TheChek News Flow

Discomfort around artificial intelligence helps explain the disconnect between a solid economy and an anxious public

Artificial intelligence might be the most transformative technology in generations. It is also the most joyless.

While Wall Street greets AI with open arms, ordinary Americans respond with ambivalence, anxiety, even dread.

This isn’t like the dot-com era. A survey in 1995 found 72% of respondents comfortable with new technology such as computers and the internet. Just 24% were not.

Fast forward to AI now, and those proportions have flipped: just 31% are comfortable with AI while 68% are uncomfortable, a summer survey for CNBC found.

Why the difference? The dot-com bubble, like the AI boom, had its excesses and absurdity. But it also shimmered with optimism and adventure. From Fortune 500 CEOs to college dropouts, everyone had a web-based business idea. Demand for digitally savvy workers was off the charts.

Today, the optimism is largely confined to AI architects and gimlet-eyed executives calculating how much AI can reduce head count while workers wonder whether they will be replaced by AI, or someone who knows AI. Meta Platforms, Microsoft and Amazon, three of the leading purveyors of AI, have all announced layoffs this year.

A piece of the ‘disconnect’

Since November 2022, when ChatGPT was released, the market value of the “Magnificent Seven”—megacapitalization tech stocks closely tied to AI such as Nvidia and Microsoft—is up 169%. The spending spurred by that wealth, and the massive sums those companies are plowing into data centers, are why the hard data on economic growth and household finances looks pretty healthy.

And yet consumer sentiment is near a record low, according to the University of Michigan.

There are a lot of reasons for this disconnect, most prominently the cost of living.

AI could be one, as well: The very thing powering the stock market to records might be gnawing away at Americans’ sense of well being.

AI can be unsettling even if you face no direct threat from it, just as an out-of-control border bothered people unaffected by illegal immigration. Both undermine your sense of control. “The AI fear is one hunk of meat in a stew of distrust and grievance that has been marinating for a long time,” said Micah Roberts, a partner at pollster Public Opinion Strategies, which conducted the CNBC survey.

Americans have always had mixed feelings about technology. They appreciate the convenience and features while worrying about the costs: to privacy, to mental health, to social cohesion. In that sense, AI is no different from personal computers, the internet or social media.

Most people also get that tech inevitably makes some jobs obsolete. But what about a technology that could make humans obsolete? In a recent report, economists at Goldman Sachs, mapping out downside and upside scenarios to AI, say the latter means an acceleration in productivity that “eventually makes human input in knowledge-based work tasks redundant.”

And here is Yale University economist Pascual Restrepo imagining the consequences of “artificial general intelligence,” where machines can think and reason just like humans. With enough computing power, even jobs that seem intrinsically human, such as a therapist, could be done better by machines, he concludes. At that point, workers’ share of gross domestic product, currently 52%, “converges to zero, and most income eventually accrues to compute.”

These, keep in mind, are the optimistic scenarios.

John Finger works as a personal banker in Lady Lake, Fla., and at age 27 and with a 4-month-old son, doubts he will ever afford a house without his parents’ help. AI, he worries, forecloses potential careers in banking: “There are back office jobs that pay a lot more money, but if AI is as powerful as they say it is, and I have my doubts, those jobs are going to be gone.”

It isn’t just the job-destroying potential that is disturbing. The technology defies comprehension. Even the modelers aren’t sure why models do what they do. Finger considers himself tech-savvy: “I like my iPhone. I like playing videogames. I love the internet. I love that any question I have I can go on Google, all I have to do is punch it in.” But AI is different. “Can bad actors train AI to give the answer it wants? Who knows.”

Peter Atwater, an economist who lectures at the College of William and Mary and studies consumer confidence, said the more his students learn about AI, the less comfortable they are. “AI has gone from being a useful, timesaving tool for papers and research to a threat to entry level jobs, higher utility bills, environmental concern about water and farmland turned to data farms,” Atwater said. “I suspect the reasons not to like AI will likely grow.”

Don’t panic

Feelings are just that: feelings. Just because AI could replace humans doesn’t mean it will. Few of the companies announcing layoffs actually cite AI as the reason. Relative to the investments of AI companies, actual corporate adoption has been modest, feeding suspicions of a bubble.

So does it matter that people don’t love AI? It might. Nuclear power once offered the sort of potential that AI promises today. But the public never got comfortable with a technology that could also wipe out humanity, especially after the 1979 Three Mile Island accident. From 1978 to 1990, polls showed overwhelming opposition to new reactors, and deployment ground to halt. Only now is it coming back to life—ironically, to power AI.

Today, AI has the political wind at its back. One of President Trump’s first acts was to rescind former President Joe Biden’s AI safety guidelines. He now gives priority to dismantling regulatory barriers to AI and competing with China.

But those winds can shift. A poll of roughly 2,000 people by Narrative Strategies, a communications and public relations firm, found just 40% said the AI industry could be “trusted to do the right thing,” well below the 62% to 63% who said that about finance, energy or healthcare. Asked about government regulation, 57% said tech and AI needed more, well above other industries.

