Klarna Reverts on AI-First

Swedish fintech Klarna is going back to humans (in part) for customer service after a two year trial with OpenAI to run customer service agents purely with AI.

Monzo Reportedly Hires Morgan Stanley to Prepare IPO

The UK digital bank, approaching its 10th anniversary, is preparing to pitch to investors in the build up to a potential IPO, believed to be targeted at the £6-£7bn mark for a listing in London or New York. Key customer metrics include: 11 million personal customers and 600,000 business customers.

Fed Holds Rates Steady as Trade War Rages On

The benchmark lending (or Policy) rate has been kept steady at a range of 4.25% to 4.5% ("Fed Funds Target Range"). This rate is influenced through monetary policy decisions and is used by banks to lend money overnight. It is set by the FOMC (Federal Open Market Committee).

Once set, the Fed steers the rate into the target range, through various mechanisms. 

The Fed has flagged a risk of stagflation - involving higher unemployment and higher inflation - a toxic combination. The US struggled with this in the 1970s and early 1980s; toxic because you need to prioritize which issue to address first. Paul Volcker, in his time, chose to fight inflation. The Fed has a dual mandate to manage both, and its current target is maximum employment at 2% inflation.

UK Signs Trade Deal with India; Whisky Tariffs Down

India will reduce tariffs on whisky and gin from 150% to 75% with 40% by year 10, according to the UK government. There will be tariffs on UK car exports to India but tariffs on those cars will drop from 100% to 10%.  Many tariffs on Indian goods to the UK will be wiped out. UK companies can also bid to deliver Indian public sector services for the first time.

Hagerty extols virtues of the GENIUS (Stablecoin) Act

Senator William ("Bill") Hagerty (Republican), who had a pre-politics career at the Boston Consulting Group, is pushing for the GENIUS Act to be passed.

The GENIUS Act stands for Guiding and Establishing National Innovation for US Stablecoins and per Hagerty "creates a strong, forward-looking regulatory framework to modernize our payment systems and affirms the dominance of the US dollar". 

The UK has been proactive in creating conditions for stablecoin development in the UK but has come under criticism for overly constraining market development.

As a sidebar, stablecoins are digital assets which can be used to make payments. These so-called "coins" can be created technology companies rather than traditional banks and are backed by equivalent currency in a 1:1 ratio. They are thus less volatile than traditional cryptocurrencies.

South Korean firm unveils quantum project with Al Fardan

South Korean quantum computing firm NORMA (whose investors include Vertex Ventures) has signed an MOU with Qatari Al Fardan Ventures to build a R&D center in the UAE specializing in quantum. The UAE has shown an interest in developing quantum computing in the region. NORMA has previously worked with Saudi Arabia signing an $18m export contract in December 2024 with Saudi IT firm Light Vision IT (based in Al Jubail Industrial City) to supply quantum computers. One of NORMA's focuses is quantum resistant encryption.

LSEG Shareholders revolt

Votes have been cast against the LSEG's group remuneration report with CEO David Schwimmer taking home £7.8m for the last financial year (with annual bonus doubling to £3m - despite delisting challenges - last year 88 companies left the LSE versus 18 new listings). 

Despite votes against, the resolution was passed at the group's AGM.

A high profile example of a take private was Thoma Bravo's 5bn EUR acquisition of UK cybersecurity firm Darktrace. 

Take privates are attractive if public companies are overlooked or undervalued.