Watson’s Weekly 08-11-2025

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 hinted that Russia might start nuclear weapons tests in response to Trump’s rhetoric last week where he asked his defence department Department of War to start testing again.

IN TRADE NEWS…

• China showed signs of easing the semiconductor export ban on Nexperia after carmakers around the world expressed concern about the restrictions clogging up supply chains. 80% of Nexperia’s finished products are processed in China.
• The US is allowing Microsoft to ship Nvidia chips for use in the UAE for the first time, months after Trump had struck an original deal in May. Microsoft now plans to boost its UAE investment from $7.3bn over the last three years to over $7.9bn for the 2026 to 2029 period, $5.5bn of which will go towards AI and cloud infrastructure capex.

IN MARKETS…

• It was a bit of a rollercoaster this week! US stocks boomed on AI hype, falling interest rates and Trump’s reining in of his trade war – then they fell as investors got tech valuation jitters, rebounded again on stronger-than-expected US jobs data and then fell again into the end of the week.

IN TRUMP THINGS…

• The White House struck a deal with Eli Lilly and Novo Nordisk to cut prices for their obesity drugs to offer on the TrumpRx platform. This will get them a three-year exemption from potential Trump tariffs and so  can rely on higher volume to make the lower prices work.
• The US Supreme Court justices initially expressed scepticism about the legality of Trump using the IEEPA to back his global tariffs. A group of American businesses and 12 US states got together to bring the case, saying that they’d been hit by Trump’s tariffs.
• Trump had a tough week because his Republican party got trounced in elections, including the high profile mayoral election in New York which Zohran Mamdani won. He tried to brush off the election losses but it seems that people are getting increasingly disgruntled about higher prices, squeezed household budgets and – particularly for public sector workers, job uncertainty – particularly given that Trump’s building a $300m ballroom at the White House!

IN INDIVIDUAL COUNTRY NEWS…

• IN THE US – the government shutdown continued into unchartered territory, equalling the longest one since 2018-19. It’s left hundreds of thousands of public sector workers without pay, services have been closed and the supply of food stamps has been disrupted for 40m people. 40 major US airports have had to cut flight traffic by about 10% from Friday.
• IN CANADA – PM Mark Carney pledged C$141bn to help offset the effects of Trump’s tariffs as he unveiled his maiden budget this week. There will be increases in spending on defence and infrastructure that will at least be partially paid for by cuts to the public sector.
• IN GERMANY – Chancellor Merz supported proposed protectionist measures suggested by the EU Commission to safeguard the country’s troubled steel industry from cheap Chinese imports. This is a major about-turn as he’s been very vocal in the past about the sanctity of free trade!
• THE NETHERLANDS – the country lurched back to more centrist politics this week as the liberal D66 party won a lot of votes. No parties want to work with the far-right Freedom Party so it’s a question of who’s going to form the coalition. The EU will no doubt be relieved by this result!
• IN THE UK – the Bank of England held interest rates steady at 4% but the governor left the door open for a cut after the Budget. Talking of which, there was ongoing speculation as to what would be included and what wouldn’t! There’s a lot of talk about those “with the broadest shoulders” taking most of the strain and that included chat about expensive homes being included in higher bands of council tax, an exit tax for people leaving the UK, targeting pensions etc. There was also talk about targeting EV drivers with a new per-mile charge (which EV makers pushed back on) and PM Starmer didn’t do anything to dampen expectations of income tax rises. In the meantime, M&S’s boss warned that the chancellor is scaring consumers into not spending and not doing enough to encourage growth. Oxford Economics published research showing that the UK’s national debt has grown at the fastest rate of any advanced economy over the last 20 years and the BCC observed that smaller companies are struggling to benefit from recent trade deals. On the plus side, UK services activity ticked up in October as customer demand remained resilient in the face of all the Budget uncertainty!

IN COMMODITIES NEWS…

• IN OIL – OPEC+ decided to pause oil output rises next year after repeated warnings of a surplus. Production will still increase in December but additional rises will be suspended from Q1 next year. Swiss trader Gunvor dropped its $22bn bid for Lukoil assets after the US moved to block a deal “as long as Putin continues the senseless killings” in Ukraine.
• IN GAS – ExxonMobil led a deal with Energean and HelleniQ Energy that will involve drilling in the Ionian Sea about 30km west of Corfu with a view to potentially begin by the end of 2026. ExxonMobil will have a 60% stake in the venture and operate it if the tests look good. This is the first gas exploration deal between the US and Greece for 40 years!

IN ENERGY…

• IN WIND – Danish wind power developer Ørsted is selling a 50% equity stake in the Hornsea 3 offshore wind farm off the east coast of Yorkshire to Apollo in a deal worth $6.5bn. At least with this in place it’s more likely to get finished!
• IN SOLAR – Solar power producer Pine Gate Renewables filed for Chapter 11 bankruptcy. Its lenders will buy its assets, independent power producer platform and its development pipeline. Trump’s distaste for renewables continues to have repercussions…

IN CRYPTO NEWS…

• Citadel Securities and Fortress, along with other investors, injected $500m into Ripple, giving the stablecoin company an implied valuation of $40bn. This is just another example of how crypto continues to make its way into “mainstream” finance.

