Category: Protected – Watson’s Weekly

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE COLOURED HIGHLIGHT REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

IN WAR NEWS…

Iran and the US agreed a deal to open the Strait of Hormuz and extend their ceasefire, the most positive development seen so far in the conflict. The Strait will reopen in phases over 30 days as Iranian forces clear mines and the ceasefire is extended by 60 days. Oil prices fell and global markets rose on the news. This is nothing like the “unconditional surrender” Trump demanded 100 days ago and instead! The deal is widely seen as the least bad available outcome rather than a genuine resolution since major issues like Iran’s nuclear programme and the permanent terms for using the Strait, including possible tolls, remain unresolved. Overall, Iran’s regime has survived intact and emerged the stronger for it, Israel is unhappy that the deal restricts its options in Lebanon and Gulf states must now reconsider their own alliances – do they huddle up closer to the Americans or seek other alliances instead?

Trump’s administration is considering a $300bn fund to help rebuild Iran if the deal holds although the money would reportedly come from companies wanting to do business there rather than the US government directly. Iran’s government is largely treating the outcome as a victory, having absorbed huge losses including 3,500 civilian deaths and damaged infrastructure without any regime change resulting. The two sides have electronically signed an interim memorandum of understanding under which the US will lift sanctions and release frozen Iranian funds, while Iran gets a waiver to export oil during the ceasefire period. Iran has separately announced plans to introduce maritime tolls for the Strait of Hormuz within two months and has rejected a European plan for a naval escort mission, with its supreme leader claiming Trump agreed the deal “out of desperation”.

IN DEFENCE NEWS…

The CEO of US defence tech start-up Anduril has called for a reset of America’s arms export controls to make it easier for allied nations to manufacture US weapons and boost production capacity.

France is seeking new defence partners, including the UAE, after its next-generation fighter jet project with Germany collapsed, with Dassault widely seen as the sticking point due to its reluctance to share sensitive technology.

In the UK, ministerial resignations and US criticism over defence spending shortfalls continued to weigh on Starmer. The Strategic Defence Review recommended an additional $68bn of spending over ten years against a current budget of around £60bn, while strategists argue Britain should refocus on defending the North Atlantic from Russian submarines and protecting undersea cables and maritime supply routes.

IN TRUMP THINGS…

Trump’s approval rating in Venezuela has fallen sharply since February due to frustration at the slow pace of change. Inflation there is still above 600% despite rising oil sales! Clearly increased sales aren’t yet filtering through to ordinary citizens.

On the domestic front, Trump has got some ground to make up in undoing some of the damage he’s done to his support base which may be why he appears to be using a personal vendetta against opponents as a distraction from the underwhelming Iran deal, with California governor Gavin Newsom claiming Trump has ordered the Justice Department to investigate him for considering a presidential run.

IN REGIONAL/INDIVIDUAL COUNTRY NEWS…

THE AMERICAS

US – The Fed kept interest rates unchanged for the fourth meeting in a row under new chair Kevin Warsh, signalling a shift in focus from encouraging jobs growth towards taming inflation. Trump, who spent the best part of two years criticising former chair Jay Powell for not cutting rates fast enough, appeared to be surprisingly relaxed about Warsh holding rates steady.

US defence secretary Pete Hegseth announced a six-month review of US military presence in Europe following the withdrawal of 5,000 troops from Germany and continued criticising NATO allies for not unconditionally granting the US base access for its Iran strikes.

ASIA

CHINA – Retail sales fell in May for the first time since December 2022, while fixed asset investment was also weaker than the previous quarter, suggesting that China is still struggling to recover from its prolonged property sector slowdown.

JAPAN – The Bank of Japan raised its short-term policy rate to around 1%, its highest level in 31 years, as inflation continues creeping into the economy.

EUROPE
The EU has officially started accession talks with Ukraine after Hungary lifted its veto under its new leader. Ukraine’s accession had previously been blocked by Hungary’s pro-Russia former leader Viktor Orbán.

SWITZERLAND – Swiss voters rejected a proposal to cap the country’s population at 10 million. This was seen as a defeat for the right-wing campaign behind the vote, with the government, business groups and unions arguing that the restriction would undermine access to foreign labour at a time of challenging demographics.

UK
The UK economy contracted 0.1% in April as the Iran war hit the services sector but the economy still expanded 0.7% over the three months to April versus the previous quarter. Arts, entertainment and recreation businesses were hit hardest, along with weakening retail activity. UK inflation held steady at 2.8% versus market expectations of a rise to 3%, thanks to easing food price inflation. This marked the second consecutive month of inflation undershooting forecasts. The Bank of England subsequently held interest rates at 3.75% in a seven to two vote.

The Makerfield by-election happened this week, with Andy Burnham’s Labour facing stiff competition from Reform and the newer Restore Britain movement, which has been gaining momentum from Elon Musk-backed support. Burnham ultimately won and the result leaves Starmer facing a genuine internal challenge.

IN COMMODITIES NEWS…

OIL – Oil prices fell to a three-month low and global markets hit record highs on the Iran deal breakthrough. Average US petrol prices dropped below $4, which you’d have thought would be popular with American consumers. Prices are unlikely to fully return to pre-war levels for months as buyers need time to replenish heavily depleted emergency stockpiles and repair damaged infrastructure. Oil sank below $80 as traders bet on a return of Strait of Hormuz flows. Analysts expect an eventual surplus to emerge as the UAE, now free of OPEC, opens its taps, Iran ramps up production as sanctions lift. Also, new projects in Brazil, the US and Guyana are due to come online from 2027 while demand from China continues to weaken while the war has accelerated the broader shift away from fossil fuels.

IN ENERGY NEWS…

The war has accelerated the transition to clean energy in some respects but the industry remains cautious about whether this momentum will last. Some countries in north-east and south-east Asia have actually burned more coal during the crisis, while the US and Canada have increased fossil fuel production to meet domestic needs and boost exports. Individual consumers, meanwhile, are buying more EVs, solar panels and domestic batteries.

NUCLEAR – Rolls-Royce struck a deal with Japan to jointly develop Advanced Modular Reactors and their fuel, working with the National Nuclear Laboratory and the Japan Atomic Energy Agency, aiming to build a UK demonstrator reactor by the mid-2030s.

Rolls-Royce also won a contract to supply small modular reactors to Sweden’s Vattenfall subsidiary Videberg Kraft after a four-year process, its third state-level endorsement after the UK and Czech governments.

Construction spending on commercial fusion plants is forecast to reach $73.1bn a year by 2040 according to consultancy Helixos, with suppliers including Japan’s Fujikura and US-based Aecom being among those expecting profitability well before reaching maximum output.

IN INVESTMENT NEWS/TRENDS…

TRENDS – Overseas buyers have spent £128bn acquiring British companies so far this year, more than three times the amount over the same period in 2025 and the highest level of UK M&A activity since just before the 2007 financial crisis! This has been thanks to depressed valuations and London still being a draw for foreign capital.

SDCL Efficiency Income Trust, once a popular ESG investment vehicle, saw its shares fall 25% to a record low after announcing it would suspend dividends and begin winding down. It has been particularly badly impacted by rising interest rates and falling asset values.

Private equity firms are increasingly wary of investing in law and accountancy firms as concerns grow regarding AI threatening their business models. Writing, translation and legal services are seen to be particularly vulnerable, while capital flows are switch into industrials with assets that less likely to be made obsolete by technology.

IN IPOs – SpaceX’s flotation was a runaway success, with shares climbing almost 20% on debut to push its valuation to around $2.1tn, making it the world’s sixth biggest company and Elon Musk the world’s first trillionaire when combined with his Tesla stake. Banks shared a record $500m fee pool, with Goldman Sachs and Morgan Stanley earning $100m each! Shares rose a further 20% the following day, taking the market cap to $2.5tn, before SpaceX briefly overtook both Amazon and Microsoft at a peak valuation of $2.97tn! SpaceX also agreed to buy Cursor parent Anysphere for $60bn to boost its AI coding capabilities and enterprise reach, a move likened to Facebook’s acquisition of Instagram. Musk is now planning a $20bn bond sale to repay a bridge loan taken out when xAI and X were folded into SpaceX.

There are still the IPOs of Anthropic and OpenAI to come and hopes are rising among charities about a wave of philanthropic giving similar to that which followed Facebook’s 2012 listing given that Anthropic’s founders have already pledged to donate at least 80% of their wealth.

IN MONEY RAISING – Nvidia is seeking to raise over $25bn in its first bond sale since 2021, upsized from an initial $20bn target due to strong demand.

Jeff Bezos backed Cambridge AI start-up CuspAI in a $400m funding round implying a $2.6bn valuation, a significant uplift from the $520m valuation it had in September! The company uses digital simulation to accelerate the discovery of new materials because it can digitally test a huge number in a very short timeframe.

M&A – Fox Corp announced the acquisition of streaming platform Roku in a $22bn deal, its first major acquisition since Lachlan Murdoch took over from his father.

American Express is buying Tripadvisor’s restaurant booking app TheFork for $700m to expand its dining network.

Yum Brands is selling Pizza Hut outside China to private equity firm LongRange Capital for $1.5bn to focus on its faster-growing KFC and Taco Bell businesses.

The CMA cleared Associated British Foods’ acquisition of Hovis, creating the UK’s biggest bread brand alongside its existing Kingsmill, Allinson’s and Sunblest brands. The question remaind – does ABF kneed more dough?? Sorry – I just couldn’t help myself…

Sportswear brand Castore bought a controlling stake in 160-year-old shoemaker Grenson in its latest acquisition after buying Belstaff last year. Lord knows why but I hope it works out for them!

McKinsey is among companies increasingly using AI in recruitment, testing how candidates use the technology to research and analyse data. They see the use of AI as an indicator of “intellectual curiosity”.

AI medical tools from Germany’s Mira and Google’s Amie matched or outperformed human doctors in controlled diagnostic and treatment tests. However, developers caution they are not yet ready for real-world deployment because the tests were done using very tight conditions.

In a separate test of AI stock-picking ability, six of eight major large language models lost money trading US stocks. Having said that, ChatGPT made almost $900 and Grok broke even on a $10,000 stake, implying that perhaps professional investors remain safe from AI (for now).

Accenture shares fell to their lowest level since 2017 after the company cut revenue forecasts, with its market cap down from over $200bn at the post-Covid consulting peak to under $80bn as investors worry about AI displacing consultancy work. The company has spent $9bn on acquisitions this fiscal year, including cybersecurity firms runZero, NetRise and a majority stake in Dragos.

CONSUMER TRENDS

An impending El Nino weather event threatens to push household energy bills higher because there’s likely to be a scramble between Europe and Asia to get gas due to a hot Asian summer driving air conditioning demand and a cold European winter increasing heating use.

UK – private sector wage growth has slowed to its lowest rate in five years, a trend likely to support the case for the Bank of England holding interest rates steady for longer.

IN RETAIL NEWS…

Major retailers including Currys, B&Q and Amazon met the energy minister to discuss guidelines for selling balcony solar panels, which the government says could save households £70 to £110 a year and are particularly suited to flats and rented homes.

Over 65 business leaders and MPs signed a letter urging the government to halt “relentless” tax rises, while retailers separately pressed for an earlier closure of the de minimis customs threshold that currently lets firms like Temu and Shein ship parcels under £135 into the UK duty-free.

Cotswold Company reported record sales and a near 25% rise in annual profit, defying the broader furniture sector slowdown. This is actually pretty impressive!

Aussie pharmacy Sigma Healthcare pulled out of talks to buy Boots. Even if takeover talks collapse, there’s still the prospect of the IPO that everyone had been expecting. It also shows that Boots is open to all options.

IN SUPERMARKETS – Tesco blamed poor weather and Middle East uncertainty for a slowdown in Q1 sales, with its chief executive saying sunshine has a bigger impact on grocery spending than the World Cup!

Aldi outlined a $9bn US expansion plan involving 4,000 new stores, with analysis showing new Aldi openings cut around one percentage point from competitors’ annual sales within a ten-mile radius. I’m not convinced as America has been the graveyard of many a retailer due to the competitive nature of the market.

AI – The Trump administration forced Anthropic to suspend exports of its Fable and Mythos models and ban foreign nationals from using them, citing national security concerns and giving the company just 90 minutes to comply! Starmer is seeking a British carve-out from the ban, while the US and Europe are discussing a “trusted partner” scheme that could restore access. Anthropic’s Dario Amodei called for the G7 leaders in France to resist the temptation to splinter over AI, a call echoed by OpenAI’s Sam Altman and Google DeepMind’s Demis Hassabis, though Mistral’s chief executive warned that intertwined AI supply chains leave non-US countries vulnerable to being cut off. JPMorgan banned its Hong Kong staff from accessing Anthropic’s models following a similar move by Goldman Sachs earlier this year. The episode has intensified debate about European AI sovereignty, with commentators noting Europe currently lacks the companies needed to build leverage in the AI supply chain, since DeepMind is owned by Google and Arm is majority-owned by Japan’s SoftBank.

Canada’s Cohere, a non-American LLM provider, is tripling its UK footprint. Could this company benefit from the travails of Anthropic and European reticence on American providers like OpenAI?

OpenAI spent $34bn last year, including $19bn on R&D, against revenues of around $13bn, ahead of a potential autumn IPO.

Legal AI start-up Legora plans to more than double its headcount after quadrupling its client list to around 1,200 in the past year.

DATACENTRES – Investors poured $58bn into 42 data centre financing deals this year, up from $34bn across 34 deals in the same period last year. Around 850 data centres worth about $7tn currently are under construction worldwide according to Oxford Economics.

HARDWARE – SpaceX criticised EU plans to reserve some of its satellite spectrum for European players, warning it could undermine connectivity in Ukraine and create global interference problems (he would say this, though!).

Apple is preparing to raise gadget prices, blaming rising AI memory chip costs. This comes ahead of the expected September launch of the iPhone 18, with DRAM prices having doubled in Q1 of this year.

Snap launched its latest “Specs” augmented reality glasses at $2,195 a pair after investing over $3.5bn in their development. Investors didn’t seem convinced at this latest effort as shares fell more than 9% on the announcement.

SOFTWARE – France’s domestic intelligence agency has replaced Palantir with local rival ChapsVision just months after renewing a ten-year contract. This is part of a broader European pullback from US tech firms that has also seen Germany’s armed forces cut Palantir from contracts and Denmark, the Netherlands and Switzerland reviewing or rejecting its services.

IN MEDIA NEWS…

The BBC’s new director-general Matt Brittin announced 550 job cuts while on holiday, alongside programme axings and a push towards reporters filming on their mobile phones rather than using camera crews, drawing criticism for poor timing just weeks into the role. I’ve seen someone do something like this when they joined a company I worked for. When things went wrong for them, everyone was lining up to stick the boot in. He didn’t stand a chance…

IN SOCIAL MEDIA NEWS…

Starmer announced a social media ban for under-16s that goes further than Australia’s equivalent, covering platforms including Facebook, Instagram, Snapchat, Reddit, TikTok, YouTube and Twitch, alongside restrictions on livestreaming and stranger contact extending to Roblox and Discord. Legislation is expected to pass by year-end with the ban taking effect by next spring. Enforcement will be modelled on the Online Safety Act, with fines of up to 10% of global revenue and Ofcom overseeing compliance. Industry groups have pushed back, warning the move could drive teenagers towards more harmful platforms.

Research firm eMarketer reckons that social media ad spend will be cut because of this legislation, so it shaved £1.3bn off its original expectation to leave an ad spend of £17bn.

IN AUTOMOTIVE NEWS – GM is in talks to supply weapons parts to Lockheed Martin as it looks to grow its small defence business while Renault and Thales are partnering on a tactical vehicle prototype for armed forces, building on Renault’s earlier drone partnership with Turgis Gaillard. Despite such moves, commentators are sceptical that defence work will rescue European carmakers from Chinese EV competition, given the loss of truck divisions that would have been natural defence partners and the specialised retooling needed for the manufacture of defence equipment.

Rivian cut just under 2% of its workforce in sales and marketing as it pushes towards profitability. It feels like Rivian is fighting for survival.

EV charging industry group ChargeUK has warned it could halve planned investment if Starmer waters down net zero targets amid reports the government may cut its 2030 EV sales target from 80% to 50%. I am going to be brutal here but I think that battery tech is developing faster than charging networks and so I wonder how much the government is really going to listen to all this.

BMW cut its 2026 profit guidance due to the Iran war’s impact on sales and continued weakness in China. Pretty much all European carmakers seem to be struggling in this market.

Jaguar Land Rover outlined ambitions to grow hybrid production as part of a major push to grow the US business to match the size of its entire current operation, while separately facing a whistleblower claim alleging it suppressed fire risk concerns over the Range Rover Evoque.

IN REAL ESTATE – housebuilder Vistry is offering staff voluntary redundancy as it seeks to conserve cash amid a weak housing market and rising material costs linked to Middle East disruption. The Item Club forecasts the housing slowdown will continue into next year due to weak consumer confidence, rising unemployment and elevated mortgage rates.

The government announced plans to overhaul the home-selling process, requiring upfront sales information packs and earlier binding agreements to reduce gazumping and gazundering. The process seems to be overdue a huge overhaul as Rightmove data shows that average transaction times have risen by 60% since 2007 to 170 days.

Rathbones shares fell almost 20% after the wealth manager announced it would pause investments by high-risk clients and suspend onboarding such clients for up to a year following an internal review, with fixes expected to take around two years and £60m.

Diageo’s new chief executive Dave Lewis has ordered job and cost cuts as part of a major restructuring focused on non-revenue-generating teams. The company employees are now learning why his nickname is “Drastic Dave”…

Chinese universities are climbing global rankings faster than UK and US institutions, with China’s representation in the top 1,504 QS World University Rankings rising from 13 to 85 institutions. Over the same period, a majority of US and UK universities fell down the rankings, something that is at least partly due to declining international student numbers that resulted since the government made changes to UK visas.

My fave video of this week was the one with the best gym bro!

