Monday 09/03/26

Mojtaba Khamenei’s appointment is a sign Iran’s hardline policies will continue (Financial Times, Najmeh Bozorgmehr and Andrew England) heralds the selection of the deceased supreme leader’s son as the new leader by the current regime. Some had thought that the choice would be delayed until after the war ended but this looks like a show of defiance against Trump, who last week described the new leader as a “lightweight”. ‘It’s our moment’: rival exiles lobby the US to lead Iran after the war (Financial Times, Guy Chazan) shows that Iranian exiles are pushing for regime change and the Islamic regime’s downfall as a golden opportunity to usher in a new democratic era while Trump raises the stakes in Iran by weighing deployment of US ground forces (Financial Times, James Politi and Alex Rogers) shows that the president is considering upping the stakes by deploying troops to Iran to take Tehran’s enriched uranium.

In terms of the latest reactions, Middle East war live: Stocks tumble as oil soars past $110 a barrel (Financial Times, Orla Ryan, George Russell, Eli Meixler, Gavin Huang, Joshua Oliver, Patrick Temple-West and Peter Barner) highlights the oil price going to $119 a barrel, the highest level since 2022, but they then fell back to about $110 on news that G7 finance ministers are to meet today about pooling petroleum reserves. Markets fell in Asia while the dollar continued to rise. Power prices in Europe swing wildly as Iran war stokes volatility (Financial Times, Rachel Millard and Clara Murray) highlights the wholesale price swings in markets including the Netherlands, Denmark and Germany over a matter of hours and Why an Iran war inflation shock could wreck global economic recovery (The Guardian, Phillip Inman and Kalyeena Makortoff) shows how many economists and central bankers are warning that the Iran war could stop a global economic recovery in its tracks by pushing inflation up. Some are saying that the Gulf states will now be seeing the US as an unreliable partner and gravitate towards China, India and Brazil as a result. Bloomberg Economics reckons that a 1% fall in oil supply pushes oil prices up by around 4%, which means that if the Strait of Hormuz was closed for a few months, oil prices would rise by 80% versus pre-Iran war levels, meaning they’d hit around $108 a barrel. Iran war muddles expectations of likely Federal Reserve interest rate cuts (Financial Times, Claire Jones and Kate Duguid) says that if inflation rises as a result of the war, the Fed is going to find it much harder to justify interest rate cuts. The market had been expected two interest rate cuts before the midterm elections in November.

Elsewhere, China consumer prices buoyed by oil surge and lunar new year (Financial Times, Joe Leahy) highlights a rebound in Chinese consumer prices 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. * SO WHAT? * China has been suffering from deflationary pressures for over three years thanks to ongoing sluggish domestic demand and a prolonged property market slump.

Back home, Iran crisis stokes fears among UK farmers over higher fertiliser costs (Financial Times, Madeleine Speed) shows that farmers are bracing themselves for even higher prices because fertiliser prices are set to go higher because of the Iran war. The Middle East is a major producer of fertilisers but now the Strait of Hormuz is a major bottleneck and prices are being squeezed higher. * SO WHAT? * Most arable farmers are sorted for fertiliser for the upcoming spring but farmers are going to start ordering fertiliser for next year – so higher prices are going to hit them badly. Fertiliser is the biggest input cost for arable farmers and accounts for about 25% of the cost for crops. Fuel accounts for about 10% – so they’re going to be facing a double-whammy.  The UK imports 100% of its fertiliser.

Then in Great Britain has only two days of gas stored, while Iran war threatens to disrupt supplies (The Guardian, Julia Kollewe) we see that Great Britain is running low on fossil gas, according to the latest readings from National Gas. We normally have 12 days worth but things aren’t looking good as LNG shipments are now headed towards Asia rather than Europe because of the war. * SO WHAT? * Although this is bad, it’s not disastrous as we do get large amounts of gas from other sources – but still, it is worth considering because the Iran war is going to put a strain on all sources of gas and so I wonder whether we will be affected eventually if the war drags on.

That being said, An unlikely boost to London’s property sector could emerge from the conflict in Iran (Daily Telegraph, Pui-Guan Man) shows that the luxury end of the London property market might see an influx of money from Gulf nationals. There are some reports of increased interest in six-month to a year rentals of luxury properties, potentially with a view to buying later. * SO WHAT? * The longer the war continues, the more likely it is that Britain could see a capital inflow – something that happened in the aftermath of the Arab Spring in the early 2010s when buyers sought a safe haven for their cash.

At the more “normal” end of the market, though, UK lenders raise mortgage rates amid warnings over inflation and energy prices (Financial Times, James Pickford) shows that NatWest, the Co-operative Bank and Skipton became the latest lenders to increase the cost of their fixed-rate mortgages as they react to events in the Middle East. They increased rates on Friday, but others including HSBC, Nationwide, Santander and Coventry Building Society beat them to it.

