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...
We see war developments in Iran, Ukraine and now Lebanon as repercussions continue and the UK faces the possibility of stagflation
IN WAR NEWS…
IN THE IRAN WAR…
The US and Iran agreed a two-week ceasefire just before the Trump-threatening-to-kill-a-whole-civilisation deadline hit. There are doubts as to whether this is going to hold, particularly as Israel is going off and doing its own thing…in the meantime, Iran struck Kuwait’s oil infrastructure, inflicting “severe material damage” and hit Saudi Arabia’s key east-west oil pipeline. Iran is demanding tolls for ships passing through the Strait, which isn’t going down well with Trump and the Gulf states.
IN THE UKRAINE WAR…
Ukraine’s drones have been busy attacking Russia’s energy export facilities, hampering Russia’s ability to fully benefit from current high oil prices. The two facilities that were attacked account for over 40% of Russia’s seaborne crude export capacity.
IN LEBANON…
Israel vowed to continue its war on Hezbollah despite the Iran ceasefire and subsequently launched a major attack hitting 100 targets in less than 10 minutes causing massive destruction and loss of life.
IRAN WAR IMPACT…
ON OIL – the chief of the IEA reckons that the impact of this war will be worse than the previous crises of 1973, 1979 and 2022 combined. He added that countries who will suffer most from higher oil and gas prices as well as inflation are developing nations.
Oil prices plunged and stocks climbed on news of the ceasefire, but that can change very quickly!
Exxon put a figure on the impact of the Iran war on Q1 earnings but even if this situation is resolved right now, it is likely to take months for things to get back to some semblance of normality.
The latest research from Kpler shows that US oil exports are on track to hit new highs thanks to strong demand from Asian customers. North sea oil prices also hit new highs thanks to a scramble in demand from European and Asian refineries.
ON SHIPPING – there was scepticism about whether the ceasefire would have any real effect and it turns out that shipowners are still reluctant to travel through the Strait of Hormuz and the chief of ADNOC said that the waterway was still effectively closed. There’s talk of ways of bypassing the Strait, but it’ll take ages, be really expensive and could fall flat if oil use falls over time, as it’s supposed to.
ON INVESTMENT – hedge funds have been building up a record number of short positions in European stocks and British retail investors sold down their holdings in equity funds in March – the worst outflow since November, which saw them sell out ahead of the Budget.
Turkey’s central bank has either loaned out or sold out of $20bn worth of gold bullion since the outbreak of the war in Iran, an outflow that accelerated into the end of March. Some commentators are saying that central banks have been selling down stocks in order to boost their currencies.
ON EXPATS – Official data shows that 10-15% of the pre-war long-term population of British residents in the UAE have left the country since the Iran war. At least some of them have been heading to Milan because “Italy has the best benefits: a flat tax and good quality of life”. As things stand currently, foreign residents can pay €300,000 a year on all overseas income.
ON TRAVEL – flight cancellations are going to get more prevalent, particularly in the UK domestic market, as smaller airlines face jet fuel prices that have risen by over 130% since the same time last year. This could even threaten the existence of smaller regional airports like Newquay.
Delta is cutting flights in the US and raising charges as it, like other US airlines, does not hedge fuel costs.
IN DEFENCE NEWS…
Britain has a defence spending bottleneck problem because Starmer’s made promises but the reality is that spending isn’t being unleashed. The good news is that, according to EY research, the UK economy could benefit from the increase in defence spending to the tune of £30bn a year…
There’s still talk about car/car parts makers potentially raking in the money from pivoting to making defence equipment. Germany’s oldest engine maker, Deutz, has done precisely this – and given the onslaught of superior Chinese EV offerings, I think that everyone’s going to have to at least consider this option.
IN TRUMP THINGS…
The ceasefire seems to be dividing the MAGA faithful into those who don’t believe Trump’s side quest aligns with America First values and those who are disappointed that he’s not following through on his threats.
