Wednesday 18/06/25

In Trump things, Donald Trump calls for Iran’s ‘unconditional surrender’ (Financial Times, Lauren Fedor, Demetri Sevastopulo and James Shotter) shows that the president’s long on chat and short on action (at the moment anyway) as he made a number of comments that make it look like he’s open to the possibility of joining the Israeli attacks on Iran.

Meanwhile, Howard Lutnick hails Donald Trump’s $5mn investor visa as almost 70,000 apply (Financial Times, Alex Rogers) highlights the excitement of the US commerce secretary over the “success” of the new golden Trump Card, the $5m a go visa scheme, as almost 70,000 people have signed up for it. The commerce department launched a website last week for would-be applicants, on trumpcard.gov, to sign up and provide basic details. Lutnick boasted that “the card will be made of gold…it will be beautiful”. It is designed to appeal to business leaders and companies looking for legal residency in the US for themselves or their employees. Applicants are expected to be vetted by the departments of homeland security, state and commerce.

Donald Trump plans to delay TikTok ban for a third time (Financial Times, Alex Rogers, Demetri Sevastopulo and Hannah Murphy) shows that the successful video-sharing platform has been granted yet another stay of execution for 90 days because Trump has so far failed to deliver a deal that has been approved by China to offload a stake in the platform that will satisfy American security/privacy concerns.

Trump Mobile may mark a golden moment for US upstarts (Financial Times, Lex) follows on from yesterday’s story about the The Trump Organization launching a $500 gold smartphone and shows how this could actually make some serious money because Mobile Virtual Network Operators (MVNOs) aren’t as prevalent in the US as they are in Europe and although ultimately this has made decimated profitability on this side of the Atlantic, there’s lots of money to be made in the meantime! MVNOs – like Sky, Tesco and Lebara over here – lease capacity from network builders such as Vodafone and then go for market share. Why Celebrity Cellular Brands Are Everywhere (Wall Street Journal, Patience Haggin) points out that there have already been a number of celebrity-backed mobile services in the US that become real money-spinners if they get acquired and that although they’re relatively easy to set up, they are difficult to make successful. * SO WHAT? * I said this in yesterday’s podcast but it seems to me like Trump is building some kind of parallel universe (or “Trump-verse”, perhaps?) where his fervent supporters can wear Trump watches and baseball caps, trade his memecoins, communicate on his Truth Social channel and now his golden phone. Is he going to be making a bank next, perhaps? Maybe it will be crypto-based somehow. At the same time as preaching to his masses, he expels dissenters and cosies up to former enemies (e.g. Russia) whilst pushing back former allies (e.g. Canada). Amidst all this, it looks like he is doing his best to make money for himself and his family. I have never seen anything like this before from the leader of a developed country.

Trump threatens to keep 25% tariff on UK steel imports over Port Talbot concerns (The Guardian, Kiran Stacey) shows that the president is pushing for guarantees about the steel

imported by Tata’s Port Talbot factory but UK hopes for steel and pharma deal with US by July (Financial Times, George Parker, Gill Plimmer, David Sheppard and Aime Williams) suggests that the mood is hopeful that any concerns can be ironed out in the near future.

In Reeves things, Rachel Reeves signals UK defence spending will not rise above 2.6% of GDP this parliament (Financial Times, Same Fleming and Chris Giles) highlights some expectation management by the chancellor who said that 2.6% of GDP is as much as the government can do for the duration of this parliament despite pressure from the US for NATO countries to spend more. Reeves considers reversing non-dom tax raid after millionaire exodus (Daily Telegraph, Eir Nolsøe and Lucy Burton) shows that the chancellor is looking at making a U-turn on its non-dom tax stance to stem the outflow of millionaires and Labour’s miscalculation on taxing non-doms (Financial Times, the editorial board) urges her to do this ASAP, although it is now probably too little too late. It observes that the previous system was too lenient, but Labour’s changes pushed it too far in the opposite direction, prompting wealthy non-doms to quit Britain to head to places like the United Arab Emirates, Italy or Switzerland, who are making more efforts to attract them. * SO WHAT? * Much was made of this and you do wonder whether the government’s credibility is going to take a battering with this coming so soon after the winter fuel-payment U-turn as well. Still, that shouldn’t stop the government from admitting a mistake. Estimates by the CEBR suggest that if 25% of non-dom taxpayers leave the UK, the net gain for the Treasury would be zero – anything more than that, and there would be a net loss. It is also worth considering that it might be a good idea sort this out sooner rather than later in order to attract disaffected Americans. Generally speaking, it would be great to attract people that can create wealth and growth for the economy.

Over half of English councils face insolvency under £5bn deficit, MPs warn (The Guardian, Richard Adams) is the sobering view of the Public Accounts Committee (PAC) which told the Treasury and other departments to address spending as a matter of urgency, particularly in the area of special educational needs. The PAC called for the Ministry of Housing, Communities and Local Government, the Treasury and Department for Education to work together on how cumulative deficits will be treated. More broadly, CBI warns of triple whammy on slow economic growth (The Times, Mehreen Khan) highlights the CBI’s concerns about the cumulative effect of rising labour costs, inflation and uncertainty on GDP as it downgraded its forecast for annual growth this year and next.