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…

IRAN – The week saw a rapid series of escalations and de-escalations. Israel launched retaliatory airstrikes on Iran after Iran fired missiles at northern Israel, before both sides halted counter-strikes following pressure from Trump. The US then launched its own strikes after Iran downed an American helicopter, followed by a fresh wave of attacks that destroyed two water storage reservoirs and left 20,000 people without water. This was the most serious US attack since the April ceasefire. Trump subsequently called off more strikes, claimed the two sides had reached “a great settlement” and that the agreement would be finalised in the next few days. Whether this holds remains to be seen, but it is the closest the conflict has come to resolution since the initial attack on February 28th, when Trump predicted the whole thing would last five weeks.

DEFENCE – The Franco-German joint fighter jet project is dead after clashes between Dassault Aviation and Airbus’s German division over work share, governance and intellectual property proved impossible to resolve. A German-led group of eight aerospace and defence companies called Team Gen 6, led by Airbus, is now planning a European alternative.

Switzerland is wondering whether it should switch from the US Patriot air defence system to the French-Italian SAMP/T alternative because Patriot deliveries have now been delayed from 2027 to 2032 or later. Lockheed Martin cannot confirm when US allies will receive their deliveries, with supply constrained by the Iran war – and this is despite their current commitment to triple capacity. Ukrainian arms maker Fire Point has developed a cheaper surface-to-air missile that can be produced at scale from August and shipped from 2027.

Talking of production delays, Mitsubishi Heavy Industries is struggling to keep up with an $82bn order backlog amid the global AI and defence spending surge.

TRUMP THINGS

Trump is pressuring new Fed chair Kevin Warsh to cut interest rates to 1% or lower, a demand that came directly after a strong US jobs report prompted markets to expect rates to rise rather than fall. Inflation rates have to strike a balance between controlling rising inflation (in which case interest rates are increased to curb borrowing, which in turn slows spending down) and stimulating job growth (in which case interest rates tend to be cut in order to make borrowing – and therefore investing in extra employees – cheaper). The argument here would be that if jobs are stable or strong (which is what happened here), then taming inflation becomes the priority – and that means interest rates should go up. Trump wants the opposite – he wants interest rates to go down because it tends to stimulate the stock markets, which makes him look good.

A nationwide poll showed that 68% of registered voters disapprove of his handling of inflation and cost of living, with around two-thirds blaming his policies for higher grocery prices.

A federal judge ruled that Trump’s $100,000 annual fee for H-1B highly skilled worker visas is unlawful, describing it as an unauthorised tax whose obvious purpose was revenue-raising rather than protecting American workers. Surely not 😁?!?

Trump also suggested he may not renew the trade deal with Mexico and Canada when it comes up for review on July 1st. If he doesn’t, it’ll have to be reviewed annually.

The president recently floated the idea of the government taking equity stakes in AI companies but critics point to conflicts of interest and the risk to taxpayers if the sector falters.

IN REGION/COUNTRY NEWS…

AMERICAS
US – US inflation rose for the third consecutive month to 4.2% in May, its highest level in three years. Trump claimed responsibility for oil sitting at $85 a barrel but a more plausible explanation is that China’s crude oil imports have dropped dramatically since the start of the Iran war by an amount equivalent to the combined daily consumption of Italy and France! Analysts say this cannot continue indefinitely and China will probably need to increase purchases in the coming months.

Former Treasury secretary Janet Yellen warned about the US fiscal deficit approaching 6% of GDP, its highest level outside of wartime – and raised concerns about threats to Fed independence due to ongoing pressure from the President for the Fed to do what he wants.

The Pentagon put Alibaba, Baidu and BYD back on to its Chinese military companies blacklist, citing alleged connections to China’s People’s Liberation Army via the country’s military-civil fusion programme. The companies are obviously objecting to their inclusion.

ASIA

CHINA – China’s factory gate prices rose at their fastest rate since July 2022 in May, driven largely by higher global energy prices.

Exports grew by 19.4% in May as shipments to the US boomed year on year. China continues to make progress despite Trump’s efforts to limit its growth, though confidence and the property sector remain stubbornly weak.

EUROPE

The ECB raised eurozone interest rates for the first time since 2023, lifting its main deposit rate from 2% to 2.25% in response to Iran-war-driven inflation. Markets are now pricing in three more rises before next spring. It remains to be seen whether other central banks will follow.

THE UK
Starmer threatened to demand resignations from any ministers who back Andy Burnham as a potential leadership rival, signalling a tense political atmosphere heading into the summer.

Starmer’s defence secretary and Armed Forces minister then resigned and he finally signed off on the long-delayed four-year Defence Investment Plan. The government is looking to fund around £15bn in new defence spending through cuts to other departments, with energy and transport most likely to be targeted rather than tax rises or additional borrowing although Reeves indicated she is open to raising taxes to fund defence spending.

IN COMMODITIES NEWS…

OIL – Oil prices jumped on fresh Iran hostilities although OPEC+ agreed to increase production quotas for the fourth successive month. The practical problem remains getting oil to customers while the Strait of Hormuz is disrupted.

Rising petrol prices are making EVs look increasingly attractive, with UK petrol prices up around 20% since the start of the year! The total cost of running an EV now falling below that of a traditional car.

GOLD – Gold fell to a six-month low of around $4,022 per troy ounce, putting it on track for its worst quarterly performance in a decade. The price has fallen by over 20% since the Iran war started, driven by profit-taking from central banks and speculators following a very strong run. It’s worth remembering that gold was the world’s biggest reserve asset by value at the end of last year, having overtaken US Treasuries.

METALS – Tin is emerging as an AI beneficiary because it’s the material that holds together racks, power modules and networking switches in AI infrastructure. Almost 75% of the world’s tin is mined in just three countries – China, India and the DRC.

Prices for industrial metals including copper and aluminium are likely to stay higher for longer due to strong datacentre demand. Copper is almost at its all-time high and aluminium is at its highest level in four years! The Iran war has also raised mining operating costs by pushing up the price of diesel.

IN ENERGY NEWS…

Trump’s Iran war has accelerated demand for Chinese cleantech, with sales of solar cells and battery-powered vehicles surging as countries seek greater energy independence. BYD and CATL had suffered earlier in the year from subsidy phase-outs and fierce price competition but the war stimulated demand once more. The longer the conflict drags on, the longer this is going to continue.

IN INVESTMENT NEWS/TRENDS…

There is a growing debate about whether we are in an AI and clean energy bubble or at the beginning of a new investment super-cycle. The case for a genuine super-cycle rests on AI being a transformative technology requiring vast energy to scale, on a clean energy revolution gaining pace and on industries needing to spend heavily to upgrade processes, infrastructure and human capital. The “bubble” argument suggests that company valuations are reaching crazy levels when judged against traditional metrics and that if financing runs out, the bubble will burst and stock market disaster will strike.

IN MARKETS – US markets have been powered by earnings strength rather than rising valuations or speculation, according to Goldman Sachs. Wall Street analysts have been upgrading S&P 500 earnings estimates in both 2026 and 2027 and upgrades have been outpacing downgrades in every sector. The five biggest hyperscalers are expected to spend $755bn on capital investment this year alone. A concern for investors is the concentration of the S&P 500, with its ten biggest companies now accounting for 41% of the index’s market cap, the tightest concentration in decades.

South Korea’s KOSPI dropped over 8% in a tech sell-off that triggered a trading halt, with Samsung and SK Hynix both falling by over 10%, following the NASDAQ’s 4.2% fall last week. The weakness could be linked to investors raising cash ahead of the SpaceX IPO rather than any change in fundamentals.

IN IPOs – SpaceX priced its IPO at a $1.78tn valuation, making it the world’s biggest ever IPO at triple the size of the previous record! The order book is more than three times covered, with strong demand from asset managers, Gulf sovereign wealth funds, hedge funds and retail investors. SpaceX secured special dispensation to skip the usual one-year seasoning period for index inclusion, meaning tracker funds will be compelled to buy its shares when it joins benchmark indices. Musk retains 80% of voting power through special shares and is eligible for a $1tn pay deal if the valuation reaches $7.5tn. It is interesting to note that American university endowments are set to make billions from the listing because they’ve got a lot of it! OpenAI also filed for a Wall Street listing that could value it at over $1tn, just days before the SpaceX debut.

IN M&A – Tate and Lyle agreed to a £2.7bn takeover by US rival Ingredion, creating a major global ingredients business.

Italian bank Intesa mounted a $35bn bid for Monte dei Paschi di Siena, just one day after a rival approach from Banco BPM.

Software buyout deals fell to their lowest level since the pandemic, with value dropping to $50bn in the first five months of 2026 versus $88bn in the same period last year, as AI uncertainty makes it harder to pick winners among software companies.

GSK agreed to buy US cancer biotech Nuvalent for $10.6bn, its biggest deal since 2014, helping offset the 2028 patent expiry of its HIV drug dolutegravir. Biotech deals have totalled almost $211bn so far this year – and I think that there will be more to come.

VodafoneThree is considering buying TalkTalk’s consumer division. There are other potential buyers in the mix, though!

Boots is in sale talks with the Weston family behind Primark as well as Australian pharmaceutical group Sigma Healthcare.

Frasers Group made an all-cash offer to buy the 74% of Hugo Boss it does not already own for €2.7bn.

IN MONEY-RAISING NEWS – Neura Robotics raised $1.4bn at a $7bn implied valuation to develop industrial AI applications in Europe.

IN BUSINESS NEWS/TRENDS…

Brazil is emerging as a potential major rival to China in rare earths, holding the world’s second biggest reserves and developing ambitions to process them domestically. China controls over 90% of global processing and magnet production despite holding around 50% of reserves. Brazil has declined to join a US-led minerals bloc and says it is open to any investors, which could prove to be a valuable bargaining chip.

Reeves is pushing companies to accelerate AI adoption by asking employers to share data with a new AI Economics Institute (the AIEI) that will also track AI’s effects on employment. Critics note that the institute is unlikely to be entirely impartial given its government backing but the initiative is broadly seen as a step in the right direction.

IN EMPLOYMENT TRENDS…

Walmart argued that AI will help rather than replace workers, although you would have thought that last month’s layoffs in its tech and product teams would have at least been partly due to AI, no??

Jeff Bezos, whose new $41bn AI lab Prometheus focuses on manufacturing and engineering, argued AI will create a labour shortage and generate more jobs than it destroys. Anthropic’s Dario Amodei has taken the opposite view, warning of a jobs crisis that could require higher capital gains taxes to fund universal basic income.

Meta is launching a free five-week Workforce Academy that trains workers for guaranteed datacentre construction jobs.

Wix.com is cutting 20% of its staff and scaling back parts of its business.

US law firm Quinn Emanuel has announced salaries of £189,000 for newly qualified solicitors in London.

UK employers are hiring more temporary workers as permanent hiring falls, reflecting a lack of confidence echoed by trends at recruitment firm Hays.

A growing number of employees are ditching full-time roles to become freelancers, a trend employers say has been driven by government policies making permanent employment more expensive.

IN EDUCATION NEWS…

Meanwhile, overseas students at Cambridge face fees of at least £450,000 for a medicine degree as top English universities raise international undergraduate fees substantially.

IN CONSUMER TRENDS NEWS…

US – Campbell’s reported weaker demand for snacks and although it didn’t blame this on weight-loss drugs, it is a likely factor! Many other consumer goods companies have felt such an impact (and some have already tried to alter recipes and provide healthier alternatives). The trend is increasingly being priced into expectations for the food and beverages sector as the proportion of people using weight-loss treatments continues to rise.

CHINA – China’s “silver economy” is gaining attention as a growth driver as over 30% of the population is projected to be over 65 by the mid-2030s. Policymakers are looking to this demographic for growth as the property market remains weak. China’s birth rate continues to decline sharply.

EUROPE – European drivers are cutting fuel consumption in response to higher petrol prices, echoing similar trends already seen in the US as the energy price shock from the Iran war begins to change behaviour at the pump.

THE UK – UK national debt is approaching £3tn and some projections suggest it could breach 96% of GDP in the coming years, a level not seen since the 1960s when Britain was still paying off World War Two. The UK currently has the second lowest debt ratio in the G7 but the combination of higher debt and toxic politics is likely to hold back growth.

IN RETAIL NEWS…

UK discount retailers’ combined market share has grown since 2019 but the sector has been losing momentum overall since 2022, if you exclude Aldi and Lidl. Rising utility bills, food costs and petrol prices could push consumers back towards discounters – something that happened in the previous cost-of-living crisis.

Supermarkets took an estimated £800m sales hit last year from weight-loss drugs, with customers on the treatments cutting grocery spend by an average of £418 per household in the year after starting treatment. Some 6.3% of British households now have at least one member using the treatments, up from 2.3% in 2024, with snacks and chocolate hit hardest.

WH Smith issued its second profit warning in a few months and is now asking shareholders for £100m to bolster its balance sheet thanks to a combination of an accountancy scandal in its US business and airport footfall that has been decimated by the Iran war.

IN LEISURE NEWS…

HOSPITALITY – The World Cup, starting this Thursday and running for six weeks, is expected to provide a meaningful boost to hospitality and gambling. Games in the US, Canada and Mexico make kick-off times awkward for Europeans, but more matches are on terrestrial television and licensing hours have been extended. Pub operators including Marston’s and Fuller’s have invested in fan experience and have high hopes. Deliveroo, Just Eat and Domino’s are also expected to benefit.

ITV describes its World Cup coverage as the most lucrative sports event it has ever aired, with ad revenues running around 30% ahead of Euro 2024, with 30-second slots in England games potentially costing up to £300,000.

Prediction markets have already taken nearly $2bn in World Cup bets, close to being the biggest market of this type in history with five weeks still to go.

AIR TRAVEL – Airline executives at the IATA summit said jet fuel shortages are unlikely but industry profits could halve and some carriers may not survive the fuel price shock. Jet fuel prices are expected to rise by 70% by end of 2026 and fare rises are described as inevitable. British Airways has already warned it will raise prices if fuel costs stay high.

Emirates is offering travel insurance and guaranteed repatriation flights to tempt passengers back to Dubai, where daily airport transfers have fallen from 100,000 pre-war to around 40,000 currently.

Wizz Air is threatening to cut UK routes if Air Passenger Duty rises go ahead. At the moment, APD is £15 for an economy class ticket to most European destinations so it can be a significant chunk of a cheap airline ticket – hence the threat!

IN TECH NEWS…

The EU’s new digital sovereignty legislation is causing concern among UK tech companies (including Synthesia) who fear being cut out of European markets. The EU legislation is designed to encourage European tech champions and could cut out British companies.

Industrial companies including Caterpillar and Nucor are emerging as AI beneficiaries because of datacentre build-out demand. Another example of an AI beneficiary that wasn’t immediately obvious, Ford’s share price surged by around 20% in May after it announced a pivot from EVs into battery storage for datacentres.

AI – OpenAI is planning its biggest ever overhaul of ChatGPT, aiming to become a superapp combining coding tools and AI agents while shifting focus towards profitable business users. OpenAI has also filed for a Wall Street listing potentially valuing it at over $1tn.

Anthropic released a “safe” version of its Claude Mythos model called Fable 5, designed for software writing and debugging as well as complex research and image analysis. Unlike the original Mythos release in April, which went only to a handful of governments and organisations, this version is available to the general public.

IN DATACENTRES – SpaceX signed a $30bn deal to lease computing capacity to Google at $920m per month. This came not long after a similar deal was announced with Anthropic – but let’s hope this time that the deal sticks because the Anthropic one was walked back quite quickly.

A UK data centre project in Wales risks collapse because the government has been very slow to grant permission to connect to a nearby battery plant. British data centre company Era4 said that the situation is getting so bad that it might have to look at other sites outside the UK.

Oracle announced $70bn in data centre spending in the coming year.

CHIPS – Apollo and Blackstone raised $35bn in a private credit deal to finance Anthropic’s expansion plans.

HARDWARE – Apple unveiled a long-overdue overhaul of Siri, now called Siri AI, aimed at competing with ChatGPT and Claude. Apple argues it can access personal information without compromising privacy, differentiating it from rivals. A beta version arrives next month with a full rollout in autumn.

SOFTWARE – Palantir is suing Sadiq Khan over his decision to block a £50m Met Police contract. The Met commissioner warned the decision will cost 700 frontline officers as planned job reductions made possible by Palantir’s software will no longer be achievable. A cross-party parliamentary committee has flagged a clear mismatch between Palantir’s activities and UK values.

IN SOCIAL MEDIA NEWS…

The European Commission ordered Meta to restore WhatsApp access for rival tech companies building AI assistants, following concerns Meta was using its control of the platform to prioritise its own AI services. Meta said it would appeal.

IN AUTOMOTIVE NEWS…

EVs – BYD’s founder said the company aims to overtake Toyota as the world’s biggest carmaker within five years, powered by battery technology advances and fast charging. BYD plans to invest almost £1.8bn in European flash-charging infrastructure.

GM is developing sodium ion battery technology in partnership with US start-up Peak Energy to challenge Chinese dominance in energy storage. Sodium ion batteries use cheaper and more abundant materials than lithium and they function across extreme temperatures without an active cooling system. Cooling systems use tons of energy.

Renault has capped its defence revenue at 5% of total sales as it expands into drone manufacturing alongside its car business. Mercedes-Benz signed a deal with Tytan Technologies to provide vehicles for a mobile air defence system targeting small drones, using Sprinter vans and a military G-Class SUV.

Driverless vehicle start-up Wayve is exploring whether its early backers could trade shares on the London Stock Exchange’s private securities platform, Pisces, potentially providing a boost to the LSE’s tech credentials.

REAL ESTATE – The latest RICS survey reflects a subdued market although some estate agents are cautiously optimistic that activity may be beginning to stabilise. Conditions have not improved meaningfully but estate agents say that there are tentative signs which suggest that things have stopped getting worse.

PHARMACEUTICALS – AstraZeneca reported positive mid-stage trial results for its leading weight-loss drug, which would suggest that it is beginning to close the gap on rivals Eli Lilly and Novo Nordisk in a fast-growing market.

