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 the latest Middle East developments, Trump goes all Jesus and Orbán's gone
IN WAR NEWS…
IN THE IRAN WAR…
The week started with stalemate and the president slagging off the Pope and then he decided to do a blockade of the blockade while the IMF warned of impending global recession if the war continued to drag on. Meanwhile, Iranian citizens and businesses continue to suffer under the ongoing internet blackout.
IN THE ISRAEL/LEBANON WAR…
Progress was made as both sides agreed to a 10-day ceasefire and a meeting at the White House.
IMPACT OF THE IRAN WAR…
Wall Street banks had a stellar Q1 thanks to all the market volatility as investors tried to buy low and sell high. They’ll probably benefit from higher-for-longer interest rates as well…
Australia’s petrol stations are starting to run dry as it is a major importer of oil and is suffering acutely from the closure of the Strait of Hormuz. Other countries in the region are also suffering – and it’s going to get worse.
The head of the IEA said that Europe only has six weeks’ supply of jet fuel left thanks to the Iran war – and airlines such as Lufthansa are now cancelling flights.
Medicines UK, the body that represents companies that make 85% of all NHS prescriptions, warned that the NHS could face drug shortages within a few weeks.
IN DEFENCE NEWS…
The Pentagon has already approached automakers including GM and Ford about using their facilities to make munitions and other defence equipment – so it’s not just the Germans who are looking into making this pivot.
Rheinmetall won a €300m order to supply the German military with kamikaze drones. This could increase to €2.39bn over the next seven years. It’s all part of Germany’s plans to spend €550bn on defence over the next four years.
British anti-drone tech start-up Cambridge Aerospace is going to send high-tech interceptor missiles to British Armed Forces and allies in the Gulf to bring down Iranian suicide drones. The company’s tech, called “Skyhammer” has been likened to Israel’s “Iron Dome” missile defence system.
IN TRUMP THINGS…
He was a busy boy this week dishing out the threats and insults. Not only did Trump slag off the Pope, he posted a picture of himself as “Jesus”, threatened to fire Fed chief Jay Powell and to rip up the trade deal that was agreed with Starmer in May. King Charles must really be looking forward to his impending trip stateside…
IN INDIVIDUAL COUNTRY NEWS…
THE US – it looks like JD Vance is toast as he had a disastrous trip abroad. He went to Hungary to support Orbán’s bid for re-election (he promptly lost the election by a large margin) and tried to conduct peace talks in Islamabad with Iran (which failed). Maybe Marco Rubio will leapfrog Vance in the Trump pecking order.
CHINA – exports rose in March but not by as much as the market was expecting. On the other hand, Q1 GDP outperformed market expectations thanks to exports, high-tech manufacturing and fiscal stimulus.
HUNGARY – PM Viktor Orbán lost the election after 16 years in office. The new PM, Péter Magyar, won a two-thirds majority that will enable his party to change the country’s constitution. He has stated his intention to build bridges with Europe in a departure from Orbán’s Euroscepticism. Magyar’s win should free up investment and cash from Brussels that will, in turn, ease financial reforms in the whole of Europe as Orbán’s Hungary often proved to be an obstacle.
THE UK – the economy showed a surprise growth rate of 0.5%, but this won’t have taken into account the effects of the war – so we’ve still got that to come! Starmer outlined plans to unveil a package of laws in the King’s Speech on May 13th that will include plans for digital ID, reforms to SEN, asylum changes and a bill that will outline the transition to low-carbon energy, among other things. He’s got to get through the May 7th elections first though – and Labour are expected to get a massive beating. Chancellor Reeves announced the broadening of support for energy-intensive businesses but the businesses themselves don’t think it’ll be enough.
COMMODITIES…
OIL – the IEA slashed forecasts for oil demand over the Strait of Hormuz closure, which its chief described as “the largest disruption in history”. Trump’s administration urged US oil bosses to increase drilling activity and chancellor Reeves is looking at ways to ramp up North Sea drilling. BP’s new boss outlined plans to return to the “pre-green” structure of yore – an upstream oil and gas production division and a downstream division focused on refining and distributing fuels and retail activities. BP’s trading business has done very well from surging oil prices over the quarter.
GAS – both UK and European gas prices have normalised despite the ongoing war in Iran because Asian countries are cutting demand whilst firing up their coal-fired power generation facilities.
SILVER – the latest World Silver Survey contends that silver prices are on the verge of another uplift following six consecutive years of production shortages and falling stockpiles. The deficit between demand and supply is expected to continue this year.
IN MARKETS, INVESTMENT & BUSINESS NEWS...
