Watson’s Weekly 06-12-2025

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…

• Putin rejected a Ukraine peace deal and blamed European countries for being the main obstacle to peace.

IN TRADE…

• The EU is looking at legally enforceable ways to force industries to buy less from China. The EC announced a €3bn strategy to wean itself off dependency on China for critical raw materials as Beijing weaponises its superiority in a number of raw materials. I’m sure the Chinese are not going to like how blatant this is!

IN TRUMP THINGS…

• Trump said that he’ll be announcing the next chief of the Federal Reserve to replace current chief Jerome Powell “early next year”. Powell’s term is supposed to end in May 2026.
• Trump brushed off criticisms about a US affordability crisis as a “con job” and “hoax” as the pressure mounts on his approval rating.
• The Trump administration is looking at loosening federal fuel economy rules for passenger vehicles that will take the pressure off America’s automotive industry to produce cleaner, more fuel-efficient cars. The administration had already neutralised the Corporate Average Fuel Economy rules (CAFE) a few months back by ditching fines for violating them.
• Costco joined a group of companies that it is suing the Trump administration in the US Court of International Trade over the reciprocal tariffs he imposed earlier this year. The Group contends that that the tariffs are illegal and they are pushing for a refund.

IN INDIVIDUAL COUNTRY NEWS…

• IN INDIA – the government backed down in the face of a major backlash one week after it issued an order to manufacturers, including Apple and Samsung, to pre-install a government-developed app that could monitor calls, memory and cameras on devices. Consumers and privacy lobbyists pushed back strongly on this and the government won’t now be making it mandatory.
• IN THE UK – as the dust settled after last week’s Budget, KPMG published its revised UK growth forecasts (they are pretty downbeat on growth and household spending) and the Bank of England outlined things to watch out for in the UK economy for 2026, which included leveraged trading by hedge funds in the gilt repo markets, the rise of private credit and cyber attacks. In addition to this, PM Starmer and the chancellor came under renewed attack for “trapping people” on welfare by giving them a “substantial” incentive to claim sickness benefits to get the most out of the removal of the two-child benefit cap.

IN COMMODITIES NEWS…

• IN OIL – oil trader Trafigura reckons that China’s consumption of road fuels is now weakening to such an extent that India’s oil consumption will grow more quickly than China’s for the first time next year as more people believe that China is reaching “peak oil”. Meanwhile, BP is in advanced talks to sell its lubricants business, Castrol, for $8bn to US infrastructure investment group Stonepeak.
• IN PLATINUM – the metal has already seen its value rise by almost 80% since the beginning of this year, but it’s possible that this could continue because 40% of platinum demand comes from the automotive sector. It’s used in catalytic converters and so the slowing demand may mean that there’s more life in the automotive revenue stream yet!
• IN LITHIUM – Germany is putting hundreds of millions of euros into Europe’s first major lithium mine in a concerted effort to push back againsst China’s stranglehold over lithium supplies.
• IN COPPER – Glencore has cut 1,000 jobs as part of ongoing efforts to streamline its business in its quest to become the biggest copper producer in the world. It wants to almost double its copper output over the next decade. Copper is a key raw material in the green revolution!

IN ENERGY NEWS…

• BP has decided to ditch a proposed hydrogen hub on Teesside because the owners of the site preferred rival plans to build a large AI data centre there. The company’s move away from previous green initiatives continues…

IN CRYPTO NEWS…

• The share price of US cryptocurrency miner American Bitoin dropped by a whopping 38.8% in trading this week on almost 40 times its average daily volume as early investors headed for the exit and cashed out off their stakes. The huge volume traded was no doubt due to the end of the investor lock-up period and recent crypto weakness.
• The share price of bitcoin hoarder Strategy fell again after it launched a $1.44bn US dollar reserve to finance its dividends and cautioned that it could take a massive $5.5bn hit if the price of crypto doesn’t recover this year to somewhere between $85,000 and $110,000. Strategy has funded its bitcoin buying by using a mix of debt and equity products, many of which pay out in dividends. Other bitcoin hoarders will be worried!