My fave video of this week was the one with that bloke on the treadmill! He was amazing!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE COLOURED HIGHLIGHT REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

IN WAR NEWS…

US/IRAN – tensions continued as zero progress appears to have been made. Meanwhile, the House of Representatives passed a resolution to stop Trump from conducting any more strikes on Iran without approval from Congress. The war has drained US oil stocks to their lowest level since 2004 and hybrid sales in America have boomed as consumers want to cut their reliance on petrol.

ISRAEL/GAZA – Trump claimed that Israel and Hizbollah were going to agree a ceasefire, they did and then Hizbollah rejected it.

RUSSIA/UKRAINE – Putin’s running out of workers because he’s lost so many as a result of the war. Russia’s now recruiting loads of Indian workers, some of whom would have gone to the Middle East but can’t work there now because of the war.

IN DEFENCE NEWS…

It looks like the Americans are going to withdraw key military assets from NATO’s rapid response force although whether this is genuine or another Trump negotiation tactic remains to be seen.

Ukrainians are brilliant at drones and Gulf states are getting attacked with drones despite having expensive American defence systems. It has been suggested that Ukraine sends experienced operators and equipment to these states and they will pay handsomely for it, which could come in useful for finances given the likelihood is that the Americans are going to pull money out in next year’s defence budget. It’ll be interesting to see

Norwegian firm Radionor Communications, which makes tactical broadband radios for the battlefield, is looking for a buyer. The company has seen a major increase in demand for communications equipment that sends very narrow signals making detection and disruption difficult. I think that further consolidation in the defence sector is highly likely as strong demand underpins future growth across what remains a fragmented industry.

IN TRUMP THINGS…

The president has abandoned his plan for a $1.8bn “anti-weaponisation” fund that would have paid out to allies targeted by the justice system under Biden, only after a court ruling temporarily blocked it. The fund was strongly criticised as a vehicle for Capitol Hill rioters to get compensation and even Republicans urged him to drop it.

He has also signed an executive order creating a “voluntary framework” for the US to get first look at AI models, having been reluctant to do so because he feared government oversight would slow down the tech advances of the likes of OpenAI, Google and Anthropic.

IN REGION/COUNTRY NEWS…

THE US – US Treasury Secretary Scott Bessent was doing his best to talk down inflation at a congressional committee hearing, preferring to point out that “the economic data is very strong”.

Meanwhile, Trump is trying to impose tariffs of at least 10% on 60 countries following an investigation into forced labour practices. China, the EU, India, Japan and the UK are among those deemed not to be doing enough. Given that the latest tariffs are due to expire soon, it is not surprising that he has found another excuse to keep the tariff party going.

IN EUROPE…

DENMARK – Danish PM Mette Frederiksen has finally formed a coalition government following over two months of negotiations since her narrow March election victory, resulting in a four-party centre-left coalition.

HUNGARY – newly-elected PM Péter Magyar has promised to change the constitution to remove Orban’s allies and restore the rule of law. His conservative Tisza party won a parliamentary supermajority in the recent election so he has real momentum behind him, but not everyone is going to take this lying down.

IN THE UK…

Government borrowing was way higher than expected – £60bn higher than then previous OBR forecasts! They admitted to underestimating the dent on growth from Reeves’s payroll tax raid. What is the point of the OBR if it gets its forecasts so badly wrong??

The UK government is putting £1.3bn towards Universal’s first European theme park in Bedfordshire. It will be called Universal United Kingdom Resort and should generate 20,000 construction jobs and then 8,000 permanent ones when it opens in 2031.

Andy Burnham has confirmed he wants to replace Starmer as PM if he wins the Makerfield by-election on June 18th. We all knew this anyway.

IN COMMODITIES…

OIL – Countries that export oil via the Strait of Hormuz are talking about building pipelines to bypass it, with Kuwait, Saudi Arabia and the UAE all exploring options. This all sounds good but it’ll be expensive, take time and could prove to be a white elephant if the Strait situation gets resolved. Such talks have happened before and have never come to fruition due to concerns about over-reliance on neighbours and possible vulnerabilities.

BP is on the verge of quitting the North Sea after over 60 years due to Labour’s fixation on tax raids. The North Sea industry is already losing about 1,000 jobs a month and while this is good news for environmentalists, it will ultimately be bad for consumers as we will have to spend more on importing oil.

GOLD – the shiny stuff is now the world’s top reserve asset, overtaking US government bonds after years of central banks loading up in search of alternatives to US assets. The ECB chief noted that “Geopolitical tensions continue to drive strong central bank demand for gold”.

IN CRYPTO NEWS…

Bitcoin is approaching its biggest weekly loss since November 2022 after Strategy, one of its biggest corporate fans, sold 32 bitcoin for $2.5m last week. Bitcoin has lost 14% of its value this week and the fall came more because of WHO was selling rather than WHAT they sold. It seems retail investors are prioritising tech stocks over bitcoin (for now at least).

IN MARKETS – Concerns about an AI bubble bursting haven’t stopped the S&P 500 from hitting record closing highs 11 times in May while Q1 earnings smashed expectations. It’s all about AI-related tech! The danger is that AI stocks drag the whole index with them, potentially masking poor performance underneath.

IN INVESTMENT TRENDS…

IPOs – Investors have been falling over themselves to get exposure to SpaceX ahead of its much-anticipated IPO, putting money into mutual funds and four ETFs that hold slices of the company since December last year. At least 14 ETFs will offer exposure once the flotation happens and a successful launch should bode well for the eventual valuations of OpenAI and Anthropic.

Chinese authorities are cracking down on citizens’ exposure to US equity markets, with the China Securities Regulation Commission ensuring investors can only buy overseas stocks via official channels. This clampdown has extended to on opening offshore bank accounts, news of which hit HSBC and Standard Chartered share prices.

As far as SpaceX’s valuation is concerned, SpaceX values itself at about $1.8tn, Morningstar analysts reckon it’s worth $780bn and Goldman Sachs, which is lead on the deal, reckons that its AI revenues will increase a hundredfold by 2030 (but then they are probably biased!).

Anthropic has now filed for an IPO likely to value it at over $1tn, less than a week after closing its latest funding round, which puts pressure on OpenAI to do the same and keep up with the Joneses. OpenAI just needs to get on board the hype train and ride it all the way to Flotation Central IMO! Will the markets be able to absorb all these mega-IPOs in short succession though??

M&A – Berkshire Hathaway agreed to buy Taylor Morrison Home Corp for $6.8bn in cash, one of the first big investments by CEO Greg Abel who took over from Warren Buffett in January.

People Inc offered to buy the rest of MGM Resorts to take it private which would likely give Entain a windfall for its 50% stake. There is speculation that Entain itself might be a takeover target given consolidation in the sector.

General Mills sold its Häagen-Dazs ice-cream stores in China to a group of local investors, following similar moves by Starbucks and Burger King as competition intensifies.

US private credit firm Castlelake put in a cheeky bid for easyJet, taking advantage of a share price that has fallen by almost a third in the last 12 months and by over 75% since its peak. EasyJet isn’t keen and there are EU poison pills to deal with for such an opportunity to work out.

EQUITY RAISE – Alphabet initially planned to raise $80bn in equity to finance massive AI infrastructure investments. This will be the biggest stock offering in history and the company’s first in over 20 years – but then demand has been so strong that it upped the ante to raise $85bn!

IN BUSINESS TRENDS…

The OECD has confirmed that subsidies and cheap loans have been behind Chinese companies’ growth in 15 key industrial sectors, attributing almost 60% of their global market share gains since 2005 to subsidies. Everyone has known this for some time so the OECD is really just putting a number on it. In many cases it is too late to do anything about it. The only real way to push back is to form alternative alliances, perhaps with Europe and the Gulf states.

Saudi Arabia’s Public Investment Fund has been replacing foreign execs with locals across a number of its companies, which makes a lot of sense given the fund’s narrowing of focus. There will probably be a lot of asset disposals where existing holdings no longer fit the new priorities.

Blackstone capped withdrawals from its $79bn private credit fund in response to redemption requests booming over Q2. This is a significant development for a firm of its stature and reflects broader concerns about private credit in general.

The M&S chairman criticised the effect of high taxes and too much bureaucracy on British businesses while the boss of Stonegate, Britain’s biggest pub company, remarked that it’s not that they don’t want to hire young people – it’s not happening because there is no economic breathing room to do so.

IN EMPLOYMENT TRENDS…

IN THE US – A New York Federal Reserve study concluded that working from home was to blame for almost two-thirds of the recent rise in youth unemployment, as less experienced workers are harder to supervise remotely, weakening incentives to hire them.

IN THE UK – hospitality bosses are calling for the chancellor to reverse NIC changes because they see the move as the primary driver of the slowdown in youth employment. BCC forecasts warn that a toxic combination of higher taxes, minimum wage rises and AI will produce a joblessness rate of 17.8% in the 16-24 age group in 2027. The number of households where no adult has ever worked has hit a record high and online ads for starter jobs have halved over the past decade. This has become a structural problem rather than a cyclical one and until the government does something dramatic, things are not going to improve IMO.

IN EDUCATION…

Almost 25% of British universities had less than 70 days of cash to cover costs at the end of 2024-25, with London South Bank University the worst performer at just seven days. The government needs to make difficult decisions about slimming down universities and courses but the current leadership situation makes that challenging.

The VAT on private school fees has resulted in pupil numbers falling by over 20,000 in the first full year of the policy and it is not clear whether the money has actually funded 6,500 new teachers – as per the government’s initial promises.

Confidence in the value of a university degree has also hit a record low, with rising costs, falling employment prospects, debt fears and the prospect of AI rendering courses obsolete all explaining the reticence. I think that the government will need to make some unpopular decisions to fix the system.

IT consulting share prices continue to take a battering every time AI advances because investors worry that it renders their billable hour business model obsolete. Accenture’s share price has more than halved in less than 18 months, for instance, but it’s possible that the pricing model moves towards being outcomes-based, something that professional services companies have increasingly been debating.

IN CONSUMER TRENDS…

Americans on GLP-1 weight-loss drugs are creating a significant headache for apparel retailers because their use has led to a rise in consumers returning their purchases. Some people are dropping one clothing size per month at peak weight loss! Returns are a major issue given shipping, labour and warehousing costs plus the risk of garments coming back out of season. There is surely an opportunity here for better virtual sizing technology!

British car sales hit their highest level for May since before Covid, up 7% overall with battery electric car sales showing the strongest uptick. This is particularly notable because private buyers were the main driver for the best May sales rise since 2019. Fleet buyers had previously been leading the charge.

Sales of lower-strength beer between 1.3% and 3.4% ABV have boomed by 2,500% between 2022 and the end of 2025, growing from a 0.4% share of the market to 12.5% following reforms in August 2023 that cut duty on drinks with an ABV of 3.4% or less.

IN RETAIL NEWS…

Amazon is expanding its fast-track UK delivery service, Amazon Now, to Manchester and Birmingham this year following its existing sub-30-minute service in parts of London. The company is putting more effort into Whole Foods following the closure of Amazon Fresh stores. This is unlikely to be a major money-spinner but given Amazon’s logistical expertise, if anyone can make a mark it is probably them.

IN CONSUMER GOODS…

Rapha and Lululemon are proving popular in China as the activewear market booms, with On and Columbia Sportswear also benefitting as the Chinese consumer base embraces a more active lifestyle.

That being said, Lululemon cut its full-year forecasts due to negative commentary from its founder and a lukewarm response to new products, with its share price down 40% year to date! It needs to get back on track quickly in what is a very competitive space.

AI – Around 90% of companies have not yet seen any financial benefit from using AI despite the sharp rise in uptake, according to the CEO of Accenture UK. Clearly, he’s just talking his own book here because helping companies in this regard is a service that Accenture provides! Still, it sounds like a valid point – and it’s interesting to see that many of the big management consultancy firms are actively recruiting grads!

Research shows that Gen Zs are increasingly concluding that AI is actually harming their prospects rather than improving them, with candidates using AI to generate applications, employers using it to screen them and multiple rounds of automated interviews before any human contact occurs.

There is also an interesting argument that if the cost of using AI exceeds the cost of having humans do the same work, the case for replacing people looks increasingly shaky. I recently mentioned the practice of “token maxxing” which has made use of AI very expensive in some cases!

Estate agents are coming in for criticism for using AI to make properties look better than they actually are in listings, with Winkworth currently in hot water in London. Savills and Knight Frank are also apparently doing the same.

Florida filed a lawsuit against OpenAI and Sam Altman alleging that its chatbots have inflicted a litany of harms on kids by releasing products it knows are addictive and unsafe.

MODELS – Anthropic is expanding access to its Mythos cybersecurity tool to over 150 organisations worldwide. New countries include members of the Five Eyes intelligence alliance as well as France, Germany, Italy, Switzerland and several other European and Asian nations. Companies including Okta, Samsung, Euroclear, Intercontinental Exchange and Swift will also get access along with NATO and ENISA.

Anthropic is also now helping the NSA use Mythos for offensive cyber operations despite simultaneously suing the defence department for designating it as a supply chain risk after it refused to let Claude be used for mass surveillance of American citizens and in lethal autonomous drones.

Microsoft unveiled seven new AI models at its Build conference, with its AI chief conceding that Anthropic is still a few months ahead in tech capability.

Kirkland & Ellis signed a multiyear deal with Palantir to develop AI tech for advising private equity groups on fundraising, enabling outcome-based fees rather than billable hours.

The House of Commons technology committee has pushed back against Palantir’s significant role across sensitive areas including UK defence, health and policing data systems. It wants ministers to trigger a 2027 break clause in its £330m contract in favour of a UK-based provider. Fair enough but whether there is anyone else that can actually do the job remains the key question.

AI AGENTS – Tencent is moving closer to launching an AI agent for WeChat, the everything app used by China’s 1.4bn people. There will be a limited rollout this month ahead of a proper public launch. Making the experience more agentic makes enormous sense though whether there is enough computing power to support it could be its Achilles heel.

Meta is rolling out a new Business Agent for WhatsApp that will automatically respond to customers, provide analysis to business owners and close sales or book appointments without human involvement, with Instagram also getting the feature soon.

CHIPS – Intel plans to produce an AI chip by the end of this year that uses cheaper memory and cooling tech than rival products from Nvidia and AMD. This chip’s focus will be on inference tasks rather than the chips used for model training that Nvidia dominates. This is a decent move that will get Intel a seat at the AI table after years on the sidelines.

Nvidia is also going to launch a new PC “superchip” that will pit it against Apple, Qualcomm, Intel and AMD to capitalise on expected consumer upgrades to AI-enabled devices. Nvidia’s CEO has said that such devices will ultimately displace the mouse and keyboard as the primary means of interacting with computers.

Despite all this positive momentum in the world of chips, Broadcom lost more than $300bn in market value in a single day after AI revenue guidance disappointed, with some of that sell-off possibly reflecting investors building up dry powder ahead of the SpaceX flotation. Is this a sign of what could happen to other chipmakers if they even fall slightly short of estimates?? Given how much of the market they make up, if they all started to lose value at the same time, it could all get quite serious…

DATACENTRES – supply chain backlogs and permit issues are delaying data centre rollouts in the US despite enormous investment. Over 60% of capacity scheduled for completion in 2027 is not yet under construction and a further 7% has already been delayed. There will probably be a grace period in investor expectations given the scale of the task but that will not last forever.

GAMING – the mobile gaming industry is pushing back against a European Commission proposal to force games to display pop-ups every time virtual currency is used to make a purchase. The industry says this will kill gameplay. What a Battle Royale this is proving to be…

IN AUTOMOTIVE – Nissan signed a deal with China’s Chery to make Chery’s vehicles at its Sunderland factory starting next year, providing a lifeline for jobs at the plant.

Resistance is building against robotaxis just as they are supposed to be going mainstream, with incidents including vehicles being barricaded in cul-de-sacs, passengers being taken into flooded streets and ambulances being blocked. Liability in the event of an accident also remains a tough hurdle to overcome. This will take a lot of time to resolve.

REAL ESTATE – Iran war-driven higher mortgage rates are going to cause house prices to fall by 2% this year according to Savills, with buyers withdrawing and more homes coming onto the market partly due to landlords leaving because of rental reforms that came into effect last month. Prices are expected to bounce back next year.

Buy-to-let lending has fallen since November’s budget, which does not bode well for tenants who may face less choice and higher rents.

New blockchain-based technology is being tested by UK banks that cut the average 120-day property transaction time in half and reduce costs by around £1,600. It works by tokenising deposits on the blockchain and automating payment obligations and property rights. Some banks believe they will be able to transact tokenised mortgages in less than three years. If this works, it could be genuinely transformational.

SoftBank has overtaken Toyota to become Japan’s most valuable company by market cap, with its share price up almost 73% this year. To overtake a veteran like Toyota after over two decades at the top is quite something and it illustrates both the massive hype around AI and the ongoing downfall of the automotive sector.

SoftBank has also pledged up to €75bn to build a network of AI computing clusters in France in what could be Europe’s biggest ever data centre project.

The established gambling companies including Flutter and DraftKings are upping their game ahead of the World Cup, which begins on June 11th, to stop punters being lured away by up-and-coming prediction market players like Polymarket and Kalshi. There is quite literally a lot at stake and it will be fascinating to see who wins the battle of the gambling platforms.

My fave video of this week was the Ed Sheeran one! What an amazing experience!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE COLOURED HIGHLIGHT REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

IN WAR NEWS…

IN IRAN – the American side talked a good game on peace/extending the so-called “ceasefire”, the Iranians said they weren’t close to a deal and the oil price went up on hopes that a deal would be done and down when it wasn’t. The US struck various Iranian targets.

IN GAZA – Netanyahu is ignoring previous conditions of a truce and pushing to get control of 70% of Gaza – much more than the 53% that had previously been agreed.

