Friday 08/05/26

Middle East war: Trump says ceasefire still in effect after US and Iran clash (Financial Times, Orla Ryan, Sarah Provan and Kieran Cash) highlights further strain on the US-Iran ceasefire as both sides exchanged fire in the Strait of Hormuz. Donald Trump halted ‘Project Freedom’ after Saudi Arabia withheld support (Financial Times, Andrew England, Steff Chávez and Abigail Hauslohner) shows the real reason why Trump hastily suspended a plan to escort commercial ships through the Strait of Hormuz – it was because Saudi Arabia initially said that it would not let American warplanes use its bases or airspace in the operation. Those restrictions were then lifted after a call between the president and Crown Prince Mohammed bin Salman. Interestingly, Riyadh thought that “Project Freedom” was “unnecessarily escalatory and not well thought through” 🤣. Funny, that…

In terms of ongoing war impact, Shipping giant Maersk hit by $500m monthly cost of Middle East war (The Times, Simon Freeman) shows that the Danish group, which carries about 20% of the world’s seaborne containers, is taking a big financial hit every month from what its CEO called the “most comprehensive energy shock in our lifetimes”. He joined the rising chorus of voices around the world warning of the damage this is doing to global trade.

Donald Trump’s 10% global tariff ruled illegal by US court (Financial Times, Aime Williams) heralds some bad news for the president as the US Court of International Trade ruled yesterday that the tariffs imposed under Section 122 of the Trade Act of 1974 were “unauthorized by law”. The tariffs weren’t suspended across the board – just for the two companies who’d brought the case, but it will be a setback for the president. Meanwhile, Donald Trump extends EU trade deal deadline while issuing fresh threat (Financial Times, Aime Williams) shows that the president is giving the EU until July 4th to implement its side of the trade deal that it agreed to last year – or face a huge hike in tariffs.

Wall Street rebound driven by smallest number of stocks on record (Financial Times, Emily Herbert, Ray Douglas and Jonathan Vincent) highlights UBS research which shows that over half of the 12% rally in the S&P 500 index since the start of April, when a Middle East war ceasefire was announced, was down to the strength of just five tech stocks – Alphabet, Nvidia, Amazon, Broadcom and Apple. * SO WHAT? * There is a risk here that the headline performance

of the S&P suggests that corporate America is in ruder health than is actually the case. That being said, results in the current earnings season also seem to support the idea that American companies aren’t doing all that badly – but it feels to me like they are still surfing the feelgood vibes that were prevalent until the Iran war started. Consumer confidence is down, spending power is down and household finances are precarious. I suspect that there will be pockets of opportunity for some big companies that have enough cash to hoover up some good quality but financially constrained smaller companies. However, the longer the war goes on the more corporate casualties will emerge.

Back home, UK elections: Labour suffers heavy early losses as Reform surges (Financial Times, David Sheppard and Philip Georgiadis) shows that Labour is losing out big time in the local elections so far and Britain braces for Ed Miliband, the radical Left-wing chancellor (Daily Telegraph, Szu Ping Chan) highlights speculation that Reeves will be kicked out and Miliband will be in once the dust settles on these results. We won’t have to wait too long to find out.

Climate campaigners attack Shell over ‘windfall’ profits from Iran war (The Guardian, Jillian Ambrose) shows that environmentalists got severely irked by Shell’s bumper profits announcement yesterday. Europe’s biggest oil and gas company announced a 115% jump in Q1 profits versus the previous quarter, largely thanks to its oil traders benefiting from volatile prices. * SO WHAT? * Whilst this is clearly frustrating, the fact of the matter is that Shell is an oil and gas company, it did not ask for the war and making money from trading isn’t inherently “evil”. OK, so it’s using its expertise to get more of its bets right but I can’t see that it’s doing anything particularly bad per se. We already saw what a windfall tax did when it was first imposed by the government – it stopped investment in the North Sea dead. Circumstances have changed and everyone’s fighting to get access to oil and gas – and we have this on our doorstep. TBH, I think that oil companies will keep doing what they’re doing and stick to their fossil fuel strategy. BP plans to sell shares in flagship carbon projects as it pulls back from green agenda (The Guardian, Jillian Ambrose) highlights a rival similarly walking away from its climate commitments as it announced plans to sell its stakes in two big carbon capture and storage projects in the north-east of England.

Further to what I said earlier about how just five stocks have powered the S&P 500 higher, Tech rally hands hedge funds biggest gains since 2020 (Financial Times, Costas Mourselas and Amelia Pollard) shows that the global hedge fund index collated by data group HFR reflected a 5% rise in April, the biggest rise since November 2020 – and, guess what, it was driven by tech-focused funds! Robust corporate earnings, ongoing investment by hyperscalers and a massive boom in memory stocks like Intel and AMD all helped to power hedge fund portfolios to “one of the best months for over 10 years”. Marshall Wace, Balyasny, Millenium and Citadel were among the funds to put in strong performances.

