Wednesday 23/09/26

US and Iran hold first talks since June as Donald Trump threatens ‘annihilation’ (Financial Times, Abigail Hauslohner) shows that talks were held between the two parties on the sidelines of the UN General Assembly yesterday not long after Trump threatened to “annihilate” Iran. Oil prices didn’t move much, presumably because we’ve heard all this before. He also threatened more sanctions on Iran and then, for good measure, insulted the Cuban delegation who then stood up and left the room when he predicted that the country “would fall”. He also used his speech to slag off the UN Human Rights Council, the International Criminal Court and the International Maritime Organization but was less rambling than his previous rant on this same stage last year. Remember last year he said that Europe was “going to hell” and suggested that he deserved to get the Nobel Peace Prize.

Meanwhile, US proposes $10bn fund with Arab allies to bypass Hormuz (Financial Times, Andrew England and James Politi) showed the president airing the possibility of putting together a joint investment fund with Arab states to repair and bolster energy and other infrastructure that’s been hit during the Iran war in order to help the region bypass the Strait of Hormuz. There was talk about the US putting $5bn into the pot as part of the Partnership for Allied Construction & Trust, an initiative designed to negate Iran’s power in the Strait. There’s already talk among some Gulf states, including Saudi Arabia and the UAE, about new pipelines. The problem is that they are also vulnerable to attack as we saw recently when Riyadh’s East-West pipeline had to be shut down following a drone attack. ‘MBS will not forget’: Donald Trump’s reluctance to fight Houthis rattles Saudi Arabia (Financial Times, James Politi, Steff Chávez and Andrew England) points out that there is growing distrust between Saudi Arabia and the US given Trump’s apparent reluctance by the latter to help the former in its fight against the Houthi rebels. America’s reluctance to help Saudi Arabia in its time of need will not be forgotten but you don’t know how that’s going to manifest itself!

In Donald Trump says he would back US diesel export ban (Financial Times, Myles McCormick and Jamie Smyth) we see that Trump is getting behind the idea of a diesel export ban as prices rise heading into the midterm elections. * SO WHAT? * Republicans in rural regions have been ratcheting up the pressure to get the ban because the agriculture and industrial sectors are hurting badly. This is particularly interesting because the administration said as recently as Monday that it would NOT bring in such a ban, so this represents a major u-turn.

Further to what I said yesterday about Burnham appealing for a global approach to AI oversight,

Donald Trump rejects ‘globalist scheme’ to control AI in blow to Andy Burnham (Financial Times, George Parker, Lucy Fisher and Jim Pickard) shows that he flatly rejected such an idea and said that he would be rebranding AI as “superintelligence” in future. Despite this, the first meeting between Burnham and Trump seemed to go OK.

The issues facing Burnham and Healey ahead of the Budget next month continue to pile up. UK borrows £18bn in August, putting pressure on Healey before budget (The Guardian, Phillip Inman) cites the latest release from the ONS which shows that the government borrowed a higher-than-expected £18.3bn last month, prompting some economists to say that it’s pretty much nailed-on for the chancellor to raise taxes in the upcoming Budget.

Talking of which, Burnham urged to scrap ‘ruinous’ family farm tax in the Budget (Daily Telegraph, Patrick Galbraith) shows that the National Farmers’ Union (NFU) has officially called for the PM to ditch the “ruinous” family farm tax in the next Budget while The over-50s benefits crisis making Labour’s welfare problems worse (Daily Telegraph, Szu Ping Chan and Ben Butcher) cites the observation by the Institute for Fiscal Studies (IFS) that the government needs to look at the over-50s demographic when it comes to benefits payments and not just focus on young people. It takes the example of the Personal Independence Payment (PIP), which is Britain’s main working age disability benefit. Claimants get up to £10,000 per year in cash to help them pay for the extra costs of living with a disability or long-term physical or mental health condition. However, the payments don’t take into account how much you earn or whether you have a job or not. * SO WHAT? * Right now, over half of the people claiming PIP are over 50 and older people are almost twice as likely to claim a disability benefit than younger people. I guess this is just one example of where the government is going to need to make benefits better targeted to the people that actually need them in order to be more efficient and potentially bring down the benefits bill.

