Watson’s Weekly 20-12-2025

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 German government just approved €50bn in military purchases including clothing, protective equipment, infantry fighting vehicles and satellite systems. It’s all part of the push to “get whatever you can by 2029”, which is when Berlin reckons Russia could be ready to attack NATO.

IN TRUMP THINGS…

• Trump threw his toys out of the pram again this week. First of all, the president blamed the murder of Rob Reiner and his wife on “a mind crippling disease known as TRUMP DERANGEMENT SYNDROME” and then attacked the UK by following through on his threat to sue the BBC (which the BBC is going to fight) and suspending the tech deal it signed on that UK state visit a few months back, citing frustration about the lack of progress.
• Trump signed an executive order this week that loosened restrictions on marijuana but didn’t go as far as legalising it. Everyone was expecting its legalisation so marijuana stocks took a beating.

IN REGIONAL/INDIVIDUAL COUNTRY NEWS…

• IN THE US – inflation appeared to weaken, which Trump took credit for, but then it turns out that the data is incomplete and was taken at the end of November, meaning that all the prices were skewed lower because of all the Black Friday offers!
• JD Vance tried to reinforce Trump’s message on the economy at a rally this week and pleaded for patience against the backdrop of falling approval ratings and a new low in terms of the perception of Trump’s handling of the economy.
• IN JAPAN – the Bank of Japan raised interest rates by 0.25 percentage points to “around 0.75%” in its fourth interest rate increase since 2023. This was widely expected in the market.
• IN EUROPE – the EU agreed a €90bn loan to Ukraine following the decision not to use Russia’s frozen funds to finance Ukraine’s war effort after all.
• The ECB held interest rates unchanged at 2% as it struck a more positive note about the outlook. The market was expecting this.
• IN THE UK – the latest figures from the ONS showed a 0.1% GDP contraction in October – against market expectations of 0.1% growth. UK inflation slowed down by more than expected to 3.2% in November. Both of these factors probably played on the mind of the Bank of England which decided to cut interest rates from 4% to 3.75% in its meeting this week.
• The government is nowhere near achieving its goal of building 1.5m homes by 2029 as the latest data from the Ministry of Housing, Communities and Local Government showed that the number of applications received by councils for planning approval fell in the period to their lowest level since 2005!
• The UK and South Korea signed a new trade deal aimed at boosting the export of cars, Scottish salmon and Guinness canned in Britain and will replace the existing post-Brexit agreement that was due to expire in a few weeks’ time. It gives British exporters tariff-free trade on 98% of goods, which is in line with the EU’s trade deal with Seoul.
• UK-EU relations appear to be improving as it looks like an agreement has been reached about Britain returning to the Erasmus programme in 2027. Separately, research from the Centre for British Progress shows that our current immigration rules prioritise academics over entrepreneurs, despite the clear need for the latter to boost “productivity growth, industrial strategy and frontier innovation”.
• There are plans to lift restrictions on litigation funders in an effort to broaden access to justice. Supporters say this will empower citizens but businesses worry that this is going to open them up to expensive class-action lawsuits.

IN COMMODITIES NEWS…

• Oil prices fell to below $60 a barrel because traders are betting that a Ukraine peace deal will free up global supplies. Both West Texas Intermediate (WTI) and Brent crude are on the way to hitting their lowest closing prices in about five years.
• BP’s CEO is stepping down with immediate effect, to be replaced in April by Meg O’Neill who is currently the CEO of Australia’s biggest energy company, Woodside Energy. I guess that Murray Auchincloss was the last remaining vestige of the previous regime’s push towards eco-friendly policies, so it’s full steam ahead now with fossil fuels!

IN CRYPTO NEWS…

• Research by the FCA showed that the proportion of UK adults who hold crypto fell to 8% this year versus a peak of 12% in 2024. That being said, the ones who already held it have bought more. The FCA also announced proposals to regulate the crypto market and there will be a consultation period until February 12th. Regulations will then be finalised later next year with a view to coming into force in 2027.
• The FCA announced this week that that retail investors will be allowed access to crypto borrowing services which means that they’ll be able to engage in “margin” trading, which effectively magnifies losses or gains. The regulator was initially reticent about letting retail investors do this but the overarching push is for more crypto participation, hence the softening of its stance. This sounds pretty risky to me!

