This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week.
THE COLOURED HIGHLIGHT REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.
IN BIG PICTURE NEWS...
The US underwhelms, countries react to Trump's policies and Reeves's repercussions continue
- IN THE US – the Fed left interest rates unchanged, defying pressure from Trump, which annoyed him greatly. US GDP growth fell short of expectations and Trump ditched plans to freeze billions of dollars in federal domestic funding just one day after he announced it after massive backlash. Trump made a number of outbursts this week – suggesting the “clean out” of Gaza and ridiculing Denmark’s efforts to protect Greenland, among other things – while Mexico and Canada made efforts to placate him and Google Maps moved to rename the Gulf of Mexico as the Gulf of America. Concerns about a deepening of trade wars boosted hopes of Hong Kong listings while markets reacted to the possibility of less-strict tariffs on Chinese imports.
- IN CHINA – manufacturing output dropped ahead of the Lunar New Year holiday and news emerged of a massive military command centre being built in Beijing.
- IN EUROPE – the ECB cut interest rates as eurozone growth stalled and the EU committed to renew sanctions against Russia.
- IN THE UK – chancellor Reeves continues to push for growth with moves to enable companies to free up access to pension fund surpluses, that could be worth up to £100bn, putting her support behind a third runway at Heathrow and the revival of a plan to encourage an Oxford/Cambridge-centric answer to Silicon Valley but business confidence has taken a real battering from Reeves’s Budget, according to various surveys. Meanwhile, the Bank of England warned against relaxing mortgage limits, something that the government is trying to push as a way of getting more people on the housing ladder.
IN ENERGY NEWS…
- The UK is on course to miss 2030 solar and wind power targets, according to research from Cornwall Insight, although the Department for Energy Security and Net Zero dismissed these forecasts and reiterated its belief that “clean power by 2030 is achievable”.
- A new UK nuclear power station will go on line in 2035, according to EDF. However, previous form would suggest that EDF is not particularly accurate when it comes to predicting timetables!
IN COMMODITIES…
- Gold hit a record high as investors loaded up on fears of the impact of US trade tariffs.
IN CRYPTO…
- Hedge fund Elliott Management warned about the dangers of the White House’s pro-crypto administration and that excessive support could actually jeopardise the dollar’s position as the world’s reserve currency.
IN TECH NEWS...
Let’s face it, this week was all about the bombshell that DeepSeek dropped, potentially turning the way we’ve thought about AI forever!
IN DEEPSEEK NEWS…
- Chinese start-up DeepSeek launched its R1 model which shocked the world because it had pretty much the same capability of ChatGPT-4o but was made at a tiny fraction of the cost (less than $6m vs OpenAI’s annual budget of over $5bn!) and in double-quick time (two months!). $1bn was wiped off US stocks and China chalked up a significant victory versus America – and the rest of the world. A “large-scale malicious attack” hit DeepSeek which prompted it to limit registrations, although it got back to normal again not too long after. OpenAI said it had evidence that DeepSeek used its model in a common practice called “distillation” where a smaller model absorbs the knowledge out of a larger model and it threatened “aggressive countermeasures” to limit its use. The AI ecosystem will no doubt change (perhaps Starmer’s plans to boost the number of data centres in Britain may get less frenetic) because of DeepSeek’s impact and although Nvidia saw a $600m slump, it still remains a smart AI play. Microsoft’s boss reckons that DeepSeek’s model will boost demand for AI and we see that OpenAI was not put off in chasing a $300bn valuation in its latest funding round. Interestingly, Apple was touted as a company that could do well from the DeepSeek shock because DeepSeek’s success shows that the company could potentially catch up to rivals on AI after all, following a relatively slow start in this area.
IN CHIP-RELATED NEWS…
- Intel’s sales slipped as it continues efforts to turn performance around.
- Samsung sounded a downbeat note about its future although its Q4 performance was pretty good.
- ASML, which makes chip-making machinery, saw its shares rebound on strong orders.
IN SOCIAL MEDIA…
- Meta reported decent Q4 numbers although advertisers have become noticeably twitchy regarding social media’s shift towards “free-speech” and away from censorship.
IN OTHER TECH NEWS…
- Although Microsoft actually had a strong Q4 overall, investors were disappointed about cloud sales and it is suffering from capacity constraints that are expected to continue this year. Still, an independent panel acting for the CMA reckons that the company is stifling competition in the cloud services market. The CMA will publish its final decision on August 4th.
- Apple had mixed news as it beat income forecasts on the one hand, but iPhone sales in China fell short of expectations on the other.
IN ADVERTISING NEWS…
- Amazon announced plans to increase ad-spending on X a year after it pulled a lot of its advertising when it expressed concerns about hate speech on the platform.
