Tuesday 03/03/26

Donald Trump struggles to explain why he launched another Middle Eastern war (Financial Times, Abigail Hauslohner, James Politi and Steff Chávez) highlights contradictions in Trump’s statements regarding the war. He started off by urging Iranians to “take over your government” and “seize control of your destiny”, followed that up with saying that he was not going to be part of rebuilding the nation, but then told The New York Times on Sunday that he had selected “three very good choices” among Iranians to take over the country. He then subsequently noted that the US and Israeli strikes had been so “successful” that those candidates were “all dead”. His MAGA commitment to end the US’s “forever wars” is looking decidedly shaky at the moment and even some of his most fervent followers are getting increasingly concerned about the confusion. Is this going to be Venezuela all over again where Trump talked a good game about “running” the country after capturing Maduro and then installed his heir as the new leader?? Iran executes Khamenei’s plan to spread regional war (Financial Times, Najmeh Bozorgmehr and Andrew England) shows that Iran has responded to the attacks by spreading chaos across the whole region to ratchet up the pressure on the US and Israel to back down. The plan, put together by the now-dead supreme leader and his top lieutenants, includes attacks on energy facilities and the disruption of air travel in the region.

In terms of international reaction to all this, Beijing fumes as Trump’s Iran strike threatens China’s oil (Daily Telegraph, Hans van Leeuwen) highlights Chinese anger at the attacks on one of its most critical suppliers of oil – not so long after an attack on another one of its key suppliers, Venezuela. Given that China imports up to 75% of its oil, about a third of which comes from Iran or Venezuela, this is bound to disrupt things for them. Starmer rebukes Trump, saying UK does not back ‘regime change from the skies’ (Financial Times, George Parker, Jim Pickard and Lucy Fisher) highlights a rare instance of Starmer criticising Trump, saying that “this government does not believe in regime change from the skies”, adding that the UK would only take part in military actions if there was “a lawful basis and a viable, thought-through plan”. This came not long after Trump criticised Starmer for taking too long to allow UK military bases to launch attacks on Iran. Starmer has his ‘Love Actually’ moment and stands up to Trump (Financial Times, George Parker, Mari Novik and Jim Pickard) draws comparisons between Starmer standing up to Trump and Hugh Grant’s PM character doing the same.

In terms of impact, Gas prices soar and oil jumps as Iran war pushes down global stock markets (The Guardian, Callum Jones and Lauren Almeida) highlights rising oil and gas prices as the conflict is causing disruption to production and supplies and How escalating Iran conflict is driving up oil and gas prices – a visual guide (The Guardian, Rob Davies, Lucy Swan, Harvey Symons, Heidi Wilson and Sean Clarke) provides an interesting clutch of videos, charts and graphics on this and cites some as saying that a prolonged conflict could push oil prices up to $100 a barrel. US LNG producers rush to seize on surging gas prices triggered by Iran conflict (Financial Times, Jamie Smyth) says that US LNG producers, including Venture Global and Cheniere Energy, are scrambling to take advantage of a 50% price hike in European and Asian LNG markets that were disrupted by supplies from Qatar being knocked out while Hormuz crisis is a wake-up call for complacent gas consumers (Financial Times, Lex) points out that disruption in the Strait actually has a much bigger effect on the supply of LNG than oil, partly because strategic reserves of LNG are much more patchy. Gas price surge threatens to send

household bills soaring (Daily Telegraph, Chris Price, Emma Taggart, Tim Wallace and Szu Ping Chan) highlights the potential effect of all this on our utility bills while Trump’s Iran strikes threaten to send petrol prices soaring and rip through global trade (Daily Telegraph, Hans van Leeuwen) highlights the effect on pump prices and on shipping and air freight.