IN INVESTMENT TRENDS…

• IN MARKETS – are we in a bubble? One commentator said that for there to be a bubble, there needs to be overvaluation, over-ownership, over-investment and over-leverage. All the signs are there to varying degrees but history suggests that bubbles don’t burst until interest rates rise and financial conditions tighten. This means that the bubble still has time to grow…US AI stocks weakened again this week as news emerged that Oracle had lost a major backer of its $10bn data centre project. The share prices of Oracle, Broadcom, Alphabet and Nvidia all weakened, dragging markets down.
• IN TRENDS – hedge funds and trading firms are increasingly investing in physical commodities markets rather than just the financial instruments that they power. The idea behind this is not only to see the assets they buy go up in value, they can also use the information they get to make money as well because they’ll be privvy to information that gives them a better idea of what’s actually going on before it appears in official data. Meanwhile, investors have been snapping up shares in Chinese makers of batteries, transformers and AI-related equipment this year as countries rush to upgrade their grids.
• IN IPO NEWS – medical supply group Medline Industries raised $6.3bn in the biggest IPO of 2025 and saw its share price boom by 41% on its debut. Tax and consulting firm Andersen Group also had a very successful market debut this week and saw its share price rise by 47% on flotation! Both IPOs were priced at the top end of their respective price ranges and there was clearly appetite for them – so that bodes well for IPOs in the New Year…with regard to potential IPOs, SpaceX started the process of choosing investment banks this week while the US hedge fund Elliott Investment Management, which owns the most popular bookstores in the US and UK – Barnes & Noble and Waterstones – has spoken to potential advisers about a listing, and they are currently leaning towards London. Back home, there’s some sounding out going on about potential flotations of the AA and the RAC. They’ll be difficult to value because there aren’t many comparative valuations.
• IN M&A NEWS – Warner Bros Discovery is rebuffing the Paramount Skydance hostile offer, Canada cleared the $60bn Anglo Teck merger and Law firms Hogan Lovells and Cadwalader, Wickersham & Taft announced a transatlantic law merger that will create what will be the world’s fifth biggest law firm by revenue with 3,000 lawyers around the world. We also saw that Trump’s TMTG media business announced this week that it’s going to combine with British fusion energy company TAE Technologies in a $6bn merger to create “the world’s first utility-scale fusion power plant”. The UK Atomic Energy Authority will contribute £5.6m in equity to the new venture.
• IN CIRCULAR DEALS – Amazon is looking to invest over $10bn in OpenAI and sell it more chips and computing power, potentially giving OpenAI an implied valuation of over $500bn if it all went ahead.
• IN OTHER MONEY RAISING NEWS – Waymo’s in talks to raise funds at a $100bn implied valuation as it looks to expand into more cities. The talks are still in the early stages but it’s thought that they’re looking to raise between $15bn and $20bn early next year.

IN BUSINESS NEWS TRENDS…

• FRP Advisory, one of Britain’s biggest restructuring firms, reckons that more retailers and hospitality businesses will face difficulties next year. The company is confident that it will “continue to see demand rise for…restructuring services” in 2026 as a result.

IN EMPLOYMENT TRENDS…

• IN THE US – the latest data release from the Bureau of Labor Statistics showed the highest unemployment rate for four years, 4.6%.
• IN THE UK – the latest REC-KPMG survey showed that new job listings fell for the second straight month in November. This was no doubt due to all the uncertainty ahead of the Budget. In addition, the ONS published figures showing the highest UK unemployment rate since January 2021 at 5.1%.
• There’s a lot of debate now as to how AI’s much-touted capabilities can translate into real world concrete value-add for business. At the moment, the benefits of using AI in the workplace can be difficult to measure although many have said that it helps them to save time. It’s interesting to note that, at the moment, although there’s a lot of chat about AI adoption in law firms resulting in less of a need for juniors, it may not necessarily be the case.

IN TECH NEWS…

• IN AI – Labour’s AI plans to let AI firms train their models on copyrighted material have been strongly rejected by Britons, according to a survey by Fairly Trained. The government wants to allow tech companies to use copyrighted material to train software unless the rights holder explicitly opted out – not the other way around. Creatives don’t want to give their IP away for free, but then if we wait until all AI companies hammer out agreements with all the owners of all the content, then we’ll be waiting for a long time and the AI ship might have sailed.
• Amazon is conducting a management shake-up of its AI team and replaced its head of AI as part of this process. Apple has also been rejigging its AI business recently so next year could be very interesting!
• McKinsey is looking to make thousands of layoffs over the next few years in response to “rapid advances in artificial intelligence”. Cuts have been made over the last few years but it looks like senior partners are now focusing on potential headcount reductions in non-client facing departments.
• We heard a few weeks back that a lot of people use AI for financial advice – but a survey by the AI Security Institute (the AISI) showed that we’re increasingly turning to AI for “emotional support”. The AISI’s CTO said that the report “offers the most robust public evidence from a government body so far of how quickly frontier AI is advancing”.
• IN CHIP NEWS – it turns out that China has has another work-around for the US chip sanctions – improving its existing chipmaking equipment! US and Dutch export controls stop the world leader in this space, ASML, from supplying its most advanced deep ultraviolet lithography (DUV) machines to China – so the Chinese have used components sourced on the secondary market to upgrade their equipment.

