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...
Trump returns to the White House, Reeves gets feisty and wind power gets blown away...
- IN TRUMP INAUGURATION NEWS – WHAT TRUMP DID: the returning president promised to prioritise America, criticised “the establishment”, attacked immigrants, moved to expand oil and gas exploration, scrapped the EV mandate, endorsed a plan to colonise Mars and made a bunch of wild promises like renaming the Gulf of Mexico to Gulf of America, Alaska’s Denali to Mount McKinley and “take back” the Panama Canal. He also withdrew America from the WHO and the Paris Climate Accord, which seemed to embolden Argentina’s president Milei, who is now seriously considering Argentina’s withdrawal from the latter. Trump also withdrew support for the global minimum corporate tax rate of 15% that had been put together by the OECD, endorsed by Biden and adopted by the EU last year. He’s slapping neighbours Canada and Mexico with extra tariffs that will be coming into force on February 1st and gave Putin an ultimatum – to sort a Ukraine deal soon or face more sanctions (although you do wonder how much more he can do!). He also put pressure on Fed chief Jay Powell to cut interest rates and called on OPEC to cut oil prices. Wall Street Bankers are getting excited at the prospect of “a bonfire of regulations”, which is likely to unleash a barrage of dealmaking, the prospect of which helped to push up US stock markets.
- IN ASIA – six Chinese state authorities are “encouraging” state-owned insurers to allocate at least 30% of new premium income every year to Chinese shares and mutual fund managers will also be “encouraged” to boost their holdings by 10% per year over the next three years. This should boost share prices for at least the short term but I think that it may encourage a skewing of the market as insurers buy into the same “safe” stocks. Meanwhile, the Bank of Japan raised interest rates from 0.25% to “around” 0.5%, its highest level for 17 years!
- IN THE UK – Goldman Sachs analysts reckon that there will be six interest rate cuts by the Bank of England by the middle of next year taking it down to 3.25% as it tries to play a part in encouraging economic growth. Pressure is continuing to build for rate cuts as the latest ONS figures showed that sales volumes fell in December. There was a lot of gloomy newsflow on the economy as the latest Lloyds Bank UK sector tracker showed that 11 out of 14 sectors experienced a fall in output and the employment market continues to display many signs of slowdown to the extent that UK ministers are already looking at potential compromises on the upcoming workers’ rights bill because there’s a danger that it could kill the delicate first shoots of economic recovery before they’ve had a chance to get established. Chancellor Reeves tried to show willing on the economic growth front by backing plans for looser limits on mortgage lending, she put her support behind plans for a third runway at Heathrow (even going as far as saying that growth trumps net zero) and looked to intervene in the car finance mis-selling case to protect lenders. Even if that comes to nothing, the fact that the government has been prepared to intervene definitely shows that they are serious about financial deregulation.
IN ENERGY NEWS…
- WIND – Ørsted announced another writedown on its US offshore wind business although the official line is still that it remained “committed to the US market for the long term”. Meanwhile, wind power collapsed to less than 1% of electricity generated in the UK as there was hardly any wind! Renewables, though desirable, just aren’t going to provide the amount of electricity that we’re going to need. Which is why we are looking more at…
- NUCLEAR – Given that Trump is going to want to really go for it with AI, and that he doesn’t believe in wind power, it’s perhaps unsurprising to find that there’s going to be a renaissance in nuclear power. The Palisades plant on the shores of Lake Michigan is going to be the first recommissioning ever attempted in America, but it is not likely to be the last! It could potentially be back online as soon as this autumn.
- CARBON CREDITS – For those that know they’re not going to be able to be green enough with their power consumption, perhaps Microsoft is showing the way forward by doing a deal with Brazilian start-up Re.green where it will buy 3.5m carbon credits to offset at least some of its expected greenhouse gas emissions. I guess this is like when all the car companies bought credits from Tesla to offset their own emission targets!
IN COMMODITIES NEWS…
- It looks like China may be reaching “peak coal” as advances in renewables mean that analysts believe that they could meet all new electricity demand needs in 2025. This is great news for the environment in China, but it could be bad news for other countries as Chinese coal producers might flood overseas with its product as its wares will have to go somewhere!
- Cocoa prices continue to boom (they’ve tripled over the last year!) as extreme weather has hit harvests. There have been three consecutive seasons of global cocoa deficits. Not great for chocolate lovers – particularly when many consumers are feeling the pinch!
IN CRYPTO NEWS…
- Trump’s crypto venture World Liberty Financial raised a whopping $1bn by selling 21bn tokens (which was above target). It said that it would make another 5bn available due to massive demand.
- Memecoins $TRUMP and $MELANIA did incredibly well with $TRUMP at one point becoming the world’s third most valuable memecoin after Dogecoin and Shiba Inu! $MELANIA’s performance still wasn’t quite enough to overtake the value of $FARTCOIN.
