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 Hormuz opens, Germany has some defence drama and Starmer resigns
IN WAR NEWS…
IRAN – US and Iranian negotiators worked in Switzerland to turn the fragile interim ceasefire into a permanent agreement. Reports that Iranian negotiators had left the talks were denied by US officials. The situation is complicated by lingering doubts about whether either side will stick to what it agrees. Since the war began, over 40 ships have been hit by missiles and 14 seafarers killed, forcing insurers to rethink operational risks and shipping companies to consider permanent alternative routes via land or alternative ports into the Gulf. As if to illustrate the point, a vessel straying from the official Strait route was attacked this week, with Iran appearing to use the incident to demonstrate its authority.
UKRAINE – Trump expressed enthusiasm for Ukraine’s long-range drone strikes deep inside Russia, angering Putin who accused the US of abandoning peace efforts at the G7 summit. American intelligence officials have shifted their assessment, moving from believing Russia had the upper hand to thinking Ukraine now does. This is positive for Ukraine and reflects how its hard-won warfare expertise is driving growing interest in its defence manufacturing capabilities.
IN DEFENCE NEWS…
Germany is scrapping plans to build its biggest warship since World War Two, opting instead for smaller frigates. The decision was particularly damaging for Rheinmetall, which had expected to be lead contractor, and its share price plunged almost 20% on the news.
Airbus and Leonardo are pushing for a pan-European space merger with Thales, arguing that scale is needed to compete with SpaceX.
Franco-German tank maker KNDS has kicked off a listing process in Paris and Frankfurt following Germany’s agreement to take a 40% stake in the business, reducing France from 50% to 40% and floating the remaining 20%. The listing could begin trading before mid-July.
Peter Thiel’s Founders Fund participated in a new funding round for German drone start-up Stark at an implied valuation of €3.2bn.
Trump demanded loyalty from NATO allies and criticised their lack of support in the Iran war, just weeks after pulling 5,000 troops from Germany and announcing a review of US military presence in Europe, ahead of the NATO summit in Turkey.
US defence contractors have been summoned to meet Trump over their failure to ramp up munitions production, with the president criticising them for paying dividends and buying back shares rather than expanding capacity.
India’s military is speeding up orders for attack drones following lessons from the Iran war, with companies including NewSpace Research and Technologies and IdeaForge among the potential beneficiaries.
IN REGIONAL/COUNTRY NEWS…
THE AMERICAS
US – The personal consumption expenditures index (aka the “PCE”), the Fed’s preferred inflation measure, rose from 3.8% in April to 4.1% in May, its highest level in three years, driven by the impact of the Iran war on global energy prices. The overall expectation is for US interest rates to rise, although economists at Citi argue markets are overestimating how high they will go given that falling global oil prices and a slowing labour market should moderate the pace.
VENEZUELA – Two major earthquakes have added to the country’s misery, while it is also set to reveal a $240bn debt pile in negotiations set to refinance what would be the world’s largest debt restructuring since Maduro was removed.
UK
Keir Starmer has resigned as Prime Minister and Labour leader, clearing the way for Andy Burnham following his Makerfield by-election victory. Wes Streeting abandoned his own leadership bid and backed Burnham, leaving nominations to close on July 16th with Burnham potentially taking office as early as July 17th or 18th if he remains unopposed.
Burnham is reportedly considering relocating part of Number 10’s operations to Manchester as part of broader devolution plans, a move that could appeal to northern voters ahead of another election.
The ONS has admitted accidentally pointing interviewers to the wrong survey for several weeks, meaning July’s labour market data will be unreliable.
The Bank of England is planning to relax capital rules for investment banks’ trading activities to more closely align with US rules, following concerns that Basel-III reforms have been too restrictive.
IN OIL & ENERGY NEWS…
OIL – The oil price has returned to pre-war levels as shipments begin flowing through the Strait again.
IN ENERGY NEWS…
Chevron has signed a 20-year agreement to sell electricity to Microsoft for Project Kilby, a 2.7-gigawatt data centre in the Permian Basin, marking a significant move by an oil and gas major into powering AI infrastructure.
A European heatwave sent electricity prices to record highs as demand from air conditioning and fans surged, causing power plant outages and forcing our National Energy System Operator to import electricity from Europe at over six times the normal price! Investors have been buying shares in air conditioning companies including Carrier Global, Madison Air Solutions and Daikin Industries.
