Friday 28/02/25

Vladimir Putin hopeful after US talks on Ukraine ceasefire (Financial Times, Anastasia Stognei) shows that progress is apparently being made on peace in Ukraine as Putin described initial contact with the Trump administration as “inspiring a certain degree of hope”. In the meantime, France and Britain have been talking about plans for a air power focussed European “reassurance force” in postwar Ukraine, supported by a US “backstop”. Trump has thus far refused to commit to this. In the meantime, Starmer will host representatives from 18 countries this coming Sunday to discuss next moves regarding peacekeepers in Ukraine. The discussions roll on…

Things have taken a surprising turn in After chiding US allies, Donald Trump lavishes praise on ‘special’ Keir Starmer (Financial Times, George Parker and James Politi) where Trump has taken an apparent break from slagging off his allies and praised a “fantastic Britain”, his “special” guest, Kier Starmer and even Starmer’s “beautiful accent” 🤣. Trump also talked about the prospect of a US-UK trade deal, something that has long been mooted but never actioned. US and UK in talks on trade deal that could spare Britain from tariffs (Financial Times, George Parker, Felicia Schwartz and Lucy Fisher) cites Trump as saying “We could very well end up with a real trade deal where the tariffs wouldn’t be necessary” and that the UK was a “very different place” from the EU. We’ll just have to wait and see but Business confidence hits post-election high in February (The Times, Mehreen Khan) also provides some welcome respite from the general gloom hanging over British businesses at the moment as the latest Lloyds Banking Group survey highlighted a strong bounceback in the confidence of businesses to a level not seen since August 2024! This boost was pretty much across the board with services, manufacturing and construction all reporting greater optimism this month. * SO WHAT? * I just wonder whether the discrepancy between this survey and, say, that of the recent considerably gloomier one from the BCC (and other sources) means that sentiment has actually bottomed out and is now on the turn. As for the Trump developments, they seem to have come out of nowhere, don’t you think?? I wonder whether we will get better treatment by Big Cheeto because treating the  UK well could

potentially further disrupt the EU by showing that it pays to break away from the herd – and splitting the EU seems to be a goal of Trump’s. We may even benefit further because the EU will need us to be onside, as well as a “friendly” socialist-led country, to keep the union together.

Meanwhile, the tariff chat keeps on coming in Trump threatens China with additional 10% tariff in escalation of trade war (The Guardian, Callum Jones) where it looks like Trump is willing to escalate the trade war with Beijing while Tariffs on Mexico and Canada start on Tuesday, says Donald Trump (The Times, Tom Saunders) shows that he’s about to follow through on his threats of imposing 25% duties on imports from his biggest trading partners. Trump’s threatened 25% tariffs on EU imports could trigger ‘economic turmoil (The Guardian, Phillip Inman) cites a prognosis from The Kiel Institute, a German thinktank, which believes that the tariffs will snuff out growth and send inflation through the roof. If you want to keep tabs on what tariffs are happening where and when, then I would strongly recommend that you look at Trump tracker: US tariffs (Financial Times, Alan Smith, William Crofton, Jonathan Vincent, Oliver Hawkins and Keith Fray), which does a good job of collating the latest developments in a very useable way. Stocks lose more ground as jitters grow over tariffs and economy (Financial Times, George Steer and William Sandlund) shows that the markets didn’t like Trump’s latest outbursts on tariffs and weakened considerably.

BP’s chief aims to more than double market value to $200bn (Financial Times, Malcolm Moore and Costas Mourselas) follows on from the news of BP’s ongoing efforts to focus on core operations and centres on the chief exec’s ambition to double its market value within five years! * SO WHAT? * This was the level which it peaked at just before Deepwater Horizon in 2010. CEO Murray Auchincloss said that this could be achieved by concentrating on oil and gas and ditching plans to become a green energy company. He said that there would be some financial pain initially as it repositions itself.

