Friday 19/12/25

Flawed inflation data dashes Donald Trump’s hopes of a quick affordability victory (Financial Times, James Politi, Myles McCormick, Kate Duguid and Claire Jones) highlights the contrast in the way Trump viewed the latest November inflation data (a vindication in his battle on rising prices) and the way that the market viewed it (with scepticism because one of the main stats providers was closed during the federal shutdown). There was no data in October and the November data was collected in the second half of the month, which is when prices are artificially low because of all of the Black Friday promotions. Although Trump and chums will take the win for now, we’ll just have to wait to see additional data to really decide which direction things are going.

Meanwhile, Marijuana stocks tumble as Trump reclassifies drug but stops short of legalisation (Financial Times, Patrick Temple-West) shows that the AdvisorShares Pure US Cannabis ETF cratered by a whopping 27% yesterday on news that the president signed an executive order that loosened restrictions on marijuana but didn’t go as far as legalising it. * SO WHAT? * The Department of Justice will now reclassify it as a less dangerous drug that would be OK for medical use with a prescription. At the moment, marijuana is illegal under the 1970 US Controlled Substance Act but 24 states have now legalised small amounts for recreational use while almost all states allow it for regulated medical use. However, this new order doesn’t really change anything in a practical sense.

Japan raises interest rates to highest level in 30 years (Financial Times, Leo Lewis) shows that the Bank of Japan raised short term interest rates by 0.25 percentage points to “around 0.75%”. This was the fourth interest rate increase since 2023. This move was expected, but markets will be monitoring the governor’s speech to divine whether there will be more increases next year.

On the Continent, EU agrees €90bn loan to Ukraine after frozen Russian asset plan fails (Financial Times, Henry Foy, Laura Dubois, Paola Tamma and Barbara Moens) highlights an

agreement by EU leaders to lend a hefty lump sum to Ukraine, borrowed against its shared budget rather than the plan to use €210bn of frozen Russian assets. * SO WHAT? * Ukraine will no doubt welcome this but it comes after a long period of European wrangling about whether Russian money could be used against it. In the end, Belgium (where the assets are held) could not stomach the possibility of getting sued by Russia at some point in the future to get the money back – but the EU wanted to help Ukraine somehow, hence the loan which was the result of 16 hours of discussions. Ukraine will only have to pay the loan back once Russia has paid reparations (although, will they actually pay reparations??). 

There were more interest rates shenanigans yesterday, what with ECB holds interest rates at 2% (Financial Times, Olaf Storbeck and Ian Smith), which was in line with market expectations as it struck a more positive note about the outlook and Bank of England cuts interest rates to 3.75% in pre-Christmas boost for struggling economy (The Guardian, Heather Stewart), which saw a cut that was also widely expected, although it was a closely contested vote. Lenders set to lower UK mortgage rates in early 2026 (Financial Times, James Pickford) highlights the inevitable – that mortgage rates will come down as lenders fight to win business. The general feeling at the moment is that there will be more rate cuts to come and so it’s likely that two-year deals will grow in popularity as people won’t want to get locked into a higher interest rate for longer.

Meanwhile, Labour’s building pledge in tatters as construction drops to 20-year low (Daily Telegraph, Pui-Guan Man) cites the latest data from the Ministry of Housing, Communities and Local Government which show that the number of applications received by councils for planning approval fell in the period to the lowest level since 2005! * SO WHAT? * Those government plans to build over one million new homes are looking like pure fantasy. The government maintains that it’s taking “decisive action” to build 1.5million new homes by 2029. Builders maintain that the target is unrealistic and that they are still restricted by rising costs and lack of demand. They are obviously appealing for more help from the government!