AI evangelists believe its sheer economic and computational force make it unstoppable. They better hope so, because it certainly isn’t going to succeed on its popularity.

The $556bn US public pension fund will increase equity allocation under overhauled framework to improve returns

California’s state pension fund has adopted a new methodology to analyse asset allocations, performance and risk in a governance overhaul that could have market implications for how it invests its $556bn in assets.

The changes, using a form of analysis known as “total portfolio approach”, will give the California Public Employment Retirement System’s investment team broader discretion to adjust allocations across asset classes, and measure returns against a single portfolio benchmark. It will replace the 11 benchmarks it currently uses to assess performance of individual asset classes.

The overhaul was approved by the board of Calpers at a meeting on Monday. It comes after years of below-average investment results, and brings the pension fund closer to global peers that have moved away from rigid asset-class silos. Calpers reported an average annual return of 7.1 per cent in the decade to 2025, below the 7.4 per cent national average, according to the Equable Institute.

The changes come into effect on July 1. One immediate result will see Calpers raise its target equity allocation to 75 per cent from 72 per cent.

“The driving rationale for this is to invest the portfolio as a whole,” said Stephen Gilmore, Calpers’ chief investment officer. “The overall objectives are to ensure that the system is sustainable and . . . improves the likelihood that we generate somewhat higher returns and improve the funded ratio.”

Gilmore said the traditional strategic asset allocation model — in which funds set fixed long-term weights for each asset class and regularly rebalance back to those targets — encouraged buying high and selling low, and left teams managing assets in isolation.

Calpers’ 11 existing benchmarks — ranging from private equity to fixed income — illustrate the problem, Gilmore noted. “It becomes quite hard to see just how the overall portfolios perform,” he said. By contrast, the new strategy introduces a single reference portfolio, made up of global equities and US Treasuries, which he said would “make it much simpler” to judge performance and risk.

The new framework limits active risk within 400 basis points — how much the fund’s performance is allowed to diverge from the 75:25 reference portfolio. The board also voted to keep the plan’s discount rate unchanged at 6.8 per cent.

Gilmore acknowledged that raising equity exposure to 75 per cent “adds a little bit more risk”, but argued this was justified over a long horizon. “It’s always very hard to time the market in terms of adding risk.”

The new 400bp guardrail replaces a maze of asset-class rules with one overall cap on how much the portfolio can differ from its reference mix. In reality, staff were expected to stay below that cap — within 250bp-350bp — rather than pushing up against the full limit, Gilmore said.

With the adoption of the reference portfolio, he said: “The board and the public can see whether the management team has done a good job of actually beating the reference portfolio.”

Frank Ruffino, a Calpers board member, urged the fund to build in an early appraisal, proposing a “formal review of the efficacy of the total portfolio approach compared to the prior strategic asset allocation governance model” within two years of the transition.

Such a review, he said, would give the board “a clear and transparent evaluation of whether the shift to TPA improves outcomes”.

In Paris, the next coffee revolution is quietly brewing

Meet the pioneers reimagining the French capital’s café society, infusing every bean with craft, conscience and creativity

Finding artisanal coffee is not difficult in today’s Paris. Joachim Morceau, who founded Substance Café — the city’s sole reservation-only coffee-tasting bar — takes it a step further. He says that the French capital’s top five coffee venues could form one of the best top-five lists in the world.

This posture would have seemed impossible even just a decade ago. In her first book, Serve It Forth (1937), American food writer MFK Fisher wrote: “France today possesses what is probably the most intelligent collective palate.” Yet for the next half century, coffee remained a glaring exception to this rule — a blind spot in an otherwise discerning food culture. In a nation renowned for sophisticated tastes, the acerbic, harsh espresso served in many bistros was not just surprising, but seemingly inexplicable. Contributing factors included France’s colonial past and the influence of industrial-scale coffee companies like Lavazza and Cafés Richard, leading espressos to often contain 25 per cent or more bitter robusta.

In 2010, The New York Times published an article questioning why coffee was so bad in Paris. But by 2019, the FT’s Simon Kuper was celebrating a Parisian coffee revolution — a transformation marked by independent roasters, many founded by immigrants familiar with high-quality coffee from Australia or the US, who introduced a focus on artisanal roasting methods and espresso drinks like the cortado or flat white.

Today, the city’s coffee culture has again entered an exciting new phase, which is less centred on shaking off a bad reputation, and more on micro-roasteries pushing for higher degrees of coffee nerdery and distinctiveness. In most neighbourhoods across Paris, you can find coffee shops championing single‑origin beans and state-of-the-art brewing techniques. It doesn’t come cheap, but it means consumers enjoy coffees that are layered and lingering — more akin to a €15 glass of wine than a €1.50 shot of espresso. 

To situate this shift, it helps to understand broader global changes in coffee production and distribution. Coffee enthusiasts often speak in “waves”. The first wave, in the late 19th century, coincided with colonisation and the mass production of coffee. The second, initially driven by postwar Italian immigration and espresso culture, and later by the global spread of chains like Starbucks, dominated until the third wave emerged at the turn of the millennium, introducing a focus on provenance, roast profiles and manual brewing techniques. Speciality coffee was treated like wine, with terroir, varietals and tasting notes shaping the vocabulary.