OpenAI reveals GPT-4.5 amid flurry of new AI model releases (Financial Times, Cristina Criddle) shows that OpenAI has now joined its rivals in releasing an upgraded version of its AI model, GPT-4.5. It hallucinates less than the previous version, GPT-4o, and follows on from the latest launches of Anthropic and xAI.

Then in Indonesia set to lift iPhone ban after deal with Apple on local investment (Financial Times, A. Anantha Lakshmi and Diana Mariska) we see that Apple managed to get south-east Asia’s biggest economy to reinstate the sales of its iPhone 16 by agreeing to invest $320m into Indonesia via a couple of new factories. * SO WHAT? * Apple’s flagship device was banned from sale in Indonesia last October because the company fell short of a regulation that stipulates that 40% of smartphone components must be sourced locally. Since then, Apple has been in negotiation with Indonesia’s government. The new factories will be the first ones in Indonesia for Apple although it also has four developer academies there to train students and engineers to develop apps.

Microsoft urges Donald Trump to rethink AI chip export controls (Financial Times, Rafe Uddin and Michael Acton) shows that the tech giant is warning Trump that pushing too hard for export controls on AI chips will force allies – particularly Israel, India and Singapore – to use Chinese technology instead. The restrictions, which were drafted in the final days of Biden’s

administration, are due to come into force in May. They make it harder for Chinese companies to get around US export controls by sourcing them from third countries and impose limits on chip export volumes on all but a few small countries in a three-tiered classification system. * SO WHAT? * The EU and Nvidia are among other parties who are also opposed to export controls, particularly as Chinese companies like Huawei are improving their chip offerings all the time.

In media news, UK advertising giant loses ground to French rival as Trump tariffs bite (Daily Telegraph, James Warrington) shows that WPP has been hit by the loss in economic momentum and Trump tariff uncertainty as revenues dropped by over 20% in China in the final quarter while it also saw weakened sales in the UK and US. Customers have cut back on ad spending amid the economic turmoil unleashed by Trump although WPP says advertisers returning to X after US election (Financial Times, Daniel Thomas) shows that some advertisers are adapting their spending patterns to take into account Musk’s presence in Washington. * SO WHAT? * Although conditions are undoubtedly tricky out there, WPP is lagging the performance of rivals such as Publicis who are facing the same issues. WPP will also face more competition in the future with the advent of an even bigger competitor when Omnicom and Interpublic complete their $31bn mega-merger.

In Hiscox predicts $170 million loss from Los Angeles wildfires (The Times, Ben Martin) we see that the FTSE100 insurer has estimated its exposure to last month’s wild fires in its annual results yesterday. It has based this on an estimate of industry-wide exposure of $40bn. It believes that $150m of the $170m will be via its reinsurance division (this is the business where insurers are insured. Don’t ask me who insures the reinsurers – or indeed who insures the reininsurers’ insurers’ insurers 🤣). American insurers are, unsurprisingly, taking most of the hit. Clearly this figure is an estimate at the moment. It seems to me that these estimates are often too low…

Elsewhere, Man Group shares rise after profits increase (Financial Times, Costas Mourselas) shows that the share price of the world’s biggest listed hedge fund company got a nice 5% bump up thanks to rising profits despite some disappointing investment performances. Its quant strategies failed to shine for the second consecutive year but the performance of its 1783 hedge fund was very strong.

Then in Stripe bounces back to $90bn-plus valuation after surge in AI demand (Financial Times, George Hammond) we see that the payments and billing company has come back from the wilderness and now has a valuation of over $90bn thanks to a surge in demand from AI companies. The latest move takes it closer to its all time high of the $95bn it reached in 2021. The company has been profitable for the last two years and will continue to be so for the foreseeable future, according to the founders. * SO WHAT? * This is an impressive comeback for the company that saw its valuation plunge from $95bn in 2021 to $50bn in 2023 thanks to booming interest rates and economic uncertainty caused by Russia’s invasion of Ukraine. Fellow fintechs Chime and Klarna have also staged a recovery but, unlike them, it has said that it will stay private and not go down the IPO route (well, it stopped short of ruling this out entirely!).

