solar panels has been strong and the prevalence of virtual power plants connecting a number of home batteries via a cloud platform looks set to increase.
    • European gas prices boom on fears of supply disruption from Russia and comes at a sensitive time given that we’re heading into winter when gas demand for heating increases.

• The transatlantic law firm love-in continues as Herbert Smith Freehills announced plans to merge with US-based law firm Kramer Levin. It comes not long after A&O joined up with US firm Shearman & Sterling. There are benefits for both sides, but it remains to be seen as to whether cultural and structural differences can be successfully bridged for the long term.
• A report from Deutsche Numis said that the number of UK listed companies that have been taken private is now at levels last seen in 2021 thanks to improving financial conditions and rising confidence among buyers.
• Klarna looks like it’s going for a New York listing rather than a London one. This is another blow for the LSE but then again you would have thought that Klarna will be able to get a much better valuation stateside, particularly as we’re in a sort of Trump-fuelled markets honeymoon at the moment.

IN CHIPS NEWS…

• TSMC is on the verge of stopping production of advanced chips for China and any future supplies of such chips to Chinese customers will have to undergo an approval process that will probably include Washington. It looks like this is another move that is designed to appease to Trump and stop him from removing Taiwan’s defensive cover.
• Amazon has made advances in developing its own AI chips in order to wean itself of its current reliance on Nvidia. The company is pouring money into making custom chips in order to make its data centres more efficient and ultimately cut costs for itself and, of course, its customers.

IN OTHER TECH NEWS…

• Baidu unvelied some AI-powered smart glasses that use its LLM Ernie. The glasses will help wearers track calorie consumption, answer questions about their environment, play music and film videos. The glasses will only be sold in China initially but it goes to show just how good Chinese tech is!
• The FTC is planning on investigating Microsoft’s cloud business over alleged anti-competitive practices. It looks like this could be current FTC chief Lina Khan’s last hurrah as many expect her to be replaced by the incoming regime.
• SoftBank returned to profit after a turbulent few years thanks to some successful IPOs in India and rising tech valuations. This will be a welcome development after a number of turbulent years.

IN SOCIAL MEDIA NEWS…

• Meta got slapped with an €800m fine for using anti-competitive practices that put sellers on Facebook Marketplace at a disadvantage. Meta said it would appeal the decision.
• Bluesky Social (a social media platform co-founder by Twitter founder Jack Dorsey) has seen a major uptick in new users as X loses users in the aftermath of the election result. It’s got a way to go to catch up with X, though as it still only has 15m users versus the 600m that the latter has.
• In the meantime, advertisers are now coming back to X as they want to suck up to Musk and Trump. Not all of them are crawling back, but surely they will??  Meanwhile, a group of French newspapers is now suing X over copyright violations under French law. Meta and Google have, in the past, been ordered to negotiate and make payments to French media outlets – so you’d think that X is going to have to cough up as well…

IN MEDIA NEWS…

• Disney announced strong Q4 results, adding that it expects “double-digit percentage growth” in adjusted earnings for 2026 and 2027. This should give it some breathing space before a new CEO is appointed.
• Spotify announced that it would pay hosts of popular videos that hit certain criteria in a bid to take on the might of YouTube. This is particularly interesting given that there is an increasing trend of people watching or listening to their favourite podcasts on YouTube! YouTube is now #1 for podcast listening in the US!

IN TELECOMS NEWS…

• Some old school US telecoms companies have been given a new lease of life by AI! Lumen Technologies, for instance, has seen its share price boom by a massive 700% since the spring thanks to it signing $8bn worth of contracts with the likes of Google, Amazon and Meta as their internet backbone provider.

• Chinese carmaker Geely announced a near-doubling of profits in a strong set of Q3 results thanks to rising sales and a better product mix.
• Sales in Russia of Chinese cars has boomed since Ukraine-driven sanctions. Since Russia invaded, Chinese manufacturers’ market share of the Russian car market have gone from 9% to 57%! Interestingly, though, about 90% of Chinese cars being sold in Russia have internal combustion engines.
• Ford got slapped with the second biggest fine in NHTSA history of $165m for delaying the recall of over 600,000 vehicles with dodgy rearview cameras.
• VW announced a chunky $5.8bn investment in Rivian. Rivian needs the cash and VW needs Rivian’s software! It sounds like this has been driven by desperation but it sounds reasonably on a strategic basis.
• BMW has set aside £70m in preparation for potential payouts for dodgy car financing. They may never have to pay it, but it makes sense to make preparations just in case.
• German auto parts maker Continental has decided to cut sales guidance for the second time this year, but its performance wasn’t as bad as everyone had been expecting because cost-cutting measures were starting to gain traction.

