Wednesday 19/03/25

In Vladimir Putin agrees 30-day halt to strikes on Ukrainian energy infrastructure in call with Donald Trump (Financial Times, Max Seddon, James Politi, Polina Ivanova and Christopher Miller) we see that some progress has been made in Ukraine as Putin has ordered his military to stop targeting Ukrainian energy infrastructure for 30 days but he has not yet agreed to an unconditional ceasefire. This is slow progress and it seems to me like Putin is the least motivated party to make a quick deal. However, it is progress.

Meanwhile, Germany’s parliament approves Friedrich Merz’s €1tn spending plan (Financial Times, Anne-Sylvaine Chassany) shows that Germany’s parliament approved incoming chancellor Merz’s plans to access up to €1tn to spend on the military and infrastructure by loosening Germany’s strict borrowing limit. It managed to get the two-thirds majority it needed and now needs to get the approval of Germany’s upper house this Friday…

So far, Trump’s economic moves have unnerved many around the world. Investors slash US equity holdings by most ever, BofA survey shows (Financial Times, Mari Novik, Ian Smith and Emily Herbert) cites Bank of America’s closely watched fund manager survey as showing that investors have made the “biggest ever” cut to their US equity allocations in March in a “bull crash” in sentiment (👀 look out for my definition of a “bull crash” in our social channels today 😁). Worries about stagflation and the global trade war are among the downers here and the month-on-month drop in investor sentiment is the biggest since Covid in March 2020. Conversely, allocations to European equities have shot up to their highest level since July 2021 – the biggest shift from US to European equities since 1999! Wall Street stocks slide as sell-off in tech shares picks up pace (Financial Times, George Steer and Mari Novik) shows that US stocks had steep falls yesterday, embodying those fears I just referred to above. That being said, a Fed report showed US industrial production rose by a lot more than analysts had been expecting. Although this may allay fears of a recession for now, the full effect of the “Trump drag” has not really kicked in yet…

There is another thing that has made the papers today – Is Donald Trump above the law? (Financial Times, Stefania Palma) which refers to Supreme Court Justice John Roberts making a rare statement to criticise Trump’s attack on American judges. Trump had suggested that a judge

whose conclusion he disagreed with should be impeached. Roberts didn’t name Trump, but said that the threats were “not an appropriate response” to rulings he didn’t agree with. * SO WHAT? * America’s judicial system has been under sustained attack recently as Trump continues to push the boundaries of what he can do. Yesterday, a federal judge in Maryland ruled that DOGE “likely violated the United States Constitution” in closing down the US Agency for International Development and a few days ago, US immigration officials apparently ignored a Massachusetts judge’s order and deported a Lebanese doctor after holding her in a Boston airport for 36 hours. If Trump continues to ignore court rulings, the country could be on a slippery slope because if officials stop following the law, the president could be inclined to ignore it completely.

Elsewhere, Donald Trump’s trade uncertainty pushes Bank of Japan to hold interest rates (Financial Times, Leo Lewis and Harry Dempsey) shows that Japan’s central bank decided unanimously to hold interest rates steady at the 0.5% mark after a two-day meeting. This had been widely expected and the Bank of Japan said that “high uncertainties” persisted on Japan’s economic activity and prices. Clearly, Japan is likely to be highly exposed to Trump’s tariffs, so it would be unwise to do anything rash at this stage…

Back in the UK, Reeves to squeeze public spending further in Spring Statement (Financial Times, George Parker and Sam Fleming) highlights the chancellor’s pronouncement yesterday that she would be cutting £5bn from the welfare bill. She is also looking to make additional cuts elsewhere. It looks unlikely at this stage that she will loosen her fiscal rules.

Then in VR headsets, yoga mats and pool sliders added to UK ‘inflation basket’ (The Guardian, Richard Partington) we see that the annual re-jig of what’s in the virtual basket of goods that helps us measure whether prices are going up or down has been made. VR headsets, yoga mates and men’s pool sliders are in while local newspaper ads, oven-ready gammon joints are out. * SO WHAT? * It’s always interesting to see what the changes are because the basket is supposed to reflect what people ACTUALLY buy. It is obviously important to keep track of this because these prices are the ones that decide the overall state of inflation. In this case, you could interpret this as reflecting VR becoming more part of our lives and the ongoing death of traditional newspapers.

In chip news, Chip sector supplier raises $3bn in Japan’s biggest IPO since 2018 (Financial Times, Harry Dempsey and David Keohane) we see that semiconductor materials group JX Advanced Metals had a nice little 2.8% bump up on its trading debut yesterday. The flotation raised $3bn in Japan’s biggest IPO in almost seven years! The money raised was even greater than that of October’s float of Tokyo Metro, Tokyo’s subway operator. * SO WHAT? * This is impressive but could have arguably been even more impressive had it not happened at a time when tech and AI stocks have come under pressure – first from the DeepSeek shock and then Trump’s tariff-brandishing.

