Watson’s Weekly 18-10-2025

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…

• Hamas and Israel released prisoners as part of Trump’s peace deal. There’s a lot more to do though! At least it is a step in the right direction…
• Trump said he’d meet president Zelenskyy in Washington with a view to talking about how to get Putin to the negotiating table.
• Trump said he’s going to set up a meeting with Putin within the next few weeks in Budapest regarding the cessation of hostilities in Ukraine.

IN TRADE NEWS…

• The Dutch government took control of the Chinese-owned, Netherlands-based semiconductor maker Nexperia using the Goods Availability Act for the first time because it felt that there was “a threat to the continuity and safeguarding on Dutch and European soil of crucial technological knowledge and capabilities”. It’s possible that this could prompt the unwinding of other deals involving Chinese assets in key areas…

IN TARIFF NEWS…

• Trump really stirred things up last week by suddenly announcing 100% tariffs on imports from China in response to China restricting rare earth exports. Markets took fright immediately, but they recovered when Trump took a softer tone in a classic TACO move. Treasury secretary Scott Bessent then warned the Chinese that the world would “decouple” from China if it insisted on maintaining its export restrictions on rare earths but let’s face it, Trump has been trying to decouple the world from China for years 🤣.
• It sounds like the situation between India and the US may be improving after Trump’s imposition of an additional 25% tariff on the existing 25% “reciprocal tariff” caused a kerfuffle. Modi promised that India would stop buying oil from Russia, although he admitted that this couldn’t happen overnight. It’s this buying of oil from Russia that irked Trump enough to slap on that extra tariff…
• There’s more evidence that Trump’s tariffs are having the desired effect as Ikea is planning to increase US production in order to avoid tariffs of between 10% and 50% on wood products, which came in this week.

IN TRUMP THINGS…

• The president threatened to withdraw a sorely needed $20bn aid package for Argentina if president Javier Milei doesn’t do well at the forthcoming midterm elections.
• Trump withdrew visas of individuals who “celebrated” Charlie Kirk’s death. He also got the DoJ to indict former national security adviser John Bolton for his alleged mishandling of classified documents and it turns out that Harvard Uni announced its first operating loss since the pandemic as the White House continues to exert pressure on it. The offensive against dissenters continues…
• Federal workers are still in the dark about whether they’ve still got jobs as the administration seems to be using the current shutdown as an opportunity to downsize departments quite dramatically.

IN INDIVIDUAL COUNTRY NEWS…

• IN THE US – finance leaders gathered in Washington DC to attend meetings at the IMF and the World Bank. The situation in the US has improved since the last time when the world was reeling from Trump’s liberation day tariffs but since then the US markets are hitting new highs, AI is booming and a tariff-induced recession hasn’t happened. Even Fed chief Jay Powell is now hinting that there could be more interest rates to come.
• IN JAPAN – the 26-year coalition between the ruling LDP party and Komeito collapsed on Friday, meaning that the LDP has been left scrambling for alternative partners, the most likely of which is the Japan Innovation Party. This means that the LDP’s recently-elected leader, Sanae Takaichi, is not nailed on to be PM just yet.
• IN EUROPE – German chancellor Friedrich Merz called for a single unified European stock exchange “so that successful companies such as biotech firms from Germany do not have to go to the New York Stock Exchange” and under-fire French PM Sébastien Lecornu managed to survive two votes of no confidence after his climbdown on Macron’s pension reforms – meaning that there is now a faint glimmer of hope for a 2026 budget to be passed within this year.
• IN THE UK – senior economists and politicians are warning that China’s ownership of a lot of Britain’s debt (in the form of bonds) is giving the country the power to poke around in British affairs and control the UK government to some extent (something that’s been brought up a lot in the whole China-spying-on-the-UK thing) and the IMF warned that the UK faces the highest inflation in the G7 this year and next according to their latest estimates. The latest numbers from the ONS showed that UK GDP is pretty much going sideways at the moment as everyone frets about the November Budget while the Institute for Fiscal Studies think-tank reckons that chancellor Reeves is going to have to find £22bn in next month’s Budget, adding to the existing pressure on her and the government. There’s lots of speculation as to what’s going to be in it – like the overhaul of cash ISAs and the targeting of the assets of the affluent.