IN RETAIL NEWS…

• Amazon launched a Temu competitor called “Amazon Haul” which is focused on items that cost $20 or less as a way to combat competition from the likes of Temu and Shein. It was rolled out to some US customers this week. I think this shows how seriously Amazon is taking its Chinese rivals but I do wonder how profitable it will be.
• Burberry’s new CEO announced turnaround plans, acknowledging some previous bad decisions and he promised to go back to classics. The problem is that the previous regime was trying to do something different because things had stagnated, so perhaps “going back to basics” might work for now but maybe not for the longer term…
• Space NK announced that it wants to open new shops as it looks to invest in the high street after a period of decent momentum. It certainly seems to me that beauty is where it’s at at the moment – something that M&S and John Lewis are also banking on!
• Homebase fell into administration although the owner of The Range and Wilko, CDS Superstores, bought some branches and saved about 1,600 jobs in the process. It also bought the brand and IP. Will this prove to be a good acquisition if the DIY and soft furnishings market goes in the same direction as the housing market?!?
• IN SUPERMARKETS NEWS, sales boomed as they hit their highest levels since lockdown, M&S overtook Waitrose in terms of market share and Aldi is closing in on becoming the UK’s third biggest supermarket, overtaking Asda.
• WH Smith announced plans to expand in the US as its travel division – the one with shops at airports, stations and hospitals – continues to go from strength to strength. In the UK, it continues to shift its focus away from the high street and towards travel hubs.

IN LEISURE NEWS…

• Just Eat Takeaway just sold Grubhub to delivery-focused casual dining chain Wonder for just $650m only four years after it bought it in a deal worth $7.3bn in 2020 😱! What a shocker of a loss!
• In gambling, Flutter posted great quarterly numbers thanks to strong demand for sports betting in the US at the start of the NFL season. It was confident enough to raise its full-year guidance for the second quarter in a row.

• IN EMPLOYMENT – the latest numbers from the ONS show that the UK labour market is slowing down as the unemployment rate rose slightly. However, the Bank of England has said that such stats may be unreliable as the way they are calculated had to be changed.
• UK renters are continuing to get clobbered by a falling supply of rental properties and rising demand for them. Tough times for tenants…

My favourite “AND FINALLY” video this week was the classic lockdown Zoom sketch! Lockdown feels a world away now doesn’t 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 THE US – Donald Trump won the presidential election pretty convincingly. IN TERMS OF REACTION,  US stocks hit a record high and investors dumped bonds in response to the result and banks like JP Morgan, Goldman Sachs experienced a “Trump bump” as investors bet that M&A/IPO activity would rise and Bitcoin broke $75,000 while renewables and pharmaceuticals companies were sold off and Asian manufacturers with exposure to EVs look vulnerable. US prosecutors will probably now drop the criminal cases against Trump as they can’t prosecute a sitting president. Some say that the fears of a Trump presidency have been overblown given some of the differences between what he said and what he did when he was last president (although this time, he’s got a much stronger mandate and some prior experience). IN TERMS OF IMPLICATIONS, the global economy is bracing for a “macro shock”, which is sending shipping rates higher and getting countries that rely heavily on exports to the US (like Ireland) very worried – but, more importantly, there are worries regarding the US’s future role in defence in terms of its commitment to NATO and its stance on Taiwan, the Middle East and Ukraine. Putin says he’s open to talking about ending the war in Ukraine. Meanwhile, Elon Musk’s gamble on getting behind Trump is paying off handsomely and it’s possible that he could now be at the epicentre of a tech M&A bonanza as his companies are all involved in growth areas with massive potential! I wonder whether the higher-than-usual number of employees making partner at Goldman Sachs is part of them keeping their rainmakers happy in readiness for raking in all those fees! Oh yes – and apart from all that, the Fed cut interest rates by 0.25 percentage points.
• IN ASIA – CHINA is turning the screws on rich people and companies to cough up taxes to raise money ahead of a widely anticipated fiscal stimulus and INDONESIA is getting increasingly feisty as the new president has just announced bans on the sales of Apple’s iPhone 16 and Google’s Pixel phones because they don’t source enough local materials.
• IN EUROPE – Germany’s coalition government is collapsing as Scholz ended up sacking his finance minister after no-one could agree on next year’s budget. He will seek a confidence vote in January and then there will potentially be an election in March.
• IN THE UK – the NIESR think tank reckons that Trump’s potential protectionist measures (taxes etc) will hit our GDP growth hard and potentially increase inflation and interest rates. Goldman Sachs trimmed its UK GDP forecasts for next year, echoing the sentiment. The Bank of England cut interest rates by 0.25 percentage points but it said that it thinks that although there will be higher growth and higher prices in the short term, there will be more economic uncertainty beyond that. Opinions re last week’s Budget continue to emerge! Reeves got defensive, saying that UK businesses can “absorb” the national insurance rises but big businesses and industry groups like UK Hospitality are warning about the negative impact, a sentiment again echoed by NIESR. TBF, something like this was expected, which is probably why recruitment slowed down in the run-up to the Budget. Farmers and the NFU (in addition to Jeremy Clarkson) rejected Reeves’s justifications for new rules on inheritance tax and they said that this would put Britain’s food security at risk.

