Tuesday 27/10/26

Israelis go to the polls in historic election (Financial Times, James Shotter and Neri Zilber) heralds Israel’s first election since Hamas’s October 7th 2023 attack and pits Netanyahu’s far-right coalition against Jewish opposition groups centred on the Yashar party. Opinion polls suggest that the vote will be very close. * SO WHAT? * The election is being billed as “the most important in the country’s near-80-year history” but if the outcome yields no majority, more elections would have to be called. Clearly what happens here is going to have huge repercussions for what’s going on in Iran and the Middle East more broadly.

‘We don’t have inflation’? Five charts show the US economic reality of Trump’s second term so far (The Guardian, Lauren Aratani) takes a look at how Trump has done since he took office for the second time at the beginning of last year. He said himself at a rally in Montana recently that “We’re richer now” and “We don’t have inflation”. The data paints a different picture while a poll for the Guardian said that two-thirds of Americans believe that the country is experiencing a recession and many are reporting that they are having trouble saving. Trump’s record on inflation: when Trump took power in January 2025, inflation was at 3% and it dropped to its lowest point in April when it hit 2.3%. Following his mass weaponisation of tariffs, inflation rose to 3% by September 2025 but then it went down again after a lot of his initial “liberation day” tariffs were paused or found illegal. Immediately prior to his war on Iran, inflation went back down to 2.4%. Since then, inflation rose to 4.2% in May, a level not seen since 2023, but has been hovering above 3.4% after that. The target for inflation is 2% and Americans haven’t seen it for almost six years. Trump’s record on petrol prices: the closure of the Strait of Hormuz has pushed up oil prices around the world and although the US is a major oil producer itself, petrol prices have shot up. Trump’s record on employment: there has been some growth here but hiring has been tricky what with tighter immigration policies, the uncertainties of tariffs and higher material costs which have led to an overall “low-hire, low-fire” economy. Trump’s record on the S&P 500: for the more affluent members of society who have exposure to markets, Trump has been good news. The stock market has made big gains since he took office with a few dips along the way when he announced all those tariffs and again when he started the Iran war. AI has been the major force behind the boom. Many Americans are invested in the stock market via their retirement and pension funds but the top 1% of wealthiest Americans have benefited most because they own almost half of all stock market investments! It looks like the rich have never felt richer while many Americans are feeling household budgets tighten because of higher prices. Trump’s record on interest rates: when Trump took office, the Fed was in a cycle of interest rate cuts but then he imposed the “liberation day” tariffs and the cycle was paused. In September, the Fed put rates up by 0.25 percentage points. The direction of interest rates can depend on what the Fed is trying to target – if it’s employment growth then they tend to cut because it makes borrowing cheaper which encourages investment, which involves hiring. If it’s reining in inflation, interest rates go up because it makes borrowing more expensive which discourages investment and slows down spending, which then takes the heat out of prices. This is perhaps an over-simplification but it is the general gist. Trump has been fixated on cutting interest rates because

he wants more companies to invest – and this is generally good for stock markets, something that he likes using as a yardstick of his “success”. Fed chiefs have been getting increasingly worried about inflation running rampant again, which is why they increased rates. * SO WHAT? * Overall, Trump has helped the rich get richer and made life more difficult for those who aren’t so affluent. The irony of it all is that inflation, which killed the Biden administration, is really impacting his popularity – and Trump has basically been the orchestrator behind it first with massive tariffs and then with the Iran war. Maybe throwing hundreds of millions of dollars at the Republican midterms campaign will get him out of this tight spot…

Meanwhile, Lula faces a fiscal reckoning after Brazil’s market rout (Financial Times, Michael Pooler and Joseph Cotterill) shows that Lula hasn’t got much time to bask in his election victory because investors showed that they are worried about his management of government finances by selling off the real, which had its worst drop against the dollar since 1999, and the Bovespa equity index, which fell by 13.9%, something that was reflected in Brazil stock market plunges after shock Left-wing election victory (Daily Telegraph, Eir Nolsøe) which highlights just how serious the reaction was. Brazil’s got a ton of debt and investors want to see a more business-friendly environment. Bolsonaro’s Liberal Party accepts defeat in Brazil as Donald Trump calls result ‘rigged’ (Financial Times, Geoff Dyer and Michael Pooler) shows that Lula’s opposition recognised the result while Trump, predictably, called foul…

Back home, John Healey to focus Budget on ‘everyday fixes’ as energy costs bite (Financial Times, George Parker, Sam Fleming, Claer Barrett, Rachel Millard and Jennifer Williams) shows that the chancellor is talking about helping first-time homebuyers and addressing high energy costs as part of a raft of “everyday fixes” in tomorrow’s Budget. Healey to announce inflation-busting minimum wage rise (Daily Telegraph, Szu Ping Chan and Eir Nolsøe) shows that the chancellor’s going to ratchet up the pressure on employers yet again by increasing the National Living Wage by just under 4%, taking it above £13 an hour for the first time. Inflation is currently running at 3.5%. We’ll put less money in UK if taxes go up, stockpickers warn Healey (The Times, Tom Howard) cites a survey of wealth managers who say that they will invest less in UK-listed companies if the Chancellor makes them face even more tax rises in tomorrow’s Budget. * SO WHAT? * This is obviously going to be an unpopular opinion but I think guessing what’s in the Budget is a mug’s game. No-one knows what’s going to happen unless they’re “in the room” with Burnham and Healey and given that Healey in particular has clamped down on leaks, it’s even harder to predict. We’re not going to have to wait long now to see what happens!