Paris is seeing a fourth wave that is largely characterised by scientific brewing techniques and more ethical, transparent sourcing. “It is hard to define,” says Alexis Gagnaire, founder of Tanat coffee shop, but one key principle is that “innovation is at the centre of everything”. Tanat is known for its experimental approach, using methods like carbonic maceration (fermenting whole coffee cherries in a sealed, oxygen-free environments) and co‑fermentation (fermenting coffee with other fruits like apples and berries) to produce funkier, tropical-flavoured coffees. Gagnaire says that doing this has “also attract[ed] a new kind of clientele that speciality coffee has never reached before”.

There is also a growing focus on the importance of terroir, which has resulted in the rise of lighter-roasted, tea-like serves with flowery notes. These coffees have emerged from the search for purer expressions of the beans — what Morceau believes is the new signature of the Paris coffee scene. At Substance Café, he brews me an Ethiopian Geisha, a highly aromatic, floral varietal that has been fermented with the coffee cherry intact to enhance fruitiness and complexity. He explains that he uses minimal extraction, traditionally frowned upon as it means too few flavour compounds have dissolved from the coffee grounds into the water, the latter of which in this case is calibrated with calcium, magnesium and bicarbonate. The result is subtle and elegant but complex, with persistent notes of delicate berries and rose.

This meticulous focus on origin, processing and brewing precision isn’t unique — it’s part of a larger trend shaping Paris’s speciality coffee scene. Kévin David of Moklair, a Reims roastery stocked across Paris, says the future lies in varietal diversity, refined drying techniques, and “processes that make coffee both clearer and deeper”.

So while David chases clarity, Morceau pursues purity and Gagnaire values innovation, it somehow all adds up to a coffee scene that feels unmistakably Parisian. The fourth wave might be hard to define, but as coffee becomes more poetic, opinionated, and refined, the only surprising thing is that it took Paris so long to catch up.

L’Arbre à Café

10 RUE DU NIL, 75002 PARIS AND FIVE OTHER LOCATIONS

Featuring minimalist design with light-wood accents and sleek copper- or stone-toned counters — all enhanced by natural greenery — the decor of L’Arbre à Café’s six shops deliberately aligns with its 100 per cent organic and biodynamic ethos.

Biodynamic farming (chemical-free practices that emphasise soil health through compost, crop and grazing rotation) “increases the fermentation effects and intensity”, says founder Hippolyte Courty. “You increase the taste of terroir.” 

L’Arbre à Café at Le Bon Marché department store . . . 

 . . . and its branch at trendy rue des Martyrs

L’Arbre à Café has been a local pioneer in biodynamic speciality coffee since 2009, with beans sourced from its own biodynamic farms in Peru and Ethiopia, and those of five other biodynamic growers. Its range of beans are rotated around its locations, with espressos starting at €3, milk-based coffees at €5 and V60 and Chemex pourovers at €6. The roasting methods applied to the beans involve a variety of ultramodern techniques, and include groundbreaking work with water — all of it aimed at creating a certain style. “Some want to increase intensity,” he says. “We definitely prefer complexity and authenticity.” Opening times (Rue du Nil branch): Sunday-Monday, 9am-1pm and 1.30pm-6pm; Tuesday-Wednesday, 9am-1pm and 1.30pm-7.30pm; Thursday-Saturday, 9am-7.30pm. Website; Directions

Substance Café

30 RUE DUSSOUBS, 75002 PARIS

It’s a one-man show at this 13-seat tasting room, as Morceau schmoozes in French and English while preparing coffees on a cherry-red espresso machine and V60 filter pots. It is reservations-only, with no music, takeaway options, food or pastries. “I try to avoid every negative bias,” says Morceau of elements that can distract from the actual coffee. The sugar ban is paramount, as it takes 30 minutes for the palate to recalibrate, he claims. 

His preference is for coffee beans that express floral and fruit flavours, mostly from Panama or Ethiopia, with the elegant Geisha varietal — rediscovered in 2004 — very prominent. A filter begins at €9, with the specials whiteboard menu going up to €21. Most of his coffees are roasted according to the washed method: removing the cherry’s fruit before the beans are dried, to highlight clarity and acidity. “I don’t want the taste of fermentation,” he says. “I want purity.” The same applies to the €7 double espresso, which he calls a “filter concentrate” (treating espresso as a concentrated filter coffee), brewing to achieve citrusy notes and a longer finish. 

Morceau might be serious about coffee but he wants the experience to be relaxed. “I don’t want people to think it’s elitist or chichi,” he says. “This place is not a temple. It’s just a place where I try and make you a good coffee.” Opening times: Monday-Friday, 12.30pm-7pm. Website; Directions

Tanat

96 RUE DES ARCHIVES, 75003 PARIS, AND TWO OTHER LOCATIONS

Tanat’s three shops each have the same minimalist aesthetic, with glossy stainless-steel bars and dedicated retail sections. Tanat cares about terroir (it is one of the categories customers can choose from) and specialises in “funky and fruity” coffees that are created by natural, anaerobic, and 30-hour fermentation processes.

