Thursday 20/02/25

Donald Trump calls Volodymyr Zelenskyy a ‘dictator’ as US rift with Ukraine deepens (Financial Times, Christopher Miller, Max Seddon and Steff Chavez) shows that Ukraine negotiations took a bizarre turn as Trump called President Zelenskyy a “dictator” after the latter accused the former of living in a “disinformation bubble” and questioned Trump’s $500bn figure for how much America had poured into the war (Zelenskyy said that it was more like $60bn so far). Trump also blamed Zelenskyy for Russia’s invasion in 2022. Trump’s rush to strike a deal on Ukraine hands Putin the advantage (Financial Times, Max Seddon and Felicia Schwartz) shows just how far the pendulum has swung in favour of Putin, whose ambition has always been to unpick Europe’s security architecture and make Ukraine a failed state. Trump is essentially facilitating all of this and his desire to do a quick deal will give Putin even more of what he wants. Nato faces ‘paradigm shift’ after Vance’s warning to Europe (Daily Telegraph, Matt Oliver) highlights vice president JD Vance’s warning to European leaders that they must “step up in a big way” on rearmament which Record orders at BAE Systems as European defence spending rises (The Guardian, Jasper Jolly) shows has so far translated into a boom in business and a fat order book. BAE currently has a record £77.8bn order backlog. In the meantime, Starmer expresses support for Zelenskyy after Trump criticism (Financial Times, Lucy Fisher and George Parker) shows that the PM has backed Zelenskyy as a “democratically elected leader” and that it was perfectly understandable to suspend elections in wartime. France and UK plan air power-backed ‘reassurance force’ in postwar Ukraine (Financial Times, John Paul Rathbone, Ben Hall and Henry Foy) shows that the UK and France are in the throes of putting together a “reassurance force” that would ensure Russia stuck to any ceasefire. Details have not yet been finalised, though.

In non-war news, Federal Reserve officials seek ‘further progress’ on inflation before cutting rates (Financial Times, James Politi) shows that the Fed is putting the brakes on any additional interest rate cuts for now, according to the minutes of the latest interest rate meeting. Members of the committee expressed concerns about “upside risk” for inflation and want time to consider the impact of Trump’s economic policies. * SO WHAT? * Given that we saw a rise in inflation last week, at a time when Trump’s policies haven’t been fully formed, I think that the Fed is right to be cautious. Pretty much everyone is expecting inflation to rise on Trump’s incoming tariffs at the very least!

UK inflation jumps to 3%, reducing chance of early interest rate cut (The Guardian, Phillip Inman) cites the latest numbers from the ONS which show that UK inflation rose by more than expected at the beginning of this year, powered by rising prices for meat, bread and cereals, among other things. Inflation fears send consumer confidence to 11-month low (The Times, Mehreen Khan) cites the latest BRC survey on consumer confidence and, funnily enough, they are getting increasingly worried about inflation.  This is the fifth consecutive month where consumers expressed worsening sentiment about the state of the economy. * SO WHAT? * This is going to pile even more pressure on the chancellor and make life tricky for the Bank of England to justify interest rate cuts.

Microsoft creates new state of matter in quest for world’s most powerful computer (Daily Telegraph, James Titcomb) highlights a major breakthrough in quantum computing as it unveiled a new chip yesterday which generates new particles that exist in a “topological” state – something that has only been a theoretical concept until now. * SO WHAT? * This chip will be used in quantum computers that will see a step change difference in performance, which could themselves lead to massive advances in chemistry and physics. Microsoft’s unconventional approach to quantum computing has now been vindicated but it remains to be seen as to how this tech can be scaled up.

Google builds AI ‘co-scientist’ tool to speed up research (Financial Times, Melissa Heikkila) shows that the tech giant has built an AI lab assistant that will help accelerate biomedical research. It will do this by identifying knowledge gaps and suggesting new ideas. Early test results of its efficacy have been promising. * SO WHAT? * This is a great example of AI being

used for the benefit of mankind! The moment an AI-designed drug comes to market surely can’t be all that far away. When that happens, it’ll be interesting to see how drugs are priced in the future as development costs and timeframes will be way less and way shorter than they are now. 