KKR eyes multibillion-dollar sale of data centre cooling company (Financial Times, Oliver Barnes and Antoine Gara) shows that the US private capital behemoth is potentially in line for making 10 times its initial investment on the sale of CoolIT Systems, a company in which it bought a majority stake for $270m in 2023. The company originally produced liquid cooling systems for gaming computers but then pivoted to provide cooling equipment for data centres. KKR is now seeking to sell off its stake for over $3bn! Talks of a sale are at an early stage. * SO WHAT? * The potential return here is just insane BUT this does make me wonder because surely we still have a looooong way to go in the development of datacentres and, of course, the need for cooling them. I may be being over-dramatic here, but if KKR sells out of its ENTIRE stake, I’d take it that they know something we don’t and they are getting out at the top. However, if they still keep a meaningful chunk of it I’d think that was fair enough. Surely they’d want to have skin in the game going forward.

Samsung seeks AI deals to challenge Apple’s smartphone lead (Financial Times, Michael Acton) shows that the Korean tech company is on the lookout for strategic deals with AI

companies 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. * SO WHAT? * Samsung’s keen to do this because it has observed that customers are increasingly using several AI services rather than staying true to a singly platform. It thinks that a greater choice on their devices can set them apart from Apple, which has been notably slow to roll out many of the AI features it announced last year.

Then in Khan seeks to lure AI giant blacklisted by Trump to London (Daily Telegraph, James Titcomb) we see that London’s mayor it looking to take advantage of Trump’s row with Anthropic to lure the company to London in a letter sent to Anthropic’s CEO Dario Amodei. Khan said that London would provide a “pro-innovation environment” that would allow the company to “flourish”. * SO WHAT? * This is just noise IMO. Trump hates Khan and Amodei transferring to the UK would, I am sure, REALLY get his goat. If I was Amodei, I’d say that it wasn’t worth the risk but perhaps he might have some quiet backroom chats.

In a quick scoot around some of today’s other interesting stories, US sheds thousands of jobs as unemployment edges higher (The Times, Louisa Clarence-Smith) cites the latest US job numbers from the Labor Department’s Bureau of Labor Statistics which 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. * SO WHAT? * This is going to make interest rate decisions by the Fed even more difficult! Cutting interest rates will help generate jobs because it’ll be cheaper for American companies to invest and employ people but the Iran war is likely to push inflation up which means that interest rate would have to rise to stop things from getting out of control. The Fed’s going to have to make a very unappetising choice between saving jobs and controlling inflation. The thing is that even if interest rates come down, businesses might still hold off on employing people because of the uncertain state of the global economy.

Back here, Britain’s job market ‘floundering’ as companies remain cautious about hiring (The Guardian, Tom Knowles) cites two reports – one from accountancy firm BDO and another from KPMG and REC – which both show that the jobs market it suffering against the backdrop of uncertainty and higher employment costs.

Elsewhere, BlackRock limits redemptions at private credit fund as outflows swell (Financial Times, Eric Platt) shows that the world of private credit continues to suffer as BlackRock is now limiting withdrawals from one of its flagship private credit funds as investors continue to try to yank their cash out. Withdrawals are now capped at 5%, which is better than Blue Owl which has banned all redemptions at one of its funds. Still, it doesn’t look good for the sector which is continuing to suffer under the pressure…

Then in car-related news, Chinese carmakers motor towards taking a fifth of UK market share (The Times, Mark Ludlow) cites the SMMT’s projections that Chinese brands are on course to account for 20% of new vehicles on our roads as early as next year. The number of Chinese makers selling to the UK is on track to double from 13 to almost 30.

Meanwhile, Car insurance bills are going up before they go down (Financial Times, Lex) shows that the car insurance sector is having a bad time and its core underwriting business has lost money for three out of the last four years. From the customer point of view, we’ve seen the average annual cost of comprehensive motor insurance rise by over 40% between 2021 and 2024, according to the Association of British Insurers. The problem is that insurers’ costs have been accelerating thanks to skills shortages, problems with supply chains and more complex modern cars. One way of improving their lot will be looking to further consolidate a fragmented sector.

The billionaire ‘buccaneer’ braving the Strait of Hormuz (Financial Times, Jamie John, Malcolm Moore and Nassos Stylianou) is an interesting piece which highlights the activities of a rare operator that’s still sending ships down the Strait of Hormuz. Dynacom Tankers has sent at least five tankers through the Strait since Saturday and each shipment sees huge rewards as owners are charging handsomely for taking big risks. The ships turn off their transponders in order to increase their chances of making it through the Strait unscathed. The International Transport Workers Federation has mandated “bonus” payments for those operating around the Strait since Monday that involve a doubling of both salaries and death and disability benefits while crew members are also allowed to refuse to sale with “repatriation at company’s cost and compensation equal to 2 month’s basic wage”. Clearly, there is some shipping getting through but it’s extremely limited at the moment…

I generally use the “smash” method in this video, but I will give this a try when I’m using a lot of garlic in a recipe!