Monday 12/05/25

India and Pakistan’s fragile ceasefire holds after alleged breaches (Financial Times, John Reed, Andres Schipani, Krishn Kaushik, Humza Jilani and Guy Chazan) highlights the current situation in India and Pakistan where a testy ceasefire appears to have survived the weekend. Trump is claiming credit for it and promised to increase trade with both nations. Both India and Pakistan claim Kashmir as theirs but India, unlike Pakistan, doesn’t want any foreign involvement in mediation. The ceasefire agreed on Saturday came after four days of conflict. The situation continues to be tense.

I’ll be waiting for Putin in Istanbul, says Zelensky (The Times, Marc Bennetts and Nick Holdsworth) highlights the latest development with Ukraine as President Zelenskyy has offered to meet Putin for peace talks in Istanbul this Thursday. * SO WHAT? * If this actually takes place, it’ll be the first time that the two leaders have met since the early days of the war back in 2022. Zelenskyy had been pushing for a ceasefire as a necessary precursor to talks but Putin said that such a ceasefire would only be possible once talks were underway.

Taiwan TV drama to give public a visceral vision of war with China (Financial Times, Kathrin Hille) is an interesting article that highlights a bit of “social persuasion” going on with an upcoming hard-hitting drama, called Zero Day, that tells the story of what could happen in the event of a China invasion. It starts with a blockade, shops and homes are in darkness as Chinese cyber attacks hit and then banks and public transport collapse. Families try to leave by boat, criminal gangs get mobilised and then soldiers of the Chinese People’s Liberation Army arrive. * SO WHAT? * For the longest time, many Taiwanese have found it hard to believe that China will invade but when you consider what happened with Russia and Ukraine and the fact that China’s military forces continue to “train” around the island, the risk is definitely rising. Some believe that such a drama will mobilise the public like films about nuclear wars did in the UK and US in the 1980s.

In Chinese companies purge supply chain of foreign parts amid US trade war (Financial Times, Ryan McMorrow and Joe Leahy) we see the cumulative effects of tariffs and sanctions as Chinese companies continue to work hard to cut foreign components out from their supply chains. Since Trump’s tariff attack on China (and the world!) over two dozen Shanghai and Shenzhen-listed companies have pledged to investors that they are doubling down on efforts to source domestic products to replace foreign ones. The process of US-China decoupling continues…

Then again, US claims ‘substantial progress’ after trade talks with China (Financial Times, Demetri Sevastopulo and Joe Leahy) shows that the US is putting a positive spin on how the trade talks with China went over the weekend in Geneva. It sounds like there will be more details to come today. Markets reacted positively on these developments and Gold sells off as US-China trade talks progress (Financial Times, William Sandlund) reflects an easing of concerns (because investors buy gold when they’re worried but then put it back into riskier assets when the concerns subside). Trump tariffs cause 20% drop in China exports to US (The Times, Mehreen Khan) highlights just how important an agreement will be because the latest trading data from Beijing reflects a substantial fall in China’s exports to the US already, since Trump imposed those

145% tariffs. Interestingly, China’s overall export volumes actually increased by 8% versus market expectations of 2% as the country redirected its sales to markets outside the US, particularly in Asia.

Back in the US, How Tariffs Are Crushing Small Businesses: ‘Nobody in Power Seems to Care’ (Wall Street Journal, Ruth Simon) shows the effects that Trump’s tariffs on China have had on small American businesses. At the moment, owners are reducing headcount and dipping into their personal savings to keep their businesses going in the hope that they can ride out the storm until a trade deal is agreed. * SO WHAT? * Smaller businesses are less able to withstand Trump’s current trade policy because their cash buffers aren’t as substantial and they don’t have as much flexibility or pricing power with their supply chains.

Meanwhile, Trump vows to lower drug prices in the US by up to 80% (Financial Times, Joe Miller) highlights the president’s latest target – pharmaceuticals. * SO WHAT? * He wants to use his executive powers to make drastic cuts to drug prices in the US. The pharma industry itself is, funnily enough, against this, but that’s not putting Trump off – he said that he’s going to sign an executive order today that will cut prices “almost immediately by 30 per cent to 80 per cent”. The whole industry is going to be rocked by this as it sounds like pharma’s worst nightmare will be coming true.

