Thursday 25/07/25

Judge rejects Trump administration’s request to unseal Epstein documents (Financial Times, Stefania Palma and Lauren Fedor) shows that a US federal judge has dismissed the Epstein request on the grounds that the district courts cannot release records except in specific exceptional circumstances – which aren’t satisfied in this case. Cracks have formed in his MAGA support base because he promised in his election campaign to make the Epstein files public – and it’s not happening! The intrigue deepened this week when US media reported that Pam Bondi, the US attorney-general, and her deputy told Trump in May that his name appeared in the files multiple times. Fast forward to earlier this month and when a reporter asked Trump whether Bondi had told him whether his name had appeared in the files, he said no. Trump had also previously said he’d been friends with Epstein for 15 years, but then claimed they had a falling out over 20 years ago. As usual, the whole thing is being branded by the White House as “fake news…concocted by the Democrats and the liberal media”. * SO WHAT? * The whole thing sounds extremely dodgy and I guess that the administration is just going to do its best in denying and fudging the details in order to protect Trump because I guess it is kind of their job! I would have thought they’ll find some scapegoat (Bondi? Maybe they’ll try and blame Jay Powell 🤣), pin everything they can on them and try to move on. At this moment, it looks like a non-terminal distraction – a bump in the road. I may be wrong here but I wonder whether, if this doesn’t go away, Trump will dish out the proceeds of all the tariff receipts to the people to a) take the sting out of the Epstein thing and/or b) perpetuate the perception that other countries are “paying” America, as per his pre-election promises. The main problem with that, though, is that a sudden doling out of cash could push up inflation. I think Trump has all sorts of potential boxes of tricks to distract the public away from the Epstein thing so, like I say, I don’t think this will ultimately come to anything.

Then in Donald Trump to visit Federal Reserve after attacking $2.5bn renovation (Financial Times, Myles McCormick and Claire Jones) we see that the president is going to pay a visit to the Fed to put more pressure on Jerome Powell. He’s scheduled to spend an hour there after making repeated demands. Bit weird. But then again Powell has spent rather a lot of money on a Fed HQ refurb. * SO WHAT? * Trump said on Truth Social yesterday that interest rates, which currently stand at the 4.25-4.5% range, should be cut to 1% in order to ease the government’s refinancing costs to $1tn. This visit is all about putting pressure on Powell to do Trump’s bidding.

In trade news, EU and US nearing trade deal that would put 15% tariffs on imports from bloc (The Guardian, Lisa O’Carroll and Jennifer Rankin) highlights some progress in EU-US tariff talks while Ursula von der Leyen tells Xi Jinping EU-China ties are at ‘inflection point’ (Financial Times, Ryan McMorrow, Joe Leahy and Henry Foy) highlights frustration on both sides in talks between the EU and China while Keir Starmer and Narendra Modi to sign UK-India trade deal (Financial Times, Jim Pickard and John Reed) highlights a finalised deal between the UK and India that was first announced in May. At first glance it looks a bit “jam tomorrow” because the benefits are going to be phased in. This was bigged up by both sides but I suspect that a lot of industries are going to be disappointed by the fact that the benefits are going to take so long to kick in! Supposedly, British exports to India are going to increase by 60% by 2040. Let that sink in! 2040!

In defence news, UK to sell Typhoons to Turkey after Germany drops veto (Financial Times, George Parker, David Sheppard, Sylvia Pfeifer, John Paul Rathbone and Laura Pitel) shows that Britain and Turkey are getting closer to signing a deal where Typhoon jet will be supplied to Ankara. Germany had previously objected to the sale of the aircraft to Erdoğan’s government. Defence ministers from both countries signed a memorandum of understanding and it looks like Turkey could buy up to 40 jets. Germany had previously objected due to concerns over Erdoğan’s politics and human rights record (put bluntly, he suppresses opposition) .

Then in The West’s Insatiable Demand for Missiles Is Boosting U.S. Weapons Makers (Wall Street Journal, Drew FitzGerald) we see that orders are, unsurprisingly, up strongly for the likes of Lockheed Martin and RTX in certain areas like missiles. The likes of Lockheed and Raytheon are experiencing massive backlogs but then the former had to make huge writedowns on jet-fighter and helicopter programmes. Aircraft makers are seeing orders are changing all the time while R&D overruns are proving to be problematic. Shipbuilders are doing their best to cope with rising construction costs and drone warefare is changing the way everyone equips their armies. * SO WHAT? * It seems that American and European missile makers are seeing particularly strong demand at the moment and it’s possible that the American ones in particular will see another surge when Trump gets going with the Golden Dome thing.

