Watson’s Weekly 12-04-2025

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE COLOURED HIGHLIGHT REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

The drama keeps coming from across the Atlantic! Countries, industries and companies try to adjust and Prada buys Versace…

IN WAR NEWS…

• IN UKRAINE NEWS – President Zelenskyy made a number of allegations this week that Chinese soldiers were captured fighting with the Russians. Is this real? Is this an attempt to drag the Ukraine war back up the priorities while the world’s attention is being taken up by Trump’s tariffs? Is it propaganda? No idea.
• DEFENCE – believe it or not but some defence companies are not doing as well as others because of their comparatively high exposure to the US.  They include the likes of Qinetiq, Chemring and Avon Technologies, but given how much money that’s being thrown at the sector you’d have thought that there’s time to catch up!

IN TARIFFS/TRADE NEWS…

• At the start of the week, Trump and his team vowed to stay the course on tariffs and his trade guy Peter Navarro reiterated that Trump’s measures were necessary for fixing a broken system. Treasury secretary Scott Bessent dismissed fears of a US recession, Trump claimed that his policies were making “tremendous progress” and appealed for Republican critics not to be a “Panican”. He reiterated that “I know what the hell I’m doing”. There was some doubt as to how sustainable these tariffs would really be given the potential damage they could cause.
• However, JP Morgan’s chief said that the tariffs will tip America into recession, BlackRock’s Larry Fink said that the US economy is “weakening as we speak”, hedge fund manager Bill Ackman warned of an impending “economic nuclear winter” and called for a 90-day time-out (something that was initially dismissed by the administration) while a number of Trump’s billionaire backers – including Musk – expressed their frustration with the tariffs. Musk and Navarro traded insults and some observers said that Trump’s actions are likely to drive Asian countries like Cambodia, Laos, Vietnam and Bangladesh towards China as an ally.
• In response to all this, China’s resolve on tariffs hardened, but the EU’s weakened initially before it decided to regroup while China put together a “national team2” of big Chinese institutions to support the stock market by doing share buy backs.
• The initial consequences of all this have been varied! US companies are finding it impossible to give any kind of market forecasts, companies that have been expanding in countries outside China in the Asian region have been caught out badly, listings and mergers have been postponed because of market volatility and this means that some PE firms are having difficulty getting out of their investments because there’s nowhere to go while banks that have more Asian exposure, like Standard Chartered and HSBC, have suffered because they’ll be in the firing line in the US-China trade war. On a more “micro” basis, products like bikes will see huge price rises as a direct consequence of the tariffs and Rupert Murdoch decided against putting in another bid for Rightmove given the resulting chaos.

IN MARKETS…

• Global stock markets tumbled initially and the Hang Seng had its worst single-day fall since 1997. US stocks fell as Trump reiterated massive tariffs on China.
• Then came the massive boom in the form of a relief rally after Trump capitulated and imposed an interim 90-day pause on the initial tariffs while applying a flat rate of 10% on everyone except China. He buckled because he realised everything was collapsing and the bond market forced his hand.
• …but then the sell-off resumed as the still-stratospheric taxes on China got worse and it doesn’t look like there’s going to be any respite unless something dramatic happens (and it could – you just never know at the moment!).

IN INVESTMENT-RELATED NEWS…

• Big institutional investors are looking at how to sell out of illiquid private equity funds following the cratering of markets around the world. Big players such as Blackstone, KKR and Carlyle saw their share prices fall by between 15% and over 20% as a result of the panic.
• UK wealth managers are seeing American clients moving their money to Britain on growing concerns that Trump might amend legislation that will limit investors’ ability to park money in foreign markets and currencies.
• Almost half of all the hedge funds are thinking about cutting their fees due to poor performance and weakening client inflows.

TRUMP THINGS…

• The president announced “very high level” talks with Iran about bringing an end to its nuclear programme, so that’s sign of some progress.
• Trump’s administration threatened to end consultancy contracts after the firms’ initial proposals, which were described as “insulting”. The contracts will be terminated unless they improve their proposals by 5pm on April 18th.
• I wondered whether Trump was indulging in a bit of front-running as he said in a post on Truth Social that “THIS IS A GREAT TIME TO BUY” just before pulling back on his raft of reciprocal tariffs! There’s just no-one to bring him to account as he pretty much controls any body that could take him to task.

MUSK THINGS…

• It turns out that Musk’s DOGE fired a number of safety experts at the National Highway Traffic Safety Administration (NHTSA) in February as part of efforts to cut public sector spending costs. Funnily enough, these people were the ones that had been a thorn in the side of Tesla and its autonomous driving function…it seems that it’s not just Trump that’s dishing out karma!