Four small modular reactors are proposed for a former coal power station site in Nottinghamshire, developed by EDF and Holtec, capable of powering around 1.2 million homes although it looks like the site will actually supply a giant data centre!
IN CRYPTO NEWS…
Bitcoin dipped below $60,000, hitting its lowest level since October 2024! Retail investors appear to have shifted attention towards AI stocks and new IPOs for now…
IN INVESTMENT, BUSINESS & EMPLOYMENT NEWS...
IN INVESTMENT NEWS/TRENDS…
TRENDS – Defence tech start-ups attracted almost double the venture capital in the first half of this year compared with the same period last year, according to PitchBook data, with VC investment now totalling $12bn. Demand for cheaper and faster next-generation weapons and confidence in sustained government defence spending are both driving the trend.
IPOs – Chinese renewable energy group China Resources New Energy Holdings is moving towards a listing on the Shenzhen stock exchange in what will be mainland China’s biggest IPO since 2022!
Humanoid robot maker Agility Robotics is going public via a $2.5bn SPAC merger, offering retail investors exposure to a company whose Digit robot is used by Amazon in warehouses.
Uber-backed bike and scooter company Lime is targeting a $1.66bn NASDAQ listing raising around $182m. However, it’s never been profitable and faces a £40m personal injury claim exposure.
UK petrol station company EG Group, founded by the Issa brothers, is filing for a New York listing that could value it at over $9bn.
David Lloyd gyms is considering a £4bn float, which would be positive for the London Stock Exchange if listed in London.
M&A – the German government announced the purchase of 40% of Europe’s biggest tank maker, KNDS, which led to the company announcing an IPO shortly afterwards (something I mentioned in the earlier section above!).
AbbVie is buying biotech Apogee for $10.9bn to strengthen its immunology and inflammation pipeline, the latest in over $200bn of healthcare acquisitions agreed so far this year as pharmaceutical companies face patent expiry cliffs. Around 60% of biotech M&A deal value this year has come from assets at phase 2 or earlier in the FDA approval process, compared with around 45% over the past five years.
US investment fund Castlelake has made multiple bids for easyJet, reaching 650p per share, with the airline rebuffing each offer but then agreeing to open its books, suggesting a deal remains possible at the right price.
US rare earths miner Energy Fuels is buying German magnet maker Vacuumschmelze for $1.9bn as part of broader efforts to build mine-to-magnet supply chains outside China.
Walmart is buying French ad-tech firm Vibe.co for $1.4bn to compete with Amazon for advertising revenues. This is Walmart’s biggest acquisition since it bought Vizio in 2024 for $2.3bn!
Bain Capital is buying a majority stake in VW’s marine engine unit Everllence in a €7.4bn deal. Qualcomm agreed to buy AI software firm Modular for $3.9bn to make AI faster and cheaper across hardware architectures.
Segro rejected a £12.6bn all-share takeover bid from US logistics firm Prologis, whose approach sent Segro’s share price up over 17%. Under UK takeover rules, Prologis has until July 22nd to make a firm offer or walk away.
IN BUSINESS NEWS/TRENDS…
PRIVATE CREDIT – Redemption requests continue to pressure private credit funds. Apollo’s flagship $15bn fund saw a jump in withdrawals over Q2, while Ares Management saw over $1.5bn in redemptions from one of its own flagship funds over the same period, adding to the significant outflows seen in Q1.
IN EMPLOYMENT TRENDS…
Oracle is cutting 21,000 jobs, around 13% of its workforce, as part of an ongoing restructuring programme. The rise in use of AI tools was also cited as a factor.
A pushback against the “consultageddon” narrative argues management consultants have not been written off entirely, since they could partner with AI providers and leverage their corporate relationships, though investors remain sceptical.
The construction and skilled trades sector is emerging as an area of genuine job growth driven by AI infrastructure, with Meta and Google being among those launching training academies. The US trade body Associated Builders and Contractors estimates a current shortfall of around 350,000 workers that have the skills to work on data centres will rise to over one million by 2030. US Bureau of Labor Statistics data suggests demand for electricians will grow by almost 10% through to 2034 and that the two fastest-growing jobs will be wind turbine technicians and solar panel installers.
NatWest is offering all 60,000 staff a two-month AI ethics training course developed with the University of Edinburgh. Surely this could be something other universities could do?
Foreign direct investment projects into the UK fell by 26% versus the prior year, the third consecutive annual drop and the steepest so far under Labour, meaning fewer jobs are being created.
