Thursday 29/05/25

There are some major Trump shockers in today’s news! US trade court invalidates Donald Trump’s reciprocal tariffs (Financial Times, Kaye Wiggins and James Politi) highlights a potentially major spanner in the works for the president’s global trade policy as the US Court of International Trade ruled yesterday that his “liberation day” tariff policies were illegal. The court found that Trump did not have the authority to dish out the taxes using the emergency economic powers legislation he cited when imposing the tariffs last month. Obviously, the ruling is going to be appealed and a White House spokesperson pushed back saying “it is not for unelected judges to decide how to properly address a national emergency”. Court tariffs bombshell should inspire trading partners to defy Trump (Financial Times, Alan Beattie) highlights just how dramatic this situation is because courts generally defer to the government on matters of national security. There are still avenues that Trump can pursue in terms of appeal but this comes at a sensitive time because the EU is deep in talks with the president about a trade deal. Brussels is trying to avoid a 50% general tariff that could apply after July 9th if an agreement is not reached and this recent development could potentially strengthen its negotiating position. * SO WHAT? * Whoever said that comment about “unelected judges” is an absolute idiot. The independence of the judiciary is supposed to protect against the abuse of power. That is why there are there! Anyway, I’m sure that Trump will have the best minds on his team digging up what they can to ensure that his tariff policy finds a way through. From his point of view, though, even if this whole “liberation day” thing collapses he can at least argue that it brought countries to the table. From the EU’s point of view, though, they have always talked a good game about acting collectively and, given that it is the only entity that can realistically stand up to the  US on trade, the US Court of International Trade may have just given it an opportunity to stop talking the talk – and actually walk the walk.

Meanwhile, US to ‘aggressively’ revoke visas of Chinese students (Financial Times, Guy Chazan, Lauren Fedor, Demetri Sevastopulo, Stephanie Stacey and Michael Pooler) shows that the US secretary of state Marco Rubio is keen to move forward with revoking the visas of Chinese students “including those with connections to the Chinese Communist party or studying in critical fields”. This is in response to the FBI and other security officials getting increasingly concerned over the years about the potential for Chinese students to spy on the US, but also coincides with Trump’s pressure on the education system as a whole. In the 2023-24 school year, over 25% of all foreign students in the US were Chinese, according to the Institute of International Education. * SO WHAT? * It seems like this has been brewing for quite some time and the whole Trump vs education thing provided the perfect opportunity to execute. This must be highly distressing for those affected and I would have thought that this is going to severely dent interest from international students thinking of studying in the US for years to come (well at least as long as Trump is in power). On the other hand, universities in other English-speaking countries could well benefit…

Fed effectively on hold until Trump’s tariff plan is complete (The Times, Louisa Clarence-Smith) is an interesting article that takes a look at the most recent interest rate meeting minutes of the Fed. Two major points emerge strongly from this – firstly, that 18 out of 19 officials reckon that “inflation could prove to be more persistent than expected”; and secondly, bond market volatility is potentially affecting the US dollar’s safe haven status and “could have long-lasting implications for the economy”. * SO WHAT? * The upshot of all this is that the Fed is unlikely to cut interest rates any further until the dust settles from the whole tariff nightmare. The situation will no doubt be made even more opaque by yesterday’s court decision!

Elon Musk steps down from Trump administration (Financial Times, Joe Miller and Alex Rogers) heralds yet another dramatic (although not wholly unexpected) development yesterday as the billionaire announced (on X, obviously) that he is formally stepping down from his role in the Trump administration after five months of chaos. He had been classed as a “special government employee”, which means that he was only allowed to work for up to 130 days in a year for the administration. That being said, Musk had originally intended to lead DOGE until summer 2026 with plenty of work-arounds for the 130 day restriction but for whatever reason, he’s now stepping away. He had promised to cut up to $2tn in costs from the annual federal budget but, as of May, DOGE had saved $175bn, with most of that being difficult to verify by the FT. Meanwhile, Pension fund investors demand Elon Musk work 40-hour week at Tesla (Financial Times, Sujeet Indap, Kana Inagaki and Stephen Morris) shows that big shareholders have taken the unusual step of co-ordinating pressure on Musk to rescue the company that has suffered so much from his political foray. * SO WHAT? * Tesla is in dire need of Musk’s leadership right now. It’s haemorrhaging market share in Europe, BYD has swiped its crown in China and EVs generally aren’t getting much love in the US either. I keep saying this but Tesla also doesn’t have a credible new model pipeline – and it usually takes years before you get from design to production. At the moment, he’s said that he wants a new pay package to keep him focused on Tesla amid other commitments in X, xAI, SpaceX, Neuralink and the Boring Company. Maybe this could be the excuse he needs to leave Tesla. I wonder whether there could be a way whereby he offloads a big chunk of his holding to concentrate on his other ventures that are actually growing. If that happens I reckon that Tesla could become a legit bid target…