China’s price wars hit investment banking as underwriters charge $100 fees (Financial Times, Cheng Leng) highlights something very interesting that’s going on at the moment in China – that Chinese investment banks are cutting fees for bond issues as low as $100 in order to win mandates! * SO WHAT? * This is apparently happening because there are loads of state-owned businesses issuing bonds and they often decide who they’re going to go with based on deal experience and price! The fact that this is happening at the same time that private companies are pulling back means that the investment banks are having to do this. It is also worth noting that this cut price trend has leached into IPOs as well – listings in mainland China have faltered in the first half so Chinese banks have been chasing all the secondary floats in Hong Kong with fees of way less than 1%. This has elbowed out the likes of Goldman Sachs and Morgan Stanley and led to both Citic Securities and CICC overtaking the American giants in terms of deal size on Hong Kong listings this year.

In Goldman Sachs to forgo second round of job cuts as outlook improves (Financial Times, Joshua Franklin, James Fontanella-Khan and Ortenca Aliaj) we see that Goldman Sachs isn’t going to make another round of lay-offs in September because it thinks that investment banking activity is going to recover and they will need bums on seats to get the deals done. It executed its annual spring cull and hinted that it might have another cull in September, but clearly it feels that there isn’t a need to do this because things are turning around. Trading has been benefiting from market volatility and the investment banking pipeline seems to be building up nicely.

In European banks news, Deutsche Bank reports highest profits since 2007 as litigation costs fall (Financial Times, Florian Muller) shows that the German bank posted its best Q2 pre-tax profit for almost twenty years thanks to a sharp drop in litigation-related charges. The good news boosted its share price to their highest level in a decade! Then in Fixed-income and currency boom boosts BNP Paribas (Financial Times, Ian Johnston) we see that the French bank’s Q2 performance was powered by fixed income and currency trading, meaning that the bank outperformed market expectations. On the flipside, its equity trading business didn’t do so

well (despite strong trading performance at American rival banks) and it hasn’t seen all that much action in investment banking revenues either. Then in Lloyds Bank overcomes lower interest rates as profits surge (Financial Times, Laith Al-Khalaf) we see that Lloyds enjoyed a boom in Q2 pre-tax profits but urged the chancellor not to use this to justify another tax raid on the banks. This appeal could fall on deaf ears given that the chancellor has to find money to plug the fiscal hole left by recent policy failures.

In market trends news, Meme stock 2.0 may prove fleeting (Financial Times, Lex) shows that there’s another meme stock boom going on, this time with real estate platform Opendoor Technologies, department store Kohl’s, doughnut emporium Krispy Kreme and digital camera maker GoPro. * SO WHAT? * Meme stock 1.0 happened back in 2021 and powered the likes of GameStop and AMC Entertainment to dizzying heights. None of the new crop look any good on a fundamental basis but the idea behind the meme stock rush was to target widely shorted stocks to such an extent that it forces those shorting the stocks to buy them back to exit their losing trade. However, it doesn’t look like they’ll have as long a run as the original meme stocks because, unlike in 2021, borrowing costs are now much higher and crypto probably has more allure to investment risk-takers.

Talking of which, Crypto-Spacs put a risky investment in a riskier wrapper (Financial Times, Lex) is an interesting article which highlights the current trend of crypto combining with another controversial financial product – the Special Purpose Acquisition Company (SPAC). The most recent combo popped up earlier this week – The Ether Machine combined with listed cash shell Dynamix to create a listed company with around $1.5bn of ethereum, as opposed to bitcoin. * SO WHAT? * SPACs got a bad name before because they lost a lot of investors a lot of their money – and one reason for that is that they failed to hit the (very) ambitious targets that they set out in the first instance. One key thing about SPAC-backed bitcoin vehicles is that they don’t really have targets per se, so there’s less to be disappointed about…perhaps…

SK Hynix widens AI chip lead over Samsung as data centre demand booms (Financial Times, Christian Davies) highlights record Q2 earnings for the memory chipmaker that is a leading supplier to Nvidia. Not only was its operating profit way higher, revenues were up by a chunky amount versus the same period last year and its operating margin was also up. It continues to pull away from big rival Samsung after overtaking the latter’s quarterly profits for the first time ever in the previous quarter. * SO WHAT? * Samsung continues to lose ground to SK Hynix because its most advanced AI chips don’t pass muster for use by Nvidia. Perhaps Samsung can try to benefit from supplying customised memory products for specific tasks – Application Specific Integrated Chips (ASIC) – to the likes of Google, Amazon, Microsoft, Meta, Tesla and Huawei while SK Hynix keeps supplying Nvidia with High Bandwidth Memory (HBM) chips. There is chat the HBM pricing is going to calm down next year, so if Samsung can prosper in other areas, it could be a good thing for them.

Then in Google’s parent Alphabet beats revenue expectations (The Times, Helen Cahill) we see that the tech group beat market expectations in Q2 thanks to strong performances in search, YouTube ads and cloud data storage.