IN COMMODITIES NEWS…

• IN RARE EARTHS – it turns out that the Pentagon has been increasing rare earth stockpiles, according to public filings by the Pentagon Defense Logistics Agency. Meanwhile it looks like GM’s gamble back in 2021 to invest in rare earth magnet production in the US is turning up trumps in the current climate.
• IN OIL – crude prices fell to their lowest point in five months due to a surplus of supply and, closer to home, Equinor has resubmitted plans to drill in Britain’s biggest untapped oil field at Rosebank. Energy Secretary Ed Miliband now has the power to give permission for the project to go forward or not.

IN ENERGY NEWS…

• Battery storage tech continues to advance. This will really help to smooth out volatile supply from renewables and global capacity is expected to rise tenfold by 2035 and more countries are announcing plans to increase development – including the UK. Technological advances are being made, raw material costs are falling and the batteries themselves are becoming more efficient.

IN CRYPTO NEWS…

• There were claims of insider dealing as an anonymous investor made up to $200m on shorting bitcoin and ether about 30 minutes before Trump’s 100% tariffs announcement was made. After Trump’s threat was made, the crypto market lost $400bn of its value in less than 24 hours.
• Trump companies are thought to have made $1bn from crypto so far thanks to his interests memecoins, stakes in World Liberty Financial and TMTG in addition to trading cards and other interests. He is doing very handsomely himself from pushing crypto forward…

IN BUSINESS TRENDS…

• Immigration lawyers in the US and UK are doing a roaring trade thanks to advising both individuals and companies about the immigration status of families and employees. It certainly looks like the H1-B visa thing is going to be another money spinner for law firms that advise on this area!
• The world’s biggest owner of industrial real estate, Prologis, was confident enough to raise its full year earnings forecasts after putting in a decent Q3 performance as it looks like demand is turning a corner after a sluggish few years.

IN INVESTMENT TRENDS…

• IN IPO NEWS – European IPO markets look like they are waking up again, the most recent example of which was Verisure’s IPO last week. There have been a few others in the last few weeks and there’s more in the pipeline! London is also due to see a bit of IPO action soon with the flotations of tinned food company Princes Group and specialist UK lender Shawbrook but we’re still miles behind New York. Meanwhile, it’s shaping up to be a big month for India as it had two big IPOs this week with more to to come! This is particularly impressive when you consider things are still red-hot despite Trump imposing 50% tariffs (so imagine what will happen when/if he lifts them!)!
• IN M&A NEWS – Following on from last week, HSBC has gone ahead with taking Hang Seng Bank private. We’ll have to wait and see whether it got the timing right as Hang Seng Bank has been hurting because of its exposure to the particularly tricky real estate market.

IN BANKS NEWS…

There were a lot of bank results this week!

• Figures from Bloomberg predict that Q3 investment banking revenues will hit heights not seen since 2021 as dealmaking in the US continues to gather momentum. Banks did voice concern about a market bubble but it does look like things are going their way what with the likelihood of more interest rate cuts and a lighter-touch regulatory environment that makes deal-making more attractive!
• JP Morgan put in a decent quarterly performance and showed its confidence in the US economy by announcing that it would invest up to $10bn in areas that are key to US security, in a sign that big businesses are putting money into Trump’s “America First” policies.
• Goldman Sachs also had a strong quarter but announced that it would be making layoffs in the coming weeks. Separately, it announced that it would buy venture capital platform Industry Ventures in cash and equity. The deal, which is thought to be worth up to $965m, is expected to close in Q1 of 2026, pending regulatory approval.
• Morgan Stanley beat all its rivals thanks to a major boost in investment banking fees over Q3, although performances were strong across the board!
• A new bank, called Erebor Bank, has been granted conditional approval by regulators. It is going to focus on lending to businesses in the fields of AI, crypto, defence and manufacturing and is backed by Silicon Valley entrepreneurs including the co-founder of Palantir Technologies and the Peter Thiel-owned VC firm Founders Fund.
• Meanwhile, US investment bank Jefferies is trying to shake off its association with collapsed car parts maker First Brands Group, in which it had a stake. This has called into question the whole private credit market – but for the moment it looks like the fallout has been contained.
• Spain’s BBVA failed in its hostile takeover bid for fellow Spanish bank Sabadell after it failed to convince the latter’s shareholders of the value of the deal.
• In the UK, the latest Bank of England quarterly survey showed the first drop in mortgage defaults since 2022, suggesting that financial pressures on homeowners are easing off but we’ve still got the November Budget to get through yet…meanwhile, Close Brothers decided to almost double the amount of money’s it’s already put aside to compensate customers affected by the car finance mis-selling scandal.

