Wednesday 28/05/25

Trump indicates ‘positive’ progress in US-EU trade talks (The Guardian, Lisa O’Carroll) highlights progress in negotiations as the EU contacted the president to “quickly establish meeting dates” and US stocks jump as Donald Trump touts ‘positive’ progress on EU trade talks (Financial Times, George Steer, Kate Duguid and Emily Herbert) highlights market reaction to this development. In other trade talks, India offers US ‘deep’ tariff cuts, but shields grain and dairy markets (Financial Times, John Reed and Andres Schipani) shows that India is willing to ease on some things but not others ahead of Trump’s deadline of July 9th for a 26% “reciprocal tariff” on all Indian goods.

In news on other Trump projects, US vows to use ‘every tool’ in crackdown on international students (Financial Times, Lauren Fodor and Andrew Jack) reflects the doubling down on student visa applicants as the administration scrutinises applicants’ social media activities more closely. Studyportals, a higher education data provider, observed that the number of students looking at US options has already halved between January and April as they looked at alternatives in Europe, Australia and New Zealand. It added that if current patterns continued, demand for US places could fall by a whopping 70% year-on-year in 2025.

Meanwhile, Donald Trump offers Canada free ‘Golden Dome’ protection if it gives up sovereignty (Financial Times, Steff Chávez and Ilya Gridneff) highlights more transactional

politics by the president as he said that Canada would have to pay $61bn to be part of his “Golden Dome” missile defence shield, unless it agreed to become America’s 51st state, in which case it would be “free”. He said that “they are considering the offer!” but I’m willing to bet money that the Canadians would rather pay up than lose their nationality.

Trump media group to raise $2.5bn to build ‘bitcoin treasury’ (Financial Times, George Steer) moves on from what I said yesterday and say that TMTG announced yesterday that would in fact be raising $2.5bn to buy bitcoin via $1.5bn in fresh equity and an additional $1bn in convertible bonds. The proceeds of this will be used to build a “bitcoin treasury” as the president moves to make the US the “crypto capital of the world”.

Back home, UK economy will be hit by Trump tariffs, says IMF (The Times, Mehreen Khan) highlights the latest musings of the IMF which reckons that Trump’s tariffs will leave a 0.3% dent in the size of our economy next year while Rachel Reeves should refine fiscal rules to avoid emergency spending cuts, IMF says (The Guardian, Phillip Inman) highlights the upgrade that the IMF gave us for growth this year as it also urged the UK chancellor to revise her fiscal rules to avoid the need for emergency spending cuts. This essentially gives her even more of an excuse to change the rules…

BYD’s aggressive push is setting baseline for what an EV should cost (Financial Times, June Yoon) is an interesting article which makes a parallel between what happened in the world of mobile phones and what’s happening now in the world of cars. At first glance, BYD’s decision to cut prices in China of its vehicles by 22% looks like a desperate attempt to build market share. However, it is able to do this because it makes its own batteries, designs its own chips and controls its own operations. This is helping BYD to change the concept of EVs from being “luxury” to being “everyday”. There are similarities between what’s happening here with cars and what happened with mobile phones in the 2010s. Post 2013, smartphone hardware became commoditised and scale became the priority, leading to industry consolidation. This left the only the big vertically integrated makers – Apple and Samsung – being able to keep pricing power and market control. Remember LG, Sony Ericsson, Nokia, Motorola and BlackBerry??  * SO WHAT? * Even for BYD there are limits as to how low it can go on price before it really damages its margin, but in the meantime it’s either going to force rivals to cut prices and take the margin hit or keep prices where they are and lose sales. Weaker ones may even be forced to consolidate. I think that BYD’s timing is actually pretty good because we’re still yet to see the BIG ramp up of EV take-up, so it can turn the screws on rivals and cut out some of the competition before things get properly interesting, particularly when it comes to overseas markets.

Meanwhile, Tesla sales down 49% across Europe in April (The Times, Robert Lea) cites the latest figures from the European Automobile Manufacturers Association which highlights the divergence between rising battery EV sales and falling Tesla sales for the fourth consecutive month, GM Invests in V-8 Engines as It Backpedals on EVs (Wall Street Journal, Christopher Otts and Kelly Cloonan) heralds a move by GM to abandon plans to invest $300m into EV motor production and put $888m into the production of its latest V-8 engines instead and Toyota mounts software challenge to Tesla and Chinese rivals (Financial Times, Harry Dempsey and Kana Inagaki) highlights the Japanese maker’s attempt to catch up with Tesla and Chinese rival’s lead in the area with its in-house system known as Arene. This is all part of a broader effort to get a piece of the action in autonomous driving. I’m not too optimistic here because although Japanese makers are great at manufacturing, they are not so hot on software. Toyota to build more cars in Britain in free trade boost (Daily Telegraph, Daniel Woolfson) shows that the maker is going to build sports cars intended for the US market in Derbyshire, which will be a nice little boost for UK manufacturing. Car import taxes from the UK to the US are 10% whereas if they were sent from Japan, they’d get a 25% tax slapped on them.