REGION/INDIVIDUAL COUNTRY NEWS…

Energy consultancy Wood Mackenzie has warned that if the Strait of Hormuz remains closed until the end of the year, oil prices could rocket from $94 a barrel to $200, which would almost certainly trigger a global recession. Advisory firm Rapidan Energy Group has warned that the world could face a downturn on the scale of 2008 if the Strait stays closed until August.

US – The Trump-backed Republican candidate Ken Paxton easily beat Republican senator John Cornyn in the Texas run-off, further tightening the president’s grip on the country. Despite Cornyn having voted with Trump 99% of the time, the MAGA base viewed him as a RINO (Republican In Name Only) and that was enough to see him ousted.

UK – the chancellor has told ministers to favour British companies for government contracts in shipbuilding, steel-making, energy and AI, with the Treasury and Cabinet Office set to oversee contracts in these areas. This sounds like a lot of hot air and may well be academic anyway given that if Starmer loses the leadership there could be a general election on the horizon.

OIL – BP has removed its chair Albert Manifold just eight months into the role over serious concerns about governance standards, oversight and conduct. BP has now lost two chief executives and one board chair since 2023, though it has a well-respected CEO in Meg O’Neill and a favourable oil price environment to work with.

Chevron’s CEO has warned that oil prices are likely to rise over the next two months as inventories fall, with prices having already dropped around 10% over the past week amid growing optimism about a US-Iran deal.

ENERGY

Canada has announced a deal to sell LNG to Germany as it pushes towards becoming an energy superpower, with Germany’s state-owned utility SEFE committing to buy a million metric tons annually for up to 20 years from the early 2030s. I would have thought that there will be more of these deals to come as countries try to reduce their reliance on America.

Paris-based nuclear developer Newcleo has announced plans for a SPAC-backed IPO valuing it at around $2.4bn, which will help finance its existing European projects and its bid to enter the American power market.

IN MARKETS…

The AI boom is having a dramatic effect on markets, with the Philadelphia Semiconductor Index on course for its biggest annual return since 1999, already up 75% since the start of the year on the back of insatiable demand from Meta, Alphabet, Amazon and Microsoft.

South Korea’s KOSPI index has also been extraordinary – up over 90% since the start of the year, fuelled by Samsung and SK Hynix! To illustrate the scale: the index took over 18 years to go from 1,000 to 2,000 points, another 13 years to reach 3,000, four months to get from 4,000 to 7,000 and just two weeks to go from 7,000 to 8,000.

It all feels precarious and valuations are getting sillier by the day, but the money keeps coming in and datacentre demand is through the roof. The fact that this bubble is still inflating during two active wars and with the world teetering on the brink of recession makes it all the more remarkable. The problem comes when the AI gravy train slows down because the market falls will be dramatic. Any slack could, however, be taken up by mass EV adoption, which should provide the next big wave of demand for the utilities and tech supply chain.

IPOs – SpaceX, OpenAI and Anthropic are among a wave of mega-flotations set to test the limits of the AI boom this year. These trillion-dollar listings will test whether investors have the appetite to get involved and will inevitably require them to sell other assets, making market direction even more skewed towards tech.

SpaceX also successfully launched its redesigned Starship, returning it to Earth intact, a real boost ahead of its imminent flotation. The launch had been delayed because of a fault.

M&A – Fertitta Entertainment has agreed to buy Caesars Entertainment for around $5.7bn in cash, something of a gamble given that Caesars’ share price has cratered 70% over five years.

Belgian gunmaker FN Browning is buying UK sniper maker Accuracy International to strengthen its bid for Britain’s rifle replacement programme. I think that there will be more defence sector consolidation as stronger companies look to take advantage of their positions and tap into all that government defence spending from governments around Europe!

Eli Lilly has agreed to buy three vaccine developers for a combined $4bn, sensibly deploying the cash generated by its weight-loss drugs.

Uber is thinking about putting in a higher bid for Delivery Hero after its initial €11.5bn offer was rebuffed, while rival DoorDash continues to circle without doing anything concrete. Shareholders are clearly holding out for a better price.

IN BUSINESS TRENDS…

Research from Boston Consulting Group shows that bank lending to UK businesses has fallen to its lowest level in nearly 30 years, dropping to 59% of GDP in Q3 2025 versus a peak of around 90% in 2008, with SMEs particularly badly affected.

IN EMPLOYMENT TRENDS…

PAY – Samsung workers are set for a massive $400,000 bonus after their union secured a profit-sharing agreement giving 78,000 semiconductor workers 10.5% of the company’s operating profit, equating to a bonus pool of a whopping $22.6bn. Both Samsung and SK Hynix are now $1tn companies thanks to the AI boom. These are eye-catching sums and employees at other AI-related companies around the world will surely take note, which could eventually start to hit margins more widely.

ByteDance is meanwhile offering special stock linked to its AI lab to fend off poaching from rivals including Tencent, the first time it has offered shares tied to a specific business unit.

RECRUITMENT – A Stanford-led study of four million job applications found that AI-powered hiring tools are producing clear racial disparities, particularly disadvantaging Black and Asian applicants. The algorithms favour candidates who most closely resemble already successful employees, which arguably just builds an expensive system for reinforcing existing bias. AI is not the whole answer in recruitment but it is a useful tool for the initial sweep of applications and will continue to improve over time.

BEHAVIOUR – Resignation rates have fallen to their lowest level since the depths of Covid according to research from Deutsche Bank, with falling vacancies and higher hiring costs making employees more reluctant to move.

THE CONSULTING INDUSTRY – the industry is facing serious disruption as individuals leave the big firms to set up independently, using AI tools that give them effective virtual scale. The major players are already cutting headcount and graduate recruitment as AI automates research, data summarisation and presentation work. Clients are pushing for outcome-based pricing rather than the traditional billable hour and the argument is that if work can be completed faster, they have the capacity to do more business. Bigger firms should ultimately survive but mid-tier firms are most exposed, lacking both the financial firepower of the incumbents and the specialist expertise of the smaller boutiques. AI consultants from the model-building companies are also beginning to move into management consultancy territory, setting up an interesting clash with the Big Four.

UNEMPLOYMENT – long-term unemployment has hit its highest level since January 2016. The longer someone is out of work the harder it becomes to return and employers tend to make lower offers to those who have been out for extended periods.

Next’s CEO has also warned of a “dramatic fall” in entry-level jobs, with the company now receiving twice as many applicants per role as it did two years ago. Rising employment costs, the Employment Rights Act and a struggling economy have made this significantly worse and the government urgently needs to come up with a coordinated plan.

UNIVERSITIES & GRADUATES – British universities are in serious difficulty, with 38% now carrying out compulsory redundancies versus 11% in 2024 and 79% making voluntary redundancies, driven by rising National Insurance costs and a sharp drop in international students. Two-thirds are considering alliances or mergers and 44% are cutting courses. There have arguably been too many courses at too many universities for too long and international fees have been papering over the cracks for years. More mergers are surely coming.

Manchester University’s plan to offer work placements to all 32,000 undergraduates is admirable but will be a very tall order given employer reticence, and one in seven graduates are currently classified as NEETs, the highest proportion in 25 years.

CONSUMER TRENDS…

The energy price cap is set to rise 13% from July, adding over £200 to the average annual bill and putting further pressure on household finances. Poorer households will be hit hardest and the likelihood is that most people will simply hunker down and wait for the economic storm to pass.

Guardian research has also found that the current heatwave has pushed prices of hot tubs and air conditioning units sharply higher, with some products more than doubling in price within a week.

RETAIL

Lidl has overtaken Morrisons to become the fifth largest supermarket in Great Britain while Aldi sits just above it and closes in on the ailing Asda.

Waitrose is cutting own-brand prices to claw back ground lost to M&S and Ocado. Asda continues to slide and desperately needs to find a point of difference: Lidl has its middle aisle and in-store bakery, Aldi has its middle aisle, and Asda currently has nothing.

Private equity firm Modella Capital bought Flying Tiger Copenhagen to add to its portfolio of TG Jones and Hobbycraft. This could actually be quite an interesting combination because TG Jones brings retail presence, Hobbycraft brings an educational angle and Flying Tiger brings fun. Melding them together could create something genuinely refreshing on the UK high street.

B&Q owner Kingfisher reported a weaker quarter, blaming wet Easter weather, although the current economic backdrop makes a strong consumer recovery in discretionary home improvement spending unlikely IMO.

Temu was fined €200m by the European Commission under the Digital Services Act for allowing the sale of illegal and unsafe products. Temu’s thinking about how to respond.

The EU is assembling a tech strategy aimed at reasserting its position in the global race for technological power centred on accelerating European data centre construction and prioritising European cloud and AI technologies. The Cloud and AI Development Act could benefit companies like SAP, Mistral and OVHCloud, but with Amazon, Microsoft and Google making up over 70% of the EU cloud market currently, the gap is very large and this may well be too little too late.

AI – Safety protections can be stripped from models by Meta and Google in a matter of minutes using freely available tools, according to tests carried out with an AI safety group. Once stripped, the models provided instructions on dispersing harmful gases, generated credit card theft code and gave lethal dosage calculations for dangerous substances. Modified versions of advanced models are readily available online to anyone with a reasonable level of technical knowledge. This is definitely something that needs addressing as a matter of urgency!

A phenomenon called token maxxing is emerging as employees given AI usage KPIs burn through token allocations far faster than employers anticipated. Amazon has already shut down an internal AI usage leaderboard after employees padded their usage with meaningless activity to boost their scores. If this continues at scale the cost benefit of AI versus humans may start to look considerably less compelling.

Elon Musk caused a stir ahead of SpaceX’s IPO by claiming that it’s much more of a shorter term thing than its pre-IPO filing said. He said that a recently announced deal with Anthropic for datacentre capacity is only a 180-day lease rather than the three-year agreement referenced in the pre-IPO filing, which had implied a total contract value of around $45bn. Musk appears to be gambling that investors will back him regardless.

On a more positive note for Anthropic, the company has finalised a $65bn funding round that has tripled its valuation in just three months, pushing it past OpenAI to a valuation of $900bn. A flotation at a trillion dollars feels like a real possibility.

Robinhood is launching a feature allowing clients to use AI chatbots including Claude Code and ChatGPT to build portfolios, automate trading strategies and place orders, with a significant rise in brokerages offering agentic trading expected to follow. This sounds interesting and could democratise trading. It could also put a lot of people on the road to ruin if used incorrectly, though.

Kirkland and Ellis announced plans to spend $500m building its own proprietary AI platform rather than adapting existing tools. I think that this risks being an expensive ego trip: it is a bit like ditching Microsoft Excel to build your own spreadsheet software. If rivals successfully adopt existing tools and lower their bills while handling greater volume, Kirkland could find itself with an inferior model it cannot afford to abandon and partners becoming increasingly unhappy about the hit to their profit share.

UK firm Pinsent Masons was reprimanded by the High Court after a junior lawyer made false submissions based on AI-generated content, a timely reminder of the dangers of over-relying on the technology.

HARDWARE – China is overhauling the world’s biggest surveillance network by integrating AI to track individuals, analyse behaviour and forecast unrest in real time. Products from Hikvision and Huawei combine computer vision and LLMs to issue alerts for behaviours ranging from erratic driving to crowd gatherings. This has distinct Minority Report vibes and raises the obvious question of whether cash-strapped governments elsewhere might eventually see the appeal.

Meta is lobbying the UK to shift social media age verification responsibility onto Apple and Android at the operating system level as the UK moves towards a ban on social media for the under-16s. Placing checks at OS level is probably the right approach but it is hard to escape the impression that tech companies are trying to do as little as possible for as long as possible on user safeguarding.

Spotify’s CEO has defended the company’s move into AI-generated music as a better alternative to piracy and unregulated content, although the risk of crowding out human artists and eroding their earnings is very real.

AUTOMOTIVE – Ferrari launched its first EV, designed by Jony Ive and priced at around €550,000, to widespread mockery. There are so many memes about the Ferrari Luce being a lookalike of Nissan’s Leaf (even Nissan’s own social media team roasted Ferrari!). The share price fell by over 6% after the unveiling. Some cars have a halo effect that lifts an entire range but the design here is so poorly received that I wonder whether the reverse could happen with buyers drifting to other marques entirely. It simply does not look like a Ferrari. Nissan Leaf sales might do well, though! I was thinking of making sticker like this that Nissan Leaf owners could put onto their cars to help any confusion…

IN REAL ESTATE – a JLL report shows that London has only built 7% of the homes it had planned to last year owing to thriftier buyers, the exit of investors, rising service charges and planning delays, making the government’s housing targets look impossible to attain. Rightmove data showed that coastal properties continue to command a premium even as average house prices moved broadly sideways.

My fave video of this week was the one with the super-cute sing-a-long! What 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.

IN DEFENCE NEWS…

Defence companies and marine contractors are deploying unmanned mine-clearing systems in and around the Strait of Hormuz as part of a broader effort to make the shipping lane safer. Companies including Kraken Technology Group, SRT Marine, Textron Systems and Thales are all offering their various hardware and software offerings. Still, minehunting remains a very difficult business and confidence will take time to return even if the Strait opened tomorrow. Modern mines tend to be laid on the seabed and are activated when sensors detect ships passing overhead and the Strait’s relatively shallow waters mean they can shift with changing seabed conditions. For commercial traffic to resume, risks will have to fall to acceptable levels and mine detection technology will play a key role in getting there.

TRUMP THINGS

Trump delayed signing an executive order on AI because he “did not like” aspects of the plan, specifically provisions for the government to vet models for national security and cyber risks, saying he did not want anything getting in the way of America’s lead over China. This clashes with public concern about AI safety, but Trump has form on ignoring public opinion, with the Iran war being the most obvious example.

The Department of Justice stated that US tax authorities will be banned from pursuing claims against Trump, his eldest sons and the Trump Organisation as part of an agreement for the president to drop his $10bn lawsuit against the Internal Revenue Service.

The Republican candidate bankrolled by the president beat the incumbent Thomas Massie in a Kentucky primary. Massie had been one of Trump’s most prominent Republican critics, clashing with him over the Iran war, the Epstein files and his “Big Beautiful” fiscal legislation. Another critic bites the dust.

REGION AND INDIVIDUAL COUNTRY NEWS

THE AMERICAS…

THE US – the US has decided to cut troop numbers in Europe. This comes after the sudden cancellation last week of the deployment of 4,000 US troops to Poland. JD Vance framed this as “encouraging Europe to take more ownership” and the Pentagon is preparing a new plan for US troop deployment in the region. The practical upshot is that US troop levels in Europe are now at their lowest since before the Ukraine invasion.

ASIA…

CHINA – the Putin-Xi summit in Beijing got underway, giving Putin a welcome opportunity to distract attention from growing problems at home and on the war front.

INDIA – PM Modi has been forced to give up on protecting consumers from high oil prices. The government has spent a great deal subsidising fuel and fertiliser prices since the Iran war began but Modi says this is no longer sustainable. State-owned fuel retailers increased petrol and diesel prices twice in less than a week as a result.

IN THE MIDDLE EAST…

SAUDI ARABIA – the government has stopped issuing new contracts for western consultancies and delayed some payments. McKinsey, BCG and the Big Four accountancy firms are all likely to suffer, given the major operations they have built up in the region. Saudi Arabia has been a massive money-spinner for international consultants since Prince Mohammed announced his raft of Vision 2030 mega-projects, but rumblings about expensive foreign consultants have been growing for a while.

LIV Golf is fighting for survival following the PIF’s announcement last month that it would pull financial support at the end of the current season. The plan now is to bring in investors while also getting the league’s roster of golfers to provide support in exchange for a majority stake. If this falls apart, a formal bankruptcy process could be initiated.

IN EUROPE…

RUSSIA – things are getting increasingly tense as the effects of the Ukraine war hit home. The FSB has been conducting widespread internet shutdowns across the country since May last year, with Moscow’s mobile internet shut off for 19 days in March with no explanation. This has had real repercussions on ordinary Russians unable to make card payments, use maps or get taxis via their mobiles. Criticism on social media is rising and Putin’s approval ratings are falling.

SPAIN – the rightwing populist party Vox had a strong result in Sunday’s regional election in Andalusia, Spain’s most populous region, in what was the ruling Socialist party’s worst ever electoral defeat. Although the conservative People’s Party won, it fell short of a majority, putting Vox in a kingmaker position.

TURKEY – a court dismissed the leader of Turkey’s biggest opposition party, effectively kneecapping Erdoğan’s main opponent. Investors sent Turkish shares down 6% in protest. Erdoğan is clearly keen to maintain his grip as the Iran war takes a serious toll on a country that imports almost 75% of its energy needs.

IN THE UK…

Inflation slowed to 2.8% according to the latest ONS data, below the 3% economists had expected and its lowest reading since March 2025. The fall was partly down to the reduction in the household energy price cap, although this also suggests the full effects of the Iran war have not yet filtered through yet.

THE LEADERSHIP BATTLE – what a mess. Wes Streeting and Andy Burnham are jockeying for position in a challenge to Starmer’s leadership. Streeting has advocated Brexit reversal while Burnham has been vowing to reverse privatisation and austerity while promising to keep to current fiscal rules. A YouGov poll of Labour members showed Burnham would beat Starmer in a head-to-head by 59% to 37% and would easily beat Streeting by 80% to 10%, while Starmer insists he will fight on. Bond markets do not like the prospect of a Burnham-Rayner combination, perceiving them as more likely to tax and spend, while Streeting is seen as closer to Starmer’s centrist position. Reform UK has picked local plumber and councillor Robert Kenyon to challenge Burnham in the Makerfield by-election.

COST-OF-LIVING – the chancellor announced a package of measures badged as the “Great British summer savings” scheme. These include a cut in VAT from 20% to 5% on tickets for attractions and kids’ meals over the summer, free bus rides for under-16s in August, suspended import tariffs on some foods including chocolate and biscuits and a rise in the tax-free mileage rate for drivers. The mooted food price cap idea was swiftly abandoned after a furious backlash from retailers and a public rebuke from Bank of England governor Andrew Bailey while Starmer announced that the scheduled increase in fuel duty would be postponed until the end of the year. However, what the chancellor gives with one hand she takes with the other, as plans emerged to impose VAT of 20% on airport fees charged to airlines, adding roughly £5 to the existing standard charge, and to scrap a tax loophole allowing oil and gas companies to offset UK profits against foreign losses. Starmer postponed the scheduled 5p increase in fuel duty until the end of the year rather than letting it go ahead in September.

