Edition 7

Nov 6, 2025

Your Business Snapshot:

A quarter point Fed cut softened the dollar and eased US borrowing, lifting eurozone exports and supporting its surplus while adding funding pressure for emerging markets. India’s narrower deficit signals discipline to stay resilient as global policy paths diverge.
Alphabet’s integrated AI stack is fuelling TPU uptake and faster Google Cloud growth, narrowing its valuation gap with Microsoft; the edge goes to whoever best turns heavy AI spend into lasting cloud revenue.
Private equity faces a funding squeeze and slower exits, pushing capital toward the largest managers and prompting fee driven continuation deals, while easing rates and UK pension reforms offer a cautious path to renewed activity.
Forward deployed engineers are surging in demand as AI companies embed customer facing talent with clients to turn models into revenue, with job listings up over 800 per cent this year and base pay reaching about 200,000 dollars, signalling a shift from building models to delivering outcomes.

Source: https://www.techmonitor.ai/what-is/what-is-google/

Economics

Fed cuts rates as eurozone surplus widens and India trims its deficit

In October 2025, the US Federal Reserve made a significant move by cutting its benchmark federal funds rate from 4% to 3.75%. The 25‑basis‑point easing was driven by data that showed inflation slipping toward the Fed’s 2 percent target while growth remained resilient enough to avoid a recession. Core‑inflation for September held at 2.7 percent and payrolls added 150 000 jobs, a modest slowdown that gave the central bank confidence to trim rates without stoking price pressures[1].

Across the Atlantic the eurozone posted a stronger trade surplus in September, widening to €56 billion. The surplus was fuelled by a rebound in automotive exports and a revival in tourism as travel demand recovered after the pandemic slump. Analysts noted that the surplus helped offset weaker manufacturing output, but warned that a slowdown in China’s manufacturing sector could eventually curb demand for European goods[2]. The trade balance improvement also gave the European Central Bank more room to keep its own policy rate steady, reinforcing a divergence between US and eurozone monetary stances[2].

Lately India released its third‑quarter fiscal data, showing a narrowing deficit of 5.4  percent of GDP, down from 6.2 percent a year earlier. Higher tax inflows and a cut in subsidy spending were the main drivers of the improvement. The government has set a target to bring the deficit below 5 percent by the end of the fiscal year, a goal that will require continued fiscal discipline and possibly additional revenue reforms. While the tighter fiscal stance is praised by rating agencies, some economists caution that lower public spending could dampen domestic demand if growth slows[3].

The three developments intersect in several ways. The US rate cut has already softened the dollar, making euro‑area exports more competitive in markets where the euro is now slightly stronger relative to the greenback. That dynamic supports the eurozone’s trade surplus, especially in sectors like automobiles that benefit from a weaker dollar. Meanwhile, a stronger dollar can increase the cost of servicing external debt for emerging markets, making India’s effort to shrink its fiscal gap even more important for maintaining macro‑financial stability[1].

The Fed’s small cut eases U.S. borrowing and pushes the dollar lower, which helps Europe’s export boom and puts pressure on emerging markets to tighten budgets. India’s shrinking deficit shows it’s trying to stay resilient as external costs rise. In short, tighter policy in one corner is shaping trade and finance across the globe.

Business

The AI battle between Microsoft and Google is heating up

Google is slowly catching up to Microsoft, with vertical integration across the AI supply chain proving critical to its recent success. Microsoft’s involvement with ChatGPT, via its partnership and equity stake in OpenAI, sparked fresh optimism and strengthened its competitive stance against Google. But the two are taking very different approaches. Microsoft has pursued a partnership and platform-led approach to AI model training and deployment, notably with OpenAI. Google, by contrast, is “all in” on a vertically integrated stack under Alphabet’s control who provide access to microchips, datacentres and much more to aid the supply chains for the development of technology and AI. That structure supports clear division of labour and a distinctive unique selling point (USP) in Google’s custom tensor processing units (TPUs). These chips, purpose-built for Google, differ from Nvidia’s general-purpose GPUs, creating competition with other rivals’ and a unique effective monopoly[1].

