Friday 12/12/25

S&P 500 closes at record high as consumer-led rally blunts Oracle slide (Financial Times, Emily Herbert) shows that the index hit a record closing high yesterday thanks to the boom in consumer-focused and financials companies more than mitigating the sell-off in Oracle and other tech companies. Gainers included cruise companies, gold miner Newmont and budget retailers Dollar General and Dollar Tree. The tech-focused NASDAQ fell slightly.

There was good news for Trump in US trade deficit shrinks to smallest since 2020 as gold exports jump (Financial Times, Zehra Munir) which cites the latest data release from the US Department of Commerce which shows that the US trade deficit shrank by more than expected in September, implying that net exports helped power economic growth in Q3. * SO WHAT? * Treasury secretary Scott Bessent said that the US was on track to finish the year with 3% real GDP growth, which is great considering the shutdown and a potential victory for Trump who has been banging on for ages about shrinking the trade deficit. Some have expressed caution over the relevance of the figures, though, because of the big jump in gold bullion exports – so they reflect a one-off rather than an overall trend. However, Team Trump is taking this as “more proof that Donald J. Trump’s America First trade agenda is working”.

Meanwhile, Donald Trump threatens federal funding cuts for states with ‘onerous’ AI laws (Financial Times, Joe Miller) shows the president in typical feisty mood as he just signed an executive order to withhold funds from states that impose strict laws on AI tools. Tech groups have been pushing to have a single federal rule book so this will help their cause. In signing the order, Trump adder that “China has a central source of approval”. His administration has twice failed to get measures past Congress to restrict states from writing their own AI rules.

Then in Trump orders increased scrutiny of proxy advisers ISS and Glass Lewis (Financial Times, Sujeet Indap) we see that Trump signed another executive order to “increase oversight”

of the two proxy advisers who advise on how pension funds and some other money managers should vote when there is a shareholder vote. Trump has told the SEC, the FTC and the Department of Labor to increase regulation on the two major players in this field because he says that they “regularly use their substantial power to advance and prioritise radical politically-motivated agendas”. The recommendations of ISS and Glass Lewis have a major influence on how company shareholders vote and have annoyed CEOs including the likes of Jamie Dimon and Elon Musk in the past. The SEC will look into whether the two have violated any anti-fraud statues and whether they should face regulation as investment advisers; the FTC will look into whether they have breached federal competition laws; and the Department of Labor will look into whether pension funds that it uses can use proxy advisers, bearing in mind their fiduciary duties. The administration is critical of the groups’ support for DEI, saying that maximising investment returns “should be the only priority”. * SO WHAT? * This is the latest attempt by the administration to control the narrative. It is true that both advisers wield significant power so it will be interesting to see what the witch-hunt comes up with. I guess this is another warning shot to anyone who has the power to lead opinion outside the White House.

Elsewhere, Mexico imposes tariffs of up to 50% on Chinese goods (Financial Times, Jude Webber) highlights the dramatic imposition of up to 50% taxes on imports of Chinese cars and other goods as America’s neighbour falls in line with Trump’s protectionist policies. This new levy will apply to around 1,400 goods imported from China and other countries with which Mexico doesn’t have a current trade deal. The current import tariffs range from 15 to 20% and Chinese imports account for about 20% of all Mexican imports. * SO WHAT? * Mexico’s leadership is mindful that its current free-trade deal with the US will be up for review next year and so wants to ensure that Trump and chums are onside given recent rumblings about China’s increasing influence and criticism that China’s is using Mexico as a “back door” for goods to skirt high US tariffs.

Get ready for a spectacular IPO boom from the big beasts of Silicon Valley (Financial Times, Richard Waters) takes an overview of recent announcements from SpaceX, OpenAI and Anthropic about their intentions to float. So far, private equity investors have poured money in but this can’t go on forever and so IPOs make sense. If all three floated at roughly the same time, it would be amazing for Wall Street. SpaceX is going for an $800bn valuation and Anthropic a $350bn one while OpenAI’s most recent share sale was done at an implied valuation of $500bn. All of them are bigger than the Alibaba valuation of over $230bn in its 2014 flotation. * SO WHAT? * I have to say, if it was me, I would very much be wanting to get a flotation done. Everyone’s going on about toppy valuations and wavering about future capex etc and so the longer the companies wait the higher the chance that the market will correct, meaning that you won’t be able to attract as high a valuation. Bonuses at companies involved in the deal food chain are just going to get ridiculous bonuses next year if all this comes off! From the investor point of view, private equity firms and other early investors will be able to trim or sell out of their stakes to crystallise the value and lock in those massive gains while retail punters will be able to get a piece of the action themselves. Of course there’s a chance that commentators are being too pessimistic and valuations will go even higher – but I’d say just get on with it because the risk of downside to waiting is just too great. If things go bananas valuation-wise next year, the companies can just restrict the amount of shares that become available at the IPO and participate in further upside that way.

Broadcom Shares Sink Despite Record Revenue (Wall Street Journal, Robbie Whelan) highlights decent revenue growth thanks to ongoing strong demand for its chips that are used in data centres. That being said, its shares were sold off on investor concern that the company’s sales forecasts weren’t as good as they first appeared and the CEO’s remarks about makers of LLMs who increasingly making their own custom chips.

