Watson’s Weekly 05-07-2025

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 WAR NEWS…

• Russia hit Ukraine with a massive attack as Russia turned the screws and Ukrainians cried out for more help with defence.

IN TRADE & TARIFFS…

• The G7 tried to strike a deal with Trump to avoid “revenge” taxes.
• Trump threatened to raise tariffs on Japan as we get closer to the end of the 90-day “ceasefire” of “revenge taxes” which is due on July 9th and he kept the threats coming – this time pushing them to accept American rice.
• The president also struck a trade agreement with Vietnam, but still kept a 20% tariff on the country whilst forcing them to give American products more access with zero tariffs. I guess that Vietnam will be relieved that it’s not going to be the 46% that Trump had previously threatened.
• The EU blocked Britain’s attempt to join the Pan-Euro-Mediterranean (PEM) convention trade agreement, saying that it would involve rewriting the terms of the existing post-Brexit EU-UK trade deal.
• The UK imposed a strict limit on steel imports following pressure from British steelmakers. This is intended to fend off the potential dumping of cheap steel in our market that was destined for America.

IN TRUMP THINGS…

• He said that he’s found a group of “wealthy people” to buy TikTok, but he didn’t say who and added that any deal would still have to get approval from ByteDance and the Chinese administration.
• The Trump/Musk feud blew up again due to Musk’s opposition to the BBB. Trump responded by semi-threatening to deport Musk and send him back to South Africa.

IN COUNTRY NEWS…

• IN THE US – To cut a long story short, the House of Representatives approved Trump’s “big, beautiful bill” with some amendments. As a result, there’s an enormous amount of money going into border security (it’s almost double the UK’s entire defence budget!), fossil fuel companies are going to well while companies involved in the electro-tech revolution are generally going to suffer. There’s a lot of detail here but Trump got what he wanted and it looks like it’s working for him at the moment. We’ll just have to wait and see whether his measures will have as much of an effect on inflation as everyone says they will.
• In the meantime, Trump continued his personal attacks on Fed Chairman Jerome Powell to get him to cut interest rates and it sounds like Powell is now open to the possibility of cutting them at the next Fed meeting.
• IN CANADA – the country scrapped the digital tax just hours before it was due to come into force in order to get Trump back to the negotiating table. He had terminated trade talks abruptly last Friday over the implementation of this tax.
• IN CHINA – manufacturing activity shrank thanks to the effects of the trade war filtering through.
• IN THE UK – there was a nervous build-up ahead of the expected announcement of welfare reforms that were supposed to deliver £5bn of cost savings but in the end Starmer had to cave to pressure on the bill to the extent that no cost savings were going to be made. After pointedly refusing to support his embattled chancellor in a torrid Commons performance, he later came out in support of Reeves, saying that she’d be in the position for “a very long time to come”. Given the fiscal hole left by this lack of cost savings, speculation increased about which taxes would be increased in the autumn Budget to make up for it.

IN COMMODITIES…

• IN SILVER – we’ve seen that this shiny metal is also having a decent run as well as gold as more investors see it as a safe haven asset in a world of Trump-driven uncertainty and wars. Its use in a growing number of industrial applications means it is becoming a double-play on being a safe haven asset and a reflection of growth sectors.

IN ENERGY NEWS…

• IN RENEWABLES – the newly-passed BBB is going to punish a lot of clean energy companies that used too many Chinese components.

IN CURRENCY NEWS…

• THE DOLLAR – the greenback has had its worst H1 performance in over 50 years against a basket of currencies as Trump’s tariffs have prompted a sell-off to the extent that it’s now fallen by its steepest rate in the first six months of the year since 1973!

IN CRYPTO NEWS…

• Since South Korea’s newly-elected president said that he’d allow crypto-backed assets to be backed by the Won, companies that would directly benefit, like Kakao Pay and LG CNS have seen their share prices more than double and rise almost 70% respectively this month. Retail investors have been particularly keen to jump on the stablecoin bandwagon.
• London-listed companies are now increasingly investing in bitcoin as a way to bolster their share prices! They are all trying to copy billionaire Michael Saylor’s company Strategy whose valuation has boomed by almost 400% since August 2020 when it announced that it would plough billions of dollars into bitcoin.