IN BUSINESS TRENDS…

• European farmers are facing crisis despite harvests improving this year because commodity prices are down but input costs continue to rise. In the UK, food inflation has been driven by high costs of beef, butter, milk, coffee and cocoa. UK and European farmers are disadvantaged by having higher costs because of the higher environmental and labour standards they have to meet.

IN INVESTMENT NEWS/TRENDS…

• IN MARKETS – UK pension funds have been reducing their exposure to US equities because they’re getting increasingly nervous about how dependent US markets are on the fortunes of the “Magnificent Seven”. The Bank of England added to the concerns by saying that the AI bubble is being fuelled by huge amounts of debt. That being said, FTSE100 gains have also been quite concentrated as they have largely been down to the strong performance of just two sectors – banks and defence. While we’re on the subject of the FTSE100, fallen advertising giant WPP dropped out of the index, to be replaced by British Land, whose fortunes are on the up once more.
• IN IPOs – Anthropic is talking to US west coast law firm Wilson Sonsoni regarding preparations for an IPO that could come as soon as 2026. It has a proper business in the form of its chatbot Claude, which although revenue generative isn’t yet profitable. That being said, although it’s potentially looking at a $350bn valuation, it could well be different by the time it gets to market next year!
• IN CIRCULAR DEALS – OpenAI just bought a stake in Thrive Holdings, a private equity group that was set up by Thrive Capital. Thrive Capital invested over $1bn into OpenAI late last year – and has seen it triple in value since then! The financial details of the deal were not disclosed. OpenAI partners have collectively built up a $100bn debt pile to support its success, with SoftBank, Oracle and CoreWeave alone borrowing at least $30bn to invest in it or help build its data centres. This is either going to work well and ensure everyone’s interests are aligned or the whole lot is going to collapse spectacularly.

IN FINANCIALS NEWS…

• IN BANKS – the Bank of England lowered capital requirements for UK banks after they passed the Bank’s stress tests. This will be the first loosening in regulations since before the 2008 crisis. It will also mean that banks will have more money to play with and invest in order to boost returns. Talking of stress tests, Blackstone, Apollo and KKR have agreed to participate in the Bank of England’s assessment of the resilience of the private credit market. The Bank of England uses stress tests for banks to see how they would fare under different scenarios to see how robust they are but this will be the first time that non-bank lenders will participate. The results of these tests will be published next year. HSBC appointed a new chairman – the one that’s been doing the job on an interim basis since the last one left!
• IN INSURANCE -one of the world’s biggest cyber insurers, Beazley, is walking back from the market as claims rise and prices fall. The company’s chief underwriting officer said that there are more claims and they’re getting more expensive. Increases in ransomware attacks and hacking have been blamed on geopolitical instability. Still, cybersecurity premiums are falling – but that’s because there’s more competition for a finite pool of players.

IN EMPLOYMENT NEWS…

• IN THE US – private employers cut 32,000 jobs in November, according to figures from payroll processor ADP. Companies that were particularly hard hit were those with fewer than 50 employees. This fall in jobs was way worse than market expectations.
• IN THE UK – UK workers will be able to get unlimited compensation for unfair dismissal, potentially from next year if the Employment Rights Bill gets approved in the commons. The current cap is about £118,000 but you have to have had the job for two years before getting the right to fight for that. Workers under the proposed new regime will be eligible for the uncapped compensation from six months. Top consultancies including McKinsey and Boston Consulting Group are freezing grad pay for 2026 as AI threatens the traditional “pyramid” recruitment model. The same model for other professional services firms, including in law, could be under threat from AI because fewer juniors will be needed. This could also herald the end of the billable hour. Talking about the law, many big law firms are upping the perks to attract and keep employees.

