Wednesday 12/02/25

EU to retaliate against US steel and aluminium tariffs (Financial Times, Andy Bounds and George Parker) shows that the EU is making noises about retaliating against the impending US tariffs, with EC president Ursula von der Leyen saying that “The EU will act to safeguard its economic interests” while Canada, Mexico and EU criticise Trump’s metal tariffs amid fears of trade war (The Guardian, Jon Henley) points out that Canada, Brazil, Mexico and South Korea are the biggest steel exporters to the US while 25% of EU steel exports go there. The respective countries’ leaders are all objecting to the tariffs but UK diverges from EU on US tariffs and artificial intelligence safety (Financial Times, George Parker and Anna Gross) shows that we may be taking a different course as Britain’s new ambassador to the US, Lord Peter Mandleson, said that we should try and take advantage of Brexit by saying that Britain can earn a living in the world by being “not Europe”.

Our trade minister already informed MPs that the UK would hold back from threatening retaliatory tariffs. We also also joined the Americans in not signing a global AI agreement in Paris because its terms were deemed to be overly-focused on safety and ethics rather than on national security. * SO WHAT? * Trump has put world leaders in a very tricky position where they are having to perform very different balancing acts with protecting their own trade on the one hand whilst not further “offending” Trump’s sensibilities on the other. In theory, Britain is in prime position between the two sides and could in theory get the best of all worlds, but the thing is I don’t think we’re in a strong enough economic position to be able to do too much, certainly with the Americans. We may stand more chance with a Europe that appears to be splintering at the moment…

Chief executives upbeat on UK economy as 82% expect profits to rise (The Times, Jack Barnett) sounds a positive note – for a change – about British business sentiment as a report by EY-Parthenon showed that a whopping 82% of chief execs expressed optimism about the business landscape for the next 12 months – a significant increase from the 67% level it was at in September. The vast majority of leaders thought that profits and income would also rise. * SO WHAT? * This seems to run counter to many other indicators we’ve been seeing recently, particularly in terms of sentiment in hiring and the overall reaction to cost rises for businesses in the latest Budget. The Bank of England’s recent halving of its full-year growth forecast for the UK also suggests a lack of confidence. Another VERY interesting thing to come out of this report was that 99% of chief exec respondents said that they would engage in some form of transaction activity over the next 12 months. Clearly this is great news for everyone in the deals food chain!

It seems that DEI is continuing to D-I-E a death in Walt Disney cuts diversity category from executive pay scheme (Financial Times, Christopher Grimes and Anna Nicolaou) as the company has become the latest company to ditch its “diversity and inclusion” policy to be replaced by a new “talent strategy” metric in its executive pay scheme. Goldman Sachs abandons IPO board diversity pledge (Financial Times, Joshua Franklin) shows that the investment bank has decided to abandon the rule that it will only act in flotations for companies in the US or EU that have at a certain number of diverse board members (it was initially one, but this was later amended to two – one of whom had to be a woman). The policy was originally put in place in 2020. * SO WHAT? * So many companies have been abandoning (or severely watering down) their DEI strategies since Trump came to power. Meta, McDonald’s and Target are among the companies to ditch them, and they won’t be the last. It seems to me that companies have been itching to do this and have been waiting for the right time to do so. Now that Trump is in, they can blame it on him!

In terms of what consumers are spending their money on, Kering sales plunge as Gucci turnaround stalls (Financial Times, Adrienne Klasa) shows that they’re not spending it at the company’s biggest brand, Gucci, as its Q4 numbers came in below expectations. Gucci accounts for about 50% of group sales and two-thirds of profits and is currently looking for a new creative director after ditching the current one just two years into his stint. * SO WHAT? * The company has consistently blamed the wider slowdown in luxury but the fact is that although some companies have definitely been affected by it, some (like Richemont and Hermès) have not. Clearly, the company needs to get its act together and find the right replacement ASAP!

Costa Coffee brews dismay for Coca-Cola (The Times, Fintan Hogan) highlights the disappointing performance of Costa Coffee, according to its parent company Coca-Cola. Coffee sales have been disappointing but then coffee bean prices did hit a 50-year high in December and consumers have already been hit with price increases. * SO WHAT? * This is a bit of a downer for the coffee shop chain given that everyone was singing its praises only last year for its “strong performance” in the UK and China. Its self-service machine business was also so successful that competitors started to copy the idea. That all seems to be in the past for now and it clearly needs to come up with a new plan to stimulate itself out of its current rut.

