Tuesday 21/04/26

Oil jumps and markets retreat as peace deal is shrouded in doubt (The Times, Jack Barnett) shows that we’re nowhere near a resolution of the war, meaning that oil prices went up (again) and markets weakened (again). In the meantime, US oil refiners reap windfall from Iran war (Financial Times, Stephanie Findlay) shows that US oil refiners are doing just fine from the war thanks to high diesel and jet fuel prices in addition to plentiful supplies of cheap North American crude oil. The likes of Valero Energy, HF Sinclair, Marathon Petroleum and Phillips 66 are now operating close to full capacity in order to take full advantage. They are also benefitting from increased flows from Venezuela following the overthrow of Maduro. Despite all this, though, US motorists are still facing big price rises at the pumps, something that could take the shine off support for Trump at the midterm elections.

Meanwhile, things seem to be getting somewhat spicy in Asia as China sends warships to Pacific as Japan tensions grow (Financial Times, Leo Lewis and Edward White) shows that China has sent warships out to test “operational capabilities” at the same time that Japan joined the annual display of military strength by the US and Philippines in a large scale exercise. This is the first time Japan has joined this event and is evidence of the Japan PM’s punchier military stance. Tensions between China and Japan have been rising for months. The exercises run until May 8th and are among the most complex to date, involving at least 17,000 troops including 10,000 Americans alongside contingents from France, Australia, Canada and New Zealand in addition to those from Japan and the Philippines. Japan lifts ban on lethal arms exports for first time since second world war (Financial Times, Leo Lewis and Harry Dempsey) provides further evidence of the new Japan under Takaichi who has just approved this new move, effectively giving the likes of Mitsubishi Heavy Industries and Kawasaki Heavy Industries freer rein to become major suppliers of missiles, aircraft and ships. Previously, exports were limited to five categories of non-lethal military equipment, but under the new regime they can export almost any military equipment as long as the buyer passes a strict screening process.

Staying in the region, South Korea braces for an end to modern life as we know it (Daily Telegraph, Christopher Jasper) highlights just how serious the situation is becoming in South Korea as the world’s 12th biggest economy is suffering acutely thanks to the ongoing

situation in the Strait of Hormuz. The country imports 90% of its energy needs and 70% of its crude oil and 20% of its LNG usually come via the Gulf so measures have started to be put in place in preparation for shortages. State employees have been banned from driving one weekday out of five, more Seoul residents are using the subway and taxi drivers are considering quitting because of the cost of fuel. Oil-based products – such as bin bags – are being rationed while people have been asked to charge electric cars and mobiles phones only during the daytime. They are being asked to shorten showers and run vacuum cleaners and washing machines at the weekend. South Korea has already stopped the export of jet fuel, of which it’s a major producer, in order to keep supplies for local airlines. There’s talk of more extreme measures having to be implemented in the next two to three weeks if the situation doesn’t improve. * SO WHAT? * We should all be watching closely here because this could be a sign of things to come elsewhere as the war drags on.

Over in America, Maga Inc builds nearly $350m war chest ahead of midterm elections (Financial Times, Alex Rogers, Ian Hodgson and Joe Miller) shows that the main political fundraising group supporting Donald Trump, Maga Inc, has managed to put together an unprecedented sum of money to help defend the Republicans’ control of Congress in the November midterm elections. The prospects aren’t looking great at the moment given the Middle East situation – but this sum of money plus the Democrats’ ongoing uselessness will no doubt help. On the other hand, Labor Secretary resigns after tumultuous tenure (Wall Street Journal, Marianne LeVine and Philip Wegmann) shows that Lori Chavez-DeRemer became the third cabinet member to leave within the last two months after Homeland Security Secretary Kristi Noem in March and Attorney General Pam Bondi in April. The resignation came against the backdrop of allegations of misused funds, among other things. She tendered her resignation, saying that she didn’t want to be a distraction to the administration. Then in Trump turns to coal to fuel AI boom (Daily Telegraph, Matt Oliver) we see that American demand for coal shot up last year, increasing by more than any region according to the IEA. This was a reversal of the trend of slowing growth around the world. Coal is part of Trump’s plan for “American energy dominance” but it releases double the amount of carbon dioxide as natural gas when burned. While 190 countries – including the US and China – pledged back in 2021 to “phase down” the fuel, Trump is focusing on the industry’s revival.

Apple chief Tim Cook to hand over to John Ternus in September (Financial Times, Michael Acton and Peter Wells) shows that current chief Tim Cook will step down as CEO in September and will be succeeded by hardware boss John Ternus, ending an eventful 15 year tenure during which time he turned Apple into one of the world’s biggest companies, growing it tenfold. Ternus has been at Apple for 25 years and will be tasked with shepherding the company through the AI revolution. Cook will move upstairs to become the executive chair. * SO WHAT? * The share price went down a tiny bit but Ternus was widely expected to get the role, so no surprises there. Also it’s probably a good thing that Cook is staying on in a leadership capacity given his experience, particularly with diplomacy!

Then in Anthropic and Amazon agree $100bn AI infrastructure deal (Financial Times, George Hammond and Rafe Rosner-Uddin) we see that Anthropic has agreed to spend over $100bn on chips and computing power from Amazon in its bid to bulk up capacity to train and run its model Claude over the next decade. * SO WHAT? * This follows deals with Google and Broadcom which also give Anthropic increased computing capacity. Last year, Anthropic’s CEO scoffed at OpenAI’s relentless pursuit of chips and infrastructure – but strain on its own computing capacity has forced it to sign these recent deals. 

Amazon’s ambition to rival Starlink set back after Blue Origin rocket grounded (Financial Times, Rafe Rosner-Uddin) highlights a bit of a misstep on Amazon’s part as its efforts to rival Musk’s satellite business hit a serious setback after Blue Origin was forced by the US FAA to halt operation of its flagship rocket and investigate why it did not deploy the satellite it was carrying in a launch on Sunday. This grounding could mean that Amazon might have to use rival SpaceX to launch its own satellites until this is solved. The investigation is likely to last several months.

*** NEWS JUST IN *** Primark heads for FTSE100 in fast-fashion spin-off plan (Financial Times, Philip Stafford) shows that Associated British Foods has announced that it will demerge Primark from its food business following 65 years of ownership, which will propel the apparel retailer into the FTSE100. The demerger will happen by the end of 2027 and is likely to be one of the biggest ever demergers in the FTSE100.

In a quick scoot around some of today’s other interesting stories, William Hill owner Evoke in takeover talks with Bally’s (The Guardian, Lauren Almeida) shows that Evoke, the British gambling company that owns William Hill and 888, is in takeover talks with US casino operator Bally’s Intralot. Bally’s has until 5pm on 18th May to put in a proper offer. Evoke effectively put itself up for sale at the end of last year. William Hill’s owner can squeeze extra winnings from its suitor (Financial Times, Lex) suggests that there could be good synergies to be had here on the operational and admin side but it’s not a done deal yet…

Then in Polymarket seeking valuation of up to $15bn in latest fundraising (The Guardian, Dan Milmo) we see that the online prediction platform is looking to raise $400m, an amount that would give it an implied valuation of up to $15bn. The company has seen a huge rise in volumes recently and now over $1bn a week is traded on its platform, which is great because it takes a commission on some of these trades on a varying fee structure. * SO WHAT? * As you know, I think that Polymarket and rival Kalshi are dodgy as – and they’re not regulated. IMO if there was a sniff of regulation in the offing, it would surely hit volumes and trading income. Until then, it’s party-time…

As “how to make first impressions go”, I think it’d be fair to say that this would be a tough one to beat…