- Crypto execs got frustrated by the launch and subsequent success of the $TRUMP and $MELANIA memecoins because they all get lumped into cryptocurrency and dents the credibility that they crave, trivialising crypto as a whole. They also pointed out the massive conflicts of interest and the fact that there are zero protections for investors.
IN BUSINESS, INVESTMENT & EMPLOYMENT TRENDS...
IN BUSINESS TRENDS…
- There’s good news for shipping as the Houthi rebels have promised shipowners, insurers and authorities that they would lift sanctions on ships that were not registered in Israel or wholly owned by Israeli individuals or entities. I wouldn’t expect shipping to return immediately, given that the rebels don’t exactly inspire trust, but this is a sign that perhaps supply channels could start to get back to normal.
IN INVESTMENT TRENDS…
- ETF investment went bananas last year, obliterating the previous high reached in 2021! Trump’s victory sent interest sky high as investors sought out a piece of the (Trump) action with an expected booming stock market.
- It looks like the call of New York continues to attract listing candidates! eToro has decided that it wants to list there rather than London and Monzo is thinking about it as well. I think this trend is going to be a tough one to reverse!
- Investors are returning to buying retail assets once more thanks to cheap prices and a recovery in popularity, according to property group CBRE. It was pretty amazing to see that UK institutional investors, real estate investment trusts and sovereign wealth made up 70% of activity because they are seen as being longer term investors rather than the opportunistic ones who’ve dabble in the last few years.
- PwC’s annual survey of global chief execs showed that Britain has overtaken Germany to become the most attractive place to do business in Europe. This is notable because it’s the first time the UK has been placed so highly since PwC started the survey almost thirty years ago!
IN TECH NEWS...
IN AI NEWS…
- A major AI infrastructure project in the US, called Stargate, was announced by SoftBank and OpenAI. The plan is to start with putting $100bn into some Big Tech infrastructure projects rising to $500bn over the next four years. Musk questioned whether they really did have the finances in place and then we learned that the Stargate project is actually going to serve OpenAI exclusively!
- There were some really interesting articles talking about how AI is being used in drug discovery, in efforts to extend human life by a decade and in the provision of legal services – currently by companies putting together contracts, although there’s clear scope for pre-deal due diligence in the future.
- Meanwhile, Chinese AI start-ups including DeepSeek, Moonshot and 01.ai are closing the gap with global AI giants. They are making particularly impressive gains in efficiency because US sanctions on tech exports mean that China has been busy innovating to develop its models, taking a “mixture-of-experts” approach that trains models on smaller amounts of specific data. This means that the results can still be powerful despite using reduced computing resources.
IN CHIPS NEWS…
- ByteDance announced plans to spend $12bn on AI chips in 2025, although about 60% of their domestic semiconductor orders have to go to Chinese suppliers including Huawei and Cambricon, with the reset going to Nvidia.
- Huawei is making concerted efforts to take a bigger share of the Chinese market by concentrating on “inference” tasks (tasks where LLMs generate a response to a prompt) while Nvidia’s chips concentrate on training the LLMs. Huawei is betting on inference being a better source of future demand, particularly if model training slows down.
IN HARDWARE NEWS…
- Samsung unveiled a new AI-powered smartphone, the S25. Samsung was first to market with an AI-powered phone, the S24, in January last year. Apple followed this by launching its AI smartphone in October last year, so Samsung’s latest phone puts its nose back ahead.
IN SOCIAL MEDIA NEWS…
- TikTok got banned and then un-banned but in the lead-up to the ban, China’s RedNote saw a massive influx of “TikTok refugees” although I’d expect that to be short-lived.
- Musk complained that China still bans X while Trump has given TikTok a reprieve in a rare instance of him criticising China. Perhaps he got emboldened by his new proximity to the President.
- Meta tried to reassure advertisers about their new fact-checking policies, but it remains to be seen as to whether advertisers believe them. In the meantime, surely Bluesky should make some mileage…
IN MEDIA…
- Netflix jacked up subscription prices in the US, announced a 44% increase in subscriber numbers for Q4 and raised its 2025 revenue guidance.
- CNN announced plans to cut its headcount by 6% as it redirects its efforts towards digital growth ahead of the expected launch of a streaming service. Will these efforts prove to be too little too late, though?
IN CAR NEWS...
IN CAR NEWS…
- Trump ordered his administration to ditch EV mandates, pull back on regulations on automotive pollution and fuel-economy standards and he will consider the elimination of unfair subsidies that prioritise EVs over other technologies. It looks like he’s set to kill off an entire industry!