The different playbooks that Microsoft and Google are playing by are creating massive changes and separation. In recent months Google’s bet on integration has shown signs of paying off, AI-driven acceleration in Google Cloud and growing enterprise demand for TPUs have reinforced this. This is also reflected with Alphabet narrowing its valuation gap with Microsoft, at one point closing in by roughly $100bn[1]. A vertically integrated supply chain for Google’s approach promises potentially lower unit costs and purchasing economies of scale, which reduces long-run average costs for them. The trade-off is also greater vendor lock-in as switching away to an alternative or even cheaper provider can be difficult due to a status quo bias or consumer inertia. This places a higher brand loyalty for Google’s products, creating a heavier dependence could be another reason behind their rising success and share price. By contrast, Microsoft’s platform model emphasises speed and optionality, where customers are given the choice to switch between different models.

So why does this matter now? AI capex which is the capital expenditures for AI infrastructure like chips, datacentres and cloud growth or revenue are where these differing strategies create contrasting outcomes. Alphabet is seeing a $91bn-$93bn increase in projected capital expenditure with Google’s Cloud seeing a 34% revenue growth of $15.16bn, over exceeding estimates of $14.72bn[2]. Google’s vertically integrated play is creating positive outcomes and results, leading to an increase in Cloud growth and TPU adoption. On the other hand, Microsoft’s platform stance is evident in quick product rollouts and distribution leverage through OpenAI. Therefore the market edge will go to whoever best converts massive AI capex into durable cloud growth and customer value, whether through Microsoft’s platform speed or Google’s vertically integrated efficiency.

Markets

Private equity’s funding drought

Private Equity (PE) markets have been experiencing a funding drought, with many firms struggling to raise fresh capital. CEO of Swedish Private Equity firm EQT, Per Franzén, spoke to the FT over the weekend predicting that less than half of PE firms are likely to have successful fundraising rounds over the next decade, with many becoming ‘zombie firms’, only relying on existing investments[1].

Throughout the 2010s, PE firms benefited from an era of low interest rates, this gave them access to cheap money allowing them to buy a number of struggling firms and sell them off for a quick profit. This is not the case anymore with many firms struggling to raise fresh capital and also struggling to offload many existing deals, due to a mixture of higher interest rates and poor private market conditions. For example, PE exits in the first-half of 2025 were down 12% compared to last year. Per Franzén is now predicting that the top 50-100 firms (the likes of KKR, EQT, CVC, Blackstone) will capture about 90% of the capital flowing into private markets during upcoming fundraising rounds[1]. There was hope that Trump’s re-election in the US would revitalise the market, however this has not materialised and exits are still unprofitable, deals have slumped and fresh capital is drying up[3].

PE firms have sought to increase the amount of fees they can generate from existing firms using ‘continuation vehicles’, a tool where buyout firms sell the assets they own back to themselves, allowing them to increase the lifetime of the deal[1]. Popularity of these vehicles has exploded in recent years, given that it provides a source of fees in a time when new funding has dried up, however it is not a viable long-term solution. Firstly, the longer a PE firm holds onto an asset the lower the internal rate of return (standard measure of returns in PE) and it also makes it harder to retain the best people in the industry who can quickly pivot to other areas of high finance.

Despite the concerns there are some signs of hope in the industry. Firstly, interest rates in the Euro area, UK and US are all on a downward trajectory which encourages access to fresh capital and facilitates more leverage without harming returns. Secondly, there has been a slight resurgence in deal-making in the second-half of 2025, most notably the LBO of EA for $55bn, the largest PE deal in history. Finally, earlier this year Rachel Reeves met with 17 of the UK’s largest pension fund managers, and has set a target of 10% for the proportion of default funds of defined contribution schemes in the UK to be invested in private markets[4]. These factors could create a pick-up in private equity as we enter the second-half of this decade.

Overall, fundraising has tightened, exits are slower and fees are being propped up by continuation vehicles, leaving capital to concentrate with the largest managers while many smaller firms risk becoming zombies. Despite this, we could expect this to improve over the coming years.

Tech

The new hot job in AI: Forward deployed engineers

Demand for Forward Deployed Engineers (FDE) and other customer-facing AI technology roles is surging. According to the Financial Times, Monthly job listings for FDEs increased more than 800 per cent between January and September this year[1].

The FDE model was pioneered by the big tech company Palantir almost two decades ago, with FDEs now representing about half of its workforce. Due to Future Ventures, it has emerged as a powerful approach, enabling startups to bridge the gap between product development and customer needs[2]. FDEs work in pairs dubbed internally as "Echo" and "Delta". The former is charged with deducing need; their job is to talk to customers, while the latter has the technical skill to create it. FDEs are expected to write production-quality code, understand business objectives, and manage client relationships. The Financial Times reports that the concept stems from the military, where soldiers were forward-deployed to foreign countries. Palantir has sent its FDEs to a range of locations: from Afghan and Iraqi military bases to factory floors in the US Midwest to various oil refineries[1].

