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...
The war continues, consequences grow and interest rates are held (for now)
IN WAR NEWS…
WHAT HAPPENED – Trump warned that NATO would face a “very bad future” if the allies refused to help him in Iran. He lashed out at Starmer (again), saying this time that “he doesn’t produce”, while the UK worked with others to de-escalate the crisis. Meanwhile, Iran successfully bombed the world’s biggest LNG facility in Qatar in response to an attack on Iran’s South Pars gas field. Apparently, Trump didn’t know that it was going to happen 🤔. Netanyahu then asserted that “this war is ending a lot faster than people think”.
WHAT WERE THE REACTIONS? Markets are reacting slightly less violently to Trump’s rantings because investors are losing belief in what he’s saying. Oil and gas prices jumped following the attack on the world’s biggest gas field.
On the domestic front, America’s spending on the war in one week exceeds what the Environmental Protection Agency, the Centers for Disease Control and Prevention and the National Cancer Institute get in a year. His director of the US National Counterterrorism Center resigned in protest at the Iran war saying that the country posed “no imminent threat to our nation”. The former army veteran posted his resignation letter on X saying that he “cannot support sending the next generation off to fight and die in a war that serves no benefit to the American people nor justifies the cost of American lives”.
On the international front, America’s biggest NATO allies rejected Trump’s demand for them to join the armada in Hormuz despite his threats. They are not willing to get involved in a war they didn’t start. Elsewhere, Australia’s central bank raised interest rates for the second month in a row in an attempt to head off a “material” risk to inflation from the Middle East war.
WHAT ARE THE IMPLICATIONS? Trump’s actions will have deep and lasting economic repercussions – and it’s great for Putin’s war effort. It’s already hitting tourism and business in the region. Airlines are drawing up contingency plans for what happens in the event of jet fuel shortages and China has ordered the restriction in exports of jet fuel, diesel and fertilisers.
Dubai’s tourism industry is getting decimated, British Airways has cancelled flights to and from there until the summer and the government is talking about relaxing the tax rules for expats to try and get them back again once this is all over.
Qatar’s gas industry has been set back for a number of years as some estimates suggest that it’ll take between three and five years to repair and cost about $20bn per year in lost revenues.
Turkey’s economy is likely to be hit particularly hard by the war because it’s a net-importer of oil and its economy was already looking pretty fragile before it all kicked off.
Back in the UK, factories are seeing a collapse in orders, farmers are facing huge price rises for fuel and fertilisers and Asda was the fastest operator to increase petrol prices.
IN TRUMP THINGS…
The president asked to postpone the summit he was supposed to be having with Xi Jinping, saying “I have a war going on”.
Trump praised visiting Japanese PM Takaichi’s “tremendous support” over the Iran war but I don’t think she can give him what he wants (warships in the Strait of Hormuz) because of Japan’s constitution.
Trump talked about having the “honour” of “taking Cuba in some form”, adding “Whether I free it, take it, I think I could do anything I want with it, if you want to know the truth”. So Cuba seems to be next on the list after a Venezuela/Iran warm-up.
IN REGIONAL/INDIVIDUAL COUNTRY NEWS…
IN THE US – the Fed left interest rates unchanged for now, but the prospect of higher inflation – and potential interest rate increases – looms large.
IN CHINA – factory output and retail sales increased at the start of the year, beating market expectations – but the National Bureau of Statistics warned that “geopolitical risks have continued to rise” and that some businesses are already facing “operational difficulties”.
IN THE UK – the Bank of England held interest rates unchanged but signalled that rate rises would be possible in the next few months to curb rising inflation. Economists are raising their inflation forecasts to take into account the rise in energy costs and the latest GDP numbers from the ONS made for depressing reading as they showed that UK economic growth ground to a standstill in January – when the Iran war was yet to break out! Britain faces a years-long energy shock because of the impact of the war on gas prices.
Meanwhile, the government is going to double tariffs on Chinese and other foreign steel to 50% in order to save its remaining plants from going under. Business secretary Peter Kyle said that the government wants 50% of steel used in the UK to be made domestically and 50% should be made in Wales.
IN COMMODITIES NEWS…
IN OIL – US oil groups including ExxonMobil and Chevron will get a significant windfall from the Gulf war but they also expressed concern about the oil flow bottleneck. Iran is also doing quite well as it’s thought to be earning over $140m a day from selling oil!
