Monday 10/02/25

In Trump vows to cut billions of dollars from US defence spending (Financial Times, James Politi) we see that Trump’s continuing to stir things up! He said in an interview yesterday that he is looking to made big cuts to the defence budget as Elon Musk’s DOGE continues to target areas for potential spending crackdowns. He believes that “We’re going to find billions, hundreds of billions of dollars of fraud and abuse”. The Trump/Musk steamroller trundles on!

Talking of which, Trump to impose 25% tariffs on steel and aluminium imports (Financial Times, James Politi) highlights the latest raft of tariffs, this time on all steel and aluminium imports, while China imposes retaliatory tariffs on $14bn worth of US goods (Financial Times, Joe Leahy, William Langley and Demetri Sevastopulo) shows China’s response – the targeting of US exports of LNG, coal, crude oil, farm equipment and some automotive goods – while Chinese inflation speeds up as investors brace for trade war (The Times, Emma Taggart) reflects a bump in consumer inflation, which saw its sharpest rise since August as consumers

splashed out during the lunar new year holiday, which began in January this year, as opposed to February last year. On the other hand, China saw producer price deflation thanks to weak factory demand. This follows on from last month’s official figures which reflected an unexpected contraction of manufacturing output in January.

Meanwhile, European companies warn of uncertainty from Donald Trump’s tariff threats (Financial Times, Syvia Pfeifer, Kana Inagaki, Oliver Telling, Clara Murray, Olaf Storbeck, Ian Johnston and Richard Milne) shows that European companies are already saying that the uncertainty of Trump’s tariffs have already hit investment plans. * SO WHAT? * I guess that the only thing worse than tariffs is uncertainty about what they are, who they’re going to affect and how deep they are going to go! At least if you know what they are, you’ve got something to work with. Some companies, such as LVMH and Shell, are already looking at increasing their US footprint (although I’d say this is for different reasons).

Jeff Bezos wins MoD contract amid concern over Musk satellite dominance (Daily Telegraph, Matthew Field) shows that Amazon’s satellite division, Project Kuiper, has just secured a £670,000 consultancy deal with the MoD to look into an advanced space-based communications system. * SO WHAT? * This could be Project Kuiper’s first military contract anywhere in the world! Although this is pretty small beer in the scheme of things, it’s an important positive step as the business tries to narrow the gap with Starlink, which already has 7,000 satellites in low orbit that give internet access to millions of people. This comes just a week after Ofcom approved a licence for Amazon to offer satellite-based broadband services in Britain. FWIW, I think it’s vital that we make sure we’re not reliant on an increasingly combative Elon Musk for something as important as communication. Although the UK government selected to use Starlink’s satellite dishes in a remote internet access trial, I think that it needs to broaden its horizons even further and look again at using Eutelsat OneWeb.

Meanwhile, Elon Musk dismisses rumours of TikTok takeover (The Times, Emma Taggart) shows

that Musk has poured cold water over hopes/theories that he might buy TikTok. He said at a conference that he had not put in a bid for TikTok, saying that “I usually build companies from scratch”. He added “I don’t have any plans for what I would do if I had TikTok”. * SO WHAT? * Funnily enough, X is a big exception to this apparent rule! Anyway, you never know whether this is a negotiation tactic or not in order to extract a better price.

Then in Macron unveils plans for €109bn of AI investment in France (Financial Times, Melissa Heikkila, Leila Abboud and Antoine Gara) we see that the French president announced chunky investments in AI for the next few years ahead of the AI Action Summit in Paris that’s starting today. * SO WHAT? * This looks a bit piddly compared to the $500bn Startgate AI infrastructure project announced last month, but it is still way more than the $6m DeepSeek spent on training its R1 model 🤣. Just to give this a bit more perspective, it is thought that Google, Amazon, Microsoft and Meta are planning to spend about $300bn combined on AI this year alone!