IN MARKETS NEWS…
The S&P 500 has bounced back strongly from the Iran shock, powered by tech, strong earnings and investor optimism about an Iran peace deal. Interestingly, investors have put over $111bn into US equity funds over the last month while European and Asian funds have seen net outflows. The most recent survey by Bank of America showed that global fund managers are increasing their allocations to US assets and tech whilst cutting exposure to Japanese and Eurozone assets. BlackRock’s stellar Q1 probably reflects this – its CEO said that this was “one of the strongest starts to a year in BlackRock’s history”.
It was interesting to see that the value of all Taiwan’s listed companies overtook all of the UK’s listed companies for the first time this week! It’s mainly due to the rise and rise of TSMC, though! This one company accounts for almost 40% of the entire value of Taiwan’s market!
IN DEALS…
It sounds like the deal pipeline is losing its lustre at the moment thanks not only to Iran war-related worries, but also concerns surrounding the impact of AI on companies.
IPOs – Autoglass owner Belron is getting closer to an Amsterdam flotation at a chunky valuation that would make it one of Europe’s biggest listings of the last few years.
M&A – the European Commission is planning the biggest relaxation of its rules on corporate mergers since the 2000s in order to take on the Chinese and Americans with European “champions”. The guidelines will be broadened and are designed to encourage “pro-competitive mergers that allow European players to grow and accelerate innovation and have the scale to be relevant players”.
Amazon agreed to buy satellite group Globalstar in a deal worth $11.6bn in a move that will close the gap with Musk’s Starlink. The Musk vs Bezos space race is on!
German news publisher Axel Springer won approval to takeover The Telegraph. The Telegraph has been in limbo for the last three years regarding ownership so hopefully this will draw a line under the whole thing and allow it to move forward with a bit more confidence!
IN INVESTMENT NEWS/TRENDS…
The Saudi Arabian sovereign wealth fund, the PIF, unveiled a new five-year strategy that will slim down its focus areas from 13 to 6, following a review of the previous plan. One area that could be cut is LIV golf but any industry that has seen a lot of Saudi money in recent years will be concerned if they’re not in one of the six focus areas.
IN BUSINESS NEWS/TRENDS…
UK BUSINESS SENTIMENT – Optimism among UK CFOs is the lowest since the Covid lockdown, according to Deloitte’s latest monthly survey. Unsurprisingly, it’s all to do with concerns surrounding the impact of the Iran war. In addition to this, wholesalers sent a letter to Rachel Reeves saying that rising costs of petrol and diesel are “causing major issues” and that they will “severely impact the long-term sustainability of the UK’s food and drink supply chain”.
CHINA’S OVERSEAS EXPANSION – it seems that things are coming together for another “China Shock” twenty years after the first one. That time was all about low-end manufacturing – but now it looks like Chinese companies are going to threaten high-end manufacturing as well. So far China has conquered EVs, solar panels, batteries and wind turbines – and there’s more to come! Another area that Chinese companies could shine is in weight-loss drugs. The pricing power that Novo Nordisk and Eli Lilly have enjoyed in this area is going to be short-lived as the active ingredient in Ozempic and Wegovy, Semaglutide, is beginning to lose patent protection in some key markets – and China has already got over 60 drugs in advanced testing. Chinese manufacturers have the scale to churn them out at a fraction of their list prices…
PREDICTIONS MARKETS – it turns out that the White House sent out an all-staff memo on March 24th, which was described as a “refresher” for employees, telling them not to use insider information to trade stocks or make bets. The likes of Polymarket and Kalshi have seen a number of dodgy bets recently, so I’m not sure how well this communication has worked…and then we saw that US broker Robinhood took action over prediction markets and excluded some because they encourage manipulation and insider trading. I keep saying it but I really think that prediction markets need to be regulated – and an audit trail needs to be enforced so that the people who make suspicious bets can be accurately identified.
IN EMPLOYMENT TRENDS…
Lots of big layoffs have been announced of late, including the likes of Oracle, Amazon and Block – but this week Snap said it would fire 16% of its staff. The BBC announced layoffs of about 9% of its employees as part of further cost-cutting measures, ahead of the arrival of its new Director-General, Matt Brittin.
IN CONSUMER, RETAIL & LEISURE NEWS...
IN CONSUMER TRENDS…
For all the problems that the Iran war is causing around the globe, rich people are still just about coping. Some of them are ditching Dubai and going to Zug in Switzerland and consoling themselves about the injustices of the world with buying Sanlorenzo superyachts and Cartier matchboxes that cost £235!
IN THE UK – research by the Resolution Foundation shows that UK households’ living standards are going to fall because of the energy price shock. Britons are already cutting back on foreign holidays, according to Barclaycard data, and the MD of Filippo Berio UK berated UK supermarkets for not passing on lower prices to customers.