In crypto news, Bitcoin price surge encourages more companies to acquire crypto (Financial Times, Philip Stafford) shows that bitcoin’s 50% hike from its early April lows is now prompting more digital asset companies to raise money from markets to enable them to buy more crypto. In addition to this, according to BitcoinTreasuries.net, the number of listed companies that hold bitcoin has risen from 89 at the beginning of April to 113. One of those is meme stock-famous GameStop, which stated yesterday that it has 4,710 bitcoin which would be worth just over $500m. Then in JD Vance touts bitcoin’s emergence and hails pro-Trump crypto investors (Financial Times, Alex Rogers) we see that the vice president continues to big up crypto by saying that the administration would establish “pro-innovation” rules for digital assets and hailed crypto’s arrival into the US economy’s “mainstream” at a conference in Las Vegas yesterday. He also said that the Trump administration would put together a regulatory framework for tokens tied to the dollar. * SO WHAT? * I may well be wrong here, but it seems to me that Trump’s lot are putting a great deal of effort into building an asset class that has arguably shaky foundations that will hugely benefit early investors and potentially leave ordinary investors high and dry. Just picture this – the president, his family and influential friends build and/or invest in crypto companies and assets, they inflate their value by bigging it all up and saying that it’s the future, ordinary people buy in thinking that “the only way is up” because all the politicians and bigwigs are up to their necks in crypto and then something happens that exposes the weaknesses. Early investors/billionaires/those in Trump’s inner circle get wind of this early and sell out while ordinary people having a bet on something that they hope will change their lives are left carrying the can. The government then blames outside forces beyond their control. I really am trying to be neutral on this but all the moves we are seeing right now just look very suspicious from my point of view…

Donald Trump orders US chip software suppliers to stop selling to China (Financial Times, Demetri Sevastopulo, Zijing Wu and Michael Acton) heralds Trump’s latest attempts at slowing China’s tech progress as US companies that offer software used to design chips were ordered by the Bureau of Industry and Security to stop selling their services to Chinese companies. Cadence, Synopsys and Siemens EDA are among those who could be affected. This follows restrictions announced in April that affected the export of Nvidia’s China-specific AI chips. * SO WHAT? * This is a tricky time to take such action because the US and China are deep in trade talks. It also provides a tailwind for Chinese companies in this space – like Empyrean Technology, Primarius and Semitronix – to grow their market share.

Despite tightening restrictions, Nvidia’s Business Is Booming Despite Being Shut Out of China (Wall Street Journal, Dan Gallagher and Connor Hart) shows that Nvidia’s dominance continues apace with revenues up by a chunky 69% in Q1 although it is wavering on its China prospects as options to sell its chips there seem to narrow by the day. * SO WHAT? * Although the results highlight robust demand for Nvidia’s products outside China, having its options severely restricted in such a big market is not good – and long term it might accelerate the development of Chinese players who will be able to take Nvidia on in other markets.

Because of tightening restrictions, HP to Raise Prices, Shift More Production Out of China Amid Tariff Pressure (Wall Street Journal, Connor Hart) shows that the computer and printer maker had to cut its outlook for the year due to Trump’s tariffs. It’s going to have to jack up its prices (= less sales) and it’s looking to take more of its production out of China (= higher costs). The company reckons that almost all of its North American products will be made outside China by the end of June. It was also interesting to hear that the PC market is continuing to grow and that commercial customers are expected to power growth for the rest of the year thanks to the continued take-up of AI (presumably this means that more powerful computers are needed?).