In the meantime, Trump and Vance have showed their support to fellow dictator Orbán ahead of the Hungarian elections. Rival Péter Magyar is currently ahead in the polls.
IN INDIVIDUAL COUNTRY NEWS…
Vietnam swore in the head of its ruling Communist Party, To Lam, as president. He is the first Vietnamese leader to be elected by the Communist Party leadership to hold the positions of president and party leader at the same time, consolidating his power.
The UK said that it would not let the US military use British bases to attack Iran’s civilian infrastructure and there’s talk that Starmer’s increasing reluctance to follow Trump into the fire might boost his premiership, which has been flagging badly. Meanwhile, worries are growing about the possibility of the UK falling into stagflation as our private sector expanded at the slowest pace for six months while the price of materials used by the private sector increased at the quickest pace since February 2023!
IN ENERGY NEWS…
Solar farms in England, Wales and Scotland generated record levels of renewable energy on Monday and Tuesday this week, overtaking previous highs. Also, the government approved plans for the UK’s biggest solar farm to go ahead in Lincolnshire that is expected to power the equivalent of 180,000 homes per year when it gets to max capacity.
IN BUSINESS & INVESTMENT NEWS...
IN BUSINESS NEWS/TRENDS…
SMEs – this category of businesses is facing some major difficulties as the FSB says that about 7% of SMEs are going to face a doubling in their heating bills while the CBI warns that employment costs are already hitting businesses – and now the new statutory sick pay rules just came into force this week. This is part of the broader roll out of the Employment Rights Act.
PRIVATE EQUITY – the latest data from Dealogic shows that the value of buyouts has dropped by a third over Q1 versus the preceding quarter due to rising concerns about AI’s impact on software businesses and war in the Middle East. Some firms are delaying the signing of any deals to see how things shake out.
PRIVATE CREDIT – some FT research showed that investors tried to pull $20bn from private credit funds over Q1, highlighting the growing strain on what has been a booming asset class.
IN INVESTMENT NEWS/TRENDS…
IPOs – everyone’s getting excited about the flotation of SpaceX and there are rumours – even before its IPO – that Tesla will merge with SpaceX. If this did happen, I would have thought it’ll happen after SpaceX’s flotation.
The Uzbekistan National Investment Fund announced this week that it’s looking to list in London and Tashkent by mid-May to give international investors the chance to get exposure to Uzbekistan’s economy. This could be great for LSEG’s pipeline.
M&A – Bill Ackman’s Pershing Square hedge fund has offered to buy Universal Music Group in a cash and shares deal worth €55bn.
Unilever bought US vitamin gummies brand Grüns as part of its plans to push further into wellness and beauty. It’s been shopping in the wellness aisle for a while now…
The Lex column made the interesting observation that although the value of M&A deals surged to $1bn over Q1, the number of deals lost momentum – and it’s the number of transactions that could indicate the direction of travel. Surely the Iran war is having/going to have a big impact on the number of deals, don’t you think?
IN CONSUMER, RETAIL & LEISURE NEWS...
IN CONSUMER TRENDS…
The increased take-up of weight-loss drugs is going to result in a rise in divorce rates, according to a study by academics in Sweden. Apparently, people who undergo rapid weight loss are twice as likely to divorce!
Petrol prices are unlikely to fall to pre-war levels any time soon because production has been interrupted and facilities need to be repaired and it’s not easy just to switch on refineries and other facilities.
IN RETAIL NEWS…
The latest figures from the BRC showed that UK retail footfall footfall bounced back in March but the recovery fell short of expectations as concerns surrounding the economic effects of the Iran war started to take hold.
Meanwhile, Lidl has now drawn level with the UK’s fourth biggest supermarket – Morrisons – in terms of market share and has plans to expand by opening 50 UK stores in the year ahead that will create almost 2,000 jobs.
IN CONSUMER GOODS NEWS…
GoPro announced that it would be cutting 23% of its workforce as part of its cost-reduction efforts on the journey back towards profitability. The axe will fall in Q2.