COMMODITIES

OIL – Oil prices fell by almost 6% on hopes of a partial opening after two China-bound supertankers crossed the Strait of Hormuz safely.

The broader picture remains gloomy however. Almost 80 countries have now been forced to introduce emergency measures to protect their economies and JP Morgan analysts reckon that commercial oil inventories in OECD countries could fall to “operational stress levels” by early June. Jet fuel and diesel inventories have already dropped below five-year lows.

US oil exports have been impressively strong but American stocks are now falling rapidly, raising the possibility of export bans, although the administration says things will not get that far.

Trump extended a waiver on Russian oil sales for a second time since March to rein in fuel price rises, giving Putin a welcome boost. The UK also relented on Russian oil sanctions to avoid supply problems, causing uproar among the Conservatives. The decision is particularly embarrassing given that Labour MPs had just voted against UK oil and gas licences. Even so, Shell’s boss is pushing the government to encourage North Sea drilling as a boost to the faltering economy.

IN ENERGY – Swiss group FlexBase is developing a giant underground battery system on the German border using UK maker Invinity Energy Systems’ vanadium flow batteries to provide 1.5 gigawatt-hours of storage, equivalent to the electricity needed to power around 200,000 UK homes for one day. Vanadium flow batteries differ from lithium-ion in that they store energy in liquid electrolytes in external tanks and can charge and discharge many times per day without significant degradation over periods of up to ten hours, versus the one-to-two hours that lithium-ion batteries can manage.

IPOs – SpaceX filed with the SEC for a flotation on NASDAQ next month and it looks set to be the first trillion-dollar US market debut and the world’s biggest ever flotation. The proposed valuation of $1.75tn is about four times what it was six months ago and reflects the “genius premium” that investors assign to Musk’s companies, a premium that has evolved into something immune to conventional economic wisdom and wider geopolitical conditions. NASDAQ’s new “fast entry” rules mean SpaceX’s stock will go straight into Wall Street indexes upon flotation, compelling index tracker funds to buy and likely driving significant inflows.

OpenAI looks to be on the verge of a flotation that could value it at around $1tn. The resolution of Musk’s legal case against the company, in which a jury unanimously found Sam Altman and Greg Brockman not liable, removes a cloud that had been hanging over OpenAI and paves the way for its market debut.

M&A – NextEra and Dominion Energy announced a $67bn deal to combine, forming the biggest electricity producer in the US. The deal is fundamentally about AI and how it is transforming the usually mundane utilities sector.

Anglo American agreed to sell its Australian coal mining business to Dhilmar for $3.9bn, completing a long-sought divestment as part of a broader business streamlining.

Uber increased its stake in Delivery Hero to 19.5%, becoming its biggest shareholder, though it said it has no current plans to take full control while leaving the door very much open.

Merger talks between Estée Lauder and Puig ended. Investors powered Estée Lauder’s shares up by 11.5% in response.

M&A activity in the midcap FTSE250 is showing genuine signs of life, with Tate and Lyle bid for by Ingredion for £2.7bn and Spire Healthcare mulling over a £1bn offer from its second-biggest shareholder.

IN BUSINESS NEWS…

IN WORLD TRADE – There is growing concern that Iran’s blockade of the Strait of Hormuz is inspiring other countries to consider charging for passage via other strategic waterways. Iran has caused global chaos with relatively modest means and some countries are openly discussing the tollbooth idea. Any narrow waterway is now potentially at risk, including the Taiwan Strait, the Malacca Strait and Gibraltar. If everyone starts to monetise their choke points, insurance, energy and freight costs will all rise and the cost of goods will go up for all of us.

The US and China agreed to establish a board of trade to promote “strategic stability” and a board of investment to “optimise the bilateral economic relationship”, with Xi due to go to Washington in the autumn.

EU lawmakers struck a deal to implement a trade pact that was signed with the US a year ago. The EU had been dragging its feet for various reasons but it’s now going ahead. This should avoid a big tax increase on exports from Europe.

The UK confirmed the much-anticipated free trade agreement with Gulf states via the Gulf Cooperation Council. The deal, two years in the making, is thought to be worth up to £3.75bn a year to the UK economy in the long run, or about 0.1% of GDP. It is particularly good news for services, which account for around 80% of UK GDP and over 50% of exports to the GCC, as they will get guaranteed market access under the terms of the agreement.

LOGISTICS – Gulf freight rates are booming because of the Strait of Hormuz bottleneck and things are getting so desperate now that businesses are now transporting product by land. Trucks can only take a fraction of the capacity that large container and cargo ships can take, though.

IN UK BUSINESS TRENDS – Business investment growth in the UK has fallen way behind the pace of investment in the US in Q1 compared to Q4 of 2019. A combination of a government that has lost its mojo, a zombie leader and a weakening economy makes the outlook grim for whoever comes next. If Burnham wins, the likelihood of significant tax hikes is very high.

UK business activity fell for the first time in more than a year in May according to the latest S&P flash PMI, worse than the market was expecting and signifying a net contraction.

Investec is planning to push into private banking for wealthy individuals in the UK, transitioning from a specialist lender to a full-service bank for high net worths. This is becoming a crowded space, with NatWest buying Evelyn Partners for £2.5bn and Revolut also building in this area.

EMPLOYMENT TRENDS

UK firms are halting investments and hiring as energy, fuel and supply chain costs squeeze mid-sized businesses from all directions, according to the latest BDO survey.

ONS figures showed that UK unemployment unexpectedly rose to 5% while wage growth slowed down significantly. UK youth unemployment was particularly high as stats show that 16.2% of workers aged 16 to 24 were unemployed in Q1. This is the highest level since January 2015! A study by the Institute for Fiscal Studies confirmed this, concluding that youth unemployment has hit levels last seen during Covid. If a new government raises taxes further on businesses, the situation will only deteriorate. Businesses are already reeling from higher NICs and minimum wage increases and there is very little slack left in the system. The retail and hospitality sectors have suffered particularly badly given their greater exposure to younger and less well-paid workers and with the uncertain political backdrop likely to persist, there is little sign of improvement on the horizon.

IN AI-RELATED JOB TRENDS – Standard Chartered plans to cut almost 8,000 back-office jobs by 2030 as it prioritises AI over humans.

The NHS is thinking about scaling back its recruitment drive in favour of AI-assisted patient treatment, a fundamentally different approach from the 2023 plan that projected headcount growing from 1.4m to 2.3m by the mid-2030s.

Big Four accountancy firms are now posting more job ads for AI specialists than auditors, with AI-related roles making up almost 7% of vacancies in English-speaking countries in 2025, more than triple the figure in 2022.

Meta is cutting a further 10% of staff and Intuit is cutting 17% of its workforce to fund big AI bets.

CONSUMER TRENDS

US consumers are limiting how much fuel they buy as pressure at the pumps grows.

British consumers are proving slightly less gloomy than last month according to the GfK index, though the same survey shows households are dipping into savings to cover day-to-day costs, which cannot go on forever. Petrol prices have hit a new Iran war high, with the average litre of unleaded now at 158.52p, a level not seen since December 2022. Household energy bills are forecast to surge by £200 a year from July. Those seeking a bargain on a new car are increasingly looking at Chinese brands. The number of Chinese car dealers in Britain has shot up from 95 in May 2024 to 440 today, with BYD and Chery-owned Omoda particularly prominent.

RETAIL NEWS

Urban Outfitters posted record Q1 sales powered by its Free People business. Its other divisions also contributed to this record performance!

Target reported its strongest quarterly sales rise since early 2022 but was cautiously optimistic about the outlook, warning that a consumer wobble was possible before year end.

M&S is winning over shoppers but not yet investors, with food going well and fashion making progress but not yet generating the investor conviction that rivals like Next enjoy.

IN CONSUMER GOODS…

Chanel is opening new stores in China as new designer Matthieu Blazy is generating a lot of excitement, which is particularly impressive given the struggles of luxury rivals.

Dr Martens beat market expectations with a profit turnaround, delivering a particularly strong performance in the US and a positive outlook, suggesting recovery is genuine rather than temporary.

Deckers Outdoor saw Q4 sales increase thanks to the ongoing success of its Hoka brand, which just serves as a reminder of how far the struggling Nike has to go in order to turn things around.

LEISURE NEWS

Ryanair warned that prices are weakening going into the summer season due to higher fuel costs and a trend towards last-minute bookings. It was unable to provide full-year guidance given the poor visibility. This echoes the experience of many airlines and travel companies.

AI – Chinese AI groups are pulling ahead of US rivals in video generation, with ByteDance and others training their systems on massive libraries of short-form video. While OpenAI, Google and Anthropic still dominate large language models in areas including coding, they are behind on video quality and usability. This will have a big impact on the advertising industry as it enables brands to generate video at unprecedented scale.

Anthropic is going to brief members of the Financial Stability Board on vulnerabilities in the global financial system’s cyber defences following a request from Bank of England governor Andrew Bailey. A co-ordinated approach to the vulnerabilities exposed by the Mythos model is sorely needed. Separately, Anthropic is also on track for its first profitable quarter, with Q2 2026 revenue expected to come in more than double Q1. The company is unlikely to remain consistently profitable given the ongoing expense of computing power, but there are rumours of a potential IPO.

CHIPS – Nvidia’s stellar results were met with an underwhelming investor response, partly reflecting a view that Nvidia is becoming a more mature stock and partly because of growing scepticism about the sustainability of AI’s breakneck growth rate.

Google is teaming up with Blackstone to create an AI cloud group backed by $5bn of the latter’s cash, aiming to bring 500 megawatts of data centre capacity online next year and become a genuine rival to Nvidia. Separately, Google also announced new autonomous AI agents, coding tools and a new lineup of smart glasses developed with Samsung, Warby Parker and Gentle Monster, along with a personal assistant called Spark.

SOFTWARE – London mayor Sadiq Khan blocked the Met Police’s £50m Palantir contract on value-for-money grounds. Palantir remains controversial given its links to ICE operations in America and the Israeli military.

IN MEDIA NEWS…

Publicis agreed to buy US data company LiveRamp in a $2.2bn all-cash deal at a 30% premium, deepening its push into AI marketing.

A study by Queen Mary University in London found that almost 90% of financial influencer posts contain more negative than positive quality features, echoing previous research. Finfluencers have helped democratise financial information but tend to over-emphasise high-risk areas like crypto and forex trading.

Spotify struck a licensing deal with Universal Music Group allowing fans to listen to AI-generated covers and remixes of songs from participating artists as a paid add-on and announced new functions including early access to tickets for top listeners and tools allowing artists to sell subscriptions directly via the platform.

IN AUTOMOTIVE NEWS – JLR and General Motors are among those eyeing a £900m MoD contract to build thousands of new 4×4 military trucks to replace the aging Land Rover fleet. First deliveries are expected in 2030 covering around 3,000 vehicles across the three armed services. JLR is presumably in pole position.

Stellantis unveiled a new five-year plan involving 60 new models and €60bn of investment in products and technology. It’s certainly got an uphill task!

IN REAL ESATATE NEWS – research by a tax firm showed that property taxes make up 3.7% of the UK economy, the highest proportion of any major economy! This is bad news for the government because if investment slows and real estate loses momentum, tax receipts fall too.

The share of properties bought by landlords between January and April hit 13.3%, its highest since 2016, with nearly a quarter of those purchases being properties sold by other landlords. The Renters’ Rights Act has accelerated some landlords’ exit while others have used the opportunity to acquire more stock. Landlords are concentrating on the north where yields are strong but not the south where they are weak, meaning rents in the south are likely to continue rising.

UK housebuilders have had a nightmare since Labour came to power. The larger builders should be OK given they have more cash than debt but Crest Nicholson and Vistry have specific financing issues that need addressing. The sector should be speeding up to meet housing needs but is instead slowing down.

IN BANKS NEWS – Halifax could disappear from UK high streets as Lloyds Banking Group reviews its branding strategy. Bank of Scotland is expected to survive as the group’s only retail brand in Scotland. A phase-out of the Halifax brand could start as early as July, with the final decision expected alongside Lloyds’ new five-year strategic plan at the end of July.

Monzo announced plans to expand into more European countries after pre-tax profits jumped by almost 50% thanks to higher lending and fee income.

My fave video of this week was the one on the quirks of the English language! I often think how lucky I am to be a native English speaker!

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…

Trump said that Iran’s response to the latest peace proposal was “unacceptable” and that the Iran ceasefire is on “life support”. So far, the Pentagon reckons that the war has cost the government $30bn.

Meanwhile, Lebanon and Israel were due to meet in Washington to discuss whether or not to extend the current ceasefire agreement. The agreement was extended.

IN TRUMP THINGS…

APPROVAL – 58% of US voters disapprove of Trump’s handling of the economy, according to Focaldata survey. If this trend continues, it’s not going to be good for Trump’s prospects at the midterm elections later this year.

POWER – Trump’s next weapon of choice in his push for global trading supremacy could be LNG. Since his war started, the only place that the UK and Europe can source LNG is North America, which now supplies over 50% of the EU’s LNG imports and over 80% of Britain’s. This dependence is surely going to grow given that a ban on Russian gas imports takes effect at the start of 2027 and there’s no more capacity coming from anyone else, so it’s not looking great!

TRIP TO CHINA – Trump’s over in China this week and will probably try to get Xi to withdraw, or at least limit, support for Iran. I wouldn’t expect much to be achieved from these talks because Trump hasn’t really got that much to offer Xi.

VENDETTA – The sole Democratic commissioner in the FCC, Anna Gomez, said in a letter to Disney’s CEO what everyone actually knows but isn’t saying: that ABC has been the subject of a “sustained, coordinated campaign of censorship and control” by the Trump administration. Basically, the FCC is being weaponised to keep the media from saying things the administration doesn’t like.

IN REGION/COUNTRY NEWS…

THE AMERICAS

US – Trump said “I think about one thing: We cannot let Iran have a nuclear weapon, that’s all” when asked about Americans’ financial situation, which is a pity for ordinary Americans because US inflation has jumped to 3.8%, its highest level in three years, thanks to Trump’s war in Iran. The incoming Fed chief is going to have a rough time given that he’s running out of reasons to justify interest rate increases while Trump is pressuring him to cut them. The US Senate has confirmed Kevin Warsh as Federal Reserve chair, replacing Jerome Powell, and he comes in at a particularly difficult moment given these competing pressures.

ASIA

CHINA – It’s been suggested that the Iran war, originally portrayed as a canny move to squeeze China, is actually aiding China’s global economic influence. Higher fossil fuel prices are hastening everyone’s transition to renewables, and Chinese firms account for at least 70% of global manufacturing capacity for the main green technologies, with Beijing’s exports of solar and battery products booming since the war began. Trump’s actions have also alienated his allies and raised China’s relative international standing, while China’s infrastructure expertise puts it in pole position for the post-war rebuild.

EUROPE

RUSSIA – Russia cut its GDP growth forecasts for this year from 1.3% to 0.4% despite rising oil prices, with its deputy PM blaming labour shortages, rising government spending and western sanctions. GDP growth has been powered for several years by military spending but the economic strains are starting to tell.

UK – Government borrowing costs are once more approaching levels not seen since 2008, adding to pressure on Keir Starmer. That being said, the UK economy grew at 0.6% in Q1, its fastest pace in a year, which Rachel Reeves seized on as evidence the government has “the right economic plan”, though some economists are more circumspect, pointing out that Q1 tends to start strong and then tail off.

STARMER/GOVERNMENT – Starmer is fighting for his political life after a huge drubbing in the elections last week. Things escalated quickly as senior ministers began urging him to leave or publish a timetable, and he faced four ministerial resignations in one day. It’s all falling apart and it’s increasingly looking like there will be a leadership contest soon. The situation is changing by the day so I won’t spend too much time on it now…

THE KING’S SPEECH – A huge range of bills was announced, which Starmer maintained would remove “barriers to growth”, covering everything from Clean Water and NHS Modernisation to Leasehold Reform, Police Reform, Northern Powerhouse Rail and Energy Independence, with Miliband also vowing a permanent shutdown of the North Sea. Businesses weren’t particularly enthused, with the BCC, CBI and BRC all saying the measures didn’t go far enough given the pressures they’re facing from the Iran war.

FARAGE – Reform’s leader is going to be investigated by the parliamentary standards watchdog over a £5m donation he received just weeks before he said he’d stand as a candidate in the 2024 general election. It sounds like Farage sailed very close to the wind on this, hence the investigation.

IN COMMODITIES NEWS…

OIL – Saudi Aramco posted a strong Q1 performance, with its east-west pipeline proving to be a godsend as it took the edge off the impact of the Iran war. The company then warned that the world’s supplies of gasoline and jet fuel could reach “critically low levels” heading into the summer if the Strait of Hormuz stays closed, particularly as inventories are falling.

It was interesting to see that, despite China signalling it would relax a ban on exports of jet fuel, gasoline and diesel, export levels remain way below pre-war levels, which is particularly bad news for Asian countries crying out for refined products.

COAL – Coal shipments have jumped as countries seek alternative fuels, with global coal imports on track to hit their third highest monthly number for May since at least 2017 and freight rates averaging about 50% higher than in February, with demand strongest from Asia.

IN MARKETS NEWS…

Despite all the turmoil, US markets continue to thrive, essentially because tech behemoths are dragging up the indexes by themselves. The NT ratio, which tracks the divergence between the Nikkei 225 and Topix, is also skyrocketing as investors seek AI exposure outside the US. Trump has been boasting that markets are strong, but the reality isn’t as simple as that. Consumer confidence isn’t good, household spending power is shrinking and such a narrow group of stocks having such an outsize influence on wider markets is concerning because, if you put all that together, you have a recipe for what could be a nasty correction.