IN INDIVIDUAL COUNTRY NEWS…

• IN THE US – US inflation fell by more than expected in March, according to the Bureau of Labor Statistics, coming in below market expectations. At the moment, the Fed faces a difficult dilemma – does it cut interest rates to avoid a tariff-driven economic slowdown or does it keep them on hold in anticipation of a rebound in inflation that the tariffs will inevitably bring.
• IN RUSSIA – Putin has been appropriating assets with increasing frequency, which makes you wonder whether he’s doing this to finance the war. Russia’s finances have been taking a bit of a drubbing thanks to the weaker oil price.
• IN EUROPE – the ECB is expected to cut rates in April and June in order to head off recession. IN GERMANY, chancellor Merz managed to reach a deal to form a coalition government. This is good progress, particularly when you think how long it took predecessor Scholz to cobble one together. IN FRANCE, Marine Le Pen complained of a political “witch-hunt” as her party pushed back against her recent conviction for embezzlement. No doubt she’ll follow the Trump playbook on how to deal with this situation and make it a rallying call for support. If the opposition wants to stand a real chance of defeating her, they will need to stop squabbling and co-ordinate.
• IN THE UK – the government is looking to scrap or merge more quangos and slash a third of roles in Whitehall as part of its broader public sector streamlining drive whilst also looking at loosening rules for smaller private equity firms and hedge funds to give them more investment freedom. Negotiations between the UK and India are being accelerated as a result of the tariffs and a trade accord looks likely to be reached in the next few months. It looks like the “Trump Brexit dividend” has proved to be worthless as the pull-back of tariffs to a flat 10% means we are no better off!

IN COMMODITIES NEWS…

• OIL – prices fell below $60 a barrel for the first time since the pandemic, something that’s very painful for the US shale sector. Trump revoked licences for BP and Shell projects in Venezuelan waters, putting further pressure on Venezuela.
• GOLD – fell initially as investors cashed in on the recent spike but then it surged again as investors sought safe haven assets. The US closed in on a deal with DRC to lock in critical mineral supplies while Aussie miners including Lynas Rare Earths, Northern Minerals and Arafura Rare Earths have been experiencing a boom since China increased restrictions of exports of rare earths last Friday.

IN ENVIRONMENT NEWS…

• Arctic sea ice hit a record low for March as climate change continues to have an impact.
• Clean energy accounted for 40% of global electricity in 2024 mainly due to an increase in solar power capacity.

IN CRYPTO NEWS…

• The US Department of Justice is now pulling back on the clampdown on crypto risks and it will no longer target crypto exchanges. This is a complete change in direction for the DoJ, which was much more crypto-sceptic under the Biden administration.

IN CONSUMER TRENDS…

• Tens of thousands joined anti-Trump rallies in cities around the world on Saturday to protest about the impact of tariffs, cuts to government agencies, the deportation of legal immigrants, attacks on the transgender community, threats to invade Greenland and DOGE
• Starmer addressed concerns that taxes could rise in reaction to Trump’s tariffs and reiterated his commitment to holding down income tax, VAT or insurance contributions.
• UK house price growth stalled as would-be buyers gave up trying to beat the tariff deadline, according to the latest Halifax report. Meanwhile, it looks like a mortgage price war is going to break out as interest rates are now at their lowest level since just before the Truss-Kwarteng mini-budget.

IN EMPLOYMENT TRENDS…

• The number of jobseekers has risen at the fastest rate since March 2020 thanks to fewer job vacancies and more companies embarking on redundancy programmes.
• UK firms ditching DEI policies run an increasing risk of legal action, according to an open letter published by the Chair of Employment Lawyers.
• Page Group saw its  profits fall and was unable to give guidance on the outlook for its business given the uncertain global economic backdrop.

IN BUSINESS TRENDS…

• Consultants are making money from companies looking at ways to get around Trump’s tariff regime. Accountants are advising on how to balance tax and customs duty more effectively in order to mitigate the impact of the tariffs, particularly on multinational companies.