Law firms Hogan Lovells and Cadwalader set to merge in record deal (Financial Times, Suzi Ring and Kaye Wiggins) heralds the latest transatlantic law merger creating what will be the world’s fifth biggest law firm by revenue with 3,000 lawyers around the world. Talks of a merger between Hogan Lovells and Cadwalader, Wickersham & Taft have been going on since November last year before pausing in March. If all goes well, the combined entity called Hogan Lovells Cadwalader could go live in June 2026. Hogan Lovells is in the driving seat here as it’s six times bigger. Apparently there won’t be mass lay-offs despite there being overlaps in London, New York and Washington DC. * SO WHAT? * This is just the latest in a string of transatlantic merger announcements. Last month saw one between Ashurst and Perkins Coie and this week we saw a tie-up being announced between Britain’s Taylor Wessing and America’s Winston & Strawn that will be known as Winston Taylor. Whenever these transatlantic mergers happen, there’s always talk about cultural clashes and massive pay differentials but that didn’t stop A&O Shearman announcing $3.7bn in revenues for the last financial year after they merged in 2024. Still, it’s early days – and I think these differences will emerge particularly when the M&A and IPO gravy train really starts kicking into gear and people start to get greedy. I think this will be particularly apparent when the massive IPOs start coming through next year in New York versus the rather more pedestrian pipeline we’re supposedly going to get over here. When huge numbers are being bandied about, that’s when you see everyone’s true colours!

Trump family deal with fusion energy firm adds to complicated UK-US ties (Financial Times, Jim Pickford and David Sheppard) shows that Trump’s TMTG media business announced

yesterday that it’s going to combine with fusion energy company TAE Technologies in a $6bn merger to create “the world’s first utility-scale fusion power plant”. The UK Atomic Energy Authority will contribute £5.6m in equity to the new venture. * SO WHAT? * It looks like this is going to create an interesting direct business link between the UK government and Trump’s family at a time where the “technology prosperity deal” has been suspended! Trump is on to something: finance and fusion have much in common (Financial Times, Lex) makes the interesting point that Trump’s move might attract others in that fusion will be seen as a real investment available to real people – and the more money it attracts the more likely we’ll see its benefits sooner rather than later. Trump’s fairy dust and hype could attract much needed interest…

Then in Waterstones and Barnes & Noble owner looks to list booksellers on stock market (The Guardian, Lauren Almeida) we see that US hedge fund Elliott Investment Management, which owns the most popular bookstores in the US and UK, has spoken to potential advisers about a listing. It looks like London is favoured over New York but a final decision has yet to be made. * SO WHAT? * This sounds lovely and all but it’s not a done deal yet and TBH it sounds pretty puny versus New York’s potential 2026 IPO pipeline of SpaceX, Anthropic and OpenAI. In fact, I do wonder whether any other IPOs will be more muted because investors might prefer to keep their powder dry so they can participate in the biggies. I don’t think that this happens normally, but the sheer size of these potential offerings is so vast that perhaps this might become a factor.

In China boosts AI chip output by upgrading older ASML machines (Financial Times, Eleanor Olcott) we see that China has another work-around for the US chip sanctions – improving their existing chipmaking equipment! US and Dutch export controls stop the world leader in this space, ASML, from supplying its most advance deep ultraviolet lithography (DUV) machines to China so the Chinese have used components sourced on the secondary market to upgrade their equipment. * SO WHAT? * This just sounds like Nvidia all over again – but the difference is that Nvidia is American and ASML is not. Given that Trump calls the shots, it’s not looking good for ASML unless TMTG takes a stake in it 🤣, in which case the president might be sufficiently motivated.

TikTok says Chinese owner will retain core US business (Financial Times) highlights the latest on the whole TikTok saga as it sounds like a US joint venture has now been created which, TBH, leaves ByteDance with direct control of its core business operations in America. The deal, such as it is, has ByteDance forming a joint venture with a consortium including Oracle, PE firm Silver Lake and Abu Dhabi’s MGX. This new entity will take over a part of TikTok’s US business including

data protection, algo security and content moderation. * SO WHAT? * This sounds like absolute 🐂💩! What a load of fuss about nothing! TikTok creators can just carry on creating…

Third of Britons using AI for ‘emotional support’ (Daily Telegraph, Matthew Field) cites research from the AI Security Institute (the AISI) which showed that we’re increasingly turning to AI to solve (or at least be a sounding board for) our problems. According to its latest survey, 33% of respondents said that they’d used AI tools for “emotional purposes” over the last year. This research has taken two years to collate and the AISI’s CTO said that the report “offers the most robust public evidence from a government body so far of how quickly frontier AI is advancing”. This comes not long after we saw a survey from Lloyds Banking Group which showed that 56% of respondents use AI for financial advice! * SO WHAT? * I think that everyone’s still getting used to using AI and working out how they can use it in their daily lives. I don’t think there’s full trust there yet, though. That being said, I can see why people use it to ask questions they’d perhaps not ask anyone else for fear of their reaction.