The focus on innovation as such may seem like a stylistic choice, but it’s related to Tanat’s sourcing experiences. “Altitude plays an increasingly important role in producing high-quality coffee, as we can clearly see in Panama,” Gagnaire explains. “Co-fermentation offers a solution for lower-altitude farms.”

Tanat is known for its “funky, fruity” coffee . . .  © Hugo Renoux

. . .created by a 30-hour fermentation process © Hugo Renoux

Currently, they’re working with coffea liberica — a rare, low-yielding species with a famously unconventional, woody, jackfruit-like flavour — including a yeast-fermented version they competed with at the World Barista Championships this year. The shops offer a sizeable menu of espresso and filter options ranging from €4 to €20, but also cater to those who are less experimental, with a cortado at €4.50 and €5.50 for a flat white (the standard price in Paris’s speciality coffee shops).

For fermentation sceptics, Gagnaire argues that while Tanat pushes coffee’s boundaries, it’s always about discovering the coffee’s essence. “So where is the balance?” he explains. “We want to know that and discover a bit more.” Opening times (Rue des Archives branch): Monday-Friday, 8.30am-7pm; Saturday-Sunday, 9pm-7pm. Website; Directions

Terres de Café

36 RUE DES BLANCS MANTEAUX, 75004 PARIS, AND NINE OTHER LOCATIONS

If Tanat is, say, experimental Loire Valley natural wine, Terres de Café would be Burgundy, where terroir is everything. Founded in 2009, it now has 10 Paris shops plus locations in Brussels, Lille, Versailles, and Seoul. It offers more than 30 exclusive coffees across five permanent ranges, including whole beans, ground varieties, single-origin coffees and blends. Natural coffees — where beans are dried inside the cherry, creating fruitier, more complex flavours — remain central to the offering, representing 60 per cent of retail sales. 

After experimenting with a variety of fermentation methods, Terres de Café concluded that innovation is only “interesting when it enhances the terroir”, says Servell, which has led him to ban additives external to a coffee farm, such yeast, fruits, aroma extracts and lactic acids. Customers, he adds, are “looking for purity and bright acidities, understanding that an exceptional coffee is refined and powerful at the same time”. 

Its Marais location at 36 Rue des Blancs Manteaux offers the full experience, with wicker chairs and Polaroids from farm visits. All the shops have fairly standard-priced staples (espresso starting from €2.90), alongside a more adventurous menu that includes coffee-plant infusions such cascara (the dried coffee-cherry husk) — plus a full line-up of Geishas and other grands crus starting around €15. Opening times (Rue des Blancs Marteaux branch): Tuesday-Friday, 9am-7pm; Saturday-Sunday, 9.30am-7pm. Website; Directions

European defence groups look to flotations as they chase market rally

Stoxx Europe aerospace and defence index has more than tripled since 2022, with more than half of that rise coming this year

Several big European defence companies are preparing to float on public markets as the industry seeks to capitalise on the investor enthusiasm that has sparked a blistering rally for the sector this year.

British metal engineer Doncasters Group, Franco-German tank maker KNDS and Czech defence company Czechoslovak Group (CSG) are among those exploring initial public offerings, according to people familiar with their plans.

The potential listings come after investors have piled into European defence-related IPOs since 2024. Shares in French night-vision goggles maker Exosens, German tank gearbox maker Renk and Poland’s Arlen all jumped on their trading debuts.

“Every investor nearly without exception is dedicating a lot of time” to the defence sector, said Andreas Bernstorff, global head of equity capital markets at BNP Paribas. “There is a great deal of focus on the new companies that are coming to market.”

European defence stocks have soared this year as the continent has committed to boosting defence spending in response to the Trump administration’s demands that the region shoulder more of its own security costs. In June, Nato’s 32 members pledged to increase defence spending to 5 per cent of GDP — a significant jump from the previous 2 per cent target. 

The Stoxx Europe aerospace and defence index has more than tripled since Russia’s full-scale invasion of Ukraine in 2022, with more than half of that increase coming in 2025. The index has outperformed the S&P 500 and the Nasdaq Composite since the start of the year.

While Doncasters is looking to Wall Street for its IPO and has tapped bankers at Moelis to work on the deal, many are hoping to list closer to home. CSG is aiming for a primary listing in Amsterdam and targeting a valuation of about €30bn, which would make it one of the continent’s most valuable defence companies. 

KNDS, which recently appointed former Airbus chief executive Tom Enders as its chair, has hired Lazard to advise on a potential listing. Finnish satellite maker Iceye is at present weighing raising new funding and could eventually pursue an IPO.

Doncasters did not respond to requests for comment; Moelis, Iceye and CSG all declined to comment. KNDS said it was undertaking an “IPO readiness” project but no final decision had been made.

“Investors aligning with where government spending is going is a good theme,” said Gareth McCartney, global head of capital markets origination at UBS. “One key trigger and catalyst in Europe is a redefinition of defence spending.”

