Monday 15/06/26

Iran and US agree deal to open Strait of Hormuz and extend ceasefire (Financial Times, Andrew England and Najmeh Bozorgmehr) heralds the most positive development we’ve seen so far in the Iran-US war and it sounds like the Strait of Hormuz will be opened (in phases as Iranian forces clear mines for the first 30 days) and the ceasefire will be extended by 60 days. Iran’s Supreme National Security Council confirmed in a statement that a memorandum of understanding had been finalised. Oil prices fell and global markets rose on the news. Donald Trump settles for a truce of convenience with Iran (Financial Times, Andrew England and Neri Zilber) shows that, far from the “unconditional surrender” that Trump shouted about 100 days ago, this new deal actually confirms Iran’s capacity to withstand American pressure and the effectiveness of the leverage it has via the Strait of Hormuz.

In defence news, Defence tech start-up Anduril calls for reset of US arms export controls (Financial Times, Sylvia Pfeifer and Tim Bradshaw) highlights an appeal by the CEO of the American defence tech start-up for a “reset” of America’s tight arms-export regime to make it easier for Allied nations to manufacture US weapons. He said that they could help to boost production capacity. * SO WHAT? * At the moment, the sale of American arms comes under the oversight of International Traffic in Arms Regulations (aka “ITAR”) and this requires export deals to be approved and sensitive technologies to be protected. Anduril is looking to expand production abroad at a time when other countries, particularly European ones, are trying to wean themselves off American defence tech so this should be quite interesting…

Back home, The strategic dilemmas behind Britain’s defence spending mess (Financial Times, Charles Clover and Lucy Fisher) takes a look at not only how much the UK should spend on the military but also the changing nature of the threats it faces. While Starmer tried to emphasise his commitment to defence spending, the ministerial resignations last week and subsequent criticism from the US administration about the whole shortfall isn’t helping Starmer’s cause. The Strategic Defence Review (SDR) that was published last year recommended a $68bn additional spend over the next 10 years. Last year, our defence budget stood at around £60bn. In terms of the changing nature of war, we have been set up for smaller-scale wars overseas with the assumption that we would be fighting alongside the US. However, since Russia invaded Ukraine, this has all changed. Strategists argue that we should now concentrate resources on defending the north Atlantic from Russian submarines whilst also protecting undersea cables and maritime supply routes. It seems that we are currently dithering at a very important crossroads.

Elsewhere, Markets ditch bets on US interest rate cuts under new Fed chairman (The Times, Mehreen Khan) reflects the increasing likelihood that the new Fed chief Kevin Warsh is going to have to raise rates at the next meeting this Wednesday rather than cut them, which is what Trump wants him to do. This could get awkward given Warsh’s previously stated stance supports looser monetary policy. US inflation now stands at 4.2%.

Then in Venezuelans sour on Donald Trump (Financial Times, Ana Rodríguez Brazón and Joe Daniels) we see that Trump’s approval rating has fallen from highs in February thanks to frustration at the slow pace of change. Many Venezuelans have said that they haven’t seen much meaningful change in a country where annual inflation is above 600%. Even though oil sales have started to rise, this hasn’t yet filtered through to ordinary citizens and has led to frustration and protests. If Trump doesn’t do anything within a reasonably short timeframe here it sounds like things could get very heated.

Meanwhile, UK economy contracted 0.1% in April as Iran war hit growth (Financial Times, Delphine Strauss) shows that our economy lost momentum in April. Our all-important services sector has suffered from the ongoing impact of war in the Middle East. That being said, in the three months to April, the economy actually expanded by 0.7% versus the previous quarter! The ONS figures showed that the biggest impact on GDP came from businesses related to the arts, entertainment and recreation. Retail activity also weakened considerably. This isn’t going to help Starmer’s cause!

Talking of the PM, Social media to be banned in UK for under-16s, Starmer announces (The Guardian, Kiran Stacey and Peter Walker) shows that we’re going to be implementing a social media ban for kids that will go further than the ban that was implemented in Australia. This is going to be a blanket ban on all of the main social media platforms, additional restrictions on online products including gaming apps and the removal of options to chat to strangers. Starmer said that legislation would be passed by the end of the year while the ban itself would come into force by next spring. I have no doubt we’ll be hearing push-back from the tech giants on this…and then in EV charging companies threaten to axe £2bn investment if Starmer softens net zero targets (Daily Telegraph, Matt Oliver) we see that industry lobby group ChargeUK has sent the government a letter saying that if he wavers on net zero, its members will halve proposed investment for the next five years. At the moment, it sounds like Starmer is going to cut the 2030 EV sales target from 80% to 50%.