In education, analysis by the Institute for Fiscal Studies shows that the financial return from a UK degree will be around a third lower than the 2020 estimate, as graduates earn less than forecast while paying more in taxes and loan repayments.
IN CONSUMER, RETAIL & LEISURE NEWS...
CONSUMER TRENDS
US – The US box office is on course to be its strongest since before the pandemic, with Hollywood releasing more films than in any year since 2019!
UK – Holiday bookings to eastern Mediterranean destinations have surged as hotels cut prices and travellers show more confidence, with Morocco and Egypt proving to be particularly popular.
The latest ONS figures showed that retail sales rebounded in May as consumers bought fans and paddling pools during the heatwave.
PwC research shows that 75% of GLP-1 weight-loss drug users are spending less on snacks, confectionery and crisps, with the trend likely to grow as pill versions proliferate.
IN RETAIL NEWS…
UK out-of-town retail parks are effectively full, with vacancy rates at a record low and British Land reporting around 99% occupancy across its portfolio.
The government has confirmed that the “de minimis” customs loophole will not close until October 2028, meaning that Shein and Temu can continue sending parcels under £135 into the UK duty-free for more than two more years! Bad news for British retailers…
UK telecoms groups Virgin Media O2 and VodafoneThree have introduced a kill switch that renders stolen handsets useless as soon as theft from a store is reported.
The Works is eyeing around 150 stores being sold off by TG Jones as part of that chain’s restructuring.
Asda was the only major UK supermarket to see both sales and market share fall over the last quarter, with Lidl the best performer in the sector. Asda’s “turnaround” under former retail legend Allan Leighton just isn’t getting any traction…
Ocado is searching for a replacement for co-founder and chief executive Tim Steiner following years of share price underperformance, with the company’s shares having returned to around their IPO price (£1.80) after reaching a peak of £28 during Covid.
IN LEISURE NEWS…
Prediction markets firm Kalshi is in talks to raise funds at a $40bn valuation as it continues to grow its customer base and take market share from established derivatives players like CME Group.
IN TECH & SOCIAL MEDIA NEWS...
AI – EU members including the Netherlands, Germany and Greece have joined Pax Silica, an American initiative to build AI supply chains independent of China, covering everything from chips and critical minerals to energy.
A rare joint statement from the Five Eyes intelligence alliance warned that AI-powered cyber attacks capable of devastating government and business systems could be just months away.
The Trump administration asked OpenAI to stagger the rollout of GPT 5.6 so that early-access users can be vetted by the US government.
OpenAI is pitching its ChatGPT advertising business at the Cannes Lions advertising conference. It has discussed growing its ad division to a $100bn business by 2030.
Getty Images signed a multi-year licensing deal with OpenAI allowing its images to appear in ChatGPT search, with Getty’s share price more than doubling on the news.
Alphabet saw its shares sell off sharply after two leading AI researchers defected to OpenAI and Anthropic respectively.
UK start-up Cosine – backed by BT, Babcock and Lloyds Bank – has accelerated the release of its sovereign AI model Lumen from November to July following demand for alternative AI platforms that won’t be subject to restrictions such as the ones brought in by Trump on Anthropic’s models.
CHIPS – Nvidia’s banned AI chips have doubled in price on China’s black market as US export controls meet voracious Chinese demand.
South Korean memory chip maker SK Hynix is planning a US listing that could raise over $29bn. It could be one of the biggest share sales in history!
Micron had a storming week this week! The positive momentum continued as it beat revenue forecasts with $50bn in quarterly revenue. The resulting share price reaction meant that its market cap briefly overtook that of Meta! Its share price has tripled this year.
Qualcomm revealed Meta as the first Big Tech customer for its new data centre CPUs, which will power Meta’s servers from late 2028.
HARDWARE – SpaceX was awarded the lowest possible ESG rating by MSCI the day before its IPO. After gaining as much as 40% above its listing price of $135, SpaceX’s share price has since fallen by around 31% from its peak, leaving it at around $155, which is still above the IPO price (so it’s not disastrous – yet). Research by Professor Jay Ritter at the University of Florida notes that IPOs priced in strong markets often underperform in subsequent years once lock-up periods expire, with SpaceX’s staggered lock-ups beginning to expire 70 days after listing. Elon Musk has lost trillionaire status as a result of the decline – the fall in his wealth alone exceeds the entire fortune of Google co-founder Larry Page! When those lock-up periods start to kick in we will get a better idea of the real state of demand. As Warren Buffett once famously said “Only when the tide goes out do you discover who’s been swimming naked”. Surely that’s why Musk is so keen to get loads of financing done in the aftermath of the feelgood in case reality takes the heat out of the hype.
