Welcome to this week’s Market Pulse, your 5-minute update on key market news and events, with takeaways and insights from the Sidekick Investment Team.

Today, we’re looking at Rachel Reeves’ latest speech, Meta’s new data centres, and the EU’s search for trade deals in Asia. 

But first, our number of the week…

22%

Those are the odds that Federal Reserve chair Jerome Powell will leave his position by the end of the year, according to prediction market Kalshi. While traders still expect Powell to remain in his role, Trump’s escalating attacks on the Fed chair have pushed up the odds in recent weeks. 

Sidekick Takeaway: Trump’s frustration with Powell stems from the Fed’s decision to keep rates high, even as US inflation has moderated. Ironically, any attempt to fire Powell would almost certainly spike Treasury yields, as investors question the stability and security of US assets.

Only have a minute to read? Here’s the TL;DR:

• Rachel Reeves’ Mansion House speech largely came up short on solving low retail investment in UK shares. The proposed measures are unlikely to fix underlying problems, which require a cultural shift and greater access to investor education. 
• In the firm’s race to catch up with AI competitors, Meta unveiled plans to build several new gigawatt-sized data centres. The investment complements Meta’s Superintelligence Lab, which has recruited leading researchers to make the next big AI breakthrough. 
• Amid rising tariff tensions with the US, the EU is seeking closer trade relationships with Asia-Pacific countries. Nonetheless, conflict over national security concerns and environmental regulation could be stumbling blocks for deals in the region. 

It’s important to note that the content of this Market Pulse is based on current public information which we consider to be reliable and accurate. It represents Sidekick’s view only and does not represent investment advice - investors should not take decisions to trade based on this information.

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Boot On The Neck: Mansion House Speech Falls Short

On Wednesday, Chancellor Rachel Reeves delivered her much-anticipated Mansion House speech in the City of London.

Reeves’ claim that regulation acts as a ‘boot on the neck’ of many businesses drew significant press attention.

However, her proposals to reform ring-fencing rules could help make UK financial services firms more globally competitive. 

Nonetheless, when it came to the most pressing issue – encouraging UK savers to invest in their own country – the speech came up far short of what’s needed.

Mansion House measures won’t move the needle on retail investment

In her speech, Reeves outlined her vision for tackling the problem of low domestic retail investment. 

However, the Chancellor’s proposed solutions fail to meaningfully address the underlying issues:

• Reeves vowed to update investment disclosure requirements, which are ‘quick to warn people of the risks, without giving proper weight to the benefits.’
• She will also seek to reform the consumer arbitration process, making it less costly for firms to navigate. 
• But little attention was paid to the underlying drivers of the issue – including limited financial education, perennially slow UK growth, and a poor culture of retail share investing. 

UK savers hold just 8% of their wealth in equities and mutual funds, compared with 33% in the US.

That’s not a gap that can be closed overnight – but neither can it be closed with surface-level solutions that fail to address the underlying issues. 

Sidekick Takeaway: While there were some positives in Reeves’ speech, we would have been more encouraged with a greater focus on improving retail attitudes and education toward domestic share investing. While it takes more than a single speech to shift long-held cultural attitudes, the proposed measures are unlikely to make real progress.

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Prometheus Rising: Meta Plans New Data Centres 

This week, Meta CEO Mark Zuckerberg unveiled the company’s plans to build several massive new data centres.

These data centres will be used to train and run Meta’s latest AI models. The first location, dubbed ‘Prometheus,’ is set to come online next year.

Meta’s plans show that Silicon Valley’s appetite for AI investment remains robust. The company is poised to spend up to $72 billion on capital expenses this year.

But at the same time, this level of spending shows how far behind Meta has fallen among AI competitors.

Meta plays catch-up with big spending

Meta has long been one of Silicon Valley’s leading firms, anchored by flagship platforms like Facebook and WhatsApp.

But both investors and analysts widely see the company as having fallen behind in the AI race. 

Not only do Meta’s models struggle with mistakes, but features like voice interaction lag competitors like OpenAI.