The IEA is considering releasing more of the oil reserves to keep oil prices reasonably under control but the US shale industry is still holding back from upping production despite the oil price spike.
IN INVESTMENT TRENDS & FINANCIALS NEWS...
IN INVESTMENT NEWS/TRENDS…
The Bank of America made a hugely dodgy move this week! It recommended clients to sell/short European companies that could be exposed to “private credit shocks”. Bank of America had circulated a list of 17 European financials stocks that had most exposure and they included the likes of Deutsche Bank, Aegon, Legal & General, Axa and Aviva. After those on the list complained, the recommendations were swiftly withdrawn with “factual inaccuracies” being blamed for the about-turn. This is ridiculous. In my opinion, either a) the analysts who put the report together are incompetent (I doubt it) or b) the names on the list threatened to withdraw all business from the bank and the higher-ups got the hairdryer treatment which filtered down to the ones who actually did the work. This absolutely should not be happening but good luck proving it…
IN INVESTMENT TRENDS…
Retail traders are are now putting a lot of bets on oil prices in the hope of making money from all the volatility.
There’s also an emerging trend of people using platforms like Polymarket and Kalshi to bet on short-term crypto movements.
IN IPOs – Drone tech developer Swarmer saw its share price boom by an incredible 520% on its US market debut this week! Swarmer’s software has been used by the Ukrainian military since 2024. This was the biggest debut gain since the rightwing media group Newsmax’s share price shot up by over 700% in its IPO in March last year!
IN BANKS NEWS – lenders are finding it harder to get insurance cover for mega datacentre projects because the amounts of money involved in these projects are so huge! This means that the Big Tech companies building them will have to hold a lot of the risk on their own balance sheets.
IN EMPLOYMENT, CONSUMER & RETAIL TRENDS...
IN EMPLOYMENT TRENDS…
Various City economists are revising their unemployment estimates upwards as a result of the disruptive effect of the Iran war. The thinking is that employers are going to pass on rising energy costs to consumers, cut headcount and/or impose hiring freezes. Unemployment is already at 5.2%, its highest level for five years.
Fears about the effect of AI on jobs continues as HSBC is looking to cut 10% of its global workforce over the next three to five years, the idea being that AI will be able to do more of the administrative functions carried out in the middle and back offices. However, American fund management company Edward Jones pushed back against suggestions that AI will supersede certain aspects of investing. Users are already using chatbots to get financial advice but the CEO of Edward Jones maintains that AI will enhance its advisers’ capabilities and give them more time to do the actual advising rather than the admin.
The accountancy profession is in a bit of a dilemma at the moment. Applications are just now turning up as the overall unemployment situation is worsening but the decline in the number of top-tier grads looking to enter the profession over the years means that the potential partnership pipeline is being squeezed. The advent of AI could worsen the situation because there’s now talk that they will be taking fewer juniors, which will narrow the pipeline even more.
JPMorgan is now deploying tech to tally up junior bankers’ self-reported hours and their actual hours versus what they should be doing. This is being presented as a way to improve welfare and I think that although it’s probably a good way of tracking your own activity it will probably bring its own pressures.
IN CONSUMER TRENDS…
IN THE US – discount store operator Dollar Tree outlined a cautious outlook for the year thanks to tariff and freight cost uncertainty. Rival Dollar General had said something similar. Unsurprising really – but I guess the danger here is that people don’t just “trade down” to shop there – they just buy less stuff.
IN THE UK – Starmer is looking at ways to shield “working people” from some of the effects of the Iran war, namely by putting together an energy support package to take the edge off higher energy prices. He’s also looking to clamp down on any profiteering.
A study by Savills showed that housing costs have increased by a massive 41% over the last five years – and mortgage borrowers coming to the end of their fixed-rate deals are getting particularly badly hit by rising payments. Ouch.
There’s a growing trend of travellers opting to book cruises since the start of the Iran war as attacks on airports and flight disruptions have prompted a rethink of holiday plans.
IN RETAIL NEWS…
Chinese retailer JD.com is expanding in the UK via a platform called Joybuy. It’s positioning itself as a faster version of Amazon with its “Double 11” delivery service. This means that if you order by 11am, your package will arrive by 11pm with no extra charge for orders of £29 or more.
IN TECH NEWS...