Then in climate news, Aphid outbreak to ruin Britain’s lettuce harvest (Daily Telegraph, Patrick Galbraith) shows that there’s bad news for salad lovers as the British Leafy Salads Association (BLSA) said that crisphead, romaine and iceberg lettuces are going to be particularly badly hit by the worst outbreak of aphids in a generation. Intense heat and drought in the summer have been ideal for aphids. Climate change strikes again…

How China and the US can work together on AI security (Financial Times, the editorial board) suggests that although America doesn’t want to lose its lead over China and China doesn’t want to be locked into second place by an enforced AI slowdown, there is something to be said for co-operation given that there are some common interests that could be met by working together. Neither side wants AI to fall into the hands of non-state actors like terrorist groups, rogue non-state groups or organised crime – nor do they want AI agents escaping testing environments and hacking indiscriminately. Common ground could be found for controlling access, identifying customers, testing models and putting together ways to contain risks. Given how quickly things could spiral out of control when something goes wrong, it would be good to collaborate on at least some things! The question is whether they will pull together now or are we going to have to wait for a catastrophe to happen before anything is done?

Anthropic and OpenAI release cheaper models as price war intensifies (Financial Times, George Hammond) shows that both companies released cheaper versions of their cutting edge models yesterday as competition between themselves and Chinese rivals continues to intensify. Claude’s Opus 5.5 is about 40% cheaper to use than its predecessor and lower cost versions of

OpenAI’s ChatGPT-6 followed the release of its most recent ChatGPT-6 Astra model. * SO WHAT? * It feels like we’ve matured from an era of getting the best, most cutting edge models to taking a step back and looking at the bang for buck we’re getting. This means that if a model is “good enough” then companies can stick to that and save themselves some money. Then there’s the rise of the “open-weight” models that users can customise and run on their own hardware. If this is the case, then you do wonder whether this is going to affect the rapid expansion of data centres at some point…

In Mercedes-Benz aims to close AI gap with China rivals through Wayve deal (Financial Times, Kana Inagaki and Harry Dempsey) we see that the premium German carmaker has agreed a partnership with Wayve, the London-based autonomous start-up, to help it keep up with rivals regarding tech and vehicle design. Wayve already has agreements with Nissan and Stellantis. Merc said that it wants to integrate Wayve’s autonomous driving system into at least one model that it’ll launch in the next two years. * SO WHAT? * European carmakers are being left behind in autonomous driving tech by the likes of Tesla and Chinese companies such as Xpeng, so this sounds like a way forward…

Gap Is Getting Into the Boy-Band Business (Wall Street Journal, Suzanne Kapner) is an interesting article which highlights the apparel retailer’s continued momentum which has been assisted in some part by partnering up with American boy band Just Your Type, known as JYT. The band is going on a music tour at malls and will do meet-and-greets in Gap stores. Gap is going to co-produce a docuseries on the creation of the band and it has launched a clothing collection that’s been co-designed by the five band members. * SO WHAT? * I think that this is a very clever marketing tactic as this will help Gap to go beyond just being an apparel retailer and become part of pop culture once more (it was a big deal in the 90s!). The CEO calls this current strategy “fashiontainment” but there are lots of other potential partnerships in the works with automotive, gaming, entertainment and consumer products companies in addition to involvement with music, movies and sporting events. I think that this sounds very refreshing – and it’s clearly working at the moment!