In an effort to play catch-up, the company has spent big on leading AI talent and infrastructure:

• Meta recently invested over $14 billion in data annotation startup Scale AI and hired away its founder.
• The company has famously offered $100 million signing bonuses to poach employees from AI rivals.
• Meta’s data centre investment complements its new ‘Superintelligence Lab,’ dedicated to achieving breakthrough AI technology. 

Reportedly, Zuckerberg is also considering shifting away from Meta’s historic focus on open-source AI to utilize proprietary software. 

That change in strategy could allow the company to more easily commercialise any AI breakthroughs – and thus justify greater investment. 

Sidekick Takeaway: While Meta may lag firms like OpenAI and Anthropic in the AI race, industry leaders should be wary about getting too comfortable. As DeepSeek’s release earlier this year shows, major breakthroughs are still possible, and Meta’s big spending could translate into the next leap forward.

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Eurasian Cooperation: EU Explores Closer Trade with Asia

In recent weeks, US President Donald Trump has threatened dozens of countries with higher tariff rates. Additional levies are set to kick in on August 1st.

Trump’s aim is to push international partners to sign trade deals with America. But his threats could be having just the opposite effect.

In an interview on Monday, EU competition chief Teresa Ribera noted that the bloc is seeking deeper trade connections with countries in the Asia-Pacific region.

That includes a long-awaited free trade deal with India, as well as a potential agreement with China.

Closer trade relations with Asia come as an EU-US trade deal looks increasingly questionable. 

However, conflicting strategic priorities could make it challenging for the EU to secure comprehensive trade deals in Asia. 

EU-Asia trade deals face stumbling blocks

Historically, concerns over regulatory standards and national security have complicated efforts at EU trade deals in Asia:

• India has clashed with the EU over environmental regulations relating to carbon taxes and deforestation. 
• EU lawmakers have rebuked China over export controls relating to the geopolitically sensitive rare earth industry.
• In the past, the EU has also raised concerns about labour standards under free trade agreements in South Korea and other Asian countries.

As these disagreements show, trade negotiations between the EU and Asia-Pacific partners may not be straightforward.

But given America’s tariff threats, deeper trade cooperation elsewhere appears increasingly necessary.

Sidekick Takeaway: The EU isn’t the only country looking to reorient supply chains away from America, with China recently conducting a free trade tour of Asia. Ultimately, Trump’s efforts at securing lasting trade deals risks greater isolating America from the global trading system.

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Notices

Sidekick Money Ltd is a company registered in England and Wales (No. 13882980). Sidekick Money Ltd is authorised and regulated by the Financial Conduct Authority (FRN 984829). Our address is 21-33 Great Eastern St, London, EC2A 3EJ.

𝘗𝘭𝘦𝘢𝘴𝘦 𝘳𝘦𝘮𝘦𝘮𝘣𝘦𝘳, 𝘪𝘯𝘷𝘦𝘴𝘵𝘪𝘯𝘨 𝘴𝘩𝘰𝘶𝘭𝘥 𝘣𝘦 𝘷𝘪𝘦𝘸𝘦𝘥 𝘢𝘴 𝘭𝘰𝘯𝘨𝘦𝘳 𝘵𝘦𝘳𝘮. 𝘠𝘰𝘶𝘳 𝘤𝘢𝘱𝘪𝘵𝘢𝘭 𝘪𝘴 𝘢𝘵 𝘳𝘪𝘴𝘬 - 𝘵𝘩𝘦 𝘷𝘢𝘭𝘶𝘦 𝘰𝘧 𝘪𝘯𝘷𝘦𝘴𝘵𝘮𝘦𝘯𝘵𝘴 𝘤𝘢𝘯 𝘨𝘰 𝘶𝘱 𝘢𝘯𝘥 𝘥𝘰𝘸𝘯, 𝘢𝘯𝘥 𝘺𝘰𝘶 𝘮𝘢𝘺 𝘨𝘦𝘵 𝘣𝘢𝘤𝘬 𝘭𝘦𝘴𝘴 𝘵𝘩𝘢𝘯 𝘺𝘰𝘶 𝘱𝘶𝘵 𝘪𝘯.

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