As investors have piled in, valuations are running at near-record highs, boosting the case for listing. The European defence index is even outstripping Wall Street’s blue-chip tech index in valuation terms, with the price-to-earnings ratio of the former sitting at about 34 times. 

The rush to consider public listings was “essentially opportunistic”, said Nick Cunningham, analyst at Agency Partners. Given some of the “enormous increases in stock prices” of listed players, defence was a sector that is “very tempting to access”.

Defence companies considering a float have reason for optimism. Submarine manufacturing business TKMS, a spin-off of German conglomerate Thyssenkrupp, saw a 35 per cent share price bounce when it debuted in Frankfurt in October. Despite falling back slightly, the stock is still trading 20 per cent higher than its initial price. 

Meanwhile, shares in Renk, which listed in February 2024, are up 235 per cent year to date. Those of Exosens, which came to market in July 2024, are up more than 130 per cent in the same period.

Investors are also increasingly betting that some of Europe’s defence tech start-ups will come to market in the not too distant future as backers look to exit. Europe now boasts a few defence start-ups with a “unicorn” valuation of more than €1bn, including drone makers Helsing, Quantum Systems and Tekever.

“I expect we’re going to see a winnowing down and a few companies emerge and build large and enduring businesses,” said Alex Ferrara, a partner at the venture capital firm Bessemer, which is backing companies in the sector.

However, Nicholas Nelson, general partner at Archangel, an early-stage venture fund focused on defence tech, said many of the European tech champions will not come to market.

It was more likely, said Nelson, that “a very small number will list and the rest will be acquired by US or European strategics or PE-backed companies”.

Ex-partner of sanctioned oligarch sells London flat for £26mn under original purchase price

The property in One Hyde Park had been held via a trust of which Natalia Rozhkova is listed as the beneficiary

The former partner of a sanctioned Russian oligarch has sold her flat in a luxury London building at a hefty discount.

Natalia Rozhkova, who dated Alexander Ponomarenko for several years, sold the property in One Hyde Park in September for £34.8mn to Israeli tech billionaire Oran Holtzman, according to Land Registry records and people familiar with the transaction.

The flat was originally purchased through an offshore company for more than £61.3mn in August 2011, according to property records.

The luxury Knightsbridge development has been a magnet for oligarchs and other super-rich buyers since it opened in 2009. Australian pop star Kylie Minogue has also owned a property there.

Brothers Christian Candy and Nick Candy — the latter of whom is now the Reform UK treasurer — were leading figures behind the project, which Sotheby’s says “is widely considered to be the world’s most exclusive apartment building”. In 2011, Ukraine’s richest man Rinat Akhmetov spent £136.6mn on a penthouse at the development, at the time the most ever spent on a flat.

Ponomarenko, the former chair of Moscow’s largest airport, was sanctioned by the UK, European Union and the US in 2022 following Russia’s full-scale invasion of Ukraine. The US Treasury in August that year said Ponomarenko was a “Putin enabler” who had “close ties to other oligarchs and the construction of Vladimir Putin’s seaside palace”.

Rozhkova and Ponomarenko, who have children together, broke up in 2016, said people familiar with the matter. A villa they co-owned in Saint-Jean-Cap-Ferrat, France was frozen in 2022 by authorities.

A lawyer for Rozhkova said he had been assured that “Mr Ponomarenko, who had no economic interest in the apartment, will not receive any proceeds or economic benefit from the sale.”

He said: “The transaction took place in compliance with all formalities, laws, and regulations of the UK. All checks were carried out and all necessary approvals were received from the Landlord and other parties to the transaction.”

A lawyer for Holtzman said “appropriate due diligence was conducted in relation to the transaction and the purchase was properly completed in compliance with UK, US and EU sanctions laws”.

The flat had been held via a trust of which Rozhkova is listed as the beneficiary.

Representatives for Ponomarenko did not respond to requests for comment.

The sale comes against a beleaguered backdrop for prime central London property. Prices have fallen 24 per cent since their 2014 market peak, according to Savills, amid higher interest rates, stamp duty and the departure of wealthy people from the UK.

However James Forbes, co-founder of London property advisory firm Forbes Gilbert-Green, said sales activity in One Hyde Park was significantly higher than any other building in the capital in the past year.

He added: “Buyers for this building are looking to move in without having to do any work as the whole model is based on a hassle-free, 5-star full service.”

Because units were more than a decade old, some were being sold at lower prices because of the costs of refurbishment, as well as higher taxes and a more challenging market, he said.

Forbes sold a flat last December for about £50mn, down from the £57mn asking price, according to data provider LonRes, which tracks the city’s prime housing market.

Another apartment was listed at £45mn and is being sold out of receivership, according to people familiar with the sale. The price being paid is not yet public. It had originally been bought in 2011 for nearly £60mn by a company owned by the wife of Hong Kong property tycoon Pan Sutong.

Companies may wish they could lift valuations without being bothered, but the cage-rattling stands to benefit investors

Insofar as they challenge underperforming companies to do better, activist investors are good for markets. So the fact that there are lots of them around is cheering news. The UK — where lowly valuations come with clear codes and rules — appears to be a particularly favourable stomping ground.