Constellation Brands announced Q4 revenues sliding thanks to falling alcohol consumption. The company said that consumers were being more careful about how they spent their money on alcohol over the last year and were being much more value oriented.
IN LEISURE NEWS…
GAMBLING – Three anonymous accounts on prediction platform Polymarket made $484,000 in profits by betting on the Iran ceasefire just hours before it was announced! Dodgy or just a coincidence? I think that the prediction market really needs to be regulated properly…
RESTAURANTS – the hospitality industry continues to suffer with independents particularly vulnerable to energy price rises because they cannot, like large groups including JD Wetherspoon and Greene King, hedge their energy prices. I mentioned the plight of the SMEs above…
IN TECH NEWS...
IN TECH NEWS…
AI – Meta released a new model – Muse Spark – which it will use across its suite of products. Meta said that Reels, photos and posts are going to be part of the answers – which will also credit the content creators. Spark is a closed model.
Perplexity AI saw its revenues jump by 50% by shifting away from chatbot-style search engines into AI agents that can perform tasks on users’ behalf. It makes money from consumer and enterprise subscriptions.
OpenAI announced that it will put its flagship UK data centre project on indefinite hold because of high energy costs and regulatory uncertainty. The Stargate UK project was originally due to be built in north-east England in Q1 of 2026. Thousands of AI chips were due to be deployed via data centre start-up Nscale.
HACKING – US Treasury Secretary Scott Bessent brought together leaders of the Bank of America, Citigroup, Goldman Sachs, Morgan Stanley and Wells Fargo – in addition to Fed chief Jay Powell – to talk about cybersecurity risks highlighted by the new AI model from Anthropic which revealed a number of vulnerabilities. Anthropic’s model, Claude Mythos Preview, has already uncovered thousands of major vulnerabilities, including in “every major operating system and web browser”, some of which had not been found for decades.
CHIPS – LG Electronics reckons that it will see a Q1 earnings rebound thanks to increasing profitability in its home appliance, TV and vehicle component business and rival Samsung also has a positive outlook thanks to the “unprecedented supercycle” for memory chips from the AI boom.
Still, the AI investment boom could all come crashing down if China decides to blockade Taiwan in the same way that Iran has blockaded the Strait of Hormuz. US Treasury Secretary Scott Bessent said in Davos that “if that island were blockaded, that capacity were destroyed, it would be an economic apocalypse”.
IN AUTOMOTIVE NEWS...
IN EV NEWS…
Sales of used EVs are booming in the US, according to credit bureau Experian, thanks to rising petrol prices – and figures from the SMMT showed that UK drivers bought a record number of EVs last month in response to the spike in petrol prices.
The latest SMMT numbers also showed that Chinese carmakers have managed to double their UK market share of new cars sales in March versus March last year. 15% of new cars in the UK last month were Chinese brands!
IN CHARGING/BATTERY NEWS…
Property consultancy Knight Frank said that the UK will need 62,000 rapid chargers within the next four years, requiring 1,900 acres of land to be dedicated to charging points to meet demand for EV chargers. I’d take this with a massive pinch of salt because I think that better batteries are key to the success of EV take-up rather than expensive charging stations.
The UK government is looking to pour money into a new battery production plant in Somerset as part of its green ambitions. The factory will deliver batteries for Range Rovers and Jaguars from 2028.
IN MISCELLANEOUS NEWS...
IN REAL ESTATE – fears of stagflation, prompted by the effects of the Iran war, are denting confidence in the UK housing market. House prices fell in March as a result.
In commercial property news, JPMorgan got approval to build Canary Wharf’s tallest tower. This is good news for the area, which has seen its reputation dented a bit in the last few years as some long-time tenants have announced plans to move out prompting rumours that it was losing its attraction.
IN BANKS NEWS – the latest CBI survey showed that Britain’s financial services companies reported their strongest recovery in activity since December 1996 but then TheCityUK lobby group said that new rules from Brussels might hold back the ability of banks outside the EU to offer banking services to companies based within it. The new rules are to come into force at the end of this year.