Chinese Carmaker Dongfeng’s Shares Surge on Restructuring News (The Guardian, Jiahui Huang) highlights a 20% rise in the Chinese automotive giant’s share price on the Hong Kong exchange today on news that it’s planning on a restructuring with another state-owned company. Its Shanghai listed shares got a 10% lift as well! * SO WHAT? * Separately, Chongqing Changan Automobile, which is also a state-owned car company, released a very similar statement, prompting speculation that Dongfeng and Chongqing Changan might be getting together.  Neither company responded  but it would be quite something if two of China’s “big four” state-run automakers team up!

Then in Tesla plots Oxford Street showroom in fightback against Chinese rivals (Daily Telegraph, Pui-Guan Man) we see that Elon Musk is thinking about opening a London flagship showroom and has appointed CBRE to do some digging on this. Oxford Street is one of the locations on the list. The aim is to have an array of new products on display including AI-powered products, driverless cars and its Cybertruck (pointless because it’s illegal to drive on UK roads). * SO WHAT? * This would be a good idea for Tesla given weakening sales in Europe. That said, I would have thought Musk would be better off reining in his political rants – and that wouldn’t cost him anything 🤣!

In a quick scoot around some of today’s other interesting stories, Morgan Stanley cedes title of chief Goldman Sachs rival (Financial Times, Joshua Franklin and Sujeet Indap) highlights bragging rights for JP Morgan Chase and Evercore as they overtook Morgan Stanley as chief rivals to Goldman Sachs in financial advisory fees last year. The 2024 fees gap between JP Morgan and Goldman got to its narrowest point in at least a decade! * SO WHAT? * M&A is the major earner in investment banking because it requires only a few bankers, unlike IPOs which require legions of people. Consequently, investment banks take this sort of thing very seriously – and they have been making positive noises about a recovery in deal flow for quite some time now.

Back home, UK recruiters say toughest conditions in jobs market since Covid (Financial Times, Delphine Strauss) cites the monthly survey by KPMG and REC which shows that recruiters are seeing the most difficult conditions on the British jobs market since the pandemic as employers’ confidence got shot to pieces by Reeves’s Budget. Recruitment agencies placed fewer people in both temp and perm positions last month in what REC’s CEO described a weaker-than-usual post-Christmas slowdown. Survey respondents also reported an overall drop in vacancies across all sectors. * SO WHAT? * There is a lot of gloom around in corporate Britain at the moment, and most of it is coming as a result of that Budget. It seems that all the big recruiters like Hays, Robert Walters and PageGroup etc. have been reporting the same thing and businesses themselves have said that they’ve had to rein in their hiring plans. I guess the key now is how long does this go on for?

In retail chat today, Tesco Clubcard at 30: the loyalty scheme that changed retail (The Times, Isabella Fish) celebrates the 30th birthday this week of Tesco’s Clubcard! It was only supposed to

be a one-off short-term trial that Tesco commissioned back in 1994, but it became the UK’s first mass-market loyalty scheme that enabled Tesco to leapfrog arch-rival Sainsbury’s into the #1 spot for the UK’s biggest supermarket! The makers of the Clubcard, Dunnhumby sold out to Tesco completely in 2010 after Tesco had acquired a 30% stake in 2001. * SO WHAT? * It’s amazing to think that Tesco was a pioneer in this regard! The customer spending data that the loyalty card harvested became incredibly powerful. This does make you wonder how much Apple would be able to do with Apple Pay and the data it may be privy to. This could arguably be even more powerful as you could see spending patterns across all shops and services – not just one supplier. However, this all depends on how separate this data is from the rest of Apple’s ecosystem. I still maintain that Amazon has the most frightening amount of data on individuals given that it can monitor your spending patterns as well as your streaming habits! If you combine that with a bigger rollout of Amazon Pharmacy as well then the company really can build up a very comprehensive picture!

Then in At least half of WH Smith high street stores could close under a new owner (The Guardian, Sarah Butler) we see that analysts are speculating that at least half of WH Smith’s 500 high street stores could be shut down under a new buyer. Offers for the stores are expected in the next few weeks and those in the running include PE groups Hilco and Alteri, Hobbycraft owner Modella Capital and HMV-owner Doug Putnam. Fun fact: 200 of WH Smith’s 500 sites include a large Post Office. I guess we’re not going to have to wait long to discover their fate!

Until I saw this video, I never realised the capabilities of an army of ducks! This is impressive!