World’s largest EV battery maker CATL to raise at least $4bn (Financial Times, Edward White, William Sandlund and Cheng Leng) looks at the world’s biggest EV battery maker and its plans to raise a whopping $4bn in what is likely to be Hong Kong’s biggest share sale this year. The shares will be priced this week and will start trading on May 20th. There’s a group of over 20 cornerstone investors who’ve already agreed to buy in. If demand is strong (and surely it will be) the share sale could actually raise $5bn if you include all the add-ons.

Back home, Miliband plots surge in wind farm subsidies to rescue net zero (Daily Telegraph, Jonathan Leake) shows that the Energy Secretary is preparing to ditch limits on cash from bills going to turbine developers in order to keep his green power target alive. This will enable the financing of thousands of extra turbines in the next few years as he clings to his pledge to make Britain’s electricity supply 95% carbon free by 2030. * SO WHAT? * This is a big ask to meet a self-imposed arbitrary target – and to get under-pressure consumers to quite literally foot the bill at a time when pressures on disposable incomes are rising. Surely he’s going to have to relent on this and push the date back?!?

Then in oil news, Saudi Aramco cuts its dividend by $10bn (Financial Times, Rachel Millard and Ahmed Al Omran) shows us that the world’s biggest oil company reported a drop in Q1 profits, which meant a deep cut in its dividend. * SO WHAT? * Although the company did well compared to rivals such as BP and Shell, the fall in dividend payouts means that state-linked entities like the PIF, which are partly funded by the payouts, will have less money to play with. The government and the PIF, Saudi Arabia’s main wealth fund, own a combined total of over 97% of Aramco.

Consumers have a lot to contend with! US beef prices extend surge as ranchers face thinnest herds in 70 years (Financial Times, Taylor Nicole Rogers) shows that US beef prices are booming because cattle inventories have hit their lowest level in over 70 years. The average price of a pound of minced beef has risen by 12.9% over the past year to the highest level on record. Ranchers have been shrinking the size of their herds, drought has dried up grazing lands while labour and insurance costs have also been rising. Higher meat costs will not be great for consumer sentiment as we hit barbeque season.

Elsewhere, Weaker economy increases lure of the ‘unsubscribe’ button (Financial Times, Lex) suggests that streaming companies are going to be in the firing line as consumers look to cut their outgoings. * SO WHAT? * They’ve done well over the last year or so with increasing prices to little detriment and you could argue that people will be reluctant to cut subscriptions if they’re going to spend more time at home and less time going out because of rising prices. However, such subscriptions are easy to cancel and resubscribe and when you’re feeling the pinch “rotating” your subscriptions is the easiest thing to do.

In employment news, Hiring plans cut due to minimum wage rise and uncertainty (The Times, Tom Saunders) highlights the latest stats from the CIPD which show that the number of employers expecting to boost their headcounts over the next quarter has dropped to its lowest

level – outside the pandemic – since 2014. Meanwhile, 85% of workers ‘burnt out and exhausted’ (The Times, Tom Saunders) cites a survey by Reed which highlights stress levels in the workforce. * SO WHAT? * It’s tough out there but I guess employers are just trying to weather the current Trump storm in particular. A lot of hope is being placed in trade deals, but TBH the one between the US and UK has not proven to be particularly earth-shattering thus far.

LLM vs LLB: the case for junior lawyers is undermined by AI (Financial Times, Lex) contends that AI will be doing more and more junior “grunt” work and low-level stuff but is also rising up the value curve with tools like LexisNexis’s Lex Machina and A&O Shearman’s antitrust AI tools. It says that junior lawyers will still be valued, they will be the seniors of the future and they will also have plenty of work yet as AI pervades society and rules need to be made! This is going to be a massive task as it will span ethics, IP and privacy among many other things. * SO WHAT? * My main concern here is that law firms won’t take on enough juniors. It seems to me that law, as with other professions, has a natural attrition rate and if you don’t take on so many juniors because AI’s doing a lot of that work, I would argue that fewer lawyers will stay the course until partnership etc. and there could be a shortage in the longer run. There’s also a chance if you take on fewer juniors that it becomes more likely that diversity will suffer because firms may be less willing to take people on who come from different backgrounds.