In a quick scoot around some of today’s other interesting stories, The AI adoption race in the workplace is on (Financial Times, Richard Waters) takes a look at how there’s increasing debate about how AI’s much-touted capabilities can translate into real world concrete value-add for business. At the moment, the benefits of using AI in the workplace can be difficult to measure although many have said that it helps them to save time. The article suggested that, in order to get more benefit from AI systems, companies should redesign work processes around AI, not the other way around. The AI Shift: If AI is coming for junior lawyers’ jobs, why does their pay keep going up? (Financial Times, Sarah O’Connor and John Burn-Murdoch) is an interesting article that asks a very good question considering the doom surrounding the future employment of juniors at law firms. At the moment, we’re seeing pay for newly-qualified lawyers going up, particularly at US firms. Also, at the moment, the number of junior positions on offer don’t seem to be falling despite AI reportedly taking some of the work that had previously been piled onto juniors. At the moment, the juniors themselves are finding that they’re having to do less of the mindless tasks – which AI can do – and more of the interesting stuff. The general feeling is that although it can be useful on the edges for research or document review it’s still not reliable enough to depend on. In answer to the question put forward in this article, at the moment, it seems that humans are still very much needed because although AI can do some things well, the output is not reliable enough to use as-is. The second thing is that bills aren’t coming down because pretty much everyone still charges by the hour. Thirdly, law firms are putting loads of money into AI so they are going to want to see some return on it before they pass the benefits on to clients in the form of lower bills. So for now, pay isn’t going to go down – I’d say that will continue to depend on supply and demand for lawyers rather than AI. Going even further forward, I would suggest that the use of AI will mean that lawyers can do more work and that they can perhaps make up for lower fees in terms of volume – and if you have more volume, you’re probably going to need more lawyers!  *SO WHAT? * We’re obviously still in the early

stages of finding out how AI can enhance our lives. This is perhaps a bit of a departure from the article above but I personally think that AI could change hiring practices forever as both employers and potential employees will connect more directly, phasing out the need for headhunters and specialised recruiters, as per what I said recently about LinkedIn. I also wonder whether, further out, we’ll see more virtual job simulation creeping into the recruitment cycle (and perhaps promotion cycles) because this could become a more accurate way of judging whether someone is suitable for a role or not. I think this could be great for both the potential employer and the applicant because both sides would get a more realistic idea of how they’d perform and applicants could get impartial AI-powered feedback as to why they didn’t get the job, without the employer having to get involved. In theory, fewer but better-qualified candidates would make it through to the job simulation phase which could be carried out over a longer period of time – and candidates could get paid for their time at this stage.

Elsewhere, FRP Advisory will ‘continue to see demand rise for its services’ (The Times, Tom Howard) shows that FRP Advisory, one of Britain’s biggest restructuring firms, reckons that more retailers and hospitality businesses will face difficulties next year. The company is confident that it will “continue to see demand rise for…restructuring services” in 2026 as a result. Retailers and hospitality will be holding out for a strong golden quarter performance otherwise they may become acquainted with FRP’s services sooner rather than later…

Then in Nike shares fall sharply as weak China sales dent faith in turnaround (Financial Times, Gregory Meyer) we see that Nike had a tough quarter and cited weakening sales in China as one of the reasons behind that. * SO WHAT? * The new-old CEO is dragging Nike through a turnaround so he’s still got a way to go before things get properly back on track. For now, though, it continues to lose ground to the likes of On and Hoka.

I thought it’d be a nice idea to end the week on some dad jokes. Enjoy!