IN EMPLOYMENT TRENDS…

• UK employers cut graduate hiring for the second year in a row, according to the latest survey results from the Institute of Student Employers (ISE). On slightly more positive note, the ISE’s joint chief exec said that fears about AI taking over the jobs of young professionals have been overdone.
• The latest ONS figures showed that the UK labour market is currently “stabilising” because the number of jobs is no longer falling. Unemployment is now back to pandemic levels of 4.8% but younger people are being hit the hardest.

IN CONSUMER TRENDS…

• Chinese consumer prices fell according to the latest numbers, highlighting ongoing sluggishness in the Chinese economy and the ongoing reluctance by Chinese consumers to spend.
• The latest stats show that UK consumers have reined in their spending more than any other G7 countries since the pandemic thanks to consistently high interest rates and the fear of economic headwinds. Ongoing consumer caution was confirmed by a report from the BRC which shows that retail sales growth lost momentum last month as consumers fretted about their post-Budget finances. Consumers look likely to face more challenges as UK energy bosses warn of rising utility bills because they expect investment costs to outweigh any falls in wholesale prices.
• SpareRoom published a report which showed that the average room in a house share in London now costs £995 per month which means that tenants have to earn at least £40,000 a year for it to be affordable (which it is deemed to be if it accounts for 30% or less of a worker’s income). Staying with the rental market, a report by Hamptons the estate agents, showed that millennials (those born between 1981 and 1996) currently make up 50% of all new buy-to-let investors. This shows a generational shift in landlords as five years ago millennials made up 40% of buy-to-let shareholders. I guess there need to be a lot more of them, though, to get rents to more affordable levels!

IN RETAIL NEWS…

• LVMH shares shot up by 13% on news that it returned to growth in Q3, bucking two consecutive quarters of decline. Rivals saw their share prices rise as well as investors bet that the luxury downturn is over.
• Shein saw profits fall despite revenues rising because of higher costs related to Trump’s tariffs.
• In the UK, Tesco increased its market share while Asda’s shrank according to data from Worldpanel. This is not good news for Asda as we head into the crucial Christmas/New Year period.

IN AI-RELATED NEWS…

• It looks very much like Sam Altman is trying to create an “everything app” what with all the deals and new features he’s been rolling out recently (like Sora 2 and “Instant Checkout”) along with more app integrations with Spotify for music and Zillow for real estate (Zillow is America’s equivalent to Rightmove). This could get interesting with Elon Musk pursuing the same goal as well…
• Talking of OpenAI, there are concerns about how all the deals it’s announcing at the moment are going to be financed but it has announced a five-year business plan about how it’s going to do this.
• Elon Musk’s xAI is making progress on building “world models”, which train on videos and data from robots to understand the real world. These models could be used in games where they could generate interactive 3D environments which would have all sorts of uses.

IN DATA CENTRE NEWS…

• A consortium led by BlackRock has agreed to buy Aligned Data Centers from Macquarie Asset Management in a deal worth about $20bn. It is one of the biggest data centre deals ever made! It’s expected to complete in the first half of 2026 as long as it gets regulatory approval.
• There was a really interesting article in the WSJ that highlighted the rising trend of tech companies making arrangements to power their own data centres because of supply chain delays and permit challenges. When you consider that one data centre can eat up as much electricity as 1,000 Walmart stores and that an AI search can use up to 10x the amount of energy as a Google search, you can understand the sense of urgency that AI companies are feeling.