IN INVESTMENT NEWS/TRENDS…

While Q1 deal activity stoked banker expectations of a Gulf deal bonanza, the Iran war cut those expectations stone dead. Investment banking revenues are weakening, M&A activity has been particularly badly disrupted and some big Gulf IPOs like Emirates Global Aluminium have been delayed. Gulf sovereign wealth funds are also reviewing portfolios with a view to changing priorities, including pulling money out to finance increased defence spending. Many bankers are probably now accepting that 2026 won’t be the bumper year they were expecting, and the future really does depend on how and when the war ends.

TRENDS

IPOs – Lime, the Uber-backed electric bike start-up, has filed for a $2bn US IPO in a test of investor appetite for flotations. Lime has done well to get to this point, given that rival Bird had to file for bankruptcy in 2023, although Lime itself admits it has lost money every year since 2017 and that expenses are likely to rise. It’s also facing claims in the UK that use of its bikes increases the risk of leg injuries. Hmm. Does this sound like an IPO that you’d like to buy into??

M&A – German energy company Eon is going to buy the embattled Ovo for an undisclosed sum, creating the UK’s largest energy supplier and overtaking Octopus Energy in size. If the deal goes through, the top three suppliers will make up 75% of the market!

GameStop’s cheeky $55.5bn bid for eBay was rejected by eBay as “neither credible nor attractive”. It’ll be interesting to see whether GameStop has another go.

MONEY RAISING – Anthropic is in the middle of a fundraising at a level that implies a whopping $900bn valuation, making it bigger than arch-rival OpenAI, which was most recently valued at $852bn.

German defence tech group Helsing looks set to raise funding at an implied valuation of around $18bn, which would make it one of Europe’s most valuable start-ups.

Blue Owl’s flagship credit investment fund for retail investors has seen inflows almost disappear as concerns about private credit persist. Its share price has taken a more than 30% tumble this year, with particularly big concerns about the fund’s massive exposure to software and tech loans.

FINTECH – Klarna announced that it had broken even for the first time since its New York IPO, helped by a surge in sign-ups for its debit card, as it tries to move away from its BNPL origins towards becoming a more traditional digital bank.

Revolut is looking to launch a private bank in the UK later this year for customers with at least £500,000 to deposit.

Hargreaves Lansdown is cutting around 100 positions from its 2,400-strong workforce to streamline operations and compete with intensifying competition from the likes of Interactive Investor and AJ Bell. There’s still a lot of work to do after a tough few years.

IN BUSINESS NEWS/TRENDS…

There’s ongoing debate as to whether the Singapore loophole has been permanently closed for Chinese companies following the Meta/Manus shutdown, or whether it was a one-off. Chinese companies have been getting around restrictions on foreign investment by “moving” their HQ to Singapore and Chinese authorities have mainly turned a blind eye until now. The cottage industry of advisers who facilitate this could be affected longer term but for now, things are looking a bit trickier than they were.

Separately, Citadel has moved some of its key quant strategy researchers out of Hong Kong and into Singapore or Miami amid rumoured concerns about data security although the official line is that this was not the case.

The UK’s FCA is pushing private credit groups to share more data by overhauling reporting requirements. As you’ll know by now, private credit is under a lot of scrutiny at the moment!

IN EMPLOYMENT TRENDS

Gen Z are increasingly becoming content creators thanks to the current jobs crisis, though the market is getting increasingly crowded. It’s worth giving it a go, ideally in a field you’re genuinely interested in, as employers may well value the following you build up.

Walmart has laid off or relocated about 1,000 corporate workers as part of a streamlining of its global tech and product teams.

Cisco has announced it will cut around 4,000 jobs in the name of putting more resource into AI, although its results were actually pretty strong and shares climbed 17%.

A court in China found in favour of a worker replaced by AI and awarded him over £28,000 in compensation after he refused a demotion and 40% pay cut when his company said that he was being replaced. This could well set a precedent as AI-related sackings become an increasingly thorny legal minefield for HR departments to navigate.

IN CONSUMER TRENDS…

US – Higher diesel prices are now filtering down and hitting every part of the supply chain in the US. Some businesses are passing those costs on to customers while others are still absorbing them, but this can’t go on forever. Voters are reminded about the effect of the war and tariffs every time they go grocery shopping, which isn’t great news for Trump given the latest 3.8% inflation reading!

UK – The UK’s biggest chicken supplier, 2Sisters, responsible for a third of all poultry products eaten in Britain each year, has hiked up prices by £70m to take the edge off the government’s tax raids on businesses. This is yet another example of the effect the government’s employment policies have had on business and you do wonder whether things might get even worse if Labour lurches further to the left under a different leader because they are arguably even more likely to tax and spend than the current regime.

IN RETAIL NEWS…

ONLINE – ASOS shares rose on the news it is selling its mothballed warehouse in Lichfield to M&S for £67.5m as part of a broader move to bolster its ailing balance sheet, netting a tidy sum while also avoiding occupancy costs of about £6m per year. It’s a lifeline for ASOS and also goes to show how M&S is gaining momentum as it ramps up efforts to double annual online sales from its non-food businesses.

Shein is also suing rival Temu at the High Court for “industrial-scale” copyright violations, which is ironic given the mountain of claims that have been made against Shein itself over the years for the very same thing!

HIGH STREET – WHSmith’s new owner Modella Capital apparently plans to combine essential high street services like postal services and retail banking in its stores while sprucing up its offering with products from Toys R Us and Hobbycraft. It sounds like a great idea but success will depend entirely on execution.

Alex Baldock, formerly CEO of Currys, has been appointed chief executive of Boots ahead of a potential flotation valuing the company at up to £7bn. He’s got turnaround form at Currys where he streamlined the store estate, cut costs and boosted online sales. I think that Boots’ main opportunity is probably in health and beauty, particularly given the demise of the department store has reduced competition in that space.

LUXURY – LVMH has sold Marc Jacobs to New York-based brand manager WHP as part of a broader pivot from acquiror mode to seller mode, having also disposed of Off-White and its stake in Stella McCartney in recent months.

Burberry, is reverting to more familiar territory in the mid-market after an attempted foray into higher-end luxury resulted in falling sales. The current CEO has culled the more avant-garde products and returned to classic trench coats, scarves and check patterns, with only 3% of stock now costing more than £2,000. It is going in the right direction.

IN CONSUMER GOODS NEWS…

Japanese snack maker Calbee is temporarily switching to black-and-white packaging for 14 of its products, saying the Iran war is restricting the supply of petroleum-based colourants. The Japanese government objected, saying Japan has enough printing ink to cope but you can see why they’re spooked because this kind of announcement could easily spark panic across the corporate world.

Chinese customers are falling out of love with Nike and favouring domestic brands like Anta and Li-Ning, making China Nike’s worst performing overseas business. Once-great American brands are increasingly losing ground in China and Nike’s going to have to take a serious look at what’s going wrong there.

IN LEISURE NEWS…

TRAVEL TRENDS – Airlines around Europe are cutting prices for summer flights to entice travellers who are delaying bookings because of the jet fuel situation. Britons are getting very cautious about holiday plans as a result and are increasingly looking at train trips and cruises.

Heathrow passenger numbers dipped last month versus April last year. There is a lot more room for air fares to rise if jet fuel supply disruption continues: the price has almost doubled and once airline reserves are exhausted, jet fuel consumption would need to drop by 20% to meet the fall in supply, which would likely see short haul suffer more cancellations than long haul.

German holiday giant Tui is hoping for wet British weather so that consumers will book holidays abroad as UK bookings are down 10% and almost half of their holidays remain unsold.

RESTAURANTS – The proliferation of weight-loss drugs is changing the dining-out landscape as many Americans are now dining out less frequently and ordering smaller quantities. A Gallup poll found that over 12% of Americans are now taking GLP-1 drugs for weight loss, up from 6% in early 2024.

Greggs has confirmed price rises as a result of the Iran war but outlined a cautiously optimistic forecast for the rest of the year. It also announced it would open a shop in Tenerife South airport, its first outside the UK since closing its Belgium business in 2008. Most foreigners’ perception of British food is not positive, so opening a Greggs in a country that actually has decent food seems like a questionable move and it’s hard not to wonder whether this is more of a CEO ego trip than a genuine commercial strategy.

IN AUTOMOTIVE NEWS…

European carmakers have taken an €8bn hit from Trump’s tariffs, with things potentially getting worse if he follows through on threats to impose 25% taxes on car imports from the EU.

Xpeng is in talks with VW about buying a factory in Europe as part of its overseas expansion. VW needs to do something with its excess production capacity in Europe.

Ford’s share price boomed by over 20% in two days on hopes that its new energy subsidiary will get it a piece of the AI data centre action via battery storage capacity.

Nissan is considering building cars for other manufacturers at its Sunderland plant, potentially including Chery, as it continues to struggle following a net loss for the last financial year.

Honda has reported its first annual loss in 70 years as a listed company.

JLR’s annual profits have all but evaporated thanks to US tariffs and a cyber-attack. It also took a bit of a beating in China thanks to intensifying competition from local makers.

Lotus Group is planning to build its first supercar at its Hethel plant in Norfolk, which will give the plant a real lifeline. The model is due for launch in 2028.

EV – BYD and its peers are smashing it in overseas markets but struggling domestically due to sluggish demand, with a risk that the Chinese government turns its attention to newer sectors like AI and robotics, reducing EV support.

Stellantis and Ford have talked about the increasing importance of partnerships with Chinese carmakers and rivals to survive in a tough European market, though this doesn’t sound sustainable long term unless established players develop new technologies using raw materials that Chinese firms don’t already control.

According to the latest SMMT figures, sales of used electric cars in the UK rose 32% to a record high in Q1, driven by booming petrol and diesel prices.

BATTERIES – Panasonic is forecasting a rebound for its battery business as Tesla appears to be gaining market share and Tesla is thought to be its biggest customer.

Tesla is injecting $250m into its Berlin-Brandenburg gigafactory to boost production as European demand for its vehicles continues to rise.

IN TECH NEWS…

AI – NHS England has given the go-ahead for external staff from companies including Palantir to have “unlimited access” to identifiable patient data while they work on the Federated Data Platform. A balance clearly has to be struck between getting the project moving and making sure data is safe.

There is also a massive danger lurking within AI systems at companies: tech start-up PocketOS lost its entire codebase because a bot running the coding tool Cursor, powered by Claude AI, tried to remove a bug and in doing so destroyed everything. A Deloitte report shows that although 85% of businesses are thinking about using AI agents, just 20% have set up any rules on how they should be used. That gap is going to become an increasingly serious problem.

HARDWARE – Nintendo decided to increase prices of its Switch 2 and cut sales forecasts, a direct knock-on effect of higher memory chip prices and US tariffs.

IN REAL ESTATE NEWS…

TRENDS – UK estate agents are at their gloomiest in more than two years as higher mortgage rates hit demand and sales, with the expected 2026 rebound looking dead in the water until the Iran war ends.

The share of new homes sold before they are built has fallen to a 12-year low and almost half of UK homes listed for sale in the last three years have failed to find a buyer, mainly because sellers price too high.

New home builds fell 6%, nearing their lowest level in 14 years, casting doubt on government housing targets.

IN COMMERCIAL PROPERTY – Canary Wharf Group is back in the black as its office portfolio rose in value for the first time since the pandemic.

Landsec has reported occupancy levels at a 20-year high, with its CEO noting that “rents are growing at their fastest pace in nearly two decades”, though it remains to be seen whether this is sustainable as companies downsize headcount.

My fave video of this week was the one with the unusual kitchen! This woman is a legend!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE COLOURED HIGHLIGHT REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

IN WAR NEWS…

The US and Iran started the week off by exchanging fire in the Gulf and the US paused “Project Freedom” after Saudi Arabia initially withheld support, saying that Trump’s actions were “unnecessarily escalatory and not well thought through”.

DEFENCE – German arms giant Rheinmettal’s Q1 revenues fell short of expectations because although it’s flooded with orders, in investors are getting increasingly worried about whether it can translate this into profit and whether it can boost capacity enough to cope

IRAN WAR IMPACT…

The war in Iran continues to send shockwaves through global supply chains. A new report highlights what’s being dubbed “plastic shock” hitting Asia, as manufacturers grapple with serious shortages stemming from the ongoing oil crisis. The Strait of Hormuz bottleneck is severely restricting supplies of naphtha – a petroleum derivative used in both chip manufacturing and plastics production – with prices in Asia having nearly doubled since the conflict began. The knock-on effects are hitting packaging for food, medical aid and everyday consumer products.

Fertiliser costs have meanwhile surged between 50% and 70% since the war broke out in late February, which could have “dramatic” consequences for global food prices. UK crops are likely to be insulated this year given that most fertiliser has already been applied, but next year could tell a very different story – and this will be a global problem, not just a British one. A survey by Opinium found that 80% of Britons are already concerned.

Shipping giant Maersk, which carries about 20% of the world’s seaborne containers, is absorbing a $500m monthly hit from what its CEO called the “most comprehensive energy shock in our lifetimes.” He has joined a growing chorus of business leaders sounding the alarm about damage to global trade.

IN TRUMP THINGS…

There was some bad news for the president on the legal front, as the US Court of International Trade ruled that tariffs imposed under Section 122 of the Trade Act of 1974 were “unauthorised by law”. The ruling only applies to the two companies that brought the case, but it’s a setback that will embolden others to challenge. Separately, Trump is giving the EU until 4th July to implement its side of last year’s trade agreement, threatening a sharp tariff hike if it doesn’t comply.

REGIONAL/INDIVIDUAL COUNTRY NEWS…

CHINA – China is quietly building soft power as America burns bridges. While Japan has manga and South Korea has K-pop, China’s cultural influence is growing with TikTok, open-source DeepSeek and visa-free travel for Europeans. Recent surveys show growing majorities in Asian and European countries and Canada are more willing to align with China than America. Trump, meanwhile, continues to antagonise potential allies – reportedly calling India a “hellhole,” slapping it with heavy tariffs and piling levies onto EU vehicles. At this rate, he really will have no friends left.

INDIA – PM Modi is on a roll after a historic BJP victory in the opposition stronghold of West Bengal, with his majority also increasing in Assam – putting him in strong position for a fourth term in 2029. This is remarkable given that his party lost its national parliamentary majority just two years ago. Grassroots campaigning, welfare handouts and genuine voter engagement are thought to be behind the surge.

EUROPE

RUSSIA – Security protocols around Putin have been tightened significantly amid growing fears of assassination, with the president spending increasing time in underground bunkers. His approval rating has fallen to its lowest level since autumn 2022, according to both state and independent pollsters. Putin is spending almost all his time on the war, leaving domestic and international politics increasingly unattended.

MIDDLE EAST

UAE – Fertiliser giant Fertiglobe is now transporting product overland to ports outside the Strait of Hormuz. This is an extremely expensive way of doing things but rising prices are making this commercially viable. The company is running plants at full capacity, which at least tells you demand isn’t the problem!

THE UK

UK goods exports to the US remain lower than before Trump’s April 2025 tariffs, leaving us running a trade deficit with our biggest trading partner for three consecutive months, despite the much-trumpeted “economic prosperity deal.” Either the government pushes harder, or we diversify away from a trading partner that has proven deeply unpredictable. On that front, the UK-Australia deal is delivering real benefits, with Australia having accelerated its dealmaking since Trump’s Liberation Day tariffs. Australia also concluded a new EU deal last month after eight years of negotiations.

The fiscal outlook is getting murkier, with 30-year bond yields hitting 5.77% – their highest level since 1998. Iran war worries and concerns about the Starmer government’s viability are hammering sentiment and making the Chancellor’s job even harder.

On the home front, the PM remained defiant in the face of calls for him to resign. He said that he ‘won’t accept deals’ to quit Number 10 ahead of local elections where Labour was expected to get a right thrashing – which it did. In the end, Reform was the biggest winner while Labour and Conservatives languished. The LibDems had modest success and the Greens also picked up some seats.

IN COMMODITIES NEWS…

OIL – Global oil reserves are depleting at a record pace. Goldman Sachs reckons they’re at their lowest in eight years, with only around 45 days’ worth of refined products left worldwide. Jet fuel stocks hit their lowest level in April and US gasoline stocks are on track to hit their lowest-ever level in April – just before road trip season!

Norway will reopen three gasfields that have been dormant for four decades, with production restarting in 2028. Environmentalists are unhappy, but Europe needs alternatives and Norway is western Europe’s biggest petroleum producer. American oil firms, meanwhile, are coining it in! US fuel exports are at record levels, with petrol costs $4.53 a gallon. If it breaches $5, the White House may have to restrict exports.

Shell has sparked the ire of climate campaigners with a 115% jump in Q1 profits, largely from trading volatile prices. The frustration is understandable, but Shell didn’t ask for this war and making money from trading isn’t inherently “evil”, especially when a windfall tax risks repeating the mistake of stopping North Sea investment dead. BP, meanwhile, is selling stakes in two major carbon capture projects as it continues retreating from climate commitments.

IN CRYPTO NEWS…

The Trump family’s World Liberty Financial is suing major backer Justin Sun – the “banana guy” – for defamation following posts on X. This comes after Sun sued WLF for fraud last month, claiming it restricted his ability to sell tokens and extorted him for more funds. The WLFI token has collapsed 80% from its peak.

Separately, Morgan Stanley is launching spot crypto trading on E*Trade at half a cent per dollar traded, undercutting rivals including Charles Schwab. Crypto’s march towards the mainstream continues.

IN INVESTMENT NEWS/TRENDS…

MARKETS – UBS research shows over half of the S&P 500’s 12% rally since the early April ceasefire was driven by just five stocks: Alphabet, Nvidia, Amazon, Broadcom and Apple. This runs counter to fragile consumer, squeezed spending power squeezed and precarious household finances. Companies are still coasting on pre-war feelgood, but the longer the war goes on, the more corporate casualties are likely to emerge. Meanwhile, cash-rich companies will find opportunities to snap up distressed smaller rivals.