IN FOSSIL FUELS NEWS…

• OPEC+ members decided to delay planned rises in oil production until the end of this year to stabilise prices, while nearer to home Wood Group saw its share price fall by 60% after Deloitte found all sorts of nasties when it conducted an accounting review. This is not looking good…
• Anglo American announced that it would sell its 33% stake in Jellinbah Group, a steelmaking coal business, for £850m as part of wider efforts to streamline its operations and protect itself from hostile takeovers (basically it fended one off from BHP recently and it’s a target because investors see its value as being less than it should be because it’s a bit of a ragbag of businesses).

IN ENERGY NEWS…

• The IEA reckons that the UK can hit its clean power target thanks to recent initiatives announced by the new government. That’s nice. It just has to execute now!
• It was really interesting to hear that the CEO of Abu Dhabi’s national oil company, Adnoc, said that oil companies should be putting more resource into renewables because there will be guaranteed demand as provision for data centres will continue to grow. Many have been rolling back their eco targets, so I thought it was interesting to hear him say this.
• Did you know that it can take up to 11 years to connect solar farms to the UK network? Well a logjam is now building because of the huge amount of time it takes to sort the infrastructure that is needed to feed power generated by panels into the grid. This is clearly going to hold back developments unless something is done about it as a matter of urgency!!!

• Chinese EV makers continue to advance in Europe and now have an 11% market share in Norway, a country where 94% of cars sold in October were electric. In 2019, that share was zero!
• STRUGGLING MAKERS include Honda, which had disappointing first-half results and cut sales forecasts; Nissan, which announced a 20% reduction of its global headcount following a bad quarter; Stellantis, which announced plans to cut 1,100 jobs at its US Jeep plant thanks to ongoing sluggish demand for EVs and stubbornly high inventories and BMW, which saw its profits collapse by 80% thanks to evaporating China demand.
• Bentley became the latest car maker to push back its EV plans – it had originally planned to switch to having an all-electric line-up from 2030, but it’s pushed that back to 2035. Toyota, Volvo and Ford have all delayed electric models in response to ongoing sluggish demand – and I’m sure that plenty more will do so as well.
• On the flipside, Ferrari continues to buck the trend by posting higher sales and earnings in Q3 and stuck with its annual guidance. How the other side live, eh?
• IN OTHER AUTOMOTIVE TRENDS – the latest figures from the SMMT show that EV sales increased by 24% in October, accounting for over 20% of the new vehicles registration market, versus an overall backdrop of a 6% fall in sales of new cars over the month. Although superficially positive, a lot of this is being driven by deep discounting in order to hit sales targets to avoid fines. Meanwhile, sales of used cars hit a new high and UK motor finance continues to be in turmoil as lenders impose varying degrees of restrictions on new car loans in response to the recent court decision. Until we get more on the appeal and potential compensation obligations, I think car sales will be in limbo, considering that 80-90% of car sales use a loan of some kind. Now is not the time to be in limbo, now is it! Other than that, automotive suppliers Michelin and Schaeffler announced job cuts and factory closures due to ongoing weakness in the automotive sector. Given the current state of the industry, it’s not surprising – although it does make rival Continental’s recent confidence look like an outlier!