Elsewhere, Defence start-up Helsing moves into missile interceptors (Daily Telegraph, Matt Oliver) shows that the German-based company backed by the founder of Spotify announced yesterday that it had developed a new air defence system (the “Contra” system) designed to shoot down targets using AI. Radar and other sensors will be used to track where the missiles and drones are headed and then AI priorities them into which order they should be shot down. Helsing has decided to move into this area given strong demand from Ukraine and the Middle East.

Anthropic: What you need to know about the high-stakes IPO (The Times, Chris Dorrell) highlights yesterday’s publishing of Anthropic’s IPO prospectus. It talked about an unprecedented growth rate, “irresponsibly large” infrastructure investment, a “novel corporate governance structure” that means ordinary shareholders pretty much get no influence and the possibility that its products could destroy humanity. The prospectus appeals for investors to see the IPO as a chance to “be part of something greater”. ‘Bold but sane’: what we learnt from Anthropic’s 240,000-word IPO filing (Financial Times, George Hammond, Ryan McMorrow and George Steer) says that the flotation, slated for next month, will effectively become a bellwether on how much investors are willing to spend on hope rather than fundamentals. Why you shouldn’t bother reading the Anthropic IPO filing (Financial Times, Lex) suggests that the prospectus is essentially a work of fantasy given that there are so many unknowns both with regard to the present but also the future direction. It all boils down to whether you want to hitch a ride on the AI train and sit back for the ride because you either think it’ll be a massive winner or you won’t. Also, anyone with a US index tracker will own Anthropic directly or indirectly anyway.

Then in Meta plans $95bn stock offering to help cover AI expansion (The Guardian, Dan Milmo) we see that Meta’s announced a mammoth fundraise to cover its AI spending. It’ll come in two parts – $35bn via their new “underwritten public offerings” – the sale of company stock – and $60bn “at-the-market offering” for new common stock to investors at the prevailing market rate in the future. * SO WHAT? * This is a big statement but I would have thought that if anyone can do this, Meta can. I would have thought that financing for other AI companies is going to get progressively harder as AI money-raising fatigue might set in. I would suggest that there will be

more consolidation among companies up and down the AI food chain in order to head off any financing concerns because I guess that there’s comfort in being part of something bigger.

Microsoft to reportedly offer buyouts to 60,000 employees in latest cuts (The Guardian, Gaya Gupta) shows that the tech giant is now offering buyouts to employees as part of broader efforts to cut costs amid the rising use of AI. This comes not long after it announced that it was offering voluntary retirement to around 7% of its US workforce. Those in Xbox, Windows and CoPilot will be participating in the offer while those in cybersecurity, datacentres and marketing won’t be. The Big Tech job cuts continue…

In hardware news, iPhone Duo owners report cracks in Apple’s first foldable handset (The Guardian, Dan Milmo) shows that some iPhone Duo users have been reporting cracks in the screen, although Apple said that this was in a “small number” of units. Reports of the defects started appearing on Reddit and other social media platforms since Friday.

In streaming news, Channel 4 strikes streaming deal with Disney (Financial Times, Daniel Thomas) shows that Channel 4 has agreed to put its linear channel and a lot of its TV shows onto Disney+ at the same time that they’re shown on its main TV channel from early next year. * SO WHAT? * This is huge – and is potentially a way for other terrestrial channels to go in order to survive. Does this mean that the clock will start ticking on the future of other public service broadcasters??

EQT to buy Range Resources in natural gas megadeal (Financial Times, Stefania Palma and Verity Ratcliffe) highlights an all-stock transaction whereby US energy group EQT Corporation has agreed to buy Range Resources Corporation to create the biggest natural gas producer in North America worth over $50bn. * SO WHAT? * This sounds like a good idea strategically as you would have thought there would be big synergy benefits to be had. This could be very useful in a world which is seeing strengthening gas demand.

DoorDash Is in Advanced Talks to Acquire Delivery Rival Instacart (Wall Street Journal, Heather Haddon and Lauren Thomas) highlights the fact that the two companies are in talks which could be finalised as soon as this week (or not). * SO WHAT? * Instacart had a valuation of about $13bn before news of the talks broke while DoorDash has a market cap of about $73bn. Instacart’s share price rose by about 8% on news of the talks while DoorDash’s fell by about 6%. This presumably means that Instacart’s shareholders are delighted with the price being paid while DoorDash’s are not!

In a quick scoot around some of today’s other interesting stories, HSBC quarterly profits surge 32% amid cost cutting (Financial Times, Arjun Neil Alim) shows that Europe’s biggest bank by market value saw big profit gains over the quarter thanks to a combination of cost-cutting and rising interest rates.

As for UK consumers, London flat prices fall at fastest pace for 17 years (Daily Telegraph, Melissa Lawford) cites the latest Land Registry numbers which show that London flat prices have dropped sharply, with owners losing out by about £50,000 on average since last summer. Inner London flats fell the most and it was all thanks to a combination of high mortgage rates, stamp

duty and the government’s clampdown on buy-to-let. The average inner London flat sold in August for £522,200, which is the lowest price recorded since July 2015! Clearly, the government’s new Your First Home scheme isn’t going to touch the sides in the capital as eligibility is capped at £500,000!

Shop price inflation rises to two-year peak before budget (The Times, Isabella Fish) cites the latest data from the BRC which shows that the pace of price rises in British shops hit its highest level in over two years this month thanks to higher energy and logistics costs. This does not bode well as we head into Christmas!

Going to a café to serve yourself instant noodles sounds bizarre to me but it seems to be “a thing” in some places! It reminds me of that fad a few years back of breakfast cereal cafés that seem to have gone now (presumably killed off by Covid). This video loses it for me when the subject of the video starts a) using Spam and b) cutting it with scissors. Why?? It looks like something I’d try once for the novelty and never go back again. What about you?