St James’s Place’s rapid recovery shows the value of aspiration (Financial Times, Lex) points out that the wealth manager has been the FTSE100’s best-performing stock for the last 12 months and the second-best one of the FTSE350 as CEO Mark Fitzpatrick’s efforts to cut costs and restore its reputation bear fruit. Inflows are looking good and it seems that the brand is attracting more people. * SO WHAT? * In order to fuel further growth it needs to target the “mass affluent” (those with anything between £75,000 and a few million in investable assets)  and it seems that their air of exclusivity is going to be hard for banks who have ambitions in wealth management to replicate.

In investment developments, Selling of dollar assets signals start of longer-term shift, warn investors (Financial Times, Ian Smith and Mary McDougall) shows that the recent dumping of US assets and subsequent shift towards European ones feels like a move that’s going to stick. Wall Street banks say that they are seeing investors cutting their US positions because of concerns over erratic policies and shifting into Europe because of catalysts like the German-led

defence spending boom and attractive valuations. * SO WHAT? * A recent Bank of America survey showed that investors made the “biggest ever cut” to US equity allocations in March and their sharpest shift to Europe since 1999! I guess we’ll have to wait to see what effect trade deals are going to have on sentiment. FWIW, although I expect some initial euphoria on the announcement of trade deals, longer term booms may be tempered about worries over whether these deals stick and what happens with China.

In Buy-to-let investment drops to pre-financial crisis levels (The Times, David Byers) we see that buy-to-let investment levels have now fallen to just 10% of all homes sold in Britain over Q1, the lowest proportion since 2007 and way off the high of 16% in 2015. Hamptons’ research also showed that those who were still investing had been shifting towards the north of the country where property prices and mortgages were lower and yields were higher in a London exodus. London landlords are also moving away from the capital, potentially meaning that the rental supply crisis will get even worse. Ouch!

In a quick scoot around some of today’s other interesting stories, OpenAI negotiates with Microsoft to unlock new funding and future IPO (Financial Times, George Hammond, Stephen Morris, Cristina Criddle and Melissa Heikkila) shows that the AI leader and Microsoft are currently re-writing the terms of their partnership that will enable a ChatGPT IPO whilst simultaneously protecting Microsoft’s access to all ChatGPT’s good stuff. The current contract runs to 2030.

Then in Insurers launch cover for losses caused by AI chatbot errors (Financial Times, Lee Harris and Melissa Heikkila) we see that insurers at Lloyds of London have just launched a product that covers companies for losses from hallucinating AI tools. The policies are developed by Armilla and will cover court costs for claims against companies sued by customers or third parties. * SO WHAT? * This is clearly a growth area! Some insurers already cover AI-related losses in their general tech errors and omissions policies but they generally have a low ceiling on payouts. You would have thought that such errors would reduce over time but then AI will have

broader take-up and therefore there could be more tricky instances. I also thought it was interesting to hear one of the insurers in the article saying that it “would not sign policies covering AI systems [judged] to be excessively prone to breakdown”. This implies that there could be some big winners and some big losers here as everyone’s going to gravitate to AI models that ARE covered by insurance! I think this could be a catalyst for further consolidation in the industry…

Elsewhere, Trump says planned gift of luxury plane from Qatar is a very ‘transparent’ deal (The Guardian, Maya Yang) is a story that’s been splashed across most of the broadsheets today. It all boils down to Qatar’s royal family “gifting” Trump a plane dubbed a “flying palace” to replace the current Air Force One, which is 40 years old 😱! Critics have said this smacks of bribery and corruption while Trump and chums don’t see any problems with it. I guess it saves them some money! Who needs DOGE when the Qatar royal family gives you a $400m plane 🤣!

This is an interesting video that reveals a unique quirk of Japan. When I lived there I was often struck by how many times you would be amazed by the futuristic stuff – but then even more amazed by things that were an anachronism! The lady in this video shows how important your personal stamp is in Japan! Basically, having this stamp is the equivalent of a signature and it is still very important! I had to have one when I was there and you have to use it for pretty much all official documents. I don’t know whether this is prevalent across any other Asian countries but I still find it surprising!