Wednesday 23/04/25

Sooooo there were some pretty big statements made yesterday! Vladimir Putin offers to halt Ukraine invasion along current front line (Financial Times, Max Seddon, Henry Foy and Christopher Miller) highlights what appears to be some kind of offer from the Russian president but there is scepticism among some European officials that this is just a ruse to get Trump to accept Russia’s other demands so that Trump can claim victory in negotiations. Then Donald Trump says he has ‘no intention’ of firing Jay Powell (Financial Times, Claire Jones and Demetri Sevastopulo) shows the US president apparently back-pedalling on previous threats, saying in the Oval Office yesterday that “I have no intention of firing him”, despite his previous comments. This was interpreted by some as showing that there are those in the president’s inner circle who are able to hold him back. Meanwhile, Scott Bessent says US and China need to de-escalate trade war (Financial Times, Demetri Sevastopulo) highlights the US Treasury secretary’s comments where he warned that the US-China trade war was “not sustainable” and that a de-escalation was in order. He added that he thought that Washington and Beijing would hammer out a deal in the “very near future” and Gold climbs above $3,500 for first time as Wall Street rallies after slide (The Guardian, Julia Kollewe and Graeme Wearden) highlights the reaction of gold while Pound at seven-month high against dollar amid Wall Street rebound (The Times, Jack Barnett) reflects the ongoing weakness of the dollar as investors continued to be sceptical. * SO WHAT? * Putin is a tricky operator so I have to say that his apparent offer will be treated with a great deal of circumspection while expectation continues to mount on Trump to get some kind of peace deal done. Bessent’s remarks were clearly taken positively by markets, representing some light at the end of the tunnel, but deals are likely to take some time to finalise. To use Trump’s phrase, I would have thought that markets are going to be “yippy” until there is some kind of closure on tariffs. Given how messy it has been so far with across-the-board tariffs followed by sudden pullbacks and subsequent renegotiations it seems to me that until someone says “OK folks, drama over – tariffs have been sorted out now” markets are going to be very nervy. HOWEVER, IF we reach the point where a line is drawn under the whole tariff thing, I think that there will be a huge market rebound as I’d argue that a worst case scenario will be pretty much priced in by that point and that a statement that signals the end of that particular phase of Trump’s economic policy would act like a starter gun! The only problem is that trust has been lost in America and so there will be a lot of nervousness around whether any deals are actually going to stick.

In terms of tariffs themselves, US to impose tariffs of up to 3,521% on south-east Asia solar panels (The Guardian, Julia Kollewe) shows that US trade officials are still very much on the tariff offensive following the conclusion of a year-long investigation by the  commerce department. This probe was originally prompted by complaints from American solar panel manufacturers that Chinese companies flooded the market with subsidised cheap goods. The US commerce department has come up with new tariffs and they will target companies in Cambodia (they’ll get hit with tariffs of 3,521% because the companies there didn’t co-operate with the investigation), Malaysia (over 41%) and Thailand (375%). A final decision on tariffs will be made by the International Trade Commission in June. And while we’re on the subject of solar panels, Miliband to ban Chinese ‘slave-trade’ solar panels (The Times, Geraldine Scott) highlights energy minister Ed Miliband’s major policy U-turn that will force GB Energy to avoid all “slavery and human trafficking” in its supply chain. This means that all solar panels, wind turbines and batteries must not contain materials that could have been produced using slave labour. A lot of the world’s polysilicon originates from the Xinjiang region, which is where human rights abuses of the Uighur population are alleged to be taking place. It’s likely that this could delay and/or add to the cost of reaching the government’s net-zero goals.

