Watson’s Weekly 07-06-2025

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 DEFENCE NEWS…

• The UK is set to support a NATO push for members to spend 3.5% of GDP on defence but our government has only thus far committed to spend 2.5% of GDP on defence by 2027 from the current 2.3%! The Strategic Defence Review published this week said we need to spend £68bn to modernise our military.
• The UK government said that we’re going to build up to 12 attack submarines as we move towards a war-ready footing.

IN TRADE…

• China got shirty with the US earlier in the week for “severely violating” the current trade truce but towards the end of the week, Trump and Xi agreed to hold a new round of talks.
• The EU tried to persuade China to relax its rules on rare earth exports as it could severely restrict the bloc’s car manufacturing industry. It’s got some stockpiles but they are not going to last forever. This is going to be tricky because on the one hand, it wants to slap taxes on Chinese carmakers but on the other it needs China’s rare earths.

IN TARIFF NEWS…

• Trump signed another executive order this week that will double existing 25% levies on steel and aluminium imports to stop foreign producers from dumping cheap product on the market. He announced an exception for the UK though, in order “to allow for the implementation of the US-UK Economic Prosperity Deal” which could potentially see that 25% go to zero.
• Meanwhile, the EU has been seeing a major surge in steel imports that had originally destined for the US. Europe’s steel industry is calling for Brussels to take swift action to stem the flood.
• Elon Musk sparked off a bit of a fight as he dismissed Trump’s “big, beautiful bill” as “a disgusting abomination”, the Congressional Budget Office estimated that the bill would increase debt by a whopping $2.4tn and Trump then branded Musk as “crazy”, threatening to cancel his government contracts as he threw his toys out of the pram for Musk slagging it off.

IN INDIVIDUAL COUNTRY NEWS…

• IN THE US – Trump demanded interest rate cuts from Fed chief, the excuse being that there was a slowdown in hiring and that the ECB has already made a ton of cuts (the implication being that the Fed should “follow”) but the fact is everyone’s getting increasingly concerned about the effect of his economic policies. Goldman Sachs’s COO said that the bank has moderated its risk positioning because of the market volatility prompted by Trump’s actions. It also cited concerns about ongoing investor appetite for dollar-denominated assets given that the US debt mountain is highly likely to get even bigger.
• IN ASIA – SOUTH KOREA got a new left-wing president in the election. Lee Jae-myung of the Democratic party secured a clear victory over the People Power Party’s candidate Kim Moon-soo, so hopefully this will bring some stability at a tricky time following a period of uncertainty. INDONESIA announced a $1.5bn stimulus package to spark consumer spending. The idea is to mitigate slowing economic momentum as weakening commodity prices and Trump tariff concerns continue to cast a cloud over the economy.
• IN EUROPE – the ECB decided to cut interest rates by another 0.25 percentage points to 2% as inflation undershot target, IN THE NETHERLANDS, Dutch leader Geert Wilders resigned from his coalition government, potentially setting the stage for an election in September. IN POLAND, nationalist candidate Karol Nawrocki won the presidential election in a closely-fought contest which means that PM Donald Tusk’s reform agenda will be more difficult to push through and that Poland’s standing with the rest of the EU may weaken. IN GERMANY – Chancellor Merz is planning to pass €46bn-worth of corporate tax breaks over the summer in order to get the economy out of its current rut.
• IN THE UK – the ONS admitted overstating April’s inflation figure (it said 3.5% when it should have been 3.4%) in yet another example of their incompetence (their job stats have been dodgy for a while now), the governor of the Bank of England said that the path for interest rates has been made more difficult by Trump’s tariffs, chancellor Reeves is locked in a spending review with government departments but the government has caved to pressure and vowed to reinstate winter fuel payments to pensioners who have been means-tested. Meanwhile, British universities have failed to capitalise on the American university ructions at the moment and have not made a co-ordinated effort to attract affected foreign students, unlike their French counterparts.

IN ENERGY NEWS…

• Europe is moving in favour of nuclear power after years of shying away following the Fukushima disaster of 2011. Last month’s Spanish blackouts highlighted the shortcomings of renewables as a stable energy source. Ralph and I discuss renewables and the future of power in Episode 941 of the podcast 🎙️.
• Meta just signed a 20-year deal to buy output from the Clinton Clean Energy Center nuclear plant in Illinois, highlighting the urgent need for more energy to power AI development. Other Big Tech companies have also signed deals with various providers for the same reasons.

IN OIL NEWS…

• OPEC+ announced that its members would boost oil output for the third month in a row, meaning weaker-for-longer prices (although the upside of this is lower ticket prices for airlines).
• Meanwhile Trump is looking to open up oil drilling in Alaska and Canadian PM Mark Carney is looking to work closely with the oil industry, in contrast to the industry’s strained relationship with his predecessor.

IN CRYPTO NEWS…

• IG became the first UK-listed firm to allow the trading of crypto and it will let retail clients trade in digital asset, including bitcoin and ethereum.
• TMGT filed an application to launch a “Truth Social bitcoin ETF” as enthusiasm grows for the asset class.