IN CHIP NEWS…

• OpenAI announced yet another deal this week, this time with Broadcom where it has committed to buy a shedload of computer chips from the US semiconductor giant! This could add an extra $350bn – $500bn on top of the $1tn it’s already spent on chip and data centre deals over the last few months!
• Samsung said it was on track to make its highest profit in three years – great news after several quarters of sluggish growth.
• TSMC posted its highest quarterly profit and raised its sales outlook for the full year thanks to “very strong” AI demand.

IN AI FUNCTIONALITY NEWS…

• Shopping seems to be a growing area of interest in AI as more people are using it and now you can buy things from within ChatGPT itself. Retailers are now shifting away from SEO towards GEO to optimise their presence in chatbots. Walmart reckons that this is the future of retailing and is partnering up with ChatGPT.

IN HACKING NEWS…

• UK security services, including MI5, are increasing their work with some of the UK’s biggest companies to gauge current and future resilience to cyber attacks. In the near future, the government is going to update the 2018 Network and Information Systems Regulations that will force regulated companies to report cyber attacks to the NCSC within 24 hours and make organisations tighten up cyber security in their own supply chains.

IN TRAD CAR NEWS…

• Western execs visiting China are coming back worried as, for instance, Ford CEO said ““Their cost and the quality of their vehicles is far superior to what I see in the West”. Other manufacturing company execs have come back saying similar things, marvelling at the sheer level of automation.
• Stellantis announced a 50% increase in American production by the end of the decade, pouring $13bn in. Trump wins!
• Ford has had to cut production of a number of different vehicles thanks to the fire last week at supplier Novelis.

IN EV/HYBRID NEWS…

• Political leaders in Canada, the UK and the EU are all walking back their commitment to EVs as consumers aren’t adopting them as quickly as had been expected and now GM is the latest car maker to react to the drop in sales prompted by the withdrawal of the EV tax credit and lower EV take-up overall by scaling back production, taking a hefty $1.6bn charge in the process.
• A report published by the non-profit advocacy group Transport and Environment said that Plug-in Hybrid Electric Vehicles (PHEVs) actually emit almost five times the amount of CO2 than official figures state – and that they emit just 19% less than petrol or diesel cars. Although this smacks a bit of dieselgate, I guess it all depends on your perspective and whether you concentrate on the much higher CO2 emission levels stated or whether you’re still OK with them emitting 19% less than petrol or diesel cars…

• IN PHARMACEUTICALS – Trump struck a deal with EMD Serono that will cut the price of IVF treatment by a whopping 73%. EMD Serono is one of the biggest providers of fertility assistance and is owned by Germany’s Merck. This will exempt it from US tariffs and its IVF treatment will be available at reduced prices on TrumpRx, the president’s drug pricing site that is set to launch next year. AstraZeneca announced that it will cut prices in the US whilst also pressuring the NHS to pay more and Novo Nordisk is hoping that its weight-loss drugs Wegovy and Ozempic can be used to treat Alzheimer’s as Phase 3 trial results are expected to be published this quarter. Novo Nordisk could do with some good news! Meanwhile, Johnson & Johnson is now subject to a group action lawsuit in the UK brought by KP Law on behalf of around 3,000 individuals accusing the US pharmaceutical company of knowingly selling baby powder containing asbestos-contaminated talc in the UK that caused cancer.
• Driverless taxis from Waymo will be on London’s streets next year. Uber Uber and UK tech company Wayve have already announced plans to test their driverless taxis in London next year so things could get quite exciting!
• Following an investigation into the industry, the Competition and Markets Authority has recommended 21 measures designed to stop pet owners from being “left in the dark” about the prices they pay at the vets. It proposed a new price comparison website to make the cost of prescriptions more transparent and the price of services more generally among other things.

My fave video this week is, I’m afraid, the croissant one 😁. Yes, I know it’s silly but I found myself watching it over and over…