IN SOCIAL MEDIA NEWS…

• Following Australia’s social media ban for the U16s, Denmark is close to doing something similar while the EU is also considering action in this area. All ten platforms caught up in the ban are lobbying hard  because their revenues could take a severe beating…
• Meanwhile, Aussie kids are trying to get around the new social media ban. Lemon8, Yope, Coverstar and Rednote all gained users last week – and even WhatsApp has seen an uptick in usage as teens look to maintain their social networks.
• Meta is working with Singapore-based company K-ID to integrate the start-up’s AgeKey technology into its apps. The idea is to then roll it out across a number of countries next year in a concerted effort to protect itself in a world where social media regulation is tightening around the world. AgeKey is seen to be a “much more user-friendly option” than current age checks.
• It sounds like a US joint venture has now been created which, TBH, leaves ByteDance with direct control of its core TikTok business operations in America. The deal has ByteDance forming a joint venture with a consortium including Oracle, PE firm Silver Lake and Abu Dhabi’s MGX.

• IN CHINA – share prices of many Chinese property developers, including the likes of China Vanke and Poly Developments – are at rock-bottom levels while promises and policy pledges to support the sector don’t seem to be doing much to improve sentiment.
• IN THE UK – according to Rightmove, sellers cut prices over the last month as everyone fretted ahead of the Budget – and London property prices fell at the fastest pace for two years, according to the latest ONS data. Rightmove reckons that there will be a strong “Boxing Day bounce” and that asking prices will rise next year.
• REGARDING MORTGAGES – Savills research showed that first-time buyers are taking out huge mortgages as rising wages and more relaxed affordability tests are helping them to buy properties that would previously have been out of their price range. Talking of more relaxed mortgages, the FCA announced its intention to reform its existing mortgage rules to “widen access, support sustainable home ownership, support growth and improve lives” as part of its efforts to encourage banks to take more risks.

IN EV-RELATED NEWS…

• Brussels is now planning to ditch the 2035 deadline where car manufacturers would have had to cut production of all combustion engine vehicles to zero by 2035. They will now be allowed to make a limited number of petrol and diesel-fuelled vehicles after this date. The car making industry applauded the climbdown and the UK is going to review its EV sales targets as well. The Zero Emissions Mandate (ZEM) was going to take place in 2027, but they’ve decided to bring it forward.
• Nissan announced that it would start production of the zero-emission Nissan Leaf in Sunderland. The factory will also start making the new all-electric Juke model there next year as well as hybrid versions of the Qashqai.
• The California DMV has given Tesla 90 days to change its advertising of the Autopilot function, which the regulator says falsely implies that its vehicles can function as driverless vehicles. Tesla objects to this but could potentially face suspension of its dealer and manufacturing licences if it doesn’t comply.

IN TRADITIONAL CAR NEWS…

• VW  ceased production at its Dresden plant this week as part of plans to cut capacity in Germany. The plant had originally been meant to be a showcase for VW’s engineering expertise and most recently produced the ID.3.
• Ford has decided to redirect money away from EV development towards hybrid and extended range EVs that include onboard petrol engines. Ford has decided to take a $19.5bn hit as a result in one of the biggest ever impairments taken by a company. For now, it will cease production of its electric F-150 Lightning pickup.

• IN HOSPITALITY NEWS – luxury hotels in London are highly likely to get even more expensive because the big business rate increases that will kick in next year are highly likely to be passed on to customers in the form of higher room rates. Pub bookings are currently strong but the new business rates next year are going to hit hard.
• iRobot, the maker of the Roomba robot vaccum cleaner, is being bought out of bankruptcy by Chinese company, Picea, after Trump’s tariffs killed it.
• Morrisons lost its court battle over whether rotisserie chickens should or should not be subject to 20% VAT because they are classed as hot food. However, it got some great publicity in the meantime! It’s now going to have to pay a £17m tax bill.

My favourite video of the week was the dad joke one!