Risks to global financial stability surging after Trump tariffs, warns IMF (The Guardian, Heather Stewart and Lauren Almeida) highlights the IMF’s stance on Trump’s tariff regime as it said that “Global financial stability risks have increased significantly” while companies and industries have decided to take action. Pharma giant plots US weight-loss drug factory (Daily Telegraph, Matt Oliver) shows that Swiss pharma giant Roche has promised to build a massive

weight-loss drug manufacturing facility somewhere in the US as part of plans to invest $50bn in the US to head off expected tariffs. Meanwhile, Pharma bosses call for higher drug prices in EU to counter tariff threat (Financial Times, Hannah Kuchler and Alice Hancock) shows that the bosses of Novartis and Sanofi reckon that the European Commission needs to narrow the drug price differential between Europe and the US. At the moment, US government estimates shows that the US pays almost three times as much for branded and generic medicines as other developed countries). Clearly the pharmaceuticals companies need to do their best not to get hit by massive tariffs given that they rely on the US for 40-50% of their sales.

In terms of response to the tariffs, Amazon and Walmart sellers hoard goods in Canada to wait out tariffs (Financial Times, Rafe Uddin) shows that independent vendors on the big platforms are letting stock pile up in Canadian warehouses in the hope that the White House will roll back its massive tariffs on China, which should save them a ton of money, while US aerospace and defence groups warn of higher costs from Trump tariffs (Financial Times, Sylvia Pfeifer and George Steer) highlights concerns of tariff impact from industries that have largely operated without trade barriers since 1979! Ouch! US defence stocks look a little less than defensive (Financial Times, Lex) points out that while European defence companies such as BAE Systems, Leonardo, Thales and Rheinmetall have seen their share prices boom, US counterparts such as Lockheed Martin, General Dynamics, Northrop Grumman, RTX and L3Harris Technologies have been in limbo due to uncertainty about Trump’s policies. A full defence budget proposal is not expected until the middle of next month and, given tariffs coming the other way, it’s not really surprising that RTX, Northrop Grumman and Lockheed have either cut their earnings forecasts for the year or at least expressed uncertainty about the outlook. US defence companies are still quite highly rated on forward earnings multiples and, given the hurdles they are likely to be facing, they look somewhat precarious. And while we’re on the subject of defence, From trains to tanks: Germany’s rearmament marks industrial shift (Financial Times, Patricia Nilsson) takes a look at how the shift in defence priorities is resulting in the rapid evolution of Germany’s manufacturing output from trains and cars to tanks and other defensive equipment. It’s interesting to see that manufacturing, which had been in decline, is now getting a major sustainable boost from America’s pull-back. Given that German defence spending has boomed by almost 80% since 2020, this new world order is going to be great news for jobs and investment. The main question is, though, how long is this going to last?

Meanwhile, UK economy to slow as tariffs take toll, IMF predicts (The Times, Mehreen Khan, Steven Swinford and Robert Lea) cites expectations from the IMF that the UK’s economy will grow by 1.1% this year versus previous expectations of 1.6% as Trump’s tariffs pose a “clear and present danger”. US tariffs threaten lay-offs at UK’s luxury car plants, industry warns (Financial Times, Jim Pickard, Kana Inagaki and George Parker) cites the SMMT’s thoughts that Trump’s tariffs are having a “severe, significant and immediate” impact.

In oil-related news, Ryanair takes advantage of oil price fall to lock in cheaper fuel costs (Financial Times, Philip Georgiadis and Claire Bushey) shows that the budget airline has taken the strategic decision to lock in currently low fuel prices by hedging a “significant” amount of its future fuel requirements for the next two years. Fuel can represent up to a third of an airline’s overall operating costs – so this is a big deal. On the ground, though, Petrol prices to slump as Trump’s trade war kills oil demand (Daily Telegraph, Jonathan Leake) highlights the impact of weaker oil prices on what you pay at the pump as global energy analyst Rystad Energy believes that “a prolonged trade war” could decimate demand from China this year, leading to oversupply in the market and therefore weak prices.