IN MARKETS NEWS…

• Hong Kong’s stock exchange has been outperforming mainland China’s by the biggest margin since 2008! This has been thanks to rising investment flows from the mainland and thirst for tech companies such as Alibaba and Tencent which aren’t listed on the mainland. This has probably helped power the IPO boom as Dealogic numbers say that listings on the Hong Kong Stock Exchange have raised $13bn so far this year which means that it is behind only the NASDAQ and ahead of the New York Stock Exchange’s performance!
• UK bond markets recovered after Reeves’s wobble in the Commons this week. They had been worried that she’d lose her job and that someone new would take over, which would have injected a bit of uncertainty. Starmer eventually voiced support, so everyone calmed down.

IN BUSINESS TRENDS…

• POWER – US energy groups are spending more on building power plants and transmission lines so that they can service the demand from data centres. As if to illustrate the point, Google announced a commitment to buy 200 megawatts of electricity from Commonwealth Fusion Systems’ planned power station in Virginia in the 2030s. In the meantime, smelters (who obviously use a lot of electricity) say that they’re finding it hard to compete with Big Tech companies because they’re willing to pay more for power.
• SENTIMENT – the latest BCC quarterly survey showed that business confidence hasn’t yet recovered from the April tax and wage rises but then the latest services sector PMI showed that output hit a ten-month high thanks to more new orders, so that’s a good sign.

INVESTMENT NEWS/TRENDS…

• M&A – Home Depot agreed a $5.5bn deal to buy building products distributor GMS. It’ll become part of Home Depot’s SRS Distribution subsidiary. Is this a sign of more M&A to come??
• IPO – aptly-named GrabAGun announced plans for a flotation on the NYSE in a few weeks’ time. It’s going to do this via a SPAC-backed merger. The “Amazon of Guns” even has a finance option called “Shoot now, pay later” 🙄.

FINANCIALS NEWS…

• BANKS – US banks announced dividends and share buybacks after they passed the Fed’s annual stress tests that judge their ability to withstand potential economic and market crises. These tests were the first ones since the Fed loosened the severity of its testing scenario. In Europe, Santander announced that it would buy TSB for £2.65bn and this is likely to mean branch closures because of overlaps between TSB and Santander branches.
• PERSONAL FINANCES – the UK launched its biggest financial advice shake-up in over a decade to help British savers get access to “targeted support”. The FCA reckons that around 7 million British adults have over £10,000 in cash savings and no investments and that 13.5m to 30.6m could benefit from such support. The new guidance means that firms will be able to offer more detailed guidance with less red tape. Better AI could also help to provide more tailored advice at a cheaper cost

IN EMPLOYMENT TRENDS…

• Pay rates for experienced US lawyers – and the teams of associates they bring with them – are skyrocketing and it’s interesting to see that lawyers who rebelled against their big firms for bending the knee to Trump are now forming their own firms. You’d think that, at some stage, they will consolidate…
• UK grad job openings are now at their lowest level since 2018 as nervous employers hold off on hiring and cut costs by using AI.

IN CONSUMER TRENDS…

• Grocery prices rose at their fastest pace for more than a year in the four weeks to June 15th, which is probably one reason why shoppers are buying fewer groceries, although the surge in weight-loss drug use is also contributing to this because it’s believed that those who take them eat up to 30% fewer calories. Bad news for companies, such as Nestlé, who make naughty snacks.

IN RETAIL NEWS…

• IN SUPERMARKETS – Sainsbury’s has done well from strong sales of summer goods, Waitrose posted its best sales in three years but probably benefited from M&S’s hacking woes while Asda continues to slide into oblivion.
• Further down the high street, Halfords announced a loss after its restructure and higher wage bills.
• Boots announced strong quarterly sales in its 17th consecutive quarter of growing market share. This will be useful in the event of a potential spin-off by its parent company, which has just been bought by PE firm Sycamore Partners.
• IN APPAREL – H&M announced sluggish half year results thanks to a tricky US market. The CEO said that US customers had become very price-sensitive and that competitors are already cutting prices.

IN CONSUMER GOODS NEWS…

• Nike shares boomed by 10% on the belief (not the reality!) of a turnaround under the returning CEO Elliott Hill. The company had its worst quarterly earnings in over three years, so presumably investors reckon the only way is up from here!
• Unilever paid a whopping $1.5bn to buy men’s grooming brand Dr Squatch from PE firm Summit Partners. Let’s hope hope it does a better job with this brand than it did with Dollar Shave Club, which was so disastrous it had to sell it in 2023.