- Influencer start-up ShopMy raised $77.5m as it leans into the growth area of influencer marketing. Research firm eMarketer believes that spending on influencer marketing will grow 14.2% year-on-year in 2025, which is more than social media advertising or digital advertising.
IN STREAMING NEWS…
- Universal announced that it had come to an agreement with Spotify for recorded music and publishing in the US and other countries. A cloud had been hanging over this, so its removal boosted Universal’s share price.
IN AUTOMOTIVE NEWS...
IN INDIVIDUAL CAR COMPANY NEWS…
- Tesla had a mixed Q4 as automotive revenues were weaker while energy storage products put in a stronger performance. It was interesting to see that a survey of motorists in electrifying.com showed that almost 60% of respondents said that Musk’s rantings were putting them off buying a Tesla. Meanwhile, Tesla is taking the EU to court over tariffs on EVs made in China…
- GM announced a loss in Q4 thanks to restructuring costs while a reshuffling of production is likely in order to combat Trump’s incoming tariffs.
IN BROADER INDUSTRY NEWS…
- UK car production fell to its lowest level since 1954 as the industry retools to EV production.
- UK ministers are looking at potentially guaranteeing EV loans to encourage more people to buy as this could help reduce monthly payments.
- British car parts firm Dowlais was on the receiving end of a £1.2bn takeover offer from US firm Axle and Manufacturing. Dowlais supplies 90% of the world’s carmakers and employs about 30,000 people around the globe.
IN CONSUMER, RETAIL & LEISURE NEWS...
IN CONSUMER NEWS…
- UK consumers continue to face hurdles as water bills are set to rocket and Savills reckons Reeves’s proposals to relax mortgage lending rules will mean higher prices for first-time buyers but, on the plus side, Rightmove says rents in the UK are starting to fall, the latest BRC data says that UK shop prices are falling.
- In terms of consumer behaviour, shoplifting has reached historic highs despite high-street brands spending record amounts of money to prevent it and weight-loss jabs are having another side-effect – people are drinking less, something that is not good for booze sellers like Majestic as well as pubs, bars and nightclubs.
IN RETAIL…
- LUXURY seems to be bouncing back as LVMH saw decent sales growth, Puig Brands reported a strong Q4 ahead of its full year results due out next month and Mulberry announced that it would be focusing more on the US and UK markets while scaling back its China efforts.
- ON THE HIGH STREET – Oxford Street got some bad news as Microsoft announced it would be closing its flagship London store next month, six years after it opened and John Lewis announced a profit warning after it reported a disappointing Christmas.
- Halfords announced some decent numbers thanks to better-than-expected trading over the peak Christmas period and a more optimistic outlook on cost savings.
- Lakeland was put up for sale by its founding family as it cited the prohibitive costs of the chancellor’s Budget.
- WH Smith put its high street stores up for sale although it will keep its cash-cow airports and train stations business and it’s already attracted interest.
- H&M missed quarterly targets and announced a bit of a streamlining of its brands but it continues to fall further behind arch-rival Inditex.
- Starbucks saw profits and sales drop over the quarter but the CEO remains quite upbeat about the chain’s prospects thanks to early positive signs emerging as a result of new measures being put in place.
- IN SUPERMARKETS – Asda decided to ditch price-matching Aldi and Lidl’s prices in favour of a broader “Rollback” campaign while Morrisons became the latest retailer to warn that it will have to double-down on cost-cutting plans following the Budget.
IN LEISURE NEWS…
- Ryanair profits rebounded thanks to stronger-than-expected Christmas demand.
- Wizz Air announced a profit warning as engine problems meant more planes were grounded.
IN FINANCIALS NEWS...
IN BANKS NEWS…
- Deutsche Bank’s profits collapsed by a whopping 92% as the broader economy continues to dive.
- HSBC announced that it would exit investment banking in the UK and Europe and focus instead on Asia and the Middle East. This is a big deal, but then again, HSBC has a reputation for doing things like this from time to time.
- Lloyds Banking Group said that it would cut 136 branches as analogue banking continues its terminal decline.
- Barclays became the latest bank to tighten its WFH requirements and asked most of its 85,000 employees to come to the office for an additional day (although most of its client-facing staff come in five days a week now anyway).
IN OTHER FINANCIAL NEWS…
- We heard that Trump’s Truth Social platform has plans to launch a financial services business, called Truth.Fi, that will put up to $250m into crypto and other assets. Talk about conflicts of interest!!!
- Wealth manager St James’s Place saw its assets under management hit a new all-time high as turnaround efforts seem to be bearing fruit.
IN MISCELLANEOUS NEWS...
- Boeing just posted its biggest loss since 2020 as the repercussions from its safety/quality control crisis continue to affect the plane maker.
BANTER
My fave video this week was undoubtedly the one about “the Dutch Giant” going shopping! What an amazing sight!