IN TECH NEWS…
IN AI DEVELOPMENTS – the Iran war is highlighting the rising dangers of the use of AI in warfare. It’s used to absorb and analyse all the intel from a myriad of sources and then spits out targets. AI was blamed on the missile strike on a girls’ school in southern Iran. There’s talk that autonomous weapons could face a ban in the same way that chemical and biological weapons do.
There’s talk that sovereign AI could be a major growth driver as countries seek out more independence in AI capability rather than just relying on the Americans all the time. It’s likely that this will present a huge opportunity to companies involved in AI infrastructure build-out.
French music streamer Deezer is fighting fraudsters on its platform who flood it with AI-generated music and then repeatedly listen to it to generate loyalty payments.
The UK government relented on its stance on AI firms using copyrighted material to train their models. The government had been planning to let AI companies use copyright-protected work without having to seek permission. Tech secretary Liz Kendall says that government has now backtracked on this and the creative industry is now breathing a collective sigh of relief.
PwC is going to offer alternatives to charging for their services by the hour. Instead, the company will convert some tax and consulting services into AI-powered automated tools that clients could use “without a PwC person in the loop”, which would be paid for via an annual subscription. The PwC One platform is the company’s AI platform that is launching today and will offer six automated services that will be added to in the coming months.
Australia’s biggest listed tech company, Atlassian, announced that it was cutting 10% of its workforce following a hiring freeze outside its AI and enterprise divisions. Atlassian has been caught up in the mass sell-off of software-as-a-service companies (aka “SaaS”) who are most threatened by AI. The fear is that clients could just use products like Anthropic’s Claude to develop their own software that does the same thing.
IN CHIP NEWS – Nvidia reckons that it’ll hit $1tn in AI chip revenues by 2027. It also announced that it is restarting production of the H200 chips that it sells to China. This is weird considering that Nvidia only recently announced that it was ceasing production of these chips!
IN SOFTWARE NEWS – Trustpilot’s shares boomed by 28% on strong results, upbeat outlook and share buyback announcement. This success has been down to the company’s switch towards LLMs as a way to get more eyeballs on its reviews. Click-throughs from AI search boomed by more than fifteen times year-on-year!
IN AUTOMOTIVE NEWS...
IN AUTOMOTIVE NEWS…
IN EV-RELATED NEWS – Tesla unveiled its first semi-truck, which garnered great reviews from its testers. Tesla’s Semi has a centred driving position, faster charging, a longer range and is around $100,000 cheaper than other battery-electric trucks.
Uber struck a $1.25bn deal with Rivian to buy up to 50,000 autonomous vehicles as part of a transition from human drivers to robotaxis. The deal will include an initial 10,000 robotaxi versions of its new R2 SUV with an option to buy more.
IN TRADITIONAL CAR NEWS – Bentley announced that it will be cutting 275 jobs in the UK among mainly office-based staff as it faces a “challenging global market environment”. While the company is still profitable, profits had taken a sizeable hit from Trump’s tariffs and weaker sales in China.
Rolls-Royce became the latest car marque to ditch its EV ambitions and continue to offer cars with these massive internal combustion engines because it says that many customers prefer the feel of a V12. It had announced plans five years ago to go 100% electric by 2030
IN MISCELLANEOUS NEWS...
IN REAL ESTATE NEWS – the price gap between the average asking price for first-time properties and bigger “second-stepper” homes across Great Britain hit its widest level on record. The average asking price for a two-bedder or smaller was £226,955 in March while a three/four-bedder was £345,857! This 52% gap is the highest it’s been since records began in 2001. Moneyfacts research concluded that “War in the Middle East has added almost £800 to a typical annual mortgage bill in just two weeks” while a report by Skipton Group showed that the average age of first time buyers is now 34 while just 6% of first-time buyers are under the age of 25.
Arizona brought criminal charges against Kalshi for allegedly operating a gambling business without a licence and offering illegal wagers on elections. This is the first time that criminal charges have been filed against Kalshi anywhere in the US but surely there will be a lot more!
EasyJet is encouraging passengers to book now or risk having to pay higher airfares this summer because of the likelihood of higher jet fuel prices being passed on. Fuel hedges are keeping a lid on things for the time being, but that’s not going to last indefinitely.
Britain’s biggest car park operator, National Car Parks, has fallen into administration thanks to a downturn in commuting and inner city shopping since the pandemic. The combination of higher rent and energy cost rises proved to be fatal.
BANTER
My favourite video this week was the one with Eddie Hall dancing in the gym! I still don’t quite know whether it’s AI or not but I’m hoping that it is real!