IN TECH NEWS…

• Amazon announced a big $40bn investment in the UK over the next three years that will include four robotic fulfilment centres and an upgrade of its film studios in Berkshire, all of which will create thousands of jobs.
• Meta won an AI copyright case against a band of authors who objected to Meta using their copyrighted material to train their LLMs. Interestingly, the way the judge handed down the decision would suggest there’s more mileage here for content creators…then we saw Meta’s CTO becoming a a lieutenant colonel in Detachment 201, a unit in the reserves which that US army says will “fuse cutting-edge tech expertise with military innovation”. The unit has taken on some major top bods at Palantir, OpenAI and Thinking Machines Lab. This sounds like a canny move for all concerned!
• Nvidia shares hit a record high on renewed AI optimism, which edged it past Microsoft to become the world’s most valuable company. CEO Jensen Huang is very excited about the “multitrillion-dollar opportunity” of AI and robotics.
• Apple is meeting resistance from carmakers who are accusing it of trying to take over the dashboard with the release of its Apple CarPlay Ultra. Sorry to sound rude but carmakers make notoriously 💩 software that can be expensive and clunky so I saw let them make the cars and let tech companies make the software. Meanwhile, there’s a lot of hope riding on the newly-released F1 movie with Brad Pitt. Could this be the blockbuster that has so far eluded them??

IN SOCIAL MEDIA…

• The US House of Representatives banned WhatsApp on government devices deeming it “a high risk to users”. Is Trump going to use this to put pressure on Zuckerberg to do something for him?? It just seems weird that the administration seems to be attacking a “national champion” for no apparent reason…
• Dating app Bumble just announced plans to cut a third of its staff as part of a broader restructuring of the company. It’s lost a lot of ground since its peak under lockdown as younger people are preferring to meet partners via more “traditional” means.
• Reddit has promised to keep its content human and protect its online communities. It has “20 years of conversation about everything” and has, somewhat ironically then, made money out of it from massive partnerships with Google and OpenAI to train their LLMs on its real-world content.

IN TELECOMS NEWS…

• An electronics company that makes smartphones in California, called Purism, doubted that Trump’s new “T1” phone will be able to be launched in September with equivalent functionality to existing smartphones. We’ll just have to see how this works out…

IN AUTOMOTIVE NEWS…

• Tesla launched a robotaxi service in Austin, Texas, with 10 Model Ys. They had a safety driver on board and charged customers a $4.20 flat fee. This is just the beginning but Tesla wants to expand its service into San Francisco, Los Angeles and San Antonio. It still needs to prove safety though! Meanwhile, we heard that Musk’s #1 “fixer” had quit Tesla. Was he a casualty of Tesla’s slump in form?? There was more bad news, though, as Skoda’s EV sales have now overtaken Tesla in Europe as Musk’s popularity continues to slide while Skoda’s popularity rises. Figures from the European Automobile Manufacturers Association show that this is the fifth month in a row of falling sales for Tesla.
• Xiaomi shares hit a record high as it sold 200,000 of its YU7 SUV within the first three minutes of its release this week! It’s the tech company’s first attempt at an SUV and looks like a cross between Ferrari’s Purosangue and Porsche’s Taycan Cross Turismo – but costs just $35,370!
• British vehicle production fell to its lowest level in May since 1949 thanks, in the most part, to the shock reaction to Trump’s import tariffs. Shipments to the US fell by a whopping 55%. That being said, Aston Martin resumed car exports to the US following the UK-US trade deal, so maybe things will improve…

ELSEWHERE…

• The future of air taxis is looking shakier as companies got lukewarm on their prospects while manufacturing costs continue to rise…Joby Aviation, Archer Aviation, Wisk Aero, Beta Technologies and EHang are still in the game – along with British player Vertical Aerospace – and they might get a boost from Trump, who seems to be more positively disposed to them.

• There are some real risks in air travel at the moment in the Middle East given current hostilities. Planes can potentially lose GPS connections, go off course and collide because of jamming technology that’s being used between the warring parties. Talking of which, it seems we’re still no nearer to learning the cause of the Air India crash. They must be getting desperate because the Indian investigation team is now looking at sending the black box to the US National Transportation Safety Board…
• The US audit regulator has fined the Dutch arms of Deloitte, PwC and EY a total of $8.5m because “hundreds” of their naughty accountants cheated on internal training exams – including, ironically, ethics tests! KPMG already got fined $25m last year for the same kind of thing. I thought that accountants were supposed to be honest!!!

My fave video from this week was, of course, the one with the nonchalantly-cool skate-boarding dog! How brilliant is this?!?