Then in China nears peak oil demand amid ‘extraordinary’ EV sales (The Times, Emily Gosden) we see that the IEA’s latest report predicts that China will reach peak oil demand within two years as sales of EVs continue to skyrocket. On the other hand, it reckons that American oil demand will rise because of the de-emphasis of EVs under Trump’s administration. Overall, though, it predicts peak global oil demand in 2029.

Amazon boss says AI will mean fewer ‘corporate’ jobs (Financial Times, Rafe Uddin) shows that Amazon’s boss is being up-front about the effect of AI on employee numbers for the next few years. Andy Jassy said in a memo yesterday that the company would be using AI across all operations, but particularly in logistics, in order to further screw down costs. Although this means some jobs will change, overall he said that net-net there will be fewer of them. * SO WHAT? * Although this is a bit gloomy, I think it’s refreshing to hear a Big Tech leader being honest about the effect of AI. So far, many have opted to take the more positive approach and emphasise the improvements in efficiency that AI will bring.

Using AI makes you stupid, researchers find (Daily Telegraph, Matthew Field) offers an interesting take on the effects of using AI – that it will make people less intelligent by restricting the development of critical thinking, memory and language skills, according to the latest research by MIT. Funnily enough, it found that people who relied on ChatGPT to write essays displayed lower brain activity than those who had just gone old school and used their brains! * SO WHAT? * The question here is whether the use of AI is going to cause lasting damage to our brains. The

research expressed concerns that frequent use will lead to “skill atrophy” in tasks like brainstorming and problem-solving! I thought that there were three particularly interesting takeaways from this research – that participants who relied on the chatbots were only able to remember a very small amount of information about their essays, which suggests either poor engagement or that they’d just failed to remember it; that those using search engines only displayed slightly lower levels of brain engagement than those who’d gone on with zero tech involvement; and that essays that had been written with ChatGPT assistance were pretty homogenous.

Then in Investors in Musk’s AI company undeterred by Trump clash (The Times, Katie Prescott) we see that xAI is on the verge of raising $9.3bn in debt and equity, implying that investors are not concerned about the recent collapse in the Musk/Trump bromance. I guess that people are concluding that they both need each other!

In a quick scoot around some of today’s other interesting stories, US retail sales fall by most in 2 years as Trump tariffs distort spending (Financial Times, Myles McCormick and Stephanie Stacey) cites the latest stats from the US Census Bureau which show a concerning drop as consumers continue to react to Trump’s tariffs. * SO WHAT? * This number fell below economists’ expectations and came after a spending spree in April when consumers stocked up on cars and auto parts. Given that consumer spending has been a major driver of the US economy since the pandemic, this is clearly concerning if it becomes an entrenched trend.

For Starbucks, China is a big market with little appeal (Financial Times, Lex) follows on from last week’s story about Starbucks’s turnaround efforts and suggest that it may be time for the coffee giant to de-emphasise its China business. Since opening its first branch there in 1999, it built up a 42% market share at its peak in 2017 but thanks to fierce local competition from the likes of Luckin and Cotti Coffee its market share has cratered to just 14% last year – and this is despite more than doubling its store numbers. At the moment, the number of outlets in China equates to about 20% of its total footprint but they only account for 9% of total revenues and 7% of group operating profit. * SO WHAT? * I definitely think that Starbucks needs to acknowledge this change, so it makes sense to seek out a partner or sell a stake in the China business. McDonald’s and Yum! Brands have done this in the past, so it won’t be alone in having reached this conclusion! The China market seems to be evolving at pace with new drinks and better automation and technology while Starbucks’s domestic market has been stagnating. Given that

Starbucks’s China business could be worth just $6bn versus its market cap of over $100bn, it would not be unreasonable to get rid so that the CEO can concentrate on getting his core offering right in his own backyard.

Takeover talk grips UK banking with Santander, TSB and Metro in frame (The Times, Helen Cahill) does a nice job of rounding up all the recent newsflow on UK banks as we’re now seeing interest in Metro Bank and TSB following last year’s consolidation in the financial sector with Nationwide merging with Virgin Money, Coventry Building Society buying Co-Op Bank, NatWest buying most of Sainsbury’s banking operations and Barclays buying Tesco Bank’s credit cars, loans and savings accounts. Interesting times!

Then in Poundland to shut 68 stores in restructuring that puts 2,000 jobs at risk (The Guardian, Sarah Butler) we see that the inevitable is happening after the discount retailer was sold to Gordon Brothers for a pound last week. 68 shops and two distribution centres are going to shut down with over 2,000 jobs at risk. In addition, 80 more stores look likely to be shut down as the new owners try to turn this business around. As things stand, the owners want to cut store numbers from 800 to no more than 650. It also wants landlords to cut rents to zero on up to 180 stores. The company will also cease online trading, ditch its Perks loyalty app, stop selling frozen goods and reduce its range of chilled foods. This is clearly nasty, but par for the course when a PE firm buys your company for a token amount.

I guess I’m in a musical mood at the moment! Here is a brilliant father-son cover of a classic!