Elliott ups stake in BP as it pivots away from renewable energy (The Times, Emily Gosden) shows that activist hedge fund Elliott Management is still pushing for more changes at BP and it now has a stake of over 5% in the company currently worth about £2.8bn via various financial instruments. It continues to pressure the oil major to cut its green ambitions.

In Elon Musk to step back from Team Trump after Tesla profits slump (The Times, Louisa Clarence-Smith) we see that Musk is going to scale back his role in the White House and concentrate more on Tesla as his EV company reported weaker sales and profits as consumers reacted negatively to his political activities. He said that he thinks that he will spend only one or two days per week doing DOGE things from May and much more time with Tesla. Tesla expects to return to growth this year. Musk drives Tesla calmly through investors’ red lights (Financial Times, Lex) points out the permanent damage that Musk will have done to future demand directly because of what he’s done at DOGE and the fact that despite having $7bn in debt, the

company has a cash pile of over $35bn to play with. * SO WHAT? * I have to say that it’s not just the whole anti-Musk backlash that’s killing Tesla’s sales, it’s the fact that they haven’t got any potentially popular and properly new models to come in the pipeline and because there’s a lot more competition and choice out there in the EV space. It seems to me that he’ll get squeezed in the US because Trump doesn’t really seem to care that much about EVs, China is getting increasingly difficult because the local offering is so good and Europe is getting increasingly hostile towards Tesla. TBH, I think he’d be better off concentrating his energies on SpaceX because he’s got a great advantage there already.

UK manufacturers to cut jobs ‘within weeks unless ministers can strike trade deal’ (The Guardian, Jillian Ambrose) highlights manufacturers’ fears as chancellor Reeves prepares to meet her counterpart, Scott Bessent, in Washington to hammer out a new trade agreement while British Steel halts redundancy plans after government rescue (The Guardian, Rob Davies) shows that the UK government’s intervention at the Scunthorpe plant has potentially saved 2,700 jobs as British Steel confirmed yesterday that it had officially withdrawn redundancy consultation forms. * SO WHAT? * This is good news for now, particularly for the steel workers, but you do wonder what the plans are when things die down a bit. If owner Jingye, which bought British Steel in 2020 promising a “new chapter”, hasn’t been able to do anything with it, will the government be any better??

Elsewhere, Office workers back as vacancy rate falls for first time since 2020 (The Times, Tom Howard) cites data from CoStar which shows that the office vacancy rate has started to fall for the first time since 2020. When the pandemic hit, office vacancy rates stood at 4.6% but they then shot up to almost 9% by the end of 2024 as companies had a rethink about office space requirements. * SO WHAT? * I have always said that, brilliant though working from home is, employers were always going to get people to go back to the office eventually! However, what I find particularly interesting about THIS story is the fact that companies who had downsized are now saying that they might have been too brutal and are now asking for more space!

In a quick scoot around some of today’s other interesting stories, Grant Thornton US expands global footprint with roll-up deals (Financial Times, Stephen Foley) shows that Grant Thornton US is looking to buy over half a dozen of its sister firms in Europe and the Middle East with PE backing. More details about these plans are expected to be revealed this week as mid-tier accountancy firms continue to consolidate.

Then in Ofcom to tell social media sites to protect children from adult content (Financial Times, Daniel Thomas and Kieran Smith) we see that the UK regulator will this week announce codes of practice to shield children from accessing online content on platforms including X and

Meta under the Online Safety Act. Ofcom will tell social media, search and gaming services to remove or “age-gate” adult content or use other ways to protect kids from seeing harmful content. * SO WHAT? * This represents one of the biggest set of changes regarding how we access social media in the UK. Tech companies had a deadline last week to do a “children’s access assessment” and now have until the end of July to complete a different risk assessment before then applying real measures to minimise risk. If companies are found to be in breach of this, they will face fines of up to £18m or 10% of global revenues. This is great, but you do wonder whether any of these requirements will be watered down in a bid to appease the Americans.

Today, I thought I’d bring you something a little unexpected – beerbonara! This is quite something…