Apple raised MacBook and iPad prices by 20%, blaming a shortage of memory chips. Morgan Stanley research said that memory prices have risen sixfold over the past year. Other manufacturers including Dell, HP, Lenovo and Asus have made price increases for similar reasons.
IN MEDIA NEWS…
The government plans to consult on forcing YouTube and Meta to give greater prominence to UK public service news content, with the aim of combating misinformation and pushing back against foreign algorithms that have come to dominate news consumption habits.
IN SOCIAL MEDIA NEWS…
There was a lot of news on Meta this week! WhatsApp’s chief executive is stepping down to be replaced by Kunal Shah, the Indian entrepreneur behind the Cred payments app. Meta will take a 20% stake in Cred as part of the deal. Mark Zuckerberg is developing a prediction markets app called Arena internally, with plans to direct users there via Meta’s existing platforms. The app would initially use a points system rather than real money, though Meta has not ruled out cash betting at some point. Meta is also rapidly increasing its use of AI for content moderation, having already replaced around 50% of human review requests with AI this year, with plans to reach 90% for certain content types by year-end.
IN AUTOMOTIVE NEWS...
UK car production rose in May versus the same month last year, the first year-on-year increase in 2026, though production remains well below levels of two years ago.
Tesla’s EU sales more than doubled in May year on year, the fourth consecutive month of growth, while the broader European battery electric vehicle market grew by 39% in May. I don’t think this is as good as it sounds given that everyone was boycotting Tesla at the same time last year because of Musk’s political rants!
US start-up Slate Auto is preparing to launch a no-frills electric pickup truck at around the $25,000 price point. The company is backed by Jeff Bezos and it’s expected to launch its first model by the end of this year.
The US banned Chinese-owned EV maker Polestar from selling cars in America, citing security concerns.
Lucid announced cuts of 18% of its US workforce as restructuring continues.
Amazon’s Zoox unveiled a redesigned robotaxi intended for large-scale production, with availability to riders expected later this year.
Ferrari’s head of marketing was ousted following the poorly received launch of the Luce, its first fully electric vehicle.
IN MISCELLANEOUS NEWS...
REAL ESTATE – For the first time since estate agent Savills began recording the data in 2006, the total value of houses sold in the north of England over the past year has exceeded that of London, reflecting the north catching up after years of outsized London price growth.
UK housebuilders have warned of rising costs and “shockwaves” after the government confirmed it would halve tariff-free quotas and double duties on steel imports to protect UK steelmakers from cheap Chinese competition.
PROFESSIONAL SERVICES – An AI law firm called Garfield AI won its first court case in the UK, believed to be the first AI lawyer victory anywhere in the world. It was representing a freelancer pursuing unpaid fees at Wandsworth County Court at a cost of around £400 to recover £7,000. The firm has taken on over 600 claims and recovered about £500,000 for clients but most of them have settled out-of-court.
Law firms continue to increase spending on legal tech, with Legora, Harvey and Relativity among the providers gaining traction. The tech can help lawyers smash through huge volumes of documents in record time and increase efficiency – but the question is, is it better to use one of these emerging platforms or develop in-house??
Magic circle law firms have been overtaken by US rivals in profits per lawyer, with only A&O Shearman making the top ten and 14 of the 18 firms with revenues above £1m per lawyer being from the US.
The Federal Reserve’s annual stress tests found that all 32 of America’s biggest banks could absorb a theoretical economic collapse while remaining above regulatory capital requirements. Following the results, JPMorgan, Goldman Sachs and Morgan Stanley all announced plans to raise dividends.
US-blacklisted battery giant CATL is rolling out battery-swapping stations for electric lorries in Britain through a joint venture with Octopus Energy called Swaptopus, with 30 hubs planned across Europe by 2035.
Bayer won a pivotal US Supreme Court ruling overturning a jury award against its Roundup weedkiller, potentially limiting future liability for pesticide makers whose products comply with EPA standards. Bayer’s share price rose by over 19% on the news, ending a litigation overhang that had cost the company over $10bn following its $63bn acquisition of Monsanto in 2018.
Ryanair is changing its family seating policy following a CMA investigation, allowing families to sit together without additional charges after previously charging for the privilege post check-in.
BANTER
My fave video of this week was the one with the dad’s ingenious device to get his kid to eat broccoli!