Watson’s Weekly 15-03-2025

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.

IN SOME OF THE MAIN THEMES OF THE WEEK…

• ON UKRAINE – peace talks made some progress this week as Ukraine accepted a 30-day US-brokered ceasefire and is getting used to the idea that it’ll have to make some territorial concessions. The two sides are still pretty far apart on what they want and Putin’s in no hurry to do anything. Europe is still getting its 💩 together on defence as we’ve realised that America could just switch us off because we have become so reliant on their equipment. Europe has now come to realise that the US cannot be relied upon as an ally and we are now, belatedly, trying to do something about it in satellites, drones and fighter jets.
• ON TARIFFS – Trump continued his combative stance on tariffs towards India, Europe and Canada whilst imposing 25% imports taxes for steel and aluminium. Ontario fought back with US power exports although it then backed down after Trump made a counter-threat while Canada retaliated and Europe targeted middle-America with tariffs of its own.
• ON TRUMP – the president conceded that recession this year was a possibility and he also cut the US Education Department’s workforce in half as part of his ongoing cost-cutting drive.
• ON MUSK – Musk pushed for a meeting with Italian president Sergio Mattarella to salvage a $1.5bn deal with Starlink but fear not, he’s still managed to sign a 5-year deal worth £85,000 with the NHS to get GPs in remote areas access to the internet 🤣. He’s also managed to sign an important deal to enter the Indian market as well. Tesla is taking a right kicking as anti-Tesla campaigners in the US call for the brand to be boycotted and second hand models flood the market in the UK while hostility against the brand rises. Trump said he’d buy one to help his BFF out but speculation is increasing about Starlink being the next Musk company to get the anti-treatment. Elsewhere, it seems that Musk’s dramatic actions with DOGE haven’t actually made much of an impact so far (but it’s probably a bit early yet, plus some of his moves backfired – like the one where a judge ordered the government to rehire 24,000 employees at 19 federal agencies who had been fired!).

THEN IN INDIVIDUAL COUNTRY NEWS…

• IN THE US – economists reckon that the risk of a Trump-powered recession (a “Trumpcession”) is rising, Wall Street weakened to the extent that it is now in “correction” territory and the gold price hit new highs. Blackstone and Goldman Sachs CEOs tried to put a positive spin on Trump’s policies, CEOs also toed the line but then hedge funds have been selling out of US equities and cutting their borrowing. Investors are switching into “defensive” stocks while the world reacts and it’s looking likely that American consumers are going to be seeing bigger grocery and fuel bills. Meanwhile, inflation fell by more than expected in February although the figures don’t yet reflect the effect of tariffs. You do wonder whether this is the calm before the storm…
• IN CHINA – the National People’s Congress was held this week and China is bracing itself for a more hostile geopolitical environment whilst it also plans to boost investment in tech and measures to support the ailing economy.
• IN CANADA – former Bank of Canada and Bank of England governor Mark Carney replaced Justin Trudeau as party leader, therefore becoming PM by default. He’s expected to call an election sooner rather than later and was pretty feisty towards America, although he may live to regret that later.
• IN EUROPE – it seems that Trump’s actions are bringing the bloc together but defence needs to be a priority. Germany’s disgruntled Green party hinted that it could be a stick in the mud regarding the imminent vote on transforming the country’s finances but chancellor-in-waiting Friedrich Merz reckons he’ll be able to give them enough concessions to get behind him.
• IN THE UK – the government abolished NHS England, shut down the Payments Systems Regulator and imposed new targets on remaining regulators to prompt innovation. The government also announced a new Planning and Infrastructure Bill that should cut planning permission times for major projects in half.

IN CURRENCY NEWS…

• There’s talk that Trump’s shenanigans may give the euro the opportunity to dethrone the dollar as the world’s preferred reserve currency. Sanctions against Russia have prompted Russia and China in particular to wean themselves off the dollar while talk of greater unity in Europe could be good news for the euro. I think this is unlikely at this stage but the euro could certainly close the gap.
• Crypto prices fell as the excitement surrounding its strategic reserve plan fizzled out because there were fewer trading opportunities than had been hoped for, although the president’s thought to be $350m up thanks to the performance of his memecoin.

IN BUSINESS TRENDS…

• Data from the Food and Drink Federation shows that exports to the EU since Brexit were down 34%. Given that the EU accounts for 61.8% of exports and 75.6% of our imports in the food and drink sector, there is huge potential here if Starmer can do a deal with the EU in the current thawing of relations…
• Deliveroo made its first full-year profit in its 12 years of existence! Investors were disappointed about its margin expansion forecasts though. Still…
• US law firm Latham & Watkins hit $7bn in revenues thanks to the rise in dealmaking activity. Last year it worked on twice as many IPOs as any other law firm. More deals had been expected this year but if Trump’s shenanigans keep destabilising the market, companies may decide to sit out and wait…

IN EMPLOYMENT TRENDS…

• There’s been a lot of job-hopping going on among senior lawyers in London as US law firms continue to splash the cash to expand, according to legal recruiter Edwards Gibson. The companies hiring most aggressively have been Kirkland & Ellis and White & Case in addition to Clifford Chance.
• The latest KPMG/REC report says that companies are reining in their hiring plans because of the uncertain economic environment while the latest Insolvency Service data shows that businesses have actually made fewer people redundant over the last 12 months than in the year before despite sluggish economic growth.
• Accountants are getting brutal as PwC slashed partner numbers by record amounts and stopped one of its apprenticeship programmes in ongoing efforts to cut costs. Meanwhile, KPMG said it would be streamlining its operations to boost growth and prevent audit scandals.
• The FCA and PRA have decided to drop their new DEI rules for financial firms because they don’t want to add to their regulatory burden.
• The MAGA movement is dividing the working environment in America as the government’s actions are proving to be highly polarising. Until Trump’s measures are shown to be working, I would have thought this situation will get worse. TBH, it’s difficult to tell exactly how divisive it is because you never quite know how much the media is puffing this up.