Musk’s xAI agrees Telegram tie-up as billionaire ‘bromance’ blooms (Financial Times, Hannah Murphy, Leila Abboud, Ivan Levingston and Arash Massoudi) highlights a $300m deal with Telegram’s founder Pavel Durov to distribute xAI’s Grok chatbot to Telegraph’s 1 billion users in a one-year deal. Telegram will own a chunk of xAI as part of the agreement. * SO WHAT? * This represents the first major expansion for the AI group into a new social media platform outside X and comes not long after Microsoft announced that it was making xAI available via its Azure cloud computing platform. I think this is a very astute move because it broadens the audience to include arguably a pro-Musk audience. When right-wingers felt compromised by X and other platforms, many set themselves up on Telegram so there could be rich pickings here for both parties in this deal.

In Data centres remain troublingly reliant on Chinese lithium (Financial Times, Lex) we see that the data centres that act as the lynchpin of AI chatbots, cloud storage platforms and financial systems face an uncomfortable truth – that they still rely heavily on battery systems that are lithium-based. That lithium-ion supply chain is mainly controlled by China. * SO WHAT? * The

problem with this reliance is that it makes the US vulnerable both economically and strategically and China knows it. China currently controls over 60% of global lithium refining capacity, which means that although the mineral is mined in many countries including China, Australia, Brazil and Argentina most of it has to pass through Chinese refineries on its journey to global markets. Right now, because of this vulnerability, there is an urgent search for alternatives to lithium-powered batteries – and one of the most promising options at the moment is the organic flow battery. Such batteries don’t need lithium, cobalt or nickel. The tech has advanced to the extent that US-based data centre provider Prometheus Hyperscale has just signed a deal to use it at scale. Another alternative to lithium-ion batteries is sodium-ion batteries, which don’t use lithium. On the opposite side of that, Chinese companies such as Tianqi Lithium and Ganfeng Lithium could be vulnerable if data centre operators shift away from using them as suppliers. A change to this new technology won’t happen overnight but the whole trade war thing has undoubtedly led to rising interest in alternative technologies.

Elsewhere, UK must toughen regulation of facial recognition, say AI experts (Financial Times, Tim Bradshaw and Josh Gabert-Doyon) considers a report published yesterday by the Ada Lovelace Institute, an independent researcher into data and AI ethics, which warned of “significant gaps and fragmentation across biometrics governance”. * SO WHAT? * It wants the UK government to tighten the use of facial recognition and introduce new legislation that will enforce this. I guess that a balance needs to be struck here between its utility and its impingement on fundamental human rights. Given how quickly tech is advancing such legislation is definitely needed. Although the Home Office said that “Facial recognition is an important tool in modern policing that can identify offenders more quickly and accurately” policy and campaigns officer at Liberty, Charlie Welton, said that “we’re in a situation where we’ve got analogue laws in a digital age”.

I thought that  Law firm clients seek clarity on AI’s potential to cut costs (Financial Times, Nick Muscavage) shines a light on one area that all the clients want answers for regarding AI – is its use going to lower their legal bills?!? There’s been a lot of comment on how lawyers can use it to make them work more effectively – but clients want to know whether this means that they won’t have to pay out as much in fees! * SO WHAT? * As things stand at the moment, costs appear to have risen. A recent report from legal ops specialist Brightflag said that outside counsel rates for the top 100 US law firms increased by 10% year-on-year in 2024. However, BT is one company that is asking law firms it’s thinking of working with to show where they use generative AI and how its use could benefit the company. At the moment, it seems that law firms aren’t willing to share this. However, this question isn’t going to go away and it may turn out that AI prompts a major change to the billable hour model that many hate but stubbornly remains in place due to lack of enthusiasm for an alternative. I think that this is going to be applicable not just in the legal profession but any profession that uses units of time to charge customers. As time goes on and the tech improves, this question is going to get asked more and more…

In consumer news, European homeowners face rising mortgage costs until 2030 (Financial Times, Olaf Storbeck) highlights concerns expressed by the ECB that homeowners in the bloc will increasingly feel the pain of rising mortgage rates when their super-low rate mortgages taken out when interest rates were near zero come up for renewal. They say that this could lead to a “drag on consumption” that could go on till at least 2030. * SO WHAT? * This will obviously vary country-by-country taking into account the length of their respective mortgage terms and what proportion of borrowers lock in fixed rates versus those who opt for the white-knuckle ride of variable rates. Although this is a valid concern, I’d say that the Bank of England has been fearful of a negative effect on our economy, but it doesn’t seem to me to have caused the kerfuffle that it was expected to have. Still, I guess that the ECB is just covering itself for if future developments get dramatic.