The data breach that rocked ‘South Korea’s Amazon’ (Financial Times, Song Jung-a) brings our attention to the hacking of “South Korea’s Amazon”, Coupang. South Korea’s worst ever data breach only really came to light in November but it compromised the personal data of over 33m active and former users and led to the resignation of its CEO this week. The breach actually began in its servers back in June but it took five months for the country’s biggest retailer by

market share to detect it! * SO WHAT? * Although Coupang has attracted a lot of criticism for taking so long to find the breach and do something about it, it’s far from the only company to have suffered from hacking. Cyber security experts reckon that 2025 has been South Korea’s worst year for big data breaches as SK Telecom, KT, Lotte Card and Upbit have all fallen victim to attacks. President Lee Jae Mynung has called for stronger cyber security and described Coupang’s predicament a wake-up call. Cyber security companies will surely do very well out of this!

Then in Disney to Invest $1 Billion in OpenAI and License Characters for Use in ChatGPT, Sora (Wall Street Journal, Ben Fritz and Joseph De Avila) we see that Disney has declared a $1bn investment in OpenAI that will let the platform use its characters and properties to generate short, user-prompted videos via Sora for three years. The investment was announced just a day after Disney sent a cease-and-desist letter to Google, accusing it of “infringing Disney’s copyrights on a massive scale” via its Gemini, Nano Banana and Veo apps. Sora users will be able to access Mickey Mouse, Elsa and Black Panther – among others – but the likenesses or voices of actors are not included. There are also limits to what the Disney characters will be allowed to do in videos. * SO WHAT? * Negotiations between Disney and OpenAI have been going on for almost two years but they accelerated this summer after OpenAI launched Sora 2. The deal will mean that Disney can deploy ChatGPT to employees and use its tools to create new products and services. This partnership is exclusive for one year and then Disney will be free to make other partnerships with rival AI companies. Separately, OpenAI released its GPT 5.2 model yesterday, which it said beat Google’s latest model on key benchmarks. 

Elsewhere, Warner battle offers two different plotlines for Hollywood (Financial Times, the editorial board) considers potential outcomes of the takeover of Warner Bros Discovery. At the moment, there’s gloom from the creative side of the business due to the belief that neither of the current potential suitors will be great for the industry. It’s likely that the amount that creatives get paid will fall and job numbers will be cut. As things stand at the moment, the Paramount bid looks like the more Hollywood-friendly option of the two but the involvement of the Saudis and Jared Kushner in the financing is not particularly appealing to LA’s creative community. Whoever wins, it’s likely that there will be big changes…

In a quick scoot around some of today’s other interesting stories, EU trims exclusivity window for new drugs (Financial Times, Andy Bounds) highlights potentially bad news for the pharmaceuticals industry as the EU has declared that new drugs will only get nine years of market exclusivity rather than ten, meaning that cheaper generic versions will be available a year earlier than they are now. * SO WHAT? * The pharmaceutical companies are up in arms about this – which is understandable, given just how much it costs to bring drugs to market – but the politicians want their public health systems to have access to cheaper drugs. I wonder what Trump will make of this, given how keen he is to lower drug prices…

In Lululemon Chief Executive Calvin McDonald to Depart Next Month (Wall Street Journal, Suzanne Kapner and Lauren Thomas) we see that the athleisure retailer’s CEO is going to step down in January thanks to the founder wanting to take drastic action to reverse the brand’s “loss of cool”. Share were up by about 10% on the news but it’s not really clear what’s going to happen next…

Back home, Insurers line up in £3bn  sale of Aegon’s UK arm (The Times, Beatrice Learmouth) shows that a number of insurers are lining up to buy Aegon’s UK business. It’s possible that a buyer could swallow the whole thing or it could be broken up and sold off separately. At the moment, Aegon UK is made up of a workplace pension provider and two adviser platforms. Aegon’s asset management arm, however, won’t be affected.

Then in Boom at the inns: UK pub groups raise a glass to festive cheer (Financial Times, Stephanie Stacey) we see that Christmas bookings for UK pubs and bars have been strong in the

run-up to Christmas as Fuller’s, Young’s and Marston’s have all reported bookings well ahead of last year in recent trading updates. This has probably been helped by the lack of train driver strikes that always seem to happen at this time of year! Pubs are faring better than restaurants at the moment…

In real estate, Plans go in for £2bn York Central regeneration project (The Times, Tom Howard) highlights a massive city centre regeneration project that developers have submitted the plans for to transform a 110-acre plot next to York station. If it’s granted, there will be 2,500 flats, a 213-bedroom hotel and a million square feet of offices, shops and restaurants in addition to a new western entrance to the station. The development looks like it will be even bigger than the regeneration around King’s Cross. The council is expected to publish a decision next spring but if everything goes through smoothly, the project won’t be completed until 2035. Nice.

Then in Britain’s youth unemployment rising at fastest pace in G7 (Daily Telegraph, Tim Wallace) we see that youth unemployment has risen faster in the UK than anywhere else in the G7, according to a new report from PwC. Graduate hiring is falling and a squeeze on the retail industry is also resulting in fewer vacancies. * SO WHAT? * Youth unemployment has risen to over 15% from just under 11% three years ago and the G7 range is 4.2% in Japan to 20.7% in Italy. This is no doubt due to a combination of higher employer NICs in last year’s Budget followed by concerns about this year’s Budget. The government is going to have to address this somehow… 

Regular readers of Watson’s Daily will know that I am a dog fan! Nothing against cats – I just have very limited experience of them. However, this interaction between one man and his dog is brilliant 😍