IN CONSUMER TRENDS…

• Official figures showed that China’s consumer prices dropped for the first time in 13 months. This is good news, but this may at least partly be due to the lunar new year being early this year which may skew the figures a bit.
• UK house prices are now levelling off, according to the latest Halifax figures, as worries about the broader economy hit while the latest RICS survey points to the imminent stamp duty deadline as a reason because the April 1st deadline is just around the corner.
• The FCA is looking at launching an industry-wide compensation scheme to repay motorists who may have been mis-sold car loans automatically. The Supreme Court is due to make a decision next month as to whether customers have in fact been mis-sold car loans.
• There’s bad news for meat-lovers as demand for red meat is rising but there’s a cattle shortage in Europe and the UK. That means that steak prices are going to rise in restaurants and supermarkets, potentially by up to 40%! The situation has been blamed on economic uncertainty and changes in farming subsidies.

IN RETAIL NEWS…

• Valentine’s Day gave retailers a boost last month, according to the latest figures from the BRC. However, they’re still holding off buying big ticket items.
• John Lewis announced a boom in profits but decided not to pay out the staff bonus after a turbulent few years.
• There are just two buyers remaining in the bidding for WH Smith’s high street business – Alteri and Modella Capital – and it is hoped that a deal could be completed in April.
• Zara’s owner Inditex has seen a bit of a sales slowdown, which disappointed investors used to seeing consistently strong results, but apparently sales have been picking up again recently.
• Boohoo is now rebranding to become Debenhams Group having bought it out of administration in 2021. It has been seeing some progress with Debenhams as an online marketplace, so it’s going to lean into that, particularly as competition in fast fashion is getting particularly fierce.
• Over in the US, Dollar General sounded pretty positive about its prospects after axing 96 underperforming stores. It will open 590 new outlets this year and refresh existing ones. Although footfall dropped, the spend per customer increased. Given expected economic headwinds, this retailer could benefit from a cautious consumer.

IN CONSUMER GOODS…

• Lego’s sales increased by 13% last year and it is looking to build up its digital games capability to tap into more “hybrid” digital and physical experiences.
• Puma reported poor performance for the first few months of this year, blaming geopolitical tensions and trade disputes. It is now pinning its hopes on sales of its Speedcat trainers. Sounds pretty flimsy to me but you never know!

• Meta’s bolstering the voice capabilities of its LLM Llama 4 in ongoing efforts to build something that generates revenues. The idea is to make conversations between humans and machines more natural.
• OpenAI struck a $12bn deal with cloud computing provider CoreWeave, who will supply the computing power needed to train and run OpenAI’s AI models.
• Amazon, Google and Meta are among a wider group of energy-intensive companies to appeal for governments and utilities companies to triple nuclear capacity by 2050. This came in the form of a joint statement co-ordinated by the World Nuclear Association.
• DeepSeek says that it is prioritising research over revenues to reach its ultimate aim of cracking artificial general intelligence (AGI). Will this mean that it will win the race to AGI while OpenAI gets distracted by the pursuit of profits??
• Saudi-owned Scopely bought Pokémon Go in a $3.5bn deal with Niantic, which is going to be focusing more on geospatial AI that will ultimately be used in products such as smart glasses and robots.

• VW is sticking with its decision to push US sales growth to mitigate weaker sales in China and Europe despite US tariffs. It was also interesting to note that it has not ruled out the possibility of getting involved in Europe’s push to rearm.
• Toyota is thinking about exporting from the UK to the US to get around the latter’s tariffs. This is unlikely to be as impactful as it sounds, though, because the UK makes smaller models that aren’t as popular in the US. It also unveiled three new EVs for the UK and European market.
• EV battery start-up Northvolt filed for bankruptcy in Sweden, ending what had been Europe’s big hope at upsetting Chinese dominance in EV batteries.

• IN PHARMACEUTICALS – Roche and Zealand Pharma struck a $5.3bn weight-loss drug deal which should accelerate the development this drug and others. Unfortunately, trial results for Novo Nordisk’s new obesity drug were disappointing. Whoever can develop the most effective drug should be able to benefit enormously from a huge addressable market in China.
• Lloyds of London estimates that the California wild fires will cost insurers £2.3bn, which is chunky in the scheme of things but not disastrous.
• Unilever said that it will hire influencers to drum up sales and get the company out of a rut as part of a recent overhaul by the new boss.

My fave video this week was a tricky one to decide, but in the end I think this incredible table tennis rally just edged it for me!