Globally, a total of 61 public campaigns were launched in the third quarter, according to Barclays, up from 36 the prior year. The 191 launched since January puts this year on course to top any in the past decade.

Turbulent markets and uncertain geopolitics have made it more likely that a company’s market capitalisation should diverge, at least temporarily, from its long-term value. Investors’ obsession with AI-related stocks hasn’t helped other sectors either, drawing away both cash and attention. The return of dealmaking and the gradual reopening of IPO markets help shareholder agitators too. Calling for boardroom seats positions an activist to influence strategy, but it is divestments that often crystallise value.  

The UK’s well-understood corporate codes have long made it the standout destination in Europe for activists. An additional spur right now is its depressed local capital market.

As a result, 52 UK companies faced activists in the 12 months to September, according to Diligent data, up from 36 in the previous 12 months. The agitators are getting punchier too, with a near 50 per cent jump in demands to remove bosses or other board members, not just to swell their ranks.

This trend shows no signs of abating. Campaigns successfully targeting the market’s biggest fish, such as Elliott’s in oil company BP, are likely to encourage smaller players too. Unilever has been slower work for Nelson Peltz, who has been on the board of the consumer brands group since 2022. Yet its new boss recently pledged a deeper overhaul, suggesting performance improvements are getting on track.

There is also no shortage of potential targets. Scan UK companies with more than £1bn in market capitalisation, and with depressed share prices — say, below their 50- and 200-day moving averages — and some 70-plus names pop up. Some like drinks group Diageo and high street stalwart Marks and Spencer have well-documented issues. Others include defence group Qinetiq, struggling to keep up with general enthusiasm for the sector, and private equity firm 3i, where a short seller is circling. The owner of the London Stock Exchange also makes the list, with a one-fifth fall in its shares despite strong performance from peers.

There’s a lot to put off an activist between a quick screen and laying their reputation on the line, of course, but the conditions are improving. UK companies may wish they could lift valuations without activists bothering them. Investors, however, stand to benefit from all the cage-rattling.

Pharmaceutical group and Fleming Initiative launch project to combat antimicrobial resistance

Pharmaceutical company GSK is teaming up with UK scientists to use artificial intelligence to fight superbugs that are making life-saving medicines increasingly ineffective.

A £45mn venture with the Fleming Initiative will fund about 50 researchers and launch six programmes to target pathogens such as MRSA “hospital superbugs” and fungi that are spreading because of climate change, GSK will announce on Tuesday.

The project seeks to combat resistance to treatments such as antibiotics, which is growing due to overprescription, failures by patients to complete their courses and careless disposal of pharmaceuticals. Climate change and pollution are other risk factors, with flooding and microplastic surfaces giving pathogens the means to mix and exchange genetic material.

“It’s a global problem, it’s pretty indiscriminate and often described as the slow pandemic,” said Emma Walmsley, GSK’s chief executive, adding that there was a “very serious and significant impact” in poorer countries. “The statistics are surging and we’re hurtling towards 10mn deaths a year by 2050 unless there is material intervention.”

The development of new anti-microbial drugs has long been hampered by a lack of investment. Companies have often seen them as unprofitable compared with other types of pharmaceuticals, in part because they need to be used sparingly to avoid promoting fresh bouts of resistance.

UK drugmaker GSK won approval from the US Food and Drug Administration in March for Blujepa or gepotidacin, a drug to treat uncomplicated urinary tract infections in women and older girls. Companies such as Japan’s Shionogi and Roche of Switzerland are also active in the field.

One in six lab-confirmed bacterial infections globally is now resistant to antibiotic treatment, the World Health Organization warned in October. Drug-resistant microbes contributed to around 5mn deaths worldwide in 2021 and that number threatens to rise by more than two-thirds by 2050, according to a paper published in The Lancet last year.

Drug resistance — known as antimicrobial resistance, or AMR — emerges when pathogens mutate in ways that make treatments targeting them less effective. Since the new strains are more resilient to the medicines than their non-mutated counterparts, they are likelier to survive and multiply.

AMR tends to be most prevalent in low- and middle-income countries but the peril is global. Drug resistance has risen sharply in Ukraine because clinics are using antibiotics heavily to treat wounded from the war against Russia’s invasion.

One of the new projects aims to “set supercomputers versus the superbugs”, Walmsley said, using AI to make antibiotics target the tough defences of so-called Gram-negative bacteria. These include E. coli, responsible for intestinal and urinary tract illnesses, and Klebsiella pneumoniae, which can cause diseases including meningitis, pneumonia and blood infections.

A second project will use human volunteers to understand better methicillin-resistant Staphylococcus aureus, a group of bacteria more commonly known as MRSA. These have historically been a leading cause of AMR-related deaths in healthcare facilities.

A third research strand will attempt to find new ways to attack Aspergillus species of fungus, some of which cause lethal infections and are thriving as rising global temperatures make more areas habitable for them.