Meanwhile, Wikipedia threatens to limit UK access to website (Daily Telegraph, Matthew Field) shows that Wikipedia could be forced to introduce a “quota-based” system for UK visitors if it gets categorised as a “category one” service under the new Online Safety Act. If it was classified as such, then it would be subject to much stricter duties of care to children. * SO WHAT? * As things stand, “category one” sites have seven million users or more and so, if it came to it, Wikipedia could withhold access in the UK to some visitors. Ofcom has to decide whether it qualifies for the tighter restrictions or not. I have to say that I think there would be a huge outcry if Wikipedia was classified as “category one” because it seems to me that the Online Safety Act is targeted more at social media platforms…

Then in Apple and Google face UK shake-up to mobile platforms (Financial Times, Tim Bradshaw) we see that the two tech giants are going to be classified as having “strategic market status” under the UK’s new digital markets regime giving the Competition and Markets Authority the power to force the companies to alter their behaviour. A final decision on the designation will be made in October. The CMA says that it’s going to be more “tailored” than Europe’s Digital Markets Act.

In a quick scoot around some of today’s other interesting stories, Tesla Profit Falls, Hurt by Plunging EV Sales (Wall Street Jourbnal, Becky Peterson) is the latest bit of negative news for the ailing EV maker as its Q2 results disappointed the market yet again as Musk continued to talk up the prospects of robotaxis and humamoid robots.

Back in the UK, EV grant confusion ‘means carmakers could miss targets’ (The Times, Tom Saunders) cites concerns by the chief of the SMMT over the lack of clarity as to which cars are going to qualify for the newly announced grant from the UK government. Ambiguity is going to make it harder for carmakers to plan their sales and production strategies so all eyes will be on what comes out on August 11th when the list of eligible vehicles will be released. Meanwhile, UK car manufacturing slumps to lowest level since 1953 barring Covid (The Guardian, Jasper Jolly) cites the latest production numbers which are the worst, outside the pandemic, for over seventy years! I guess this is all to do with the transition to electric, high prices and economic uncertainty.

In retail news, Luxury brands ease off on price rises as shoppers push back (Financial Times, Adrienne Klasa) highlights the slowdown in luxury goods after a period between 2019 and 2023 when brands such as Louis Vuitton and Chanel benefitted from strong demand and all that “revenge spending”. * SO WHAT? * We’ve now come to a point where even affluent people are saying that enough it enough – and that means that there could be a return to the more normal price rises of 1-2%.  The majority of luxury goods analysts have reined in their forecasts for 2025 and reckon that the sector won’t rebound until the second half of 2026 at the earliest.

At the other end of the scale, River Island at risk of collapse within weeks (Daily Telegraph, Ben Marlow and Pui-Guan Man) shows that the apparel retailer could collapse within the next few weeks unless landlords and creditors come up with a workable plan. The retailer wants to close 33 stores, cut rents on another 71 and write off a number of debts. This plan will be brought to High

Court for scrutiny next week. * SO WHAT? * If it’s not passed, the retailer will run out of money by the end of August. It has blamed this state of affairs on the rise in business costs and shift to online retailing over the last few years. The thing is that all their rivals faced the same problems as well, so I guess they just didn’t deal with it as well (let’s face it – Next has been thriving!). We’ll just have to wait and see what happens next week…

In restaurant news, Chipotle sales slip as inflation drives belt-tightening in US (Financial Times, Taylor Nicole Rogers) shows that the restaurant chain underperformed versus market expectations for the quarter and it lowered its sales growth target for the second time this year. * SO WHAT? * US restaurant chains have suffered of late because of customers reining in spending as menu prices rise. That being said, they haven’t actually risen at Chipotle since last year.

Then in Roche in talks with Washington on selling drugs directly to patients (Financial Times, Hannah Kuchler) we see that the pharma company is looking for ways to cut out the middlemen and sell medicines directly to patients. * SO WHAT? * Roche’s CEO said that half of all the earnings in the supply chain actually went to intermediaries, known as pharmacy benefit managers, who don’t take any risk in the drug making process. Roche says that this is probably the easiest way to halve prices! This could get interesting because it could be absolutely huge for pharma companies…

Back in the UK, Consensus grows that house prices will barely rise this year (The Times, Tom Howard) suggests that there’s a growing feeling in the market that house prices will hardly rise this year thanks to consumer confidence being dented by Trump’s actions and potential tax rises to come in the chancellor’s forthcoming Budget in the autumn. Savills and Rightmove have already cut their full year forecasts while data from Nationwide and the ONS reflect a slowdown in house price inflation.

We see a lot of chat about whether AI is going to replace humans. Do you think it’ll replace this pizza guy??