Large FTSE rally, CEO lays of 90% as a result of AI and the UK auto industry get a boost

Good morning and welcome to third ever issue of trxn. Today’s topics include:

• The FTSE 100 increased by 1.83% yesterday following a rally in banking and mining stocks

• An Indian firm laid off 90% of their customer service staff and replaced them with an AI bot

• Renault and a US carmaker are making the UK their headquarters for a significant new venture

• A brief (inspiring) history of the life of Arnold Schwarzenegger to get you pumped for the day

UK stocks rise by largest amount in 2023

• The FTSE 100 increased by 1.83% yesterday (12th July), which is the largest increase in 2023.

  • One of the main drivers for this increase was a vote of confidence from the Bank of England over UK banks’ resilience. They stated “the UK banking system would be able to withstand the severe macroeconomic scenario and has the capacity to support households and businesses throughout the stress”. (In plain English: if sh*t hits the fan [or simply continues to hit the fan as it has been recently] UK banks should be ok and we shouldn’t see a repeat of 2008).

    • Ironically, 15th March this year saw the largest drop this year due to the exact opposite reason: worries about a collapse of the banking system due to the (rightful) fears of Credit Suisse collapsing and the aftermath of SVB (Silicon Valley Bank) failing.

  • The mining industry also drove an increase in the FTSE 100 as the price of most base metals increased.

Is AI now good enough to replace human customer service assistance? One CEO thinks so…

• India’s Shopify equivalent, Dukaan, announced (on Twitter) that they’ve laid off 90% of their customer service staff and replaced them with an AI chatbot.

  • The BBC rightfully reported that “many users criticised his tweets and accused him of disrupting the lives of his staff with this ‘heartless’ decision”. And this is rightfully another example of a leader demonstrating poor EQ and insensitivity in announcing layoffs (similar to Better’s CEO in March last year).

• However, the impact of what’s happened here is profound. No doubt you’ve heard and been reading about AI in the news for the past few months. This is one of the first stories of a sizeable company with existing teams and infrastructure making a decision to change how they operate as a result of an implementation of AI technology. It remains to be seen whether this turns out to be a trend with AI having the impact on jobs that many have implied it may.

UK’s auto industry gets a boost

• The UK has been chosen as the headquarters of a partnership between Renault and Geely (a China based carmaker).

  • The firms will invest up to ~£6bn to develop low-emission petrol, diesel and hybrid engines, employing about 19,000 workers at its 17 engine factories, as well as five research and development hubs.

  • Interestingly, Geely also owns a London Black Cab manufacturer called London Taxi Company. They built London's first electric black cab, and there are now around 5,000 black cabs on London’s streets.

Other snippets

• A report from the UK’s Environment Agency stated that the number of water pollution incidents remains “unacceptably high”. With more than 50% of all pollution incidents coming from Thames Water and Anglian Water, this further damages Thames Water’s reputation. In case you missed it, you can read up on Thames Water’s current situation in yesterday’s newsletter here.

• In contrast to the UK, the US has experienced falling inflation levels. In the 12 months to June, the CPI (consumer price inflation) in the US was 3.0% (falling from 4.0% in May).

Personality of the day - Arnold Schwarzenegger

• I recently finished watching the 3-part Netflix documentary on Arnold Schwarzenegger and found it fascinating learning about his life.

  • He spent this teens, 20s and 30s absolutely dominating the sport of body-building. Whilst doing this, he invested in real-estate and became a millionaire by the age of 25 (before he even started acting!).

  • After conquering the body-building industry, he decided to dabble his hand in Hollywood (or more accurately become a ‘star’ as he clearly explains was the goal of his acting career). Testament to his success as an actor, I bet you’re familiar with lines such as ‘Hasta La Vista, baby’ and ‘I’ll be Back’.

  • In case that wasn’t enough, he campaigned and succeeded in becoming governor of California and went on to serve 2 terms there.

  • What I liked most about the series was the balanced reflection on his life. He talked honestly how his childhood and upbringing was tough, how not everything he tried succeeded (e.g. his attempt at playing hercules) and how he’d messed up his marriage through an affair.

  • He’s lived an inspiring and interesting life. (Clearly, I’d highly recommend watching the Netflix series if you haven’t already).

If you read to the end, thank you so much. And if you’re a new subscriber, welcome! In case you’ve never met me, my name is Vishal 👋. I live in London and enjoy writing, talking about business-y stuff and hiking to get away from it all! I’d love to get to know you better. Please do reply to this email with a short intro. And if you have any ideas of non-news topics that you’d like me to write about at the end of the email, please let me know (it can range from a brief history / fact about someone famous, to the economics of Wimbledon to the concept of loss aversion).