- European makers are worried about what 2025 has in store despite 160 new models due to be launched! European industry body ACEA reckons that its members could be forced to pay €16bn in fines in 2025 for not hitting EV sales targets if the rules don’t change. As if to illustrate what the industry is up against, German EV sales fell by over a third last month thanks to the withdrawal of government tax breaks. It’s not looking good…
- Polestar is looking for new suppliers after the US imposed a ban on Chinese software in EVs. Geely-backed Polestar is going to have to find non-Chinese suppliers in order to at least have some chance of a future in the US thanks to a US government ban on Chinese software in new high-tech vehicles.
- Stellantis announced US investments worth over $5bn in order to strengthen its US manufacturing footprint (and to suck up to the new administration, no doubt!).
IN CHARGING…
- Charging firm Pod Point, said that proposed changes to relax sales quotas may slow sales down even more, particularly in the private EV market.
IN RETAIL, CONSUMER & LEISURE NEWS...
IN RETAIL…
- It seems that spending on luxury goods in the US is on the rise, optimism in this area is rising and Lacoste announced plans to make an “aggressive” push there that will involve the opening of new stores and concessions in “big box” retailers.
IN CONSUMER GOODS…
- Adidas managed to post a better-than-expected annual performance thanks to the popularity of retro trainers such as the Samba and Gazelle. On the other hand, Puma’s 2024 profits fell short of expectations thanks to rising costs and underwhelming sales growth. It hopes to remedy this by launching a cost-savings programme.
- Premier Foods had a decent Christmas as sales of its branded products did well and it now expects full-year profits to be towards the top end of expectations.
RE THE CONSUMERS THEMSELVES…
- The latest GfK confidence index hit its lowest point since December 2023 thanks to pessimism about the UK’s economic prospects and rising concerns about personal finances over the coming year. That being said, the shops and restaurants in Battersea Power Station bucked the gloom by reporting higher footfall and sales versus the previous year. This sounds like the exception rather than the rule, though!
- In terms of wages, research from Nationwide which shows that solid earnings growth over the last year has made purchasing a home for first-time buyers slightly more affordable. However, affordability is still tricky on historical comparisons.
- Disposable income is still being squeezed, though, as research by Hamptons estate agents show that the under-45s have seen a collective £3.5bn rise in rent in just two years as landlords have passed high mortgage costs directly on to tenants. Ouch.
IN RETAIL…
- IN SUPERMARKETS – Waitrose urged chancellor Reeves to stop the tax raid on farmers, saying that it is imperative that they help them plan for the future and Sainsbury’s announced that it would cut 3,000 jobs by shutting down hot food counters and cafes along with some senior management roles.
- Waterstones announced a quadrupling of profits thanks to more workers returning to work (reading books on the commute?). It said it would open dozens of new bookshops in the UK this year and even intimated that it could have an IPO.
IN LEISURE…
- HOSPITALITY – industry body UKHospitality warned that its members could face a double whammy in April as they estimate that businesses will “incur £1bn costs from employer NICs on 774,000 more workers” in addition to business rates more than doubling from April.
- PUBS – Marston’s announced a “solid” quarterly performance with particularly strong trading over Christmas, echoing the experience of rivals Mitchells & Butlers. Wetherspoons also announced a decent first half performance but is bracing itself for big cost rises in April.
- TRAVEL – EasyJet managed to halve losses thanks to a boost in Christmas travel and lower fuel costs and it looks like demand in Easter is shaping up nicely.
IN MISCELLANEOUS NEWS...
- IN REAL ESTATE – the world’s biggest industrial property developer Prologis said it has seen an acceleration in warehouse leasing since Trump won in November. In the UK, Tritax Big Box REIT just splashed £70m on buying 74 acres of land between Heathrow and Slough in order to build a massive three-storey data centre. This will be its first ever data centre and be the the UK’s largest! IN RESIDENTIAL, Riyadh’s property boom is pushing locals out and in the UK, Rightmove has reported a busy start to 2025. Average prices are rising and the number of sales agreed has already gone up!
- IN FINANCIALS – Santander is rumoured to be considering an exit from the UK to focus on more profitable markets elsewhere while analysis from LCH Investments shows that hedge fund managers are absolutely raking it in thanks to the fees they charge! Top performers included DE Shaw, Millenium Management and Citadel – and they also have some of the highest charges.
- IN INDUSTRIALS – Boeing warned on Q4 revenues and profits as their nightmare continues, factories in the UK saw the biggest slump in orders since Covid hit according to the CBI’s latest survey and Rolls-Royce announced that it had just signed an eight-year deal worth £9bn to power new UK submarines.
- A large study just showed that popular weight-loss drugs reduce the risk of Alzheimer’s, something that will be music to the ears of Eli Lilly and Novo Nordisk!
- Trainline shares plummeted in trading this week on the announcement that the government would launch a state-backed rival. This has been announced before and subsequently canned and so I am very sceptical as to whether this really will see the light of day.
BANTER
The prize for this week’s most impressive video goes to the guy on the monkey bars! This is an absolutely astounding feat!!!