Then in TUI shares drop as demand for holidays this summer slows (The Times, Robert Lea) we see a rare mis-step from the company as news of slower bookings for the upcoming summer season prompted investors to sell the shares and worry more about the state of holiday demand in Europe. The company maintained its forecasts for the full year and emphasised its focus on new growth markets outside its traditional European stomping ground. The biggest drop-off in performance came from its northern European business, which is mainly made up of the UK. * SO WHAT? * Given that the UK is Tui’s second biggest market, this is a big deal and the company said that the weakness in booking growth is due to fewer price cuts and a shift in interest to new destinations outside traditionally strong markets like Turkey. I think that this is a tad concerning because it seems to me that airlines and other firms involved in travel have been doing pretty well over the last year or so despite pressures on household incomes. Are we seeing an end of the good times for now? Or is this just a Tui thing??

Boost for UK borrowers as Santander ‘fires starting gun’ on mortgage price war (The Guardian, Zoe Wood and Rupert Jones) highlights the potential race for property buyers as Santander is going to start offering two and five-year fixed rate mortgages under the 4% mark, the catch being that buyers have to put down a 40% deposit. This follows on from the Bank of England’s decision last week to cut interest rates from 4.75% to 4.5%. * SO WHAT? * Santander has become the first major lender to dip below the 4% mark on two and five-year fixed mortgages but I’m sure others will now follow, particularly as lenders scramble for business ahead of the stamp duty deadline in April.

In Chinese Battery Giant CATL Applies for Hong Kong Listing (Wall Street Journal, Sherry Qin) we see that the world’s biggest EV battery company put in an application yesterday for a secondary listing in Hong Kong. * SO WHAT? * Increasing numbers of Chinese companies are looking into having secondary listings in Hong Kong after a somewhat dry period in the territory. I guess that this must be a good compromise between getting themselves more access to overseas investors whilst also not offending China itself by, say, going for a New York listing.

China’s carmakers shift up a gear (Financial Times, Lex) is an interesting article that follows on from what I said on Monday about the possibility that two state-owned car makers – Dongfeng

and Chongqing Changan – could get together. It observes that the EV market in China is evolving and an overhaul is due as domestic winners and losers continue to emerge. * SO WHAT? * China has a lot of experience in consolidating fragmented industries and bolstering the state-owned ones – like SAIC Motor and Guangzhou Auto – and private sector ones – like Geely and Great Wall – so if the merger between Dongfeng and Changan goes ahead, it could herald a very interesting period in Chinese automotive history. This will presumably make it much harder for non-Chinese makers to do well in China. It may also mean that Chinese auto manufacturers will have an even more compelling offering in overseas market than they have already!

In a quick scoot around some of today’s other interesting stories, China’s tech stocks enter bull market after DeepSeek breakthrough (Financial Times, Arjun Neil Alim) highlights the strong performance of the Hang Seng Tech index which covers the 30 biggest tech groups listed in Hong Kong. It’s gone up by 25% from its mid-January low, meaning that it is now officially in bull market territory. This happens when share prices rise by 20% or more from a previous low for a sustained length of time. Despite all the hype behind US Big Tech, this performance has outpaced that of the NASDAQ 100, which has seen an increase by just 4.4% over the same period of time. * SO WHAT? * It looks like the recent DeepSeek bombshell has reignited foreign interest in Chinese tech companies as the market has seen a major uptick in inflows.

In BP pledges ‘new direction’ after profits fall by a third (The Times, Emily Gosden) we see that BP’s CEO has promised a “new direction” for the oil major, prompted by weakening profits and

the prospect of having to engage with activist investor Elliott Management, which has been building up a stake in the company. Details of this new plan will be revealed at an investor day on February 26th. An emphasis on oil and gas and a de-emphasis on low carbon spending plans are expected.

Elsewhere, Real estate developers pile into UK student housing sector (Financial Times, Joshua Gabert-Doyon and Joshua Oliver) shows that private developers are not being put off by falling numbers of international students and ongoing financial issues in the higher education sector – and are buying into UK student housing regardless. According to research by Knight Frank, private developers made 22 land deals in the purpose-built student accommodation market over the course of last year. They like the high rests and property density.

This race is my idea of hell on Earth. Although it looks “simple”, my calves and lungs ache just watching this thing 🥵🥵🥵! That being said, I’m going to be doing a CrossFit competition this weekend. This will undoubtedly involve me grimacing and making horrendous gurning faces whilst doing four team workouts throughout the day where I shall be considering my life choices…please pray for me 🙏🙏🙏