In IMF warns new AI models risk ‘systemic’ shock to finance (Financial Times, Martin Arnold) we see that the fund is warning that the rapid progress that AI models are making “elevate cyber risk to a potential macro-financial shock”. It echoes rising concerns from regulators about threats that new models – like Claude Mythos – pose to the world’s banking systems given their ability to root out weaknesses in lenders’ cyber defences. Senior IMF officials wrote that “Advanced AI models can dramatically reduce the time and cost needed to identify and exploit vulnerabilities, raising the likelihood of simultaneously discovering and targeting weaknesses in widely used systems”. As usual with what the IMF say, they aren’t really telling us anything we don’t already know, but this just adds to the chorus of voices calling for some kind of moderation or oversight.

Then in Zuckerberg’s Meta sues Ofcom over Online Safety Act (Daily Telegraph, James Warrington) we see that Meta is launching a legal challenge against Ofcom regarding the cost of fines under the Online Safety Act, which came into force last summer. Meta says that the methodology of calculating fees and fines is “disproportionate” and should be overhauled. As things stand currently, fees are based on a company’s global revenues and cover companies making over £250m per year. If companies such as Meta break the rules, the Online Safety Act gives Ofcom the power to fine them up to 10% of global revenues or £18m, whichever is higher. * SO WHAT? * Although Meta’s legal team will argue that this is disproportionate, I would suggest that the regulations are about forcing global Big Tech companies to do right by their users and not just pay paltry fines for bad behaviour that they’ll just treat as a cost of doing business. Big companies rarely do the right thing until they are forced to do so.

Paying with your face will become mainstream, says Korean fintech group (Financial Times, Song Jung-a) is an interesting article that highlights the success of the uniquely-named South Korean fintech Toss whose payment-by-facial-recognition app is used by almost 10% of the country’s population! Its FacePay service has attracted 4.8m users since it was launched in September and face scanners have been installed in around 330,000 retail outlets. The lead developer at Toss said that “We aim to eliminate physical credit cards in Korea in three years”. Toss wants to get to 10m users and 1m retail locations by the end of this year. FacePay allows users to pay by just using a scan of their face after they register with the Toss app and verify their identity with a government-issued ID card. * SO WHAT? * I would have thought that the main barrier to adoption in the US and Europe is concern about privacy. Toss maintains that it stores facial information and personal data separately in encrypted form and can only use both with user consent. That being said, the company was officially approved by South Korea’s Personal Information Protection Commission. Sounds pretty amazing though, right?

Staying with fintech, Corporate Card Startup Ramp Raising Funds at $40 Billion Valuation (Wall Street Journal, Kate Clark) shows that the corporate card and expense management start-up is launching another fundraising effort. It wants to raise $750m at a valuation of over $40bn before the investment and represents a valuation uplift of about 30% just six months after its previous funding round, so clearly things are “Ramp”-ing up (sorry)! Ramp uses AI to automate finance tasks and has been rolling out a number of AI tools. This thing sounds HOT!

Then in Cloudflare to Slash 1,100 Jobs Due to AI-Driven Restructuring Plan (Wall Street Journal, Elias Schisgall) we see that the cloud-connectivity company is the latest company to announce AI-related job losses. It reckons that the cost of the layoffs will hit in Q2 and that the layoffs themselves will be largely completed by the end of Q3. * SO WHAT? * By doing this, Cloudflare joined PayPal, Coinbase and Freshwork who all announced AI-related job cuts this week alone. It’s not the first and it certainly won’t be the last…

In a quick scoot around some of today’s other interesting stories, Kalshi valuation quadruples to $22bn in less than a year (Financial Times, Stephanie Stacey) shows that prediction market player Kalshi has put in a massive growth spurt in less than a year, which is proving to be very useful in its latest fund raising efforts. Investors are loving it and piling in as a result. This is particularly impressive when you consider that this implied valuation of $22bn is almost double the £12.7bn market cap of FanDuel owner Flutter, the world’s biggest online gambling group. Kalshi makes most of its revenues from sports wagers and said that it would use the money raised to enhance its recently-launched block-trading capabilities and additional risk products as it wants to do business with financial institutions. As we’re on the subject, Paddy Power owner may quit London in latest blow to City (The Times, Jessica Newman) shows that Flutter is threatening to quit the LSE and switch its primary market listing to New York. It’s doing a review currently and will release the conclusions in June. * SO WHAT? * Given that growth for the gambling industry is dying a long and painful death in the UK while growth seems to abound in

America it seems logical to me that it should change its primary listing. One of the reasons for the company wanting to go over there is to get access to more funding.

Meanwhile, Polymarket anonymity must end (Financial Times, Rajiv Sethi) argues that Polymarket’s commitment to the anonymity of its users must stop because it encourages dodgy activity, like trading on classified information. At the moment, everyone’s concentrating on insider trading but then Polymarket lets people bet on hantavirus pandemic breaking out (Daily Telegraph, Eleanor Harmsworth) shows that the platform can be used for other things as well. So far, $693,000 has been bet on the “Hantavirus pandemic in 2026” which it says gives a 10% chance of a significant worldwide outbreak. Those who vote on a “yes” outcome will cash in if the WHO officially classifies the hantavirus as a “pandemic”. What a disgusting way to make money. Betting on war and death is actually illegal in the US but because Polymarket is based offshore, it can get around this.

Sometimes, you run late. It happens! Using this excuse may be difficult to explain without video evidence though…