Two other projects of the GSK-Fleming partnership will seek to improve antibiotic prescription and examine how analysis such as wastewater monitoring could help curb the spread of resistant microbes. The final one will look at potential policy changes, including to influence public use of anti-microbial drugs and incentivise companies to develop new ones.

The Fleming Initiative is a collaboration established by Imperial College London and its associated NHS trust to foster public-private efforts to tackle AMR. It is named for Sir Alexander Fleming, whose discovery of penicillin revolutionised the treatment of bacterial infections.

But Tesla also has its own cash needs, which will likely grow in the coming years as its robotaxi and Optimus robot development scales up. Musk said at the meeting that Tesla will need to spend “tens of billions” of dollars on training AI for its Optimus humanoid robot alone.

Tesla also needs chips. Musk has said that Tesla’s goal is to create a chip that works well inside consumer products like cars and the Optimus robot, as well as in data centers. That would be a big shift from how Tesla now operates. It now uses chips it designs in its cars, manufactured by TSMC and Samsung, and relies on Nvidia and others for data center chips. Musk said at the meeting that Tesla might explore a deal with Intel in addition to its own fab because he expects its need for chips to skyrocket in the coming years.

Yet Musk’s projections for Tesla’s chip needs are based on the premise that the company will grow at a breakneck pace in the coming years, which is far from guaranteed and would require Optimus and Cybercab, an upcoming two-seater vehicle built for autonomous ride-hailing, to be major hits. That would be a significant reversal from Tesla’s current state—this year, the company is on track to sell fewer vehicles than it did in 2024, which itself was a decline from 2023. And Tesla faces significant technical and regulatory challenges as it tries to get both Optimus and Cybercab off the ground.

Analysts expect Tesla’s free cash flow to decline slightly in 2026 before accelerating quickly in the following years, according to data from S&P Capital IQ, but that’s dependent in part on its self-driving software helping to make up for sagging electric vehicle sales and increasing competition.

Tesla and xAI did not respond to requests for comment.

Delivery Robots

Optimus is Tesla’s biggest long-term bet. Musk has said there will eventually be more humanoid robots than cars in the world, and that Optimus will one day be responsible for about 80% of Tesla’s market capitalization. Inside Tesla, he’s pushed the Optimus team to find ways to use the robot in tandem with another big, nearer-term bet: the Cybercab, according to a person with direct knowledge.

That includes Musk’s desire to have the Optimus robot sit in the Cybercab so it can deliver packages. That should be possible: newer versions of the Optimus robot are capable of consistently lifting and moving around with roughly 25-pound objects for three to four hours on a 30 minute charge, another person with direct knowledge said.

But the connection between the robot’s torso and legs isn’t flexible enough to allow it to seamlessly get in and out of a Cybercab, according to the first person. Tesla would need to redesign the robot to change that or use a different vehicle for deliveries more tailored for Optimus’ shape, that person said.

For now, Tesla is focused on figuring out a design for Optimus that Musk is comfortable scaling up. The company had originally planned to produce 5,000 Optimus bots this year, but abandoned that target and delayed scaled production to 2026 due in part to technical issues with its hands, The Information previously reported. Tesla is now focused on refining a version of the robot Musk has dubbed V3.

At the recent shareholder meeting, Musk said is going to stand up a “million unit production line” for Optimus in Fremont, Calif., followed by a ten million unit production line in Austin, though he did not share a timeline for doing so. One of the milestones in Musk’s pay package is selling a million robots.

In the near term, Tesla expects to deploy at least the first several thousand Optimus bots it produces inside its own facilities like factories and warehouses, one of the people with direct knowledge of the program said. That’s due in part to avoid technology leaks to rivals that could come from placing its robots in other companies’ facilities, the person said. It’s an approach allowed by Tesla’s scale and is a contrast with humanoid robotics rivals like Figure AI, which has deployed its robots in a BMW factory, and 1x, which is putting robots in customers’ homes.

In the longer term, though, Musk envisions Optimus working in people’s homes and offices. That means the robot needs to be able to reliably communicate with humans. To do that, Tesla has been using xAI’s Grok chatbot.

But the companies still have kinks to work out. In September, Salesforce CEO Marc Benioff posted a video from the Tesla office in Palo Alto. While Benioff captioned the video with effusive praise for Musk and Tesla, the video showed the Optimus taking several seconds to respond to Benioff’s voice and required him to repeat himself before it would take an action.

The awkwardness in the video was a result of xAI taking too long to process the audio from the Optimus bot before telling the robot what to do, one of the people with direct knowledge of the program said. After Benioff posted the video, the person said, the Optimus team watched it repeatedly and has been trying to figure out how to make the robot respond to speech faster.

Cybercab Questions

Another big reveal at Tesla’s shareholder meeting was Musk saying that Tesla would start producing the Cybercab at its Austin factory in April.

The Cybercab design shown publicly by the company features no steering wheel or mirrors because Musk says that the self-driving software powering the vehicle will be so capable that a human will never need to take over. But despite the plan to start production soon, Tesla has many hurdles to clear before it can put such a car on the road.