Elsewhere, Hugo Boss UK lifts dividend to £15.4m after profits surge (The Times, Isabella Fish) highlights success at the German fashion label as it turns out that its profits jumped by over two-thirds last year. The company’s UK arm said that it would pay out £15.4m in dividends and that its success was thanks to more cost efficiency, better control of margins and the execution of various key initiatives. This is welcome news for a company that’s come under a lot of fire recently…

B&Q owner raises profit forecast after ‘standout’ Screwfix sales (The Times, Guy Taylor) highlights a strong performance for Kingfisher, the parent company of B&Q and Screwfix (along with Castorama and Brico Dépôt in France), thanks to a particularly strong performance from

Screwfix. Demand for kitchens, aircon and garden leisure products had been strong but like-for-like sales in the first half did suffer from a slowdown in spending on big ticket items. The company is bracing itself for the Budget and wants the government not to raise rates on large retail stores. * SO WHAT? * I think that this sounds pretty impressive overall given the macro environment, lacklustre property market and lack of consumer confidence. Unfortunately, I don’t see things improving much from here…

In leisure news, Tui tightens profits guidance on surge in late holidays in the sun (The Times, Jessica Newman) shows that Tui has tightened its full year forecasts into a narrower range (that was within the previous range) thanks to a late uptick in bookings for holidays in Greece and Spain in the last few weeks. Tui’s still keeping the market guessing on its revenue forecasts though. Europe’s biggest travel company says that the trend for later bookings is continuing – and that’s a pain for them because it makes it harder for them to plan.

Then in Qantas pushes ahead with new ultra-long flights despite high fuel prices (Financial Times, Peter Wells and Peter Campbell) we see that the Aussie flag carrier is going to plough on ahead with plans for non-stop 22 hour flights despite the astronomical price of jet fuel at the moment (they’ve doubled since the start of the Iran war). The company maintains that they will still be profitable. Its Sydney to New York service will launch in the middle of 2028. I guess there’s a lot of time between now and then for jet fuel prices to calm down! This will complement the direct Sydney to London flight that is scheduled to start in October 2027 as part of its “Project Sunrise” ultra-long flight strategy. The new direct routes will be more expensive than the ones that stop to refuel.

In a quick scoot around some of today’s other interesting stories, European drugmakers say they are ‘losing ground’ to US and Chinese rivals (The Guardian, Julia Kollewe) highlights a join letter entitled “Europe is losing the Pharma Investment Race” from the chairs of nine big European pharmaceutical companies – including AstraZeneca, GSK and Novo – addressed to UK and European leaders. It appealed for help to “safeguard our companies’ future” as the companies argue that US and Chinese counterparts are seeing a lot more investment and have better approval infrastructure. According to the European Federation of Pharmaceutical Industries and Associations, Europe’s share of pharmaceutical R&D has dropped from 43% in 1990 to 31%.

Polymarket presses Europe to treat its bets as financial products (Financial Times, Nikou Asgari, Martin Arnold and Stephanie Stacey) shows that the prediction markets platform is upping efforts to persuade European and UK regulators that it should be treated as a financial services group and not a gambling company. Clearly this will make international growth a lot easier! Polymarket has become popular in the US because it gives people the power to bet on all sorts of future events. * SO WHAT? * As you know, I think that prediction markets are dodgy as hell given how easily they can be abused with insider trading and market manipulation but clearly Polymarket wants to prize the UK and European markets open.

Airtel Money poised to launch one of London’s biggest IPOs in recent years (Financial Times, Keiran Smith) highlights intentions of the African mobile payments company to float on the LSE. It is believed to be filing the paperwork today and could be looking at raising at least $800m at a valuation of around $8-9bn. This would be great news for the LSE if it goes ahead. There have only been seven UK listings this year, raising £577.2m, which is pathetic.

Then in Jim Ratcliffe halts production at Hull chemical plants over ‘ridiculous’ gas prices (The Guardian, Jillian Ambrose) we see that Ineos is going to “mothball” three chemical plants because the cost of gas is “ridiculously high”. The company’s owner said that gas prices in the UK were 12 times higher than in the US and eight times more expensive than the coal used in chemical plants in China. Gas prices have always been higher in the UK than other parts of Europe because we rely on it for heating and electricity generation. This demand used to be met by North Sea reserves but now we have to rely increasingly on imports.

The co-ordination required to do this is pretty incredible! This guy is very impressive 🤯!