IN CONSUMER TRENDS…

• IN THE US – 22m Americans could be facing a healthcare cost crisis at the end of this year as health insurance premiums for plans under the Affordable Care Act – or Obamacare – will skyrocket if their tax credits expire on December 31st as expected. One person cited in the article is currently paying $400 a month but this will jump to $1,965 – a near-400% increase – if he renews his plan! This is yet another headache for people as they struggle with the cost of living. American consumers are also becoming more price resistant to new cars and Gen Z shoppers are reining in expenses. Dollar stores are doing really well – and attracting more affluent shoppers who are “downgrading” – as Mastercard data highlighted that the differences between the wealthy and the not-so-well-off continues to widen.
• IN EUROPE – the Swiss rejected the proposal to introduce a wealth tax of 50% on all transfers of money or assets above 50m Swiss francs (£47m). It had been proposed to fund measures to address climate change.
• IN THE UK – HENRYs will be taking advantage of tax efficiencies following last week’s Budget changes that won’t come into force for a few years yet. They might not be buying ham this Christmas, though, because an outbreak of African swine fever in Spain will squeeze supplies as a temporary ban has been put in place.

IN TECH NEWS…

• IN AI – OpenAI’s position at the cutting edge of AI is being put under pressure as the likes of Google and Anthropic have been closing the gap. Sam Altman has issued a “code red” to motivate staff to make advances that will ensure ChatGPT doesn’t lose its lead.
• Talking of rivals making advances, Mistral unveiled some new “open” AI models in its bid to push the technology forward. It claimed yesterday that its latest LLM, Mistral Large 3, was one of the world’s leading multimodal and multi-lingual open-weight models. HSBC signed a deal with Mistral that will grant it access to Mistral’s models that can be used by staff across the bank for a range of things including financial analysis and translation. Financial details weren’t disclosed. Meanwhile, German AI start-up Black Forest Labs is emerging as one of the world’s foremost developers of AI image generation. It effectively tripled its valuation to $3.25bn in its latest funding round in just 15 months! During that time, it has struck deals and partnerships with the likes of Meta, Adobe and Canva.
• Lloyds Banking Group’s CEO suggested that blockchain and AI could be used in combination to transform the buying and selling of houses. Charlie Nunn asserts that mortgages, conveyancing, document sharing, value exchange and the payments process could all be built into a smart contract without the need of a broker.
• IN HARDWARE – Samsung’s launching a new triple-folding smartphone called the Galaxy Z TriFold which is scheduled to hit the US market in Q1 of 2026 after going on sale in South Korea and some other countries this month. Samsung has offered foldable phones since 2019 while Apple is planning on launching its first folding phone towards the end of next year!
• Apple appointed a new head of AI who was poached from Microsoft. This is a key appointment given how AI could be Apple’s most important driver in the future post-Tim-Cook era.
• IN SOFTWARE – Trustpilot was accused by American research firm Grizzly Research of engaging in “mafia-style extortion campaigns” against businesses to force them to sign up to its services. Trustpilot’s share price hit a two-year low yesterday as a result of this revelation but rejected the claims. This was very damaging for the share price.

IN SOCIAL MEDIA NEWS…

• Meta poached senior Apple designer Alan Dye to spearhead Meta’s new design studio where he will oversee design, software and AI integration across all products. Meta is also considering plans to cut back on metaverse efforts next year by up to 30% as it shifts focus to AI.
• Goldman Sachs analysts reckon that the influencer economy will be worth just short of $500bn by 2027. The beauty of this sector is that influencers often need no – or very little – start-up capex, which means that influencers can become profitable right from the off. It seems that the job of in-house corporate social media influencer is getting more common as companies realise the value they can get from employees who are digital natives.

IN RETAIL NEWS…

• Shop price inflation has been kept under control thanks to retailers launching Black Friday offers earlier than usual this year, according to the latest BRC-NIQ numbers. Even food inflation eased off.
• Zara owner Inditex posted strong November sales, impressing investors who took the share price 9% higher on the news. Its supplier network and efficient design-to-shelf process continues to put it ahead of competitors including H&M.