In retail news, Shein shifts focus from London to Hong Kong for listing (Financial Times, Zijing Wu, Ivan Levingston, Martin Arnold and Laura Onita) shows that the much-anticipated IPO of Shein looks like it will take place in Hong Kong and not London after all. * SO WHAT? * A final decision hasn’t been made just yet, but given the Trump tariffs, everyone clamping down on their respective “de minimis” rules and overall hesitancy over Chinese “things” in general I would have thought that this would be the better move for Shein itself. Although this will be a blow to the London Stock Exchange which could do with a bit of good news, I think investors could dodge a bullet here given litigation – and now trade – risks that could manifest themselves in the near-ish future.

Then in Asda market share hits record low as crisis deepens (Daily Telegraph, Emma Taggart and Daniel Woolfson) we see that Asda’s market share has hit a new low, according to the latest figures from Kantar. Retail big hitter and previous saviour of Asda Allan Leighton was brought in as Asda’s chairman at the end of last year and it seems that his launching of a price war has fallen flat. According to the latest figures, Asda was the only supermarket to see a fall in sales over the last three months. Even M&S and the Co-Op increased grocery sales – and they’d been subject to cyber attack! * SO WHAT? * Sorry, but if this is all Leighton has got I think he needs to hand over to someone else. The supermarket landscape is very different to when he last resurrected Asda around a quarter of a century ago. Consumers have more options and it’s now imperative, IMO, more than ever for the supermarket to find its “voice”. One thing they could start off with is ditching that ridiculous thing they do with tapping the change in their back pocket in their adverts, joyous in how much money they’ve saved. Firstly, who has change these days? And secondly, who keeps it loose in their back pocket?? They need to have fresh ideas, home in on who their customer really is and then aim their offering squarely at them. A format refresh might help with that – but this won’t work on its own. Maybe Leighton doesn’t have the star quality he had back in the day – but if he can use some of his old magic to attract someone who CAN help then that’d be great.

In a quick scoot around some of today’s other interesting stories, Salesforce Raises Full-Year Sales Outlook (Wall Street Journal, Katherine Hamilton) highlights a strong performance for the customer relationship platform which gave it the confidence to lift its full year forecasts. It said that its investments in AI in particular are gaining momentum as subscription growth in this area is more than doubling.

UK confirms powers to force pension funds to back British assets (Financial Times, George Parker and Mary McDougall) shows that the chancellor remains dead set on making stodgy British pension funds buy into British assets and will force them to invest in them in new pensions legislation later this year. * SO WHAT? * I understand the arguments on both sides here. The government wants pension funds to use their vast buckets of cash to invest in British assets,

which sounds quite reasonable. On the other hand, the government doesn’t really know what it’s doing regarding investment and it’ll be forcing the hand of professional investors and potentially restricting returns. However, I think that the investors have had ample chance to invest in British assets and haven’t done so to a major extent thus far so I think that the Pension Schemes Bill could provide a powerful nudge for them to look at such investments more seriously.

Then in Starling’s profits drop 25% as bank takes blame for Covid loan losses (The Guardian, Kalyeena Makortoff) we see that the digital bank saw a massive drop in its annual profits thanks to its handling of the government-backed Bounce Back Loan (BBL) scheme that came about during lockdown. Ouch. You do wonder whether this draws a line under things or whether there’s more bad news to come…

It’s been a while since I’ve put an omelette video on here, so here’s someone who really knows what they’re doing making an omelette! This just makes me want to buy a hotplate (although TBH, I have no room for it)! I find this video strangely relaxing…