Meanwhile, ‘Half of Dubai is booking’: expatriates drive to Oman and Saudi Arabia to find flights (Financial Times, Peter Campbell, Marianna Giusti and Silvia Sciorilli Borrelli) shows that there’s been a migration of expats out of Dubai trying to get on the limited number of flights out of the region and Airlines Grapple With Disruptions That ‘Far Surpass’ Previous Middle East Conflicts (Wall Street Journal, Benjamin Katz and Dean Seal) just highlights how disruptive the attacks have been, even in an area that is used to violence and missile strikes from time to time. The question everyone is asking is “how long is this going to go on for?”…

In other news, OpenAI makes changes to ‘opportunistic and sloppy’ Pentagon deal (Financial Times, George Hammond) sees OpenAI’s Sam Altman claiming that OpenAI has managed to amend its contract with the US defence department to have “more guardrails than any previous agreement for classified AI deployments, including Anthropic’s” after last week’s deal was made in the wake of the Pentagon carving Anthropic out of its operations. He emphasised that an alteration in the terms of the contract would ensure that “the AI system shall not be intentionally used for domestic surveillance of US persons and nationals”. I guess the key word in there is “intentionally”. * SO WHAT? * I think this sounds like an &rse-covering exercise on the part of Altman after employees voiced concerns internally since the company signed a deal with the Pentagon. Both Anthropic and OpenAI have expressed the same concerns about using AI for surveillance and for weapons with no human oversight. I personally think that this stinks. If it was this easy to satisfy the Pentagon then Anthropic would still be in the driving seat.

Trump drops battle against law firms over punitive executive orders (Financial Times, Stefania Palma and Kaye Wiggins) highlights a very interesting development – that the US government has terminated its appeal to enforce punitive executive orders on the likes of Jenner & Block, Perkins Coie, WilmerHale and Susman Godfrey who managed to successfully challenge Trump on the executive orders he slapped on the top law firms early on in this term’s presidency. This is going to make the other firms who struck deals with the president – companies like Paul Weiss, Skadden, Kirkland & Ellis, Latham & Watkins etc – look bad. This follows on from the Supreme Court’s recent ruling that his tariff policy is illegal. * SO WHAT? * It will be interesting to see whether the law firms who stuck up for themselves will get more business because clients may believe that they will represent them more robustly. Maybe they’ll get more graduate applicants as well…

Then in France offers to deploy nuclear deterrent across Europe for first time (Financial Times, Leila Abboud) we see that France has offered to move some of its nuclear deterrent to other allied European countries for the first time as part of efforts to deepen co-operation. France’s groundbreaking nuclear offer to Europe (Financial Times, the editorial board) describes this move as “the most important revision to France’s nuclear doctrine in a generation” as it is a major step forward for Europe to take responsibility for its own defence.

In Retail investors shun private credit funds after Blue Owl gating (Financial Times, Eric Platt and Amelia Pollard) we see that rich retail investors who had been throwing money at private credit are now pulling back while Blackstone flagship private credit fund hit with wave of redemptions (Financial Times, Eric Platt) highlights the example of just one major private credit fund as seeing net outflows of $1.7bn over Q1. The Blue Owl decision to stop redemptions seems to be having a ripple effect and momentum seems to be gaining, not receding. Fund outflows aren’t being being replaced by new inflows either. AI is blowing up one of shadow banking’s biggest bets (Daily Telegraph, Tom Saunders) shows that the AI/tech/SaaS sell-off is affecting the world of private credit/shadow banking because the latter has been lending a lot to the former because they have had, up until now, reliable growth. * SO WHAT? * The problem is that if defaults keep rising, it’s not just the shadow banks that are going to suffer – this is going to leak into traditional regulated banks and pension funds because they also lend money to the shadow banks. The UK is the world’s second biggest private market after the US, so if things really kick off, we are going to have decent exposure to all the fallout.