IN INVESTMENT NEWS…

• IN IPOs – the Princes lacklustre IPO at the end of last week contrasted with the more robust performance of Shawbrook a few days previously. Not all flotations are absolute bangers even in the US (travel tech group Navan lost 20% on its market debut last week on the NASDAQ) but if you’ve got momentum, you can afford the odd flop. When your pipeline’s as poor as London’s, every flotation counts and affects sentiment.
• IN M&A – Kimberley-Clark struck a $40bn deal to buy Kenvue to create a health-and-wellness company behemoth. It’s not universally popular with investors because Kenvue could potentially get caught up with problems given Trump’s recent baseless comments on Tylenol. SM Energy and Civitas Resources announced a merger to create a $13bn Permian Basin-focused driller in an all-stock deal. The new entity will be called SM Energy. Meanwhile, Starbucks sold a 60% stake in its China business to Boyu Capital, which has a reputation for turning around global brands in the Chinese market.

IN FINANCIALS NEWS…

IN BANKS – US bank deals are flourishing. Almost 150 bank mergers worth about $45bn have closed so far this year, but given that there are over 4,000 regional banks there’s clearly more to go! Trump’s “light-touch” style of regulation is certainly helping!

IN OTHER FINANCIALS – London Quant trading funds are really getting a reputation and companies such as XTX, Qube and Quadrature are closing the gap with quant funds in New York. Meanwhile, it looks like there are plans afoot to launch a SPAC, codenamed “Project Mayflower” on the LSE with a view to buying a business worth somewhere between $2bn and $5bn.

IN CONSUMER TRENDS…

• IN THE US – the effect of Trump’s policies continue to filter through. The future of EV battery factories looks uncertain, ICE’s crackdown on immigrant workers is causing unease and Trump’s approval rating appears to be slipping. There have been stories about his policies resulting in empty shelves and a rising rate of car payment defaults but Visa figures last week showed that consumers were still spending. Overall, this suggests to me that the haves are doing quite well but the have-nots aren’t.
• IN THE UK – Research from MoneySuperMarket shows that UK consumers have been making deep cuts to discretionary spending over the last year in response to the rising cost of living. Everyone’s really just waiting it out for the Budget…
• IN PROPERTY-RELATED NEWS – Miami realtors are talking up the chances of New York millionaires fleeing Mamdani’s regime and settling in “The Magic City”. It hasn’t really resulted in a deluge so far. Back in the UK, Savills halved its forecast for house price growth in 2026 given Budget uncertainty and interest rate prospects. That being said, it turns out that HSBC is offering 6.5x salary mortgages to Premier account holders but student landlords are suffering because of the fall in Chinese student numbers.

IN RETAIL NEWS…

• IN SUPERMARKETS – Sainsbury’s upgraded its profit forecasts for the full year but it did say that it was worried about the consumer sentiment-dampening effect the Budget would have, so it is launching Black Friday deals earlier than usual this year. Asda sold Leon back to its original co-founder just four years after they bought it in 2021 for £100m. The Issa Brothers really should have stuck to owning garages via their EG Group as they managed to destroy both Asda and Leon!
• IN APPAREL – Associated British Food, mooted the idea of spinning off its apparel retail business, Primark, to become a separate quoted entity on the LSE. Initial investor reaction was pretty underwhelming, but I think it would be much better for the long run as both companies would have purer investment stories. France is looking to ban Shein after a controversy involving the company’s website appearing to sell childlike sex dolls and a large number of weapons.
• ELSEWHERE – John Lewis is testing out a new VIP area at its flagship London store for loyalty card holders. It’ll go until Christmas upon which time the retailer will decide whether to roll it out or not. Meanwhile, luxury tile retailer Fired Earth has fallen into administration and shut all of its high street stores.

IN CONSUMER GOODS NEWS…

• Diageo cut sales and profit forecasts for the year on sluggish demand in the US and China. It’s still looking for a CEO to sort out the mess.
• Monster Beverage reported big sales in the latest quarter thanks to higher demand for energy drinks. One of the reasons behind this is thought to be because they’re a cheaper way to get a caffeine fix at the moment!

IN LEISURE NEWS…

• IN AIRLINES – Ryanair saw a 40% profit boost thanks to Europeans’ reluctance to fly to the US. The company predicted that more people will continue to holiday in Europe and increased its passenger forecast for the year.
• IN HOSPITALITY – Airbnb sales were up by 10% and travellers are now booking vacations further in advance, which is good for visibility purposes and implies that consumers are more confident.
• IN RESTAURANTS – Yum Brands is considering the options for its Pizza Hut business. It recently bought out the UK operation. Elsewhere, McDonald’s bucked the gloom in the fast food sector by having a decent Q3 thanks to new promotions and menu items.