In a quick scoot around some of today’s other interesting stories, ‘Hiring is back on’ for UK consulting (Financial Times, Ellesheva Kissin) shows that consultancy firms are now emerging from the crisis mode of the last two years where they have generally been wielding the axe and are now gearing up for growth as they expect advisory business to pick up. * SO WHAT? * A survey by Statista showed that 67% of respondents believe AI to be the biggest growth area for UK consultancies for the next three years as they help clients with their respective AI strategies. US-based training company Management Consulted said that, after a major contraction in 2023 and tiny rebound last year, hiring momentum has picked up noticeably. More M&A and IPOs should also help business pick up!

Staying with professional services, KPMG to Launch U.S. Law Firm Following Court Approval (Wall Street Journal, Mark Maurer) shows that the Big Four accountancy firm has just been given the go ahead by Arizona’s Supreme Court to set up a law practice. KMPG Law will allow the company to expand its legal offerings considerably. On the downside, the court said that it won’t be allowed to provide US legal services to audit clients anywhere in the world to prevent conflicts of interest. * SO WHAT? * As a result of this decision, KPMG will be the first Big Four accountant to set up a legal practice in the US! It already has practices in roughly 80 countries including the UK and Australia, mainly via hoovering up smaller law firms. This sounds pretty interesting don’t you think? Although there aren’t supposed to be cross-selling opportunities between audit and legal services within KPMG itself you would have thought that there’s nothing stopping accountancy firms having reciprocal arrangements with pure law firms where they could recommend legal and accountancy services to each other.

Elsewhere, Rolls-Royce hits turnaround targets two years early under boss ‘Turbo’ Tufan (Daily Telegraph, Matt Oliver) shows that the engineering company has hit profits targets that were originally identified for 2027! The company continues to get leaner and more profitable under CEO Tufan “Turbo” Erginbilgic’s leadership. Profits and margins for 2024 were up and the company was confident enough to dish out a chunky dividend to shareholders as well as announcing a share buyback. The CEO also jacked up the company’s mid-term targets for good

measure. * SO WHAT? * This is a great performance but there are still issues that the company needs to address. Its Trent 1000 engines which power British Airways’ fleet of Boeing 787 Dreamliner jets are showing signs of excess wear  and the company has struggled to keep up with demand for replacement engines and parts, meaning that some planes have had to be grounded. Also, ongoing supply chain problems have taken their toll on Rolls-Royce. Still, the renegotiation of contract terms with airline customers continues to be favourable and the prospects for its defence and power systems businesses are good.

Landsec shifts focus from offices to homes (The Times, Tom Howard) highlights an interesting change for the landlord more commonly associated with office space – it announced that it would shift its focus to rental housing! It said yesterday that it plans to sell off its remaining retail and leisure parks assets within the next year or two and then at least halve its investment in offices after the current pipeline of developments are completed. The money generated will be used to buy more “destination” shopping malls and fund the creation of a “£2bn-plus residential platform”. * SO WHAT? * OK so Landsec is somewhat late to the party but at least it is moving forward! Hopefully, this should be good news for residential tenants who are facing sky-high rents due to the relative lack of rental properties. This change in direction won’t have an overnight impact, though…

Then in Ocado to cut more than 500 research jobs as focus turns to AI (The Times, Isabella Fish) we see that Ocado is streamlining its R&D workforce in the face of a tricky outlook for its automated grocery warehouse business. The company’s share price cratered by 18% yesterday as it announced redundancies, another annual loss and weak guidance. * SO WHAT? * This is not good. After a period of hype and excitement surrounding the increasing popularity of its automated warehouses, there has been a definite lull and the company’s share price is down by over 40% year-on-year. It needs to sign a few new deals for sure. This could turn its fortunes around and round out an improved performance in its retail arm.

This card trick guy is impressive! And he’s hardly even looking at what he’s doing because he’s busy talking to camera!