IN RETAIL NEWS…

• IN LUXURY – Prada bought Versace from Capri Holdings for €1.25bn, a hefty discount for what Capri bought it in 2018 for €2bn.
• IN APPAREL – Uniqlo’s owner, Fast Retailing, doesn’t think that tariffs will stop the shift of supply chains to Asia and it looks like Shein’s glory days might be behind it as Trump’s closed the duty loopholes and its prices won’t be as cheap any more. Back in the UK, JD Sports warned of a hit from US tariffs thanks to the uncertainty of the impact of Trump’s tariffs on suppliers and consumer confidence. This is important because the US is now its biggest market by revenues!
• IN SUPERMARKETS – we see that grocers could be decent/less fraught places for investors to park their money in current market turmoil as they sell basics, but then even the mighty Walmart said that the profit outlook has become much more difficult because of all the tariffs. Tesco cut its profit guidance thanks to the break-out of a price war. The increasingly competitive environment means that Tesco has had to concentrate its efforts on keeping costs down.
• OVERALL – the latest data from the BRC showed that footfall fell in March and there are worries that it could get worse thanks to the effect of Trump’s tariffs.

IN LEISURE NEWS…

• The president of Hyatt Hotels sought to calm panic over the impact of Trump’s policies on tourism, but then again he would say that wouldn’t he!
• Despite the Hyatt Hotels’ big cheese appealing for calm, airlines voiced their uncertainty about the outlook. At the moment, there’s a definite divergence between premium and transatlantic travel (both doing well) and domestic leisure and corporate travel (seeing a slowdown).
• Starmer hailed the announcement of a new Universal theme park in Bedfordshire as a “vote of confidence” in Britain – a very welcome bit of good news for a change!

• Apple’s collapse just shows that cosying up to Trump is no guarantee of safety and fears that iPhone prices would skyrocket thanks to the tariffs were eased initially over this weekend as it sounded like there would be an exception carved out for smartphones, computers and other electronics – but then hopes were dashed a bit when US commerce secretary Howard Lutnick said this was just an exception for the reciprocal tariffs. Separate tariffs for semiconductors would be forthcoming…in the meantime, Apple has turned to India as a longer term solution for production.
• A&O Shearman has created an AI tool in collaboration with AI start-up Harvey that will be on sale later this year. It will accelerate work performed by senior lawyers.
• IN SATELLITES – Starlink is having ongoing problems in Canada – this time over access to subsidies – while Amazon’s Project Kuiper launch was postponed because of “stubborn cumulus clouds and persistent winds” and Eutelsat/Oneweb is still working out whether it can become a credible competitor to Starlink.
• Samsung Electronics posted decent quarterly profits thanks to customers stockpiling chips and buying smartphones ahead of US tariffs but rival SK Hynix continues to outperform.
• Tesla supplier ST Microelectronics announced the axing of about 5.5% of its workforce as demand from non-AI related chips continues to be sluggish.

• The South Korean government announced emergency support for the automotive sector against US tariffs in the form of financial support, tax breaks and subsidies for carmakers after Trump imposed a 25% import tax on cars and auto parts.
• Starmer said that he’d support the automotive and pharmaceutical industries that would be particularly hard-hit by Trump’s tariffs. He said that he’d ease the UK’s EV targets and cut red tape for the pharmaceutical industry to hasten the setting up of clinical trials.
• JLR paused US shipments while it assess the impact of Trump’s tariffs. The US is the second biggest importer of British-made cars after the EU.
• VW saw its profits tank by 40% as it set aside over €1bn to use for restructuring costs and potential fines for falling short of emissions targets.
• Porsche said that it had seen a steep drop in orders from Europe and China in Q1 although there had been an uptick in sales to the US (to beat the tariffs, perhaps??).
• Data from Auto Trader and CarGurus showed that prices for used Teslas are falling faster than other marques in the US and Britain. This is more likely to be because of an influx of previously leased cars coming onto the market rather than the anti-Musk effect.
• UK AI start-up Wayve announced its first deal with a big carmaker – this time it’s Nissan. It will be putting its new “ProPilot” semi-autonomous software in the Japanese carmaker’s vehicles from 2027.

• IN BANKS NEWS – Revolut was fined €3.5m over money laundering control failures and Barclays cut rates on some mortgages to below 4%.
• Accounting firms Baker Tilly and Moss Adams are getting close to a merger that would create an enlarged group with over $3bn in annual revenues.
• The share price of the world’s biggest cocoa processor, Barry Callebaut, fell to its lowest level for 12 years after the market reacted to the Swiss chocolatier citing “unprecedented volatility” in the cocoa market.
• WeightWatchers is facing bankruptcy as dieters are increasingly turning to weight-loss jabs. Slimfast is also suffering similarly.

My fave video this week was the one about how different languages express numbers! It was an eye-opener!