Then in Lenovo Doubles Profit on Strong Sales (Wall Street Journal, Sherry Qin) we see that the world’s biggest PC maker posted quarterly earnings ahead of market estimates. This came thanks not only to the commercial PC replacement cycle but also the release of several AI-powered PC models in China last May. * SO WHAT? * I guess now’s the time for companies to splash out on new PCs (the replacement cycle tends to be every 4-5 years) and if they are AI-enabled, then it gives more impetus for firms to pull the trigger on spending. The last time there was a big rush for PCs was when we went into lockdown and people bought laptops etc. to work from home.

Falling coal prices push Glencore profits to lowest in four years (The Times, Emma Powell) shows that weakening coal prices pushed profits down to their lowest level in four years, which meant that they fell short of market expectations. It said that it would return an additional $2.2bn to shareholders, which sounds good but was less than some analysts had been expecting. At the moment, the company is also reviewing whether to move its primary listing from London to New York following pressure from Tribeca Investment Partners, an Aussie hedge fund, to list outside London to get a higher rating.

Then in Rio Tinto 2024 Profit Rises, but Weaker China Iron-Ore Demand Hurts Underlying Earnings (Wall Street Journal, Rhiannon Hoyle) we see that the world’s second biggest miner reported a healthy 15% increase in annual net profits as its bottom line was boosted by some asset sales and lower impairment charges in some of its Australian refineries. That being said, stripping out one-time charges, underlying earnings fell short of market expectations and reduced its dividend. * SO WHAT? * Iron ore makes up most of Rio Tinto’s profits but weaker steel demand from China has hit prices, which has in turn hit Rio’s profits. It’s currently trying to decrease its reliance on iron ore by investing in other commodities including lithium and copper.

In a quick scoot around some of today’s other interesting stories, BYD’s strategy shift is bad news for global automakers (Financial Times, June Yoon) highlights BYD’s strategy of making advanced features like self-driving, standard in its cars. Carmakers have, for many years, used driver assistance software as a way of clawing back declining hardware margins. For instance, Tesla charges $8,000 for its driver assistance software. Advanced driver assistance systems have increased in popularity as research shows that cars that have features such as automatic emergency braking, traffic assist and forward collision warnings are proving to be a hit with drivers. * SO WHAT? * BYD’s decision to make these features standard is going to dent other makers’ ambitions to make money out of this because once such luxury features are expected (power windows, anti-lock brakes, rear-view cameras etc.), they can’t charge for them any more. No wonder BYD is gaining momentum!

Tesla rival once valued at $30bn collapses amid electric car downturn (Daily Telegraph, Matthew Field) highlights the final nail in the coffin of Nikola, the maker of hydrogen fuel and

battery-powered trucks which was once valued at over $30bn, as it filed for bankruptcy protection in the US leaving over $1bn in liabilities. * SO WHAT? * The current CEO blamed the lack of appetite for EVs but let’s face it, the writing was on the wall when Hindenburg Research published its hatchet-job report, which revealed the whole thing to be a sham back in 2020. Its founder, Trevor Milton, left the business in 2021 and was sentenced to four years in prison in December 2023.

Then in HSBC to cut 8% from workforce costs in $1.5bn savings drive (The Times, Ben Martin) we see that Europe’s biggest bank announced better-than-expected profits for 2024 but also set out plans to cut costs by $1.5bn by axing 8% of its workforce. It also pushed back net-zero targets by 20 years. * SO WHAT? * I guess this is all part of the bank’s increasing focus on its Asia business and the overall mood where corporates are feeling confident enough to ditch their climate ambitions as the geopolitical mood music has changed.

The kids in this obstacle race are just incredible! They are superhuman!!!