IN REAL ESTATE NEWS…
UK SENTIMENT – both buyers and sellers are nervous because of the uncertainty of the war. First-time buyers in particular are pulling out and some sellers are saying that viewings have fallen considerably. Prices are being cut and chains are collapsing at a time of year where activity usually starts to pick up.
MORTGAGES – the Iran war has prompted rises in mortgage rates as lenders anticipate higher interest rates but borrowers are now seeking out shorter-term options including tracker loans and two-year fixed loans while some buyers are suspending their purchases.
IN REAL ESTATE NEWS…
Lidl announced that it’s going to start offering cheap mobile phone contracts in up to 30 countries later this year, in a challenge to the established telecom operators. The idea behind this is to increase customer loyalty and broaden its revenue streams. Lidl plans to offer services via its Lidl Plus app.
IN CONSUMER GOODS NEWS…
IN LUXURY – LVMH’s Q1 sales took at hit as shoppers and tourists in the Middle East region reined in spending, rival Kering didn’t perfom well either because of weakness at Gucci, its main brand. Kering’s CEO subsequently outlined a plan to double profitability that included store closures and the emphasis of other brands in its portfolio including Bottega Veneta and Balenciaga. Even the usually reliable Hermès performed badly.
IN CHOCOLATE – the world’s biggest chocolate maker, Barry Callebaut, had to cut its profit forecast thanks to falling cocoa prices, overcapacity and supply disruptions. The main issue here is that the company buys cocoa months in advance but sells chocolate at current market prices. This has the unfortunate consequence of meaning that when prices fall sharply, the company has to sell at a loss. Elsewhere, Mondelez-backed Israeli company Celleste Bio has succeeded in creating a dozen chocolate bars at Cadbury’s Bournville factory in Birmingham! This could be very interesting – and potentially reduce chocolate makers’ reliance on good harvests for cocoa beans.
PepsiCo announced in its quarterly statement that the cost of its food and drinks might have to increase as a result of disruption caused by the Iran war. I expect more consumer goods companies to say similar things…
IN LEISURE NEWS…
Richard Caring, the restauranteur, sold a majority stake in his hospitality company that owns Annabel’s and The Ivy to an Abu Dhabi sheikh. Given that he’s 77 and hospitality’s going down the toilet at the moment, you can’t blame him!
The next big thing for coffee chains could be ube, the purple yam that comes from the Philippines. Matcha drinks have ruled the roost among higher spending customers over the last decade, so perhaps it’s time for something else!
IN TECH NEWS...
AI – Meta is developing a photo-realistic, AI-powered 3D version of Mark Zuckerberg that can interact in real time. The character is being trained on his mannerisms, tone and publicly available statements. Everyone’s getting excited about this but is there a real everyday use for this sort of thing??
OpenAI reiterated its commitment to the UK – after last week suspending its proposed Stargate UK datacentre project – by securing its first permanent London office in King’s Cross.
CHIPS – advanced chip-making equipment maker ASML raised its full-year sales forecast thanks to the ongoing AI boom powering demand.
HACKING – Anthropic’s Mythos model is still causing a major kerfuffle – now in the UK – because it is the first AI model to hack networks. OpenAI this week launched its own cybersecurity model, called GPT-5.4-Cyber, which is designed to autonomously find flaws or bugs in software, alerting professionals to fix the issue before bad actors find them.
IN AUTOMOTIVE NEWS...
BATTERIES – Chinese battery giant CATL, which has a 40% global market shares of EV batteries, is now making a splash in energy storage systems. Demand is being supported by increased volatility in energy markets because users can load up batteries when prices are cheap and then discharge them when prices are high. It certainly makes sense for CATL to diversify into areas that are driven by policy (which are more stable) than by consumer cycles (which are more volatile).
EVs – research by S&P Global Mobility showed that 20% of Tesla’s Cybertrucks were bought by other companies within Elon Musk’s business empire during Q4 last year! Without these purchases, Cybertruck registrations over Q4 would have more than halved! Wow!
DRIVERLESS – Uber is committing another $10bn into robotaxis as it transitions from a “gig economy” asset-light player to an asset-heavy fleet operator.
IN MISCELLANEOUS NEWS...
IN FINANCIALS – Wall Street’s “big six” banks had a stellar Q1 largely thanks to trading revenues that were powered by market volatility. They’ll also probably benefit from interest rates that’ll stay higher-for-longer due to the unstable geopolitical situation. Meanwhile, insurance companies are being sold off because of their exposure to private credit. Insurance companies’ investment portfolios have added more private credit assets in the last few years in order to boost performance over the longer term.
Chancellor Reeves gave Rolls-Royce £600m to help accelerate the development of Britain’s Small Modular Reactors (SMRs) on the island of Anglesey.
PwC announced that it would be doing an overhaul of its global consultancy business with a view to streamlining operations. It announced that it would merge its risk and consulting businesses.