IN LEISURE NEWS…

• IN AIRLINES – there was chaos at the beginning of the week as Airbus had to issue urgent software updates to its A320 jets, necessitating the grounding of planes around the world for a lot of airlines which caused widespread delays. Airbus then found problems with some fuselage panels but this probably won’t be as disruptive. Meanwhile, EasyJet’s profits hit targets two years ahead of schedule as it continues to benefit from providing its new premium options in its package holiday business.
• IN RESTAURANTS – Posh bakery Gail’s announced a strong performance and plans to open 40 more outlets.
• IN THEME PARKS – Merlin Entertainment announced plans for the world’s first Lego Harry Potter land along with accommodation at its Legoland resort in southern Bavaria. Merlin has 11 Legoland resorts.

• IN EV-RELATED NEWS – the European Commission is planning to force rental and company car markets to adopt EVs by 2030 which some executives have described as a “backdoor ban” on petrol cars. It’s expected that this will coincide with plans by Brussels to relax the 2035 ban on the internal combustion engine on December 10th. Funnily enough, Volvo and Polestar (who are heavily invested in EVs) are very much against pushing back the 2035 ban.
• Research from Electrifying.com said that the new pay-per-mile tax that will be brought in following the Budget could make petrol cars cheaper to run if you’re an EV owner who has to rely on public chargers. The proposed levy is due to start in 2028.
• The latest figures from the SMMT showed that demand for EVs in the UK grew at their slowest pace for two years in November thanks to Budget worries.
• Tesla broke sales records in Norway as buyers rushed to dealers before a planned increase in EV taxes from January. That being said, Tesla’s overall market share on the continent fell to 1.6% between January and October, down from 2.4% in the same period last year.
• Ford EV sales collapsed by a whopping 61% last month while hybrid sales were up by 14% over the same time period. The company is currently debating whether or not to scrap production of its electric pick-up truck, the F-150 Lighting.
• The guy responsible for Jaguar’s disastrous re-brand last year got booted just days after the new CEO started work.
• Zipcar, the world’s biggest car-sharing company, is going to shut down its UK operation at the end of this year. Car sharing clubs just haven’t really taken off in the UK as much as in other countries such as Germany and Switzerland.
• IN PHARMACEUTICALS – a new transatlantic agreement has been made whereby the UK has agreed to pay 25% more for new medicines by 2035, something that could cost an additional £3bn a year. Critics say that ministers just caved to Trump’s demands but, to be fair, the the formula used to judge whether drugs are value for money or not hasn’t been changed since it was introduced in 1999! This means that UK-made drugs exported to the US will NOT now incur the 100% tariffs threatened by Trump on drugs made outside America (for the next three years, anyway).
• IN REAL ESTATE – HS2 is going to be selling off loads of surplus land as part of an effort to make a dent in the project’s £100bn bill. It’s thought that there is over 100 acres of land that is now surplus to requirements that will go on sale. Meanwhile, the latest construction PMI showed that the UK construction sector had its steepest slowdown in activity since the first Covid lockdown in May 2020, with the only other time it being this bad being just before the financial crisis! This has been down to builders scaling back on residential projects over the last year against a backdrop of a fragile housing market and rising construction costs in terms of both materials and labour. In residential property, perhaps all is not as it seems as a first-time buyers are still spending a huge proportion of their wages on mortgage repayments – at levels that are generally associated with what people pay during a housing bubble and they are not improving. In fact, if interest rates fall next year, house prices might go up again. If more people buy with a high loan-to-income ratio, the danger of default increases

I’m so sorry but my favourite video this week was the one with Arnold belting out Careless Whisper. I just can’t help it. This will go in my collection of videos I play when I feel I need a bit of cheering up along with Stiffler’s dance-off, Chicken Attack and the croissant video. As I’ve said before, I think it’s good to have some silliness in our lives from time to time!