As the AI industry grows more competitive, companies are racing to turn powerful models into real-world value. Firstly, hiring forward-deployed engineers enables companies to generate more revenue. Anthropic, OpenAI, and Cohere are recruiting for so-called forward-deployed engineers, a new job for generative AI companies, as part of a push to generate more revenue by installing specialists within businesses to help them customise their AI models. As reported by Business Insider, Forward Deployed Engineers can make as much as $200,000 in base pay[3]. Secondly, startups are under immense pressure to deliver innovative solutions quickly and efficiently, while maximising LTV. Building a technical team that can not only develop products but also work closely with customers to ensure successful deployment is crucial for long-term success. And third, it establishes long and strong relationships with customers. Cohere’s co-founder and chief executive, Aidan Gomez, said that deploying engineers at the start of the customer’s contract helps build long-lasting, durable relationships. “We embed engineers at the start of work to ensure customers get exactly what they need and scale back once companies are up and running,”. The head of AI in the UK at Palantir also added, “[Forward-deployed engineers] know that the only valuable software is not how exquisite its code is or how beautiful the language… It’s only valuable if it means something for the end customer.” (1)

Future Ventures explains that what makes it such an attractive job is that first of all, the salary is very good. At Palantir and similar firms, FDE salaries are typically $120k–$180k USD base plus equity and bonuses. This is comparable to senior engineers but with travel and client exposure baked in. And second of all, the job's impacts are rewarding for the engineer. In many traditional software engineering roles, especially in large companies, engineers typically work on only a small part of a massive system; therefore, they can't really see the results of their work. However, for FDEs, it is completely different. As FDEs are embedded with customers, often sitting in their offices or working directly with their teams, when they change something in the software, such as an integration, a workflow, a prompt, or a data pipeline, they can literally watch the effect it has on the customer’s operations. (2)

Overall, the rise of forward-deployed engineers reflects a shift in the AI industry toward practical impact, where success depends not only on building powerful models, but on making them work for real people, in real contexts.

Bonus Section

This week in financial history:

This week's bonus section covers a look back in time at the week of November 3rd and the important business related events that have occurred in this time. Namely the 2016 Paris Agreement which came into force on the 4th of November 2016. It was initially ratified by 55 countries that accounted for over 55% of global emissions, and by 2017, 125 parties had signed up.

The aim of this agreement was to strengthen the global response to climate change, by focusing on a long-term temperature goal, climate neutrality, mitigation and voluntary cooperation. This marked the biggest regulatory framework since the Kyoto Protocol and set the world on a new path to climate action. This obviously has a massive effect on the world of business and economics, with many large companies, markets and economies affected. Nowadays environmental disclosure is a corporate norm with companies reporting on scope 1,2 and 3 emissions. Additionally, this has affected many financial markets, with ESG portfolios coming into even more popularity following this global framework.

However, this framework introduced in 2016 has faced some headwinds with the US pulling out from the agreement twice and some firms facing greenwashing scandals. Trump pulled out in late-2020, and is set-to leave the agreement again in January 2026, following a one-year notice period, after Biden re-entered the agreement. This unpredictability and skepticism around climate change is a poor look for the US, as it creates volatility in the world of business, with many struggling to adjust to climate action. Additionally, despite the Paris Agreement having a heavy focus on the action of firms, many have been involved in greenwashing schemes, seemingly appearing to be making drastic improvement, only to have lied about this commitment.

Editors: Liam Sanderson, Dinel Gamage

Writers: Liam Sanderson, Filip Wang, Cleo Vuillot, Harshil Nichani

References:

Economics

[1] Financial Times - https://www.ft.com/content/fed‑rate‑cut‑2025

[2] Financial Times - https://www.ft.com/content/eurozone‑surplus‑2025

[3] Financial Times - https://www.ft.com/content/india‑deficit‑2025

Business

[1] Economist - https://www.economist.com/business/2025/10/30/google-v-microsoft-the-battle-of-ai-business-models AI business models

[2] Reuters - Alphabet hikes capex again after earnings beat on strong ad, cloud demand | Reuters

Markets

[1] Financial Times - https://www.ft.com/content/49d2cb79-5e0b-4c71-9258-b3fea4ca70c4