UK homeowners selling for 4.5% below asking price, survey shows (The Guardian, Mabel Banfield-Nwachi) cites research from Zoopla which shows that UK homeowners are settling for less than the asking price while UK house sales strongest since lockdown race for space (The Times, Tom Howard) uses the same report to highlight the current frenzy in the property market as estate agents are now busier than they have been since the post-lockdown “race for space” in 2021. A lot of this has been powered by the availability of cheaper mortgages – and although there was a lull in April, activity has rebounded sharply in May. * SO WHAT? * When you consider all the uncertainty in the global economy at the moment it’s interesting to see how the UK property market is reacting. Still, if wages are rising in a tight labour market and mortgage rates are coming down, I guess that people are just thinking that they might as well keep trying to get on that property ladder.

Elsewhere, John Lewis wins approval to build hundreds of homes in Ealing (The Times, Isabella Fish) shows that the John Lewis Partnership has just been given the go-ahead for a build-to-rent project despite opposition from the council and local residents. * SO WHAT? * This is a just a legacy from the previous chair of the partnership who stated an aim of making 40% of its annual profits from ventures outside retail by 2030. This idea was quite rightly dropped as the company then focused on its core retail offering, which it continues to do under its new chief, Jason Tarry.

Meanwhile, Grosvenor’s profits increase sharply due to fast-rising rents (Financial Times, Joshua Oliver) shows that the Duke of Westminster’s property company has reported a boom in profits thanks to rising rents at its offices, flats and shops in Mayfair and Belgravia. The group, which owns a staggering £8.2bn property portfolio, announced an increase in underlying profits of 16.5%. It is controlled by the Grosvenor family which started developing Mayfair over 300 years ago. Occupancy rates at its properties increased to 97% in a steady recovery from the 90% in the aftermath of the pandemic. It certainly sounds like things are going in the right direction here!

Then in Ministers explore plans to ease rules for small builders in England (Financial Times, Daria Mosolova) we see that the government is currently looking at plans to ease the rules for smaller building companies bidding to develop new sites across England as it continues to look at ways to boost the housing supply. Proposals would exempt smaller housebuilders from some onerous environmental controls and the safety levy. A working paper is due to be released in full today. * SO WHAT? * This sounds like a step in the right direction but I would have thought smaller builders are going to need some financial protections to go alongside this given the way that this industry works. The government remains committed to building 1.5million new homes in England by 2029.

In a quick scoot around some of today’s other interesting stories, US consumer confidence rebounds after months of tariff anxiety (The Guardian, Associated Press) cites the latest data from the Conference Board which shows that Americans’ view of the economy improved in May after five consecutive months of decline, McKinsey sheds 10% of staff in 2-year profitability drive (Financial Times, Stephen Foley and Ellesheva Kissin) shows yet another professional services company wielding the axe because of a lack of advisory work as it turns out that its made deep cuts over the last 18 months and Citadel Securities profits jump 70% on surge in trading revenues (Financial Times, Eric Platt) highlights chunky gains for Citadel as it benefited handsomely from Trump-inspired market volatility. Citadel tends to gain market share when trading activity booms.

In tech news, SpaceX Starship rocket fails to deploy satellites and explodes on re-entry (Financial Times, Rafe Uddin) highlights more bad news for Elon as its Starship rocket reached space but it failed to release its payload while part of the rocket was lost on re-entry to the earth’s atmosphere. On a more positive note for the company, Elon Musk’s Starlink to get bigger slice of UK broadband network (Daily Telegraph, James Warrington) shows that Ofcom is going to grant new temporary spectrum licences to Starlink to boost frequencies and therefore expand network capacity. This sounds like great news for those with patchy broadband coverage.

OK so I thought I’d include this phone call for a bit of fun today (and it takes the theme of pizza on from yesterday!). This video also made me think of this classic prank call (warning – there are swear words in this so if you are offended please avoid!). If you haven’t heard this before you’re in for a treat 🤣🤣🤣