IN AI NEWS…

• Nvidia’s Jensen Huang reckons that China “will win” the AI race with the US because of lower energy costs and looser regulation.
• AI is helping tech companies like Meta and Google take more control of the ad market by improving ad targeting. This runs counter to expectations of an advertising slowdown resulting from tariff wars and increasingly budget-conscious consumers. What a contrast to the fortunes of the trad ad agency WPP – which having a ‘mare at the moment. ITV’s also seeing a big drop in ad revenue in the run-up to Christmas, which isn’t great…
• IN DEALS – OpenAI struck a $38bn computing deal with Amazon Web Services where OpenAI will commit to make use of AWS infrastructure for seven years to run its products. This will tie OpenAI closer to Amazon, which has already invested $8bn in rival AI group Anthropic. It also makes OpenAI slightly less dependent on Microsoft. Snap’s share price jumped by about 24% following the announcement by Snap that Perplexity AI’s search engine will pay $400m for one year to feature prominently in the Snapchat app starting in 2026. Snap also announced a strong Q3 performance.
• IN USAGE – scientists have discovered that structural heart problems by using an AI tool to interpret data from Apple’s smartwatch. This could be a real game-changer in terms of early heart disease diagnosis. Elsewhere, a team led by Nobel Peace-winning scientist David Baker used an AI tool to create new antibodies that could accelerate drug development! The generative AI model can be used to develop completely new antibodies from scratch! Meanwhile, a study by Lloyds Banking Group showed that financial advice is the most commonly cited reason for using AI – at 56% of respondents! They are still doing so with some trepidation, though, as 80% of respondents said that they are concerned about getting inaccurate information and 83% worried about data privacy.

IN CHIPS NEWS…

• Chinese owners of Lincoln-based Dynex Semiconductor have shifted production of IGBT chips, which are used to control high power loads in electric trains and cars, to China because they have been blacklisted by the US government. Concerns are building that a potential hollowing out of Chinese-owned British tech companies as China reshores production.
• AMD posted much higher profits and sales over the quarter as the company dived deeper into AI data centres and benefited from rising sales of PC processors.
• Qualcomm announced a Q4 loss thanks to a tax-related charge but it actually saw a 10% increase in sales, so it sounds like there are better times ahead.

IN SOFTWARE NEWS…

• Palantir announced yet another very strong performance with revenues hitting record levels thanks to a surge in new customers. Its share price has more than doubled so far this year thanks to the huge boost it’s had from executing government contracts and it raised its full year guidance! There’s a lot of talk about the company being way overvalued, though!

IN HARDWARE NEWS…

• Nintendo raised its Switch 2 sales forecasts and earnings guidance for the full year as its latest device proves to be popular.
• Quantinuum, one of the biggest players in quantum computing, unveiled its latest computer this week, called the Helios. Everyone’s getting very excited about quantum computing but no-one seems to quite know what its practical uses are going to be!

IN SOCIAL MEDIA NEWS…

• Elon Musk launched “Grokipedia” this week. He described it as “an open source, comprehensive collection of all knowledge”. It’s AI powered and not “woke”. It’s also not very good at the moment…

IN AUTOMOTIVE TRENDS…

• IN TRAD CAR NEWS – European car makers are saying that they will boost investment in Europe significantly if Brussels relaxes its 2035 deadline to ban petrol engines. They say that Europe’s car market will shrink further if the industry is forced to sell just EVs. The European Commission is due to review the 2035 ban in December. Elsewhere, we heard that Ford is considering scrapping the electric version of its F-150 truck and Ferrari tried to reassure investors that “we do not see any weakening in our pricing power” and raised forecasts for the full year.
• IN EV NEWS – Elon Musk’s proposed $1tn pay package was voted through successfully. There was a lot of comment about this in the build up but I don’t think it was ever in doubt!
• IN DRIVERLESS – the share prices of two of China’s biggest robotaxi start-ups, Pony.ai and WeRide tanked by up to 15% when they listed in Hong Kong this week. There were concerns about profitability given what a competitive market it’s going to be. Baidu’s Apollo Go and Xpeng are both planning on launching three new robotaxi models next year at cheaper price points than Pony.ai!

IN PHARMACEUTICALS NEWS…

• AstraZeneca won shareholder approval to get a New York listing. Given that the company makes almost 50% of its revenues in the US and Trump’s ongoing pressure for pharma companies to move production there or face massive tariffs, this is unsurprising. It will still retain its primary listing in London, remain in the FTSE100 and have its HQ in the UK, so it’s not a complete retrenchment.
• Pfizer filed a lawsuit to block Novo Nordisk’s late bid for Metsera and later matched Novo Nordisk’s higher bid.

IN SERVICES NEWS…

• Uber’s profit fell short of expectations for Q3 but that was largely thanks to a hefty one-off legal charge of almost $500m relating to tax probes. Q4 bookings are looking good currently…
• PwC cut headcount in marketing, HR and other support functions in the US as part of a business overhaul and KPMG announced that it would cut overtime pay for junior auditors in the UK as part of broader cost cutting measures. Data from the Institute of Student Employers highlighted the fact that the gap between the lowest graduate salaries and the minimum wage is narrowing. Some chief execs are worried this will lead to recruitment problems – but I guess if they are that concerned they should just pay them more!

My fave video this week was the one that I wish was true and not AI-generated! Do you think it’s AI-generated??