Then in Nvidia’s Jensen Huang unveils superchip and General Motors tie-up (The Times, Louisa Clarence-Smith) we see that the advanced chip supremo yesterday announced a partnership with GM to integrate AI into its cars, factories and robots and unveiled the new Vera Rubin superchip. This chip will succeed the Grace Blackwell chips, which recently started to be shipped out in high volumes. * SO WHAT? * This is impressive stuff and Huang said that demand for GPUs from the top four cloud service providers is still increasing. This all sounds great, but that DeepSeek moment will have sowed the seed of doubt in the minds of many! Tariffs could also prove to be more problematic over time but I guess we’ll just have to wait and see…

Elsewhere in the world of AI, Anthropic set to focus on business users in search for new revenues (Financial Times, Cristina Criddle) shows that the start-up is on the verge of releasing a range of features focused on business users. It added that the revenue it’s getting from developers and enterprises via its application programming interface (API) is growing at double the rate of its consumer subscriptions! * SO WHAT? * The focus on business users sounds like a good move because although mass-market adoption is good for recognition, recognition doesn’t pay the bills! The company now has an implied valuation of over $60bn after its most recent funding round. Rivals are also trying to aim their products at a corporate audience – Microsoft has rolled out Co-Pilot across its Office productivity software and OpenAI is marketing ChatGPT enterprise, for instance – so it’s not going to have the market all to itself!

Then in Microsoft teams up with AI start-up to simulate brain reasoning (Financial Times, Michael Peel) we see that Microsoft has joined up with Swiss start-up Inait to develop an AI model that copies mammal brains’ powers of reasoning in a number of areas including financial trading and robotics. * SO WHAT? * This is notable because the model can learn from real-world experiences rather than picking up on correlations in historic data. Essentially, the model is trying to copy our brains! AI models based on brain simulations could potentially use less electricity and learn more quickly.

Why China is suddenly flooding the market with powerful AI models (Financial Times, June Yoon) is a really interesting article which suggests that China’s recent big AI model giveaway is about decentralising development and accessing global talent to refine their models. This means that models are continuously improving. * SO WHAT? * If open-source AI catches up with proprietary AI models, the proprietary models will be more difficult to monetise because customers will wonder why they’re paying for closed models if a free and equally decent alternative exists. If AI models reach this stage, it will nullify related restrictions in the US-China tech war.

Following on from what I said yesterday about Alphabet buying Wiz, Google’s $32bn cloud deal rests on hazy assumptions (Financial Times, Lex) suggests that Alphabet is paying a high price for Wiz while Google parent Alphabet agrees $3.2bn break fee in Wiz deal (Financial Times, Ivan Levingston, Oliver Barnes, James Fontanella-Khan and Arash Massoudi) highlights a 10% break clause in the deal as Wiz owners look to give themselves a safety net for if the whole deal collapses. * SO WHAT? * This deal is not expected to get a smooth ride from the regulators. This termination fee is among the biggest such fee ever! Usually they are about 2-3%, so 10% reflects a high risk of this deal not getting through!

In social media news, Elon Musk’s X obtains $44bn valuation in sharp turnaround (Financial Times, George Hammond, Tabby Kinder, Hanna Murphy and Eric Platt) shows that X’s valuation has returned to $44bn again showing just how far it’s come since Musk became Trump’s BFF-in-chief. * SO WHAT? * Remember, Musk bought Twitter for $44bn back in 2022, so this is a big moment. Research from Fidelity Investments in late September last year gave X an implied valuation of below $10bn, so the performance since then is impressive! Although advertisers abandoned X because of its increasingly lax approach to policing its content, Musk’s status in the White House has brought many crawling back. There are some interesting things coming for the company as well – for instance, X is working closely with xAI to integrate its AI tech into the platform that will enable better ad targeting.

Then in French music streamer Deezer breaks even for first time (Financial Times, Daniel Thomas) we see that the streamer reported upbeat results yesterday evening as it said that it had seen revenues increase by 12% last year. It broke even for the first time in the second half of the year. Deezer wants to launch new tech to provide a more personalised experience. * SO WHAT? * The company said that now it is cashflow positive, it will be more able to “invest in research and in developing the right solution to build a long-term path for growth and profitability”. The tech company was founded in 2007.

In a quick scoot around some of today’s other interesting stories, First-time buyers move further out of London as property costs bite (Financial Times, Valentina Romei) cites the latest ONS figures which show that first-time buyers are increasingly looking beyond London versus first-timers ten years ago thanks to affordability challenges. The stats showed that first-time buyer mortgage sales had been “falling in London” but had “risen in more rural areas”. * SO WHAT? * When you consider that the average first home now costs a whopping ten times the average salary in some parts of London, it’s no wonder this exodus is happening!

Then in ‘Magic circle’ law firm ties bonuses to office working (The Times, Jonathan Ames) we see that A&O Shearman has officially warned junior lawyers that their bonuses could at least partly depend on their office attendance record. * SO WHAT? * The company is just the latest firm to adopt a less subtle approach to encouraging people back to the office! Those days of Goldman Sachs trying to entice employees back to the office with free food and ice cream seem long gone don’t they! It was always going to happen.

There is some impressive talent at airports these days! Have a look at this! Impressive ! Fun fact: I used to play both the piano 🎹 and the violin 🎻 but haven’t played either for years 😭.