For one, deploying a car without a steering wheel, mirrors or pedals will require Tesla to apply for an exemption from federal safety rules with the Department of Transportation. That process can take many months, and success is far from guaranteed—before General Motors shut down Cruise in 2023, the self-driving car firm had been stuck in limbo for 18 months waiting for the DOT to approve an application for a car without a steering wheel. However the DOT, which is led by Musk nemesis Sean Duffy, said earlier this year that the department would change its rules to streamline the approval process.

Moreover, even if the DOT grants an exemption for the Cybercab, current federal rules allow companies to manufacture and deploy a maximum of just 2,500 vehicles covered by an exemption each year. Unless the DOT were to change its rules, Tesla would be barred from manufacturing Cybercab at the scale Musk wants. One of the targets outlined in Musk’s pay package is to put one million robotaxis on the road by 2035.

One way around this challenge is to manufacture the first versions of the Cybercab with a steering wheel and mirrors. Tesla has already produced versions with those features that have been spotted being driven by humans at the Austin factory and on public roads in Texas and California in recent months.

While Musk has repeatedly pushed back on the idea of putting a steering wheel in Cybercab—and killed plans last year for a $25,000 driveable consumer vehicle built on the same platform as the Cybercab, The Information has reported—Tesla board chair Robyn Denholm dangled the possibility during a press tour ahead of the vote on Musk’s compensation. “If we have to have a steering wheel, it can have a steering wheel and pedals,” Denholm told Bloomberg in October.

Ahead of the Cybercab production, Tesla has launched a limited ride-hailing service, called Robotaxi, in Austin and San Francisco. So far, Robotaxi has been using Model Y vehicles with human operators in the cars who can take over from Tesla’s self-driving software. Musk said in October that Tesla wants to launch the service in 8 to 10 U.S. metro areas by the end of 2025—down from a previous goal of reaching half the U.S. population this year—but Tesla still has to complete key steps with state regulators.

Dispute between Swiss-based company and its former business partner has rocked commodities trading industry

Trafigura allegedly made just $10mn from selling the contents of so-called nickel cargoes it bought for $500mn from Indian business tycoon Prateek Gupta, according to lawyers for the commodities trader accusing its former business partner of fraud.

On the first day of a five-week trial in London’s High Court, Trafigura admitted it “overpaid for rubbish” after purported nickel shipments it purchased from Gupta were found to contain various low-value materials such as iron briquettes.

In a commercial dispute that burst into the public domain two years ago, Trafigura alleges it was the victim of a “systematic fraud” perpetrated by Gupta and companies he controlled. 

The scandal has rocked the commodities trading industry and raised questions over the due diligence procedures in place at Trafigura, which have since been revamped.

Lawyers for Dubai-based Gupta argue Trafigura was in on the scheme, which they allege was beneficial to the company because it was earning interest for financing the cargoes while they were being transported.

Under this alleged “loop arrangement”, Trafigura would buy cargoes from Gupta and his affiliated companies, then sell them back to him and the affiliates at the end of the journey — and was allegedly aware the cargoes did not contain the high-quality nickel they were supposed to.

Trafigura was able to draw on a low-interest credit line from Citibank for the cargoes, although Citi eventually became concerned about the size of its exposure.

About 542 trades valued at $3.3bn allegedly took place as part of this arrangement, according to court documents from Gupta’s side.

“A moment’s reflection reveals that so long as the circle kept turning . . . then each of Citi, Trafigura and [the defendant] gained, and nobody suffered,” wrote Gupta’s lawyers in court documents.

Trafigura’s legal defence said the question of whether this alleged arrangement existed is the “principal factual issue” requiring resolution at the trial.

The commodities trader’s lawyers say it is “logically and commercially absurd” to argue that Trafigura would be part of such an alleged arrangement.

“The evidence shows it to be a fiction conceived after the event by admitted fraudsters, no doubt to put off the day of judgment against them,” said Trafigura’s lawyers in court documents, referring to the defendant.

Instead, they say, the trading house was simply fooled. “Ponzi schemes involve many investors, this scheme involved one,” said Nathan Pillow, a lawyer representing Trafigura, while addressing the judge.

“The exposure accumulates, as more and more of these deals are done, until the music stops. And that is a classic case of fraud,” he added.

Switzerland-based Trafigura brought a case against Gupta in February 2023. London courts imposed a worldwide freezing order on him shortly afterwards, and subsequently also on his wife.

Trafigura and Gupta started doing business together as early as 2014. In 2022, rising nickel prices caused lenders, including Citi, to review their nickel exposure, leading to a series of events that uncovered the alleged fraud.

Trafigura is expected to call several witnesses during the trial, including Socrates Economou, its former head of nickel. Gupta is expected to testify remotely from Dubai.

One central figure in the case is former Trafigura employee Harshdeep Bhatia, who was based in Mumbai and was a key liaison with Gupta during the period concerned. Bhatia will not be testifying during the trial, according to court documents submitted by Trafigura.

Lawyers for the defendant allege that Economou and Bhatia were aware of, and in fact proposed, the alleged arrangement. Trafigura denies this.