In Europe, Swiss voters reject proposal to cap population at 10mn (Financial Times, Mercedes Ruehl) shows that Swiss voters have decided to reject the proposal to limit the country’s population at 10m, in what is being interpreted as a defeat for right-wingers who pushed for a vote. The Swiss government, business groups and trade unions did not want such a restriction because they argued that it undermined Switzerland’s access to foreign labour just when demographics are going against them.

In energy news, Rolls-Royce strikes nuclear deal with Japan (Daily Telegraph, Matt Oliver) shows that Britain will work with Japan on building mini nuclear reactors that can power factories, datacentres and military bases. This will involve Rolls-Royce partnering up with the National Nuclear Laboratory and the Japan Atomic Energy Agency to develop Advanced Modular Reactors (AMRs) and the fuel they will use. The aim is to build a demonstrator AMR in the  UK by the mid-2030s. * SO WHAT? * I think that this is a great initiative and I guess that if you want to work with anyone on nuclear projects, it’ll be the Japanese given their very direct experience of what can happen when things go wrong. We’ll have to wait for a while yet to see what the outcome is, though…

Then in Fusion industry suppliers bet on race for reactors creating a $73bn market (Financial Times, Ryohtaroh Satoh) we see that construction spending on commercial fusion plants will hit $73.1bn per year by 2040, according to consultancy Helixos. Companies such as Japan’s Fujikura and US-based Aecom, are among those who reckon they will be profitable way before they sell the maximum amount of electricity that they’re capable of doing. * SO WHAT? * Nuclear fusion has long been energy’s Holy Grail as it generates huge amounts of electricity without the nuclear waste association with fission. This all sounds very exciting but we’re unlikely to see the benefits for a very long time!

SpaceX’s surge on debut makes Elon Musk world’s first trillionaire (Financial Times, Stephen Morris, Ryan McMorrow and George Steer) shows that SpaceX’s flotation on Friday was wildly successful as its share price climbed by almost 20%, propelling its valuation to about $2.1tn. SpaceX is now the world’s sixth biggest company and Musk’s 42% holding makes him the world’s first trillionaire (when combined with his $280bn stake in Tesla). Banks on the deal shared in a fee pool of $500m, easily the biggest IPO windfall in history. Goldman Sachs and Morgan Stanley earned $100m each! Tracker funds are going to have to buy into it over the next few weeks (because they have to reflect their benchmarks) so I suspect that the momentum is going to continue. How Wall Street pulled off the biggest IPO in history for SpaceX (Financial Times, Stephen Morris, Ryan McMorrow, George Hammond and George Steer) goes behind the scenes on the IPO and all the parties benefiting from the deal including the financiers and employees alike – well worth a read! A Guide to the Biggest Winners From the SpaceX IPO (Wall Street Journal, Jonathan D.Rockoff) takes a look at how early investors, hedge funds, VCs, family offices, university endowment funds and employees benefited and Emboldened by SpaceX, Investors Are Piling Into All Things Space (Wall Street Journal, Micah Maidenberg) highlights the halo-effect that the SpaceX is having on space-related companies like Observable Space (involved in laser communications and sensing), Northwood Space (ground systems) and CesiumAstro (makes space systems and electronics) who have all managed to raise tidy sums. The main problem, though, is picking those winners because while the likes of Musk’s SpaceX and Bezos’s Blue Origin have enough financial firepower to bounce back from big setbacks, smaller start-ups haven’t. * SO WHAT? * This was an extraordinary float for so many reasons. If I was an investment banker, I’d be wanting to get Anthropic and OpenAI to market quickly in order to surf the current wave of feelgood before investors start looking too closely at valuations and profitability…

Tech’s Next IPO Wave Promises a Charitable Windfall (Wall Street Journal, Laura J.Nelson and Keach Hagey) reminds us that there are still more humungous flotations waiting in the wings after SpaceX – as both Anthropic and OpenAI have also filed for IPOs – and that hopes are rising among charities that they will be getting some big donations either to offset tax bills or from those who truly want to give back. When Facebook floated in 2012, a wave of philanthropy followed and now we’ve seen that Anthropic’s seven founders have pledged to donate at least 80% of their wealth. I am sure that wealth advisers will also be doing very well from this! Wall Street digests record fundraising haul as AI race intensifies (Financial Times, Eric Platt Kate Duguid, Michelle Chan and Amelia Pollard) highlights the fact that investors just aren’t being phased by massive activity in the debt and financing space despite surging inflation that could yet hit economic activity.

