Weekly Espresso

On Saturday, the US and Israeli forces launched strikes across Iran targeting key security and political targets. President Trump announced the death of Iran’s Supreme Leader Ayatollah Ali Khamenei later that day. Airstrikes have continued across the country since, and, despite the loss of forty senior commanders, the Iranians have continued retaliating by bombing targets in Israel and the Gulf. Unlike last year’s Operation Midnight Hammer, Trump expects the current campaign to go on for “four weeks or less”.

At least three ships were attacked near the Strait of Hormuz this weekend and the important waterway is effectively at a standstill. 20% of the world’s oil and gas are shipped through Hormuz…

UK unemployment reached its highest since the pandemic at 5.2% in the final quarter of last year, above the 5.1% economists were forecasting. The jobless rate among 18–24 year olds continued to rise, climbing to 14% as young people bear the brunt of the hiring slowdown. The market is now pricing in two UK interest rate cuts this year to 3.25%…

Fresh fears over new AI innovations hit the UK and US wealth management sectors last week. On Monday, US startup, Altruist unveiled a new AI driven tax planning tool which they claim can “produce fully personalised tax strategies… in minutes.” The latest feature from their Hazel AI platform can supposedly generate personalised tax strategies…

Fears over AI spending sparked a massive selloff that saw Amazon, Microsoft, Nvidia, Meta, Alphabet and Oracle shares collectively have more than $1tn wiped off their valuations last week.

Amazon’s market capitalisation fell over $300bn after they released their fourth quarter earnings report and announced that their capital expenditure is expected to reach $200bn in 2026, $50bn more than expected. Despite beating revenue expectations, Alphabet shares also fell after they said they expect to spend between $175bn and $185bn in 2026, more than double their 2025 capital expenditure…

Despite pressure from President Trump, the Federal Reserve voted to keep its key lending rates unchanged at 3.5% to 3.75%. The Fed’s statement was quite positive on the state of the US economy, saying activity has been “expanding at a solid pace” and that while new jobs have “remained low”, “the unemployment rate has shown some signs of stabilisation.”

On Friday, Trump nominated Kevin Warsh to replace the outgoing Jerome Powell as the new Fed Chair. Warsh worked as a Fed governor from 2006 and 2011. He’s been an open critic of the Fed in recent years…

Markets started the week poorly after President Trump threatened eight European Nato allies with new tariffs in his push for the US to take “ownership” of Greenland. On Tuesday, US markets had their worst day since October with the S&P 500 finishing down 2.1% and the Nasdaq falling 2.4%.

They steadied on Wednesday after Trump told the audience at Davos that he “won’t use force” to take Greenland…