Hedge funds posted a 5% rise April – their best month since November 2020 – driven by tech-focused funds, robust earnings, hyperscaler investment and a boom in memory stocks. Marshall Wace, Balyasny, Millennium and Citadel were among the standout performers.

M&A – GameStop made an unsolicited $56bn offer to merge with eBay, having quietly built a 5% stake. It’s a half-cash, half-shares deal at a 46% premium to eBay’s February closing price. The CEO argues a merger could reduce costs, boost earnings and give eBay a proper retail network. Some say that the rationale is flimsy and unoriginal. We’ll see.

Vodafone is also taking full control of VodafoneThree by buying CK Hutchison’s 49% stake in an all-cash £4.3bn deal, expected to complete in H2.

IN FINANCIALS NEWS…

BANKS – NatWest profits surged as war-driven borrowing cost rises boosted its Net Interest Margin, prompting a full-year guidance upgrade. Higher interest rates are a double-edged sword good for margins but increasing the risk of bad loans as customers are squeezed.

HSBC took a $1.3bn hit including a $400m fraud-related charge and war-related exposure, though underlying operations remain reasonably solid.

TSB will disappear from high streets after over two centuries as Santander phases out the brand following last week’s merger, targeting £400m in combined savings. Another high street stalwart bites the dust!

FINTECH – South Korean fintech Toss is making waves with FacePay – facial recognition payments now used by nearly 10% of the population, with 4.8m users and scanners in 330,000 outlets since September. The lead developer is targeting the elimination of physical credit cards in Korea within three years. Privacy concerns will be the main barrier to adoption in Europe and the US, but it’s genuinely impressive.

Corporate card platform Ramp is raising $750m at over $40bn – a 30% valuation uplift in just six months – using AI to automate finance tasks. This one looks very hot.

IN EMPLOYMENT TRENDS…

Graduate job opportunities have fallen by a third over the past year, according to the latest figures from Adzuna. Coinbase is cutting 14% of its workforce, blaming AI and Cloudflare is slashing 1,100 jobs, joining PayPal and Freshworks in announcing AI-related cuts in the same week. It won’t be the last.

The accountancy profession is also changing, with the hallowed path to partnership losing its lustre – the Big Four are increasingly demoting partners, prompting many to set up rival firms.

Meanwhile, over 7,000 Just Eat couriers have launched legal action to secure minimum wage and holiday pay, with the tribunal running until 2nd June. Worker or contractor? The outcome has implications far beyond Just Eat.

IN CONSUMER TRENDS…

“AFFORDABLE LUXURIES” – Live Nation swung to a loss on legal fees – it was found to have illegally monopolised US concert ticketing — but revenues rose on strong demand for live experiences. It does make you wonder about the potential for virtual concerts: with ticket prices rocketing and technology improving, there’s a compelling proposition in high-quality virtual events blended with food delivery. Acts get unlimited audiences; fans get affordable tickets. Someone will crack this I’m sure!

DoorDash, which now owns Deliveroo, saw Q1 revenues boom by 33%, though profits dipped on higher costs. In what looks like a cost-of-living crisis, it still amazes me how much people spend on take-outs!

Heat pump sales rose 34% in Germany and 21% in France in Q1 as higher fossil fuel prices drive consumers towards alternatives.

IN THE UK – NIESR economists are warning that 200,000 UK households could be tipped into poverty by higher energy, petrol and food costs combined with slowing wage growth.

ECIU research suggests food prices are on track to be 50% higher by November than at the start of the cost-of-living crisis in 2021 – prices for pasta, frozen veg, chocolate and eggs are all up at least 50%, beef up 64% and olive oil has more than doubled. Three of England’s worst ever harvests have happened in the last five years. The government has precious few levers.

IN RETAIL NEWS…

UK retail space is shrinking for the first time since the 1940s, with closures outpacing new development – a trend accelerating this year. Online now accounts for 28% of sales, up from under 15% a decade ago. Property developers are redirecting capital to warehouses and data centres. We’re entering cost-of-living crisis 2.0.

Chinese e-tailer Joybuy, owned by JD.com, is making a UK push with its “double 11” delivery promise. It can’t cover the whole country yet but it’s making progress – and it’ll be interesting to see how it fares against a well-entrenched Amazon.

IN CONSUMER GOODS…

LUXURY – LVMH is shifting from buyer to seller, putting Marc Jacobs, Joseph Phelps Vineyards and its Fenty Beauty stake up for sale to refocus capital on Louis Vuitton and Dior. Some pruning makes sense although timing is awkward – luxury is having a hard time and everyone knows it, so buyers are likely to be low-balling.

IN LEISURE NEWS…

PUBS – Pub groups are pinning their hopes on the World Cup to boost sales. Greene King reported an influx of bookings and Admiral Taverns expects 10% more beer sales.

Heineken’s Star Pubs has been upgrading screens and sound systems since September to attract the punters. Heineken is also trialling a “contemporary pub model” – coffee shop by morning, remote-work friendly by day, comedy or game night by evening. The problem is that drink prices are high, the cost-of-living squeeze is real and the games are at awkward times because of where they are. Supermarkets and people hosting at home could be the bigger winners IMO.

JD Wetherspoon issued its third profit warning this year. If even ‘spoons is struggling, smaller operators must be having a miserable time.

GAMBLING – Kalshi has quadrupled its valuation to $22bn in under a year – nearly double Flutter’s market cap. Flutter is reportedly considering ditching its London listing for New York which, given the divergence in growth prospects, makes complete sense.

Meanwhile, Polymarket is hosting a market where $693,000 has been wagered on a hantavirus pandemic. Betting on war and death is illegal in the US, but Polymarket’s offshore base lets it circumvent those rules.

TRAVEL – Airlines have cancelled 13,000 flights in May as scarce jet fuel forces capacity cuts. Lufthansa couldn’t refuel one of its Cape Town flights on landing and is now scheduling refuelling stops on some Asia and Africa routes.

Rail ticketing platform Trainline is also feeling the pinch – sales to foreign visitors have dived, prompting muted earnings guidance.

Airbus secured a $19bn order from AirAsia, potentially rising to $38bn if a larger variant is launched. This will be a huge boon to Airbus’s Canadian manufacturing base and PM Carney is loving it.

IN TECH NEWS…

AI – The IMF has warned that rapid AI advancement poses a potential “systemic” shock to financial systems, with advanced models dramatically reducing the time and cost needed to find and exploit vulnerabilities in widely-used systems. It adds to a growing chorus calling for oversight.

Google, xAI and Microsoft have meanwhile agreed to pre-deployment national security reviews by the Center for AI Standards and Innovation – probably following the alarm caused by early versions of Anthropic’s Claude Mythos model, which prompted Anthropic’s ongoing legal dispute with the government over its “national security threat” designation. Relations appear to be thawing.

Palantir delivered record quarterly revenue of $1.63bn on surging US military demand.

German rival Celonis, valued at $13bn, is positioning itself as Europe’s answer to Palantir, having worked with BMW, Airbus and AstraZeneca and recently signed a deal covering half a million UK civil servants.

DeepSeek is approaching a $45bn valuation as China’s state-backed Big Fund leads a new round with Tencent participating, powered by Huawei’s Ascend 950PR chips.

CHIPS – AMD beat Q1 forecasts on AI infrastructure demand.

Samsung hit a $1tn market cap – only the second Asian company after TSMC to do so. This was also due to AI-related demand.

Arm is projecting $2bn in sales from a new AI data centre chip by 2027-28, though making its own chips puts it in direct competition with its customers including Nvidia, Google and Amazon.

HARDWARE – Apple has reached a $250m settlement over overstated 2024 AI Siri capabilities, admitting no fault ahead of an expected AI-enhanced Siri reveal next month.

Anthropic has secured 300 megawatts of computing capacity from SpaceX’s Colossus 1 data centre, adding to Amazon and Google deals.

Nintendo’s share price has fallen 45% since August as AI-driven memory chip price inflation has been squeezing margins and threatens Switch 2 pricing. Sony is down over 30% since November for similar reasons.

IN MEDIA NEWS…

Disney reported higher revenues despite slower US theme park footfall, as visitors spent more and cruises held up. The outlook is murky given rising fuel costs and a drop in international visitors amid anti-American sentiment – plus the distraction of Trump allies pursuing the company over a Jimmy Kimmel joke about Melania.

IN SOCIAL MEDIA NEWS…

Meta is building a highly personalised “agentic” AI assistant for its 3bn-plus users, powered by its new Muse Spark model. The trust issue is the key obstacle – genuine usefulness requires handing over sensitive personal information – but this feels like the inevitable direction of travel.

Meta is also facing a copyright lawsuit from major publishers including Hachette and Macmillan over training its Llama models. If publishers win, AI companies may have to start paying for quality content, which would reshape the economics of model training entirely.

Meanwhile, Meta is challenging Ofcom over the Online Safety Act’s fining methodology – a predictable move from a company that treats regulatory penalties as a cost of doing business.

Match Group reported higher profits as Tinder’s Gen Z turnaround gains traction, helped by a double date feature, better recommendations and Face Check verification. Hinge continues to perform well.

IN AUTOMOTIVE NEWS…

The Big Three US carmakers – GM, Ford and Stellantis – have all flagged a $5bn commodities shock in Q1 results, warning that discounts could be cut and prices raised if the conflict persists another six months.

Toyota more than doubled EV sales in Q1 and is pushing further into electrification – notable given that many rivals are pulling back.

UK new car sales rose 24% year-on-year in April, with BEV sales surging 59.1% to account for over a quarter of the total – higher fuel prices are a clear driver. Chinese brands played a big role, with the Chery group overtaking BYD, Ford, BMW and Mercedes-Benz in registrations.

Nissan is closing one Sunderland production line and cutting 900 European jobs, with talks underway with Chery and others. A Nissan-Chery deal would be quite the moment given the historical tensions between Japanese and Chinese automakers — and would underline just how serious Nissan’s position has become.

IN REAL ESTATE – RENTAL – London rental listings fell 21.7% in Q1 versus two years ago while for-sale listings rose 17.6%, as landlords exit the sector. With the Renters’ Rights Act now in force, making it easier to contest rent rises, the exodus is likely to continue. Fewer rentals means more competition for those that remain, so rents are likely to keep rising regardless. Stamp duty data also shows landlords and second-home buyers now account for the majority of receipts in over half of English local authorities, a revenue stream that looks increasingly fragile.

BUYING – Nationwide showed a fourth consecutive monthly house price rise with a new record high in April. However, Halifax, which tends to react faster to market shifts, showed prices peaking in February and softening in March – a reading more consistent with falling consumer confidence, declining new buyer enquiries in the RICS survey and reduced housebuilder website traffic.

Mortgage affordability has hit its worst level since 2008, with initial repayments averaging 21.3% of gross income and that’s using pre-Iran-war data, so the real picture’s probably even worse.

IN PHARMACEUTICALS – Novo Nordisk gets a second shot at weight-loss supremacy with the pill version of its semaglutide treatment. The clock is ticking – patents expire in the US and Europe in 2032 – so it will be working hard to maximise returns before generic competition arrives.

My fave video of this week was the one with the showering dog 🤣!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE COLOURED HIGHLIGHT REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

IN WAR NEWS…

The Pentagon says that the Iran war has cost $25bn so far and frustration with the situation is growing. Some Republican lawmakers are now challenging the president’s authority regarding the continuation of the war but I can’t see this going anywhere. German chancellor Merz even said that the US was being “humiliated” by Iran while Iran’s supreme leader vowed to “prevent the enemy’s abuses” of the Strait and referred to the US as the “Great Satan”. Clearly things aren’t getting any better…

Meanwhile, G7 central banks had a big week this week, what with the Fed, the Bank of Canada, the Bank of Japan, the Bank of England and the ECB all having interest rate meetings. All of them kept interest rates on hold but indicated that rates could go up if a prolonged Iran war pushed up inflation.

LOSERS OF THE WAR – developing nations because of the rising prices of oil and gas (they are net importers and don’t have much in the way of renewables), disruption to food supplies (worsening malnutrition) and returning expats who have been working abroad and sending the money home

Countries, industries and companies that have seen lots of investment from Gulf countries who are now reviewing the investment criteria of their sovereign wealth funds.

Industries and companies that use helium are going to be in trouble soon because there’s a shortage! Qatar normally supplies about a third of the world’s helium but it has not been able to make any shipments since the Iran war started. Helium is used in AI, nuclear power, advanced weaponry, aerospace, fibre-optic cables, quantum computing, chromatography and the cooling of superconducting magnets in MRI machines, among other things.

Shipping, because capacity is down and more stability is needed for prices to normalise.

Agriculture, because there’s not enough fertiliser – and that means crop yields are going to be poorer than they would have been otherwise.

Airlines, because of higher fuel costs and more travel disruption.

Consumers are already losing out as petrol prices have already climbed but air fares and food prices are set to rise considerably amid shortages of fuel. Britain is the most vulnerable country in Europe to jet fuel shortages because we don’t have as much oil refining capacity as other European countries

WINNERS FROM THE WAR – include the oil and gas sector (high prices, high demand), defence (share prices have weakened but that may be due to investors selling out of a strongly performing sector to raise money) and Chinese solar (China dominates supply chains for clean energy technologies).

OTHER EFFECTS OF THE WAR – US motorists are spending less at the pumps, according to data from Upside which tracks consumer spending across over 23,000 petrol stations in America. Pistachio prices have hit their highest level in years thanks to supply disruptions (Iran is one of the world’s biggest producers), London’s luxury hotels are suffering from the lack of rich Middle Eastern visitors and consumer worries about the effect on the UK economy are denting the prospects for house price growth this year.

IN TRUMP THINGS…

There was an assassination attempt on the president/his entourage, but the shooter didn’t get anywhere near the actual room he was in and, somewhat bizarrely, he was not shot dead. Trump used this as an opportunity to justify spending $400m on a new ballroom for the White House.

King Charles and Queen Camilla made a state visit to the US and it seemed to go quite well. A lot was made of the so-called “special relationship” but, in an unguarded moment caught on tape, it turns out that the current British ambassador to Washington saying that the “special relationship” everyone keeps banging on about is not with Britain, but with Israel. He also said he thought that it was “extraordinary” that the Epstein scandal “hasn’t touched anybody” in the US given that it had a major impact on the royal family and continues to have a huge impact on our PM and, obviously, on Mandelson. Trump then magnanimously dropped Scotch whisky tariffs “in honour” of King Charles.

Trump showed his continued taste for vengeance as US federal prosecutors charged former FBI-head James Comey with threatening the life of the president by posting a photograph of seashells arranged in a pattern that read “86 47”. Prosecutors interpreted this as “86” meaning “get rid of” and “47” referring to the number of Trump’s second presidency. Then the FCC launched a probe into all broadcast TV stations owned by Disney for the breach of a number of rules including “unlawful discrimination” which happened, completely coincidentally, just days after Jimmy Kimmel made a joke about Trump’s wife. On the other hand, the US Justice Department decided to shut down the investigation into Jerome Powell, chair of the Federal Reserve, regarding cost overruns at the Fed’s HQ.

In an update on other presidential ego trips, America is going to be issuing passports with the president’s face on as he continues with his campaign to Trumpify everything. The new passport will be a special limited edition with his portrait overlaid on the Declaration of Independence on the inside cover with his signature in gold (obviously) at the bottom. Unfortunately, his $5m golden visa scheme isn’t going well as, so far, only one person has been approved for the expedited visa despite the price of the “Gold Card” visa being cut from $5m to $1m in December.

IN REGIONAL/INDIVIDUAL COUNTRY NEWS…

THE AMERICAS

THE US – economic growth rebounded although consumer spending is slowing down because of the Iran war. In the meantime, the S&P 500 shot up by 10% in April in what was its biggest monthly jump since November 2020 when there was a vaccine breakthrough! Tech stocks were the main drivers of the rebound and it is notable that corporate America has been raking in the money, as evidenced by numbers bandied around in the current earnings season so far.

CANADA – PM Carney announced the creation of a new sovereign wealth fund (called the “Canada Strong Fund”) that will be used to finance big projects that are of national interest and provide returns for Canadians. It is part of Carney’s drive to make Canada the “strongest economy of the G7” and the fund will work with the private sector to finance 15 infrastructure proposals with the nation’s Major Projects Office.

ASIA

CHINA – the country’s regulators decided to block the deal and are insisting on a full unwinding. This is going to be a massive pain for Meta because it’s already integrated Manus into some of its tools. The action sends a strong signal to Chinese tech companies that their expertise will not be allowed to go abroad.

THE MIDDLE EAST

THE UNITED ARAB EMIRATES – the country announced that it would leave OPEC and OPEC+ in frustration with oil production quotas (imposed by OPEC) and Russia’s support of Iran (OPEC+). This is a win for Trump, who has wanted to break the cartel’s grip on the oil price for a very long time and could signal the beginning of the end for OPEC as others may feel emboldened. Israel took advantage of the move to strengthen ties with the UAE by sending a sophisticated weapons system – and “several dozen” Israeli military personnel to operate it – to the UAE to help defend it.

EUROPE

GERMANY – the country made a formal announcement that it would increase original defence spending plans by 20% in 2027 and meet NATO’s new defence spending target at least six years ahead of plan! Well, given that Trump’s just decided to withdraw 5,000 American troops from the country, this is probably just as well!

THE UK – borrowing costs hit their highest level since the 2008 financial crisis but Starmer got a rare bit of good news as it turns out that he won’t have to face a parliamentary ethics inquiry over the whole Mandelson thing after all because it was convincingly voted down in the Commons.

There was a whole load of noise this week, though, and I guess this is just par for the course in the run-up to the local elections that are going to be held next week. Labour is expected to get absolutely trounced. There was talk about a one-year freeze on private rents to help tenants, but all that does is store up problems for later – and it was officially dismissed as an idea. Reeves defended her record in the job as chancellor as rumours surfaced about a potential cabinet reshuffle when Labour loses at the local elections.

