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 potential tax hikes in the UK, a landmark tariff court case in the US, and Amazon’s recent lawsuit against Perplexity. 

But first, our number of the week…

$118 billion

That was the scale of investor demand for China’s recent issuance of dollar-denominated debt, over 30 times the amount of bonds issued. As a result, the bonds were priced at nearly no spread to US Treasuries, a historical first. 

Sidekick Takeaway: The fact that Chinese dollar bonds and US dollar bonds traded hands at roughly the same price underscores the extent to which America’s risk-free reputation has diminished. Nonetheless, this story also highlights how firmly entrenched the dollar is in the global financial system, with even rivals like China unable to avoid the currency. 

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

• In an unusual speech, Chancellor Rachel Reeves appeared to prepare the public for tax rises in her November budget, citing rising debt interest payments and downgraded productivity forecasts. Analysts expect she may raise income taxes, potentially breaking a key Labour manifesto pledge.
• The highest court in the US is currently debating whether Trump’s tariffs are legal, with prediction markets giving 70% odds of a ruling against them. Even if overturned, Trump could reimplement tariffs through several other legal channels, although the case adds significant uncertainty to trade deal negotiations. 
• Amazon sued Perplexity for allowing agentic AI models to purchase items without disclosure, claiming it violates the platform’s terms of service. The lawsuit could set legal limits on agentic AI autonomy, potentially restricting a multi-trillion-dollar market opportunity for general-purpose AI agents.

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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The Dawn Raid: Reeves Teases Tax Hikes Ahead of Budget

Ahead of unveiling a new government budget, it’s typical for UK finance ministers to keep a low profile.

But on Tuesday, Chancellor Rachel Reeves broke sharply from that tradition, delivering an unusual early morning speech.

Her aim? To prepare the British public for potential tax rises to come.

Reeves argues that the measures are necessary to combat Britain’s deteriorating public finances. 

But they could risk alienating voters, all while failing to fix the UK’s underlying growth issues.

Reeves faces rising interest bills & declining productivity ahead of budget

Chancellor Reeves is set to release a new government budget in late November, which is expected to feature fresh revenue-raising measures:

• In her speech, Reeves cited interest payments on Britain’s growing national debt (which now amounts to nearly 95% of GDP) as a key factor behind her decisions. 
• Reeves got more bad news this week as the UK’s main statistics agency downgraded national productivity forecasts, which also reduces expected tax revenue.
• Some analysts even expect Reeves to raise income taxes in her new budget, which could break a half-century taboo.

Raising income taxes would also violate a core pledge from Labour’s latest manifesto. Nonetheless, Reeves has vowed not to resign, even amidst potential voter fury.

Sidekick Takeaway: Unfortunately for Reeves, even raising taxes would merely paper over the cracks in Britain’s national economy. Achieving a sustainable footing for the UK’s public finances must be achieved by promoting higher economic growth, something that raising taxes to fund rising interest costs is unlikely to accomplish. 

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The Art of Appeal: Trump Tariffs Face Supreme Court Test

Since January, US President Donald Trump’s sweeping international tariffs have disrupted financial markets and the world economy. 

Through it all, the Trump administration has argued that large trade deficits constitute a national emergency in the US, justifying the levies.

Now, America’s highest court is set to rule whether that argument is sound – and whether many of the tariffs can remain in place.

So far, the situation doesn’t look good for Trump. On Wednesday, the administration’s lawyers faced a string of sceptical questions from the judges. 

If the tariffs are overturned, the US government faces the prospect of returning about $100 billion in collected levies. 

Tariffs could be overturned, but Trump has other options

As of late Thursday, the odds appear to be against Trump. On prediction market Kalshi, the likelihood of the court ruling against the tariffs was above 70%.

However, even that outcome wouldn’t cause Trump’s tariffs to disappear entirely:

• The court’s ruling pertains to a specific piece of legislation known as ‘The International Emergency Economic Powers Act,’ which has been Trump’s main tariff tool. 
• However, Trump has also relied on at least six other legal channels to implement tariffs, which would not be affected by the case.
• As a result, the US could seek to reimplement non-compliant tariffs through other channels, potentially even with new legislation. 

In the meantime, the case has added significant uncertainty to the administration’s ongoing trade negotiations.

By the time any deal is signed, it’s not clear whether the underlying tariffs will still be in place.

Sidekick Takeaway: Given the US president’s enduring love of tariffs, it’s unlikely to think that a court ruling will stop Trump from using them entirely. But between the logistical complexity of refunding levies and added negotiation uncertainty, a court order could still cause serious headaches for his administration. 

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Secretive Agents: Amazon Sues Perplexity Over AI Purchases

Artificial intelligence has pushed the boundaries of technology – but it’s also pushed the boundaries of the law.

The most well-known legal issue has to do with copyrighted content and model training. 

But this week, a fresh lawsuit sparked a new debate: How independent are agentic AI models allowed to be?

On Tuesday, Amazon filed a lawsuit against Perplexity for allowing the startup’s agentic models to purchase items on behalf of customers.

Amazon claims that failing to disclose when purchases are being made by AI is deceptive and violates the site’s terms. Perplexity, however, sees the lawsuit as nothing more than a bid to disrupt a competitor. 

Amazon-Perplexity lawsuit could shape agentic AI industry

Agentic AI is a potential multi-trillion-dollar market opportunity. Unlike a simple chatbot, this technology allows AI to work autonomously, completing digital tasks based on user instructions.

However, the Amazon-Perplexity suit could set legal limits on how independently these agents are allowed to act.

If platforms like Amazon can block outside agents in an effort to direct traffic to their own models, the potential for a general-purpose AI agent could drop dramatically.

Separately, Perplexity is also facing a lawsuit from Reddit for scraping comments and posts from the site.

Clearly, some of the most important limits to the growth of AI aren’t just technological, but legal as well.

Sidekick Takeaway: Perplexity’s legal woes are reminiscent of some of the lawsuits that shaped the early days of the internet, such as Microsoft’s battle with US regulators. Similarly, these AI cases could serve as landmark legal precedents for the future of the industry. 

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Notices

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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.