IN BUSINESS NEWS…

• Big investors are shifting their money away from US markets because of ongoing uncertainties while US manufacturers are saying that Trump’s trade war is directly impacting production.
• British businesses are preparing for WW3 in 2027 (something that Ralph and I discuss in Episode 941 of the podcast 🎙️) as a number of potential geopolitical events could combine to produce dramatic developments. There was mixed news in terms of sentiment as the CBI’s latest “growth indicator” highlighted private sector gloom thanks to rising wage costs and trade concerns while the latest service sector PMI showed that UK service sector confidence hit its highest point in May since before the autumn budget.
• IN IPO NEWS – Circle Internet put in a storming performance on its NYSE debut (it shot up by 168%!) and Anglo American’s $11bn platinum spin-off, Valterra (used to be called “Amplats”) started trading on the LSE (its primary listing is in Jo’burg). On the other hand, opioid addiction treatment drugmaker Indivior decided to abandon its London listing while fintech company Wise announced that it would move its primary listing to New York – although it said it would keep a secondary listing in London. The LSE must be very concerned at the latest exodus…
• IN M&A NEWS – the Vodafone-Three merger has now complete and the new entity will be called VodafoneThree, L’Oréal is on the verge of buying UK skincare company Medik8 in a €1bn deal to augment its offering of premium beauty brands and it looks like biotech M&A activity is increasing as Sanofi is buying Blueprint Medicines for an initial $9.1bn in cash and Bristol-Myers-Squibb paying BioNTech $3.5bn for a 50% stake in a new immunotherapy cancer drug that’s in trials at the moment.

IN EMPLOYMENT TRENDS…

• JP Morgan said it would sack analysts who accept future-dated offers elsewhere within 18 months of beginning their analyst training programmes. This is to stop the private equity hiring trend of skimming off investment banking analysts just after the bank has invested a lot of time and energy training them. There is an ongoing war on talent and it’s getting serious!

IN CONSUMER TRENDS…

• IN THE US – wealthier Americans are shopping at dollar stores as economic concerns filter through to households.
• IN CHINA – Chinese consumers are feeling the pinch but still want to have a good time – which is why an increasing number of unlicensed “homebars” are popping up.
• IN UK PROPERTY – 100% mortgages seem to be making a return and the Bank of England is encouraging lenders to loosen lending rules but UK house prices are on the rise again after a bit of a post-stamp-duty-deadline blip, according to the latest figures from Nationwide.
• IN THE UK MORE GENERALLY – lower income consumers are buying less because of “limited real wage growth”, something that has hit discount retailer B&M and food price inflation, while food prices keep rising.

IN AI NEWS…

• Musk’s xAI had a $300m share sale which was priced at a level that gave it an implied value of $113bn.

IN HARDWARE NEWS…

• Starlink satellites are being considered as a potential solution for the rubbish WiFi on British trains. A six month trial began in Scotland last month.
• Xiaomi is just one of the many Chinese tech firms that will be adversely affected by the recent US chip software ban. Even though Chinese companies are developing their own chips, they still need US software so this will be painful.
• Meta is holding talks with Disney about the provision of exclusive content for a premium VR headset that it’s planning to release next year. The new “Loma” model will be more powerful than the current Meta Quest VR, looks more like a big pair of glasses rather than goggles and will be priced below $1,000.
• Nintendo released its Switch 2 console this week and it was a big hit despite being pretty darn expensive!
• Cyberattacks hit Victoria’s Secret, North Face and Cartier this week. Given the recent spate of cyberattacks against a number of British retailers you would have thought this will prompt many companies to invest more in their digital security.

IN MEDIA NEWS…

• Universal, Warner and Sony are now negotiating AI rights for their music with start-ups and Udio. Music companies are clearly taking a more active role with the use of their output on AI models. I’d expect to see more of this as time goes on!

• BYD is looking at taking on Japan’s “Kei car” segment next year. Sales of these boxy mini-cars make up about 40% of the world’s fourth biggest car market, so there are potentially rich pickings to be had!
• Tesla’s sales continued to drop everywhere in Europe apart from Norway but then its share price had a massive 14% one-day drop after the Trump-Musk spat started to get nasty.
• In the UK, 10% of all new cars sold are now from Chinese makers with SAIC-owned MG being the best-selling brand at the moment. You do wonder how the European makers can respond to this!!!

• BlackRock was finally removed from the Texas state investment fund blacklist three years after first being put on it. It made the list initially because of its pro-environmental policies, which Texas took exception to given how important the oil industry is in the state. The state can now take BlackRock’s advice, invest in its funds etc.
• Wells Fargo saw its $2tn asset cap, that was imposed in 2018, lifted. It was initially imposed as punishment for the opening of millions of unauthorised customer accounts.
• Monzo announced strong profits mainly thanks to a decent performance in its business banking division. This prompted some speculation of an IPO, but that was dismissed by the CEO (which probably means they are definitely thinking about it 😁).

• AstraZeneca announced promising results for a breast cancer drug that could stop mutating tumours dead in their tracks before they start growing. This could be an important part of the company’s aim to become the “number one cancer company globally” by sales.
• Wizz Air saw its share price drop by a whopping 25% in trading on news that it was forced to ground dozens of its planes due to engine troubles. The company’s CEO said that the airline was forced to lease 12 aircraft and 40 spare engines to maintain its existing flight schedule, which all pushed up expenses.

There is a very clear winner for me for video of the week – it’s this pair of amazing people on a pull-up bar! They are amazing!!!