🗓️ The Daily Ledger - 20 May 2025

🤝 1. UK and EU Finalise New Trade Reset Deal

What happened: The UK and EU have agreed on a long-anticipated post-Brexit “reset” aimed at repairing trade ties and improving economic cooperation. The deal includes new arrangements on customs processes, youth mobility, and digital trade, though fisheries concessions have drawn political backlash. Prime Minister Keir Starmer claims the agreement could be worth £9 billion to the UK economy, while Chancellor Rachel Reeves said it should act as a stepping stone to further EU market access.

Why it matters: This deal could reduce friction for UK businesses trading with Europe and restore investor confidence in sectors impacted by Brexit uncertainty. Easier cross-border trade, particularly for goods and services, may support growth in industries like logistics, manufacturing, and food production.

Consultant Insight: A stabilising EU relationship could help re-rate UK equities, especially smaller companies more reliant on European demand. Clients underweight the UK may want to revisit the case for domestic exposure.

What to Watch: Whether follow-up deals emerge — particularly in financial services, where passporting rights and equivalence could materially affect market access.

🧠 2. UBS Rolls Out AI-Generated Analyst Avatars

What happened: UBS has started using models from OpenAI and Synthesia to create avatar-based research content. Analysts’ insights are now being delivered via synthetic video — a move driven by increased client demand for engaging, digestible formats.

Why it matters: This reflects a broader trend of AI reshaping client engagement in capital markets. It also hints at growing acceptance of synthetic media in highly regulated sectors like finance.

Consultant Insight: Expect clients to ask whether AI will change how they receive research or interact with managers. This may drive adoption of content-rich, digital-first communications in investor relations.

What to Watch: How quickly other major banks adopt similar tools — and whether this changes how research is consumed and priced.

This is what ChatGPT came up with when I asked for an AI-generated UBS avatar for research content

💳 3. Klarna’s Losses Deepen as Defaults Climb

What happened: Buy-now-pay-later firm Klarna reported that net losses more than doubled in Q1. The jump is driven by more customers missing payments, raising concerns about consumer credit quality, particularly in the US.

Why it matters: This sharp rise in defaults could signal wider stress in the consumer economy, especially among younger or lower-income borrowers.

Consultant Insight: Review exposure to consumer credit and BNPL fintechs — rising default rates may change risk assumptions.

What to Watch: Whether losses at Klarna and peers force credit tightening or a pullback in BNPL availability.

🏦 4. US Banks Fuel Surge in Non-Bank Lending

What happened: US banks are increasing their lending to buyout firms and private credit groups, helping drive up loans to non-bank lenders. Regulators have expressed concern that growing links between traditional banks and shadow finance could pose systemic risks.

Why it matters: The boundaries between banks and alternative lenders are blurring — which may increase contagion risks in a downturn.

Consultant Insight: Portfolios with exposure to private credit or leveraged finance may need closer scrutiny, especially around counterparty risk.

What to Watch: Any regulatory moves to tighten bank lending into the private markets ecosystem.

🇪🇺 5. EU Approves €150bn Loan-for-Arms Fund

What happened: EU member states have agreed to launch a €150 billion defence fund, financed through shared borrowing. The fund will be used to boost European military production, in response to Russia’s invasion of Ukraine and pressure from the US to increase defence spending.

Why it matters: This marks a historic shift in EU defence policy and could drive long-term investment into defence, aerospace and security infrastructure.

Consultant Insight: This could open new opportunities in European defence and infrastructure. Consider whether clients are exposed to these long-duration growth themes.

What to Watch: Details on fund deployment and the sectors most likely to benefit from sustained procurement activity.

⚡ 6. Nvidia Doubles Down on Taiwan With New AI Hub

What happened: Nvidia CEO Jensen Huang announced a new AI supercomputing centre in Taipei and reaffirmed the company's commitment to Taiwan as a global tech hub. The facility will use thousands of Nvidia chips and strengthen its presence in Asia.

Why it matters: Taiwan remains central to the global semiconductor supply chain — and Nvidia’s investment strengthens its role amid rising geopolitical tension.

Consultant Insight: Investors should consider their exposure to supply chains that run through Taiwan and assess how geopolitical risk is being priced.

What to Watch: Whether other tech giants follow Nvidia in anchoring AI development in Taiwan — or hedge their bets with diversified supply chains.

🧠 Consultant’s Watchlist

• 🤝 Could stronger UK-EU trade ties lift mid-cap sentiment?

• 🧠 Will AI-generated content become the new research standard in capital markets?

• 💳 Are consumer defaults a warning sign for fintech lenders?

• 🏦 Is the link between banks and private credit becoming a hidden risk?

• 🇪🇺 Will EU defence spending reshape infrastructure and aerospace strategies?

• ⚡ Does Taiwan remain investable amid rising tensions — or is it becoming a concentration risk?