UK ministers are going to get the power to force pension funds to invest a minimum amount in British companies via some upcoming legislation. Fund managers will complain that this could affect returns for their investors because it will restrict what they can or cannot invest in. I say that fund managers should make sure they do their job properly and invest in the right British companies 😬.

IN COMMODITIES NEWS…

OIL – Goldman Sachs analysts sounded a warning about the rapid depletion of the world’s oil supplies thanks to the Iran war. They also nudged up their Q4 oil price estimates. Prices topped $120 a barrel in response to Trump making noises about not wanting to end his blockade of the Strait of Hormuz. China’s about to restart the exporting of jet fuel, diesel and gasoline from May. An export ban had been put in place at the beginning of the war to protect domestic supply, but that is going to be relaxed.

In company news, Shell agreed to buy Canadian shale producer ARC Resources in a deal worth $16bn. This will be its biggest acquisition since it bought BG Group for $70bn at the beginning of 2016. BP’s Q1 profits more than doubled, mainly thanks to its oil traders raking in the money from betting on volatile prices. It swiftly warned the government against getting any funny ideas about imposing another windfall tax, though!

It turns out that Exxon Mobil, ConocoPhillips and other US oil majors are now sniffing around Venezuela again just three months after turning their noses up at the opportunity after Trump invaded and effectively put Delcy Rodriguez in charge. They were burned in the past after they poured loads of money and effort into the country’s oil industry only for it to be nationalised, shutting them out with no recourse.

IN CONSUMER TRENDS…

Savills data shows that home renovation approvals have dropped to their lowest level in over a decade. It seems that homeowners are getting increasingly reluctant to splash out on major refurbishments if they think they might not get the return when it comes to selling the property. On that front, the latest data from Zoopla shows that homes across London are now taking six days longer to sell than at the same point this time last year. It’s eminently understandable that people are getting more cautious given the current macroeconomic scenario.

UK high streets are rebounding in terms of footfall but it’s still lower than it was in 2019. Rents in prime locations are rising and vacancies are falling – but this seems to be concentrated in specific places while other locations are struggling as city centre vacancy rates remain a problem. I suspect that there will be more business failures in retail and hospitality because of cost rises and a weakening of demand – and that will no doubt put downward pressure on rents once more.

IN RETAIL NEWS…

The BRC said that price rises in UK shops are slowing down as retailers are offering discounts on clothing, furniture and DIY goods.

Boots is potentially looking to float on the UK stock market sometime in 2027. The company is actually doing surprisingly well at the moment but I think that the real opportunity for the high street stalwart is in beauty because a) it’s a trusted name, b) since department stores shut down, there are fewer outlets where you can buy beauty products and c) the shops are always in prime locations. If they get the offering right, it could work well. It’s not as if the company is having to do this from a standing start either – it has form! It’s just that perhaps it should concentrate on making it have a more premium feel IMO…

IN CONSUMER GOODS NEWS…

Mondelez boasted improved profits and revenues over Q1 thanks to stronger performances in developing markets offsetting weakness in North America and Europe. However, you would have thought that this isn’t necessarily going to last given the uncertain macroeconomic picture and then there’s that problem on the horizon of more people being on weight-loss drugs, meaning that a lot of people are going to be snacking less.

Adidas benefitted from a boom in sales of football merch ahead of this summer’s World Cup, helping the company to beat market expectations. Its clothing sales were particularly strong and managed to offset weaker growth in footwear.

IN LEISURE NEWS…

A report by market research firm NIQ showed that three licenced venues are shutting down every day because of rising labour and energy costs in addition to shaky consumer confidence.

Starbucks announced a rebound in sales over the quarter despite consumer gloom. The chain has invested significant amounts in improving its offering over the last 18 months and it’s clearly paying off.

IN TRAVEL-RELATED NEWS…

The industry lobby group Airlines UK is urging the government to put together an emergency plan or face a summer of travel chaos if the Strait of Hormuz remains closed. The government has insisted thus far that there is no need for people to change their travel plans – but it did advise people to top up their travel insurance.

The Airports Council of Europe said that regional airports were the most at risk if airlines cut capacity and/or raise fares. All they can do is wait…

Wizz Air made the unusual move this week of accusing Middle Eastern airlines of putting politics ahead of customer safety as many have resumed flights in the war zone. Many European airlines have already stopped flights to the UAE because of the conflict. Separately, the company said that flight bookings for this summer were up by 17% despite all the jet fuel fears and that it expected to turn a profit in its next financial year.

Airbus profits halved in a tough Q1 as it delivered the fewest commercial aircraft over a single quarter than it has done since 2009. Revenues were ahead of analyst estimates, though, and the company kept its 2026 delivery target unchanged.

IN GAMBLING…

Robinhood saw its quarterly results falling short of expectations – but it did well from rising fees on prediction market trades and growth in its subscription service. Although prediction markets did well, crypto trading did not.

Analysis by the Anti-Corruption Data Collective showed that long-shot bets – deemed to be bets of $2,500 plus at odds of 35% or less – on Polymarket had an average win rate of around 52% in markets on military and defence actions! This win rate is notably higher than the 25% rate across all politics-focused markets and just 14% on all markets on the platform. Surely prediction markets are going to get regulated – it’s just the wild west out there!

IN TECH NEWS…

Tech stocks saw a massive $180bn sell-off after ChatGPT said that it fell short of an internal goal of reaching one billion weekly users by the end of 2025 and missed its revenue goals.

OpenAI and Microsoft relaxed the terms of their partnership to allow both sides to negotiate outside deals – and OpenAI promptly announced an expanded deal with Amazon that enabled Amazon’s cloud customers to use OpenAI’s advanced models via AWS’s Bedrock AI developer platform.

Google unveiled particularly strong results this week among its “hyperscaler” peers Amazon, Meta and Microsoft. Although investors are getting increasingly nervous about the eye-watering sums being thrown at AI, they seemed to be satisfied with results generally.

IN AI NEWS – Anthropic has had to ration access to its most popular tools and the situation has become so serious that it is now talking about dropping this coding tool entirely from its popular Claude Pro tier, which costs £18 a month. Basically, the company can’t build datacentres fast enough and it now seems to be more constrained than arch rival OpenAI. There is no quick fix, unfortunately, but it could take 12 to 18 months to get on top of.

Google employees signed an open letter to their CEO, Sundar Pichai, to say that they were against allowing the government to use their AI tech for classified military operations. That fell on deaf ears as the company said that it is not only proud to work with the military – it will continue to do so. Google signed a deal with the defence department on Monday to allow its AI tech to be used in classified operations. I’m sure that the company will be of the view that the employees can just leave if they object that much. It might even help them out given all the redundancies the tech sector has been announcing recently.

Anti-Palantir sentiment continues to grow as Australian government agencies are being called upon to ban any new contracts for the company that is closely aligned with Trump, ICE and the Israeli military. It’s also possible that the Met’s bid to use Palantir’s AI intelligence software could be blocked by the Mayor of London. Palantir is already facing efforts to strip its tech from the NHS because of its links to the Israelis and the war in Palestine.

IN HARDWARE NEWS – Huawei’s chip sales boomed by a whopping 60% thanks to strong demand from Chinese clients seeking an alternative to Nvidia.

Sandisk and Western Digital put in strong Q3 performances thanks to huge demand for their data storage products as the great AI datacentre buildout continues.

Apple smashed market expectations in a quarter that saw strong sales driven by its “most popular” iPhone ever! Tim Cook will be leaving his post on a high! Investor concerns remain about Apple’s disappointing showing in AI but its deal with Google earlier this year is supposed to address that.

IN SOFTWARE NEWS – Roblox cut its full-year guidance in order to put more resource into safety features. It thinks that the roll-out of age checks is slowing down – and will continue to slow down – user and bookings growth and so has decided to factor that in.

Synthesia’s CEO warned against the generation of over-complicated documents with “pages full of fluff” when churning out AI content, something he referred to as “AI-sloppification”. He believes that the use of LLMs should “make us more concise, not more verbose”.

IN STREAMING NEWS – Spotify’s shares slumped after the company unveiled weaker subscriber growth and profit forecasts. Investors were concerned by higher subscription prices putting off customers.

IN SOCIAL MEDIA NEWS – Meta signed a deal with US start-up Overview Energy that will enable Meta to harvest solar energy from space to power its AI datacentres on Earth. Power will be collected in space and then be converted into low-intensity infrared beams that can be directed at photovoltaic panels on Earth where they are then converted into energy.

EVs – Xiaomi, , better known for making cool smartphones, has now delivered 650,000 EVs, which puts it on a par with Tesla in terms of vehicles sold last year in China. What an achievement in just two years! The company has European expansion plans but hasn’t yet said which market it will enter. The Chinese wave is coming to Europe!

Rivian said that it wants to increase initial production capacity for a plant that it’s building in Georgia by 50%. The idea of this is to lower the cost per unit. It’s a punchy move for a company that hasn’t done particularly well until now, but I guess you have to go all in!

IN TRADITIONAL CAR NEWS – VW rolled out the ID.Polo, one of four entry level EVs to be released this year across the VW stable of brands. The models were jointly developed, which saved costs, and have almost 80% of shared components. The company also announced that it would cut its European production capacity by an extra 500,000 vehicles per year in response to weakening demand and rising US tariffs.

Aston Martin got another cash injection, this time from a consortium backed by billionaire chair Lance Stroll as the carmaker suffered its fifth consecutive quarterly loss whilst bracing itself for Middle East fallout. Aston Martin makes great cars but is an absolutely massive money pit…

BANKS – JP Morgan is now relocating staff back to London from Paris as it now says that it overestimated the numbers needed there. CEO Jamie Dimon was pretty damning about the prospects for London in the wake of Brexit but he got this one very wrong.

UBS put in a stellar Q1 performance as the trading and wealth management divisions both did a roaring trade. Volatile markets powered UBS’s trading, reflecting similar at US banks. Stronger equity capital markets activity also helped.

UK banks are preparing for Starmer potentially losing the leadership, meaning that the government policy is more likely to lurch to the left. They are bracing themselves, in particular, for another windfall tax.

Lloyds Banking Group made pretty downbeat comments about the likely effects of the Iran war on the economy and slashed its UK GDP growth forecasts quite dramatically from 1.2% to 0.5%. Lloyds is of the belief that the war will spark a return to inflation and a rise in unemployment.

INVESTMENT NEWS…

Bill Ackman’s Pershing Square USA closed-end stock picking fund and his Pershing Square hedge fund management company floated this week on Wall Street. The former fell on its debut and the latter was slightly up. Investors don’t like closed-end funds because they tend to trade at a discount to their assets.

Back in London, the RAC decided to postpone its proposed IPO until the end of the year. The driving services group was originally going to do a flotation in the first half of the year but then Iran happened and markets became very volatile.

Negotiations between Pernod Ricard and Brown-Forman ended as neither side could reach agreement. It seems to me that alcoholic beverage companies need to change their offering because of changing consumer tastes, so a reshuffling of brands is surely likely. I would not be surprised if this brought other bidders out of the woodwork.

AstraZeneca made a surprise U-turn as it decided to invest £300m in the UK after all following the pause in all large-scale projects last year. It will resume a £200m expansion in Cambridge and invest £100m in its Macclesfield site.

GSK announced decent results thanks to stronger vaccine sales. The company is currently focusing on its late-stage drugs pipeline and will unveil which medicines made the cut this summer.

Eli Lilly profits more than doubled thanks to booming sales of its diabetes and weight-loss drugs. Its performance was so strong that it raised its guidance for the full year. It’s a bit early to tell how its new Foundayo weight-loss pill is doing, but the early signs are good…

Apparently, side effects of taking GLP-1 weight-loss drugs – nausea, dry mouth and burping – are resulting in higher sales of mints and chewing gum! Sales of protein bars have also risen as increased use of weight-loss jabs has pushed jabbers to buy more protein-dense food to avoid losing muscle.

My fave video of this week was this alternative version of Wrecking Ball!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE COLOURED HIGHLIGHT REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

IN WAR NEWS…

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

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

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

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

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

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

IN TRUMP THINGS…

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

IN INDIVIDUAL COUNTRY NEWS…

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

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

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

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

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

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

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

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

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

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

IN COMMODITIES – the BP board got some knock-backs by investors at its AGM as they voted against the company’s plans to ditch its existing climate reporting and against the proposal to replace in-person annual shareholder meetings with online-only events.

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

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

IN ENERGY NEWS…

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

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

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

IN INVESTMENT NEWS…

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

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

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

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

IN BUSINESS TRENDS…

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

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

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

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

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

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

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

IN CONSUMER TRENDS…

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

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

IN RETAIL NEWS…

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

IN CONSUMER GOODS NEWS…

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

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

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

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

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

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

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

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

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

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

Anthropic is currently in talks with the UK government about rolling out its Claude Mythos model to key British businesses Banks and financial institutions are particularly keen on getting access. Separately, Anthropic has agreed a deal with the law firm Freshfields to build specialist legal AI tools that could subsequently be sold to rival law firms. Anthropic will use Freshfields’ legal expertise to develop the tools while Freshfields will roll Claude out to all offices globally and get early access to future Anthropic models (except for Mythos).

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

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

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

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

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

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

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

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE COLOURED HIGHLIGHT REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

IN WAR NEWS…

IN THE IRAN WAR…

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

IN THE ISRAEL/LEBANON WAR…

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

IMPACT OF THE IRAN WAR…

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

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

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

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

IN DEFENCE NEWS…

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

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

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

IN TRUMP THINGS…

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

IN INDIVIDUAL COUNTRY NEWS…

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

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

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

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

COMMODITIES…

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

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

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

IN MARKETS NEWS…

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

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

IN DEALS…

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

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

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

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

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

IN INVESTMENT NEWS/TRENDS…

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

IN BUSINESS NEWS/TRENDS…

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

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

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

IN EMPLOYMENT TRENDS…

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

IN CONSUMER TRENDS…

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

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

IN REAL ESTATE NEWS…

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

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

IN REAL ESTATE NEWS…

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

IN CONSUMER GOODS NEWS…

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

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

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

IN LEISURE NEWS…

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

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

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

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

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

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

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

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

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

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

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

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

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

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE COLOURED HIGHLIGHT REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

IN WAR NEWS…

IN THE IRAN WAR…

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

IN THE UKRAINE WAR…

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

IN LEBANON…

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

IRAN WAR IMPACT…

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

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

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

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

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

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

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

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

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

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

IN DEFENCE NEWS…

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

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

IN TRUMP THINGS…

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

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

IN INDIVIDUAL COUNTRY NEWS…

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

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

IN ENERGY NEWS…

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

IN BUSINESS NEWS/TRENDS…

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

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

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

IN INVESTMENT NEWS/TRENDS…

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

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

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

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

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

IN CONSUMER TRENDS…

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

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

IN RETAIL NEWS…

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

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

IN CONSUMER GOODS NEWS…

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

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

IN LEISURE NEWS…

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

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

IN TECH NEWS…

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

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

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

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

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

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

IN EV NEWS…

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

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

IN CHARGING/BATTERY NEWS…

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

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

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

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

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

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

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE COLOURED HIGHLIGHT REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

IN WAR NEWS…

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

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

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

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

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

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

THOUGHTS ON THE WAR SO FAR…

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

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

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

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

IN TRUMP THINGS…

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

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

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

IN INDIVIDUAL COUNTRY NEWS…

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

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

IN COMMODITIES NEWS…

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

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

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

IN INVESTMENT NEWS/TRENDS…

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

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

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

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

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

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

IN BUSINESS NEWS/TRENDS…

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

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

IN EMPLOYMENT TRENDS…

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

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

IN CONSUMER TRENDS…

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

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

IN RETAIL NEWS…

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

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

IN CONSUMER GOODS NEWS…

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

IN LEISURE NEWS…

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

IN TECH NEWS…

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

IN SOCIAL MEDIA NEWS…

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

IN BATTERY NEWS…

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

IN CHARGING NEWS…

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

IN TRAD CARMAKER NEWS…

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

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

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

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

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE COLOURED HIGHLIGHT REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

IN WAR NEWS…

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

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

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

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

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

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

IN TRUMP THINGS…

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

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

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

IN REGIONAL/INDIVIDUAL COUNTRY NEWS…

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

IN EUROPE…

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

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

IN THE UK…

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

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

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

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

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

IN BUSINESS NEWS/TRENDS…

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

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

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

IN EMPLOYMENT TRENDS…

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

IN CONSUMER TRENDS…

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

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

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

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

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

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

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

IN SOCIAL MEDIA NEWS…

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

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

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

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

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

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

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

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

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

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

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

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

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE COLOURED HIGHLIGHT REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

IN WAR NEWS…

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

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

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

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

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

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

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

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

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

IN TRUMP THINGS…

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

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

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

IN REGIONAL/INDIVIDUAL COUNTRY NEWS…

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

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

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

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

IN COMMODITIES NEWS…

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

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

IN INVESTMENT NEWS/TRENDS…

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

IN INVESTMENT TRENDS…

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

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

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

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

IN EMPLOYMENT TRENDS…

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

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

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

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

IN CONSUMER TRENDS…

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

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

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

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

IN RETAIL NEWS…

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

IN TECH NEWS…

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

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

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

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

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

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

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

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

IN AUTOMOTIVE NEWS…

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

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

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

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

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

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

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

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

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

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE COLOURED HIGHLIGHT REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

IN WAR NEWS…

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

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

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

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

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

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

IN TRUMP THINGS…

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

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

IN REGIONAL/INDIVIDUAL COUNTRY NEWS…

IN THE AMERICAS…

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

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

IN ASIA…

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

IN EUROPE…

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

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

COMMODITIES…

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

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

IN ENERGY NEWS…

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

IN INVESTMENT NEWS/TRENDS…

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

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

BUSINESS TRENDS…

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

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

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

IN EMPLOYMENT TRENDS…

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

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

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

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

IN CONSUMER TRENDS…

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

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

IN RETAIL NEWS…

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

IN TECH NEWS…

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

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

IN AUTOMOTIVE NEWS…

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

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

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

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

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