Apart from that, an additional kerfuffle emerged in Anthropic scrambles after Trump administration freezes its top AI models (Financial Times, Madhumita Murgia, George Hammond, Rafe Rosner-Uddin and Joe Miller) where the Trump administration forced Anthropic to suspend exports of Fable and Mythos, banning foreign nationals from using the tech, citing national security concerns. Anthropic suspends latest AI models after US blocks access to foreigners (Financial Times, George Hammond and Joe Miller) shows that it was given just 90 minutes to comply with the order and Starmer seeks British carve-out from Trump’s Anthropic AI ban (Daily Telegraph, James Titcomb) shows that Starmer’s trying to get us access. This does serve as a salutary lesson about how exposed we are to the whims of the Americans at the moment.

Cotswold Company hits record sales, defying UK furniture slowdown (The Times, Guy Taylor) highlights a strong performance from the Cotswold Company as it announced an increase of almost 25% in annual profit and record sales. * SO WHAT? * This is notable because of the broader slowdown in the British furniture and homeware sector. Its premium bedroom furniture and new product range did really well. You do wonder how long this can last, though, against the uncertain geopolitical, political and economic backdrop along with an uncertain consumer.

Meanwhile, Gail’s and Boden warn Labour ‘relentless’ taxation must stop (Daily Telegraph, Tom Haynes) shows that a letter sent to The Telegraph, with signatures from over 65 business leaders and MPs, is imploring the government to stop the “relentless” tax rises that are pushing founders to leave the country while Tax delay ‘risks UK becoming a dumping ground’ (The Times, Isabella Fish) also highlights pressure on the government to get a move on with closing

the “de minimis” customs thresholds for imports. * SO WHAT? * Retailers are warning that if this isn’t closed quickly, more high street shops will have to shut down. The current plan is to abolish the rule in 2029 but British retailers want this to happen sooner. At the moment, the likes of Temu and Shein are allowed to ship parcels worth less than £135 into the UK without having to pay customs duties. British retailers are at a disadvantage because when they import in bulk, they have to pay duties, VAT and compliance costs.

Then in Australian pharmacy group pulls out of $10bn talks to buy Boots (Financial Times, Nic Fildes) we see that Sigma Healthcare has now pulled out of talks to buy Boots.

In a quick scoot around some of today’s other interesting stories, Buying Britain: overseas buyers pile into UK companies (Financial Times, Ivan Levingston) cites research by the London Stock Exchange Group which shows that overseas buyers are buying British companies at a record pace. So far this year foreign buyers have spent £128bn on British companies, which is more than three times the amount in the same time period in 2025. It seems that buyers are enjoying depressed valuations and the pull of London. M&A activity involving UK companies has not been this high since just before the financial crisis in 2007!

UK housebuilder Vistry offers staff voluntary redundancy (Financial Times, Jennifer Williams and Julie Steinberg) shows that the troubled housebuilder is now employing desperate measures to save cash to prop up the business. Employees are now being offered redundancy packages of

up to two months’ pay plus another payment. * SO WHAT? * This just reflects the slowdown in the housing market along with the effect of material costs been pushed up by wars in the Middle East. Isn’t it ironic that, while we’re so far behind housebuilding targets in this country, a housebuilder is fighting for survival!

Talking of which, Housing market slowdown to continue next year, Item Club forecasts (The Times, Tom Howard) cites research from the economists at the Item Club which says that it’s likely that the current market slowdown will continue well into next year thanks to a combination of weak consumer confidence, rising unemployment and tricky household incomes. The situation won’t be helped by mortgages staying higher for longer because interest rates are likely to remain elevated to combat inflation.

I thought I’d start the week with a bit of music! This is pretty mesmerising…