Meanwhile, UK private equity investor plots closure of up to 80 former WHSmith stores (Financial Times, Phillip Stafford) shows that the private equity group that bought WHSmith’s high street business – now called TG Jones – is looking at store closures and job losses as part of a restructuring. Modella has spent £14m on refurbishing the chain since it bought it last year. * SO WHAT? * I’ve always been down on WH Smith’s high street business because it just doesn’t really

provide any kind of experience of note and doesn’t really sell anything that you can’t get online. I would have thought that Modella’s just going to sell up the portfolio of shops. It seems to me that it has acted a bit like that daytime TV show where people buy cheap properties at auction, do a bit of token decorating and then sell on for a fat profit. The fact that Modella put pretty much zero thought into renaming the brand and has only spent a paltry £14m on a nationwide network of outlets (let’s face it – at least a few of their staff will get paid that amount of money!) suggests to me that a classic asset-stripping and sell-off was always on the cards…

Then in ‘Equity punks’ wiped out in BrewDog’s £33mn sale to cannabis company (Financial Times, Stephanie Stacey) we see that the tens of thousands of retail investors – referred to as “equity punks” – who invested over £75m in BrewDog via crowdfunding between 2009 and 2021 are going to get zero after US brewery and cannabis producer Tilray struck a £33m deal to buy all of BrewDog’s brands. * SO WHAT? * Tilray’s intention is to return BrewDog to its original focus of craft beer. Tilray is in separate talks about buying the company’s assets, including pubs and breweries. We’ll just have to see where this goes!

I smell a crash coming, says former Goldman Sachs boss (Daily Telegraph, Tom Saunders) cites Lloyd Blankfein as saying that a markets crash is on the cards thanks to the boom in private credit, echoing previous sentiments expressed by JPMorgan’s longtime chief Jamie Dimon. Its rapid growth means that it has already leached into the traditional banking system…

In a quick scoot around some of today’s other interesting stories, BYD’s February sales fall by most since pandemic (Financial Times, Edward White) shows that the latest data from the company shows that sales fell by their sharpest rate for five years as decent overseas sales could not make up for weakness in its domestic market. For the near term, BYD is likely to try to spur a turnaround with the introduction of new models and battery tech.

Labour pushed bookies to the brink. This new craze could make it worse (Daily Telegraph, Tom Haynes and Eleanor Harmsworth) is actually an article that I missed from the weekend but I thought it was worth mentioning because it just emphasises what a massive threat prediction markets are to “trad” gambling firms that already took a massive beating in the UK with the decimation of betting shops. Punters will soon be able to bet on various yes-no prospects, via platforms such as Kalshi and Polymarket, including will a White House briefing last longer than 40 seconds or whether President Zelenskyy will be wearing a suit by July. The platforms basically act as financial exchanges where users trade contracts linked to real-world events. Traders, not companies, take the other side of the bets. * SO WHAT? * This sounds like it is hideously addictive. Peer-to-peer betting already exists in the UK as the Betfair Exchange, which is owned by Flutter. It sounds like Flutter needs to jump on this bandwagon otherwise it’ll get swallowed up!

In property news, UK mortgage approvals fall to lowest level in 2 years (Financial Times, Valentina Romei) cites the latest data from the Bank of England which shows that UK mortgage levels fell by more than was expected, reflecting uncertainty among would-be buyers at the end of last year although UK house prices rise in February as chancellor avoids ‘negative speculation’ (The Guardian, Julia Kollewe) cites the latest figures from Nationwide which show that activity and sentiment have picked up – but the thing is that neither of these data points reflects the changing situation in the Middle East which could lead to higher bills, higher inflation, squeezed spending power and therefore more prospective buyers sitting on their hands.

Shop price inflation slows, easing cost of living pressure (The Times, Guy Taylor) heralds good news for consumers in the latest BRC figures which show that shop prices were held down by discounting in fashion, health and beauty. * SO WHAT? * This is good news for inflation prospects BUT the goings on in the Middle East could potentially push up global inflation again. The longer it goes on for the worse the impact will be.

Given what’s going on in the world’s right now, I thought I’d bring you some wholesome and calming puppy moments 🥰!