FirstFT: US strengthens Red Sea defence force

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The Pentagon has convinced more than a half dozen allies to join a strengthened naval task force in the Red Sea amid mounting attacks by Iran-backed rebels on commercial shipping that have driven oil prices higher.

Lloyd Austin, US defence secretary, announced details of Operation Prosperity Guardian on a trip to Israel yesterday just hours after UK oil supermajor BP said it was halting all shipments through the Red Sea, citing the “deteriorating security situation”.

More than 9mn barrels of oil shipments, or almost a tenth of global demand, pass through the narrow Bab el-Mandeb strait at the southern end of the Red Sea everyday, making it one of the world’s busiest energy chokepoints.

The naval deployments, which will include ships from more than a half dozen Nato countries, including the UK and France, as well as regional allies such as Bahrain, come as Iranian-backed Houthi rebels in Yemen have increased their attacks on US assets in the region since the Hamas attacks on Israel in October.

BP’s pause came after commodity trader Trafigura said it was taking “additional precautions” for its owned and chartered vessels. Several of the world’s biggest shipping companies, including MSC, Hapag-Lloyd and Maersk, have also paused travel through the Red Sea due to security risks.

Austin will convene a virtual meeting of international partners in Bahrain today to discuss the Houthi escalation. After visiting Bahrain, where the US Navy’s Fifth Fleet is stationed, the defence secretary will stop aboard the USS Gerald R Ford aircraft carrier, currently in the eastern Mediterranean, and also travel to Qatar.

Here’s what I’m keeping tabs on today:

• Monetary policy: Raphael Bostic, president of the Federal Reserve’s Atlanta branch, will participate in a fireside chat at the Harvard Business School Club of Atlanta. Bostic, who will be a voting member of the Fed’s interest rate-setting Federal Open Market Committee next year, has tried to damp market speculation about imminent rate cuts.

• Economic data: New residential construction in the US is expected to have fallen slightly to an annualised rate of 1.36mn homes in November, compared with 1.37mn in October. 

• Results: FedEx, the parcel delivery group, considered an economic bellwether, is expected to report lower revenues for its latest quarter compared to the same period a year ago.

• Politics: Former US president Donald Trump will speak at an Iowa caucus event in Waterloo as he seeks victory in the first state to vote in the Republican primaries. Joe Biden will deliver remarks at a memorial service for Sandra Day O’Connor, the first woman to sit on the Supreme Court.

The Financial Times’ award-winning podcast series Hot Money is back. Season two investigates a mysterious murder in a small town that leads to a web of drugs, money laundering and state-sponsored assassinations stretching from Dublin to Dubai. Listen on Apple Podcasts, Spotify or wherever you get your podcasts.

Five more top stories

1. Activist investor Cevian Capital has taken a €1.2bn stake in UBS, betting that the Swiss bank can double its valuation over the next three to five years. Cevian, Europe’s largest dedicated activist, has invested just under a tenth of its total portfolio in UBS shares since it rescued Credit Suisse in March, according to people with knowledge of the approach. Read more of this exclusive story.

2. The Bank of Japan has held off on lifting negative interest rates, sending the yen lower as its governor said it was in no rush to change its policy before the US Federal Reserve considers cutting rates next year. The BoJ, which wants to ensure a lasting end to Japan’s decades of deflation, is the only major central bank to maintain interest rates below zero. Here’s more on the outcome of today’s meeting.

3. Apple will stop selling its smartwatches through the company’s US stores before Christmas after losing a patent infringement case, dealing it a blow during the holiday sales season. A US judge found in January that a blood oxygen sensor on recent Apple Watch models infringed patents owned by medical device maker Masimo.

4. Trevor Milton, the founder of electric and hydrogen-powered truckmaker Nikola, was sentenced to four years in prison yesterday for lying to investors about the readiness of his start-up’s technologies in order to boost its share price. Milton broke down in tears during the sentencing hearing, pleading with the judge to take his “unusually tender heart” into consideration and spare him prison time. Read Judge Edgardo Ramos’s response.

5. BlackRock was sued yesterday by the US state of Tennessee, which accused the $9.1tn New York-based asset manager of violating consumer protection laws by misusing environmental, social and governance factors in its investment strategy. The lawsuit alleged that BlackRock had been inconsistent in stating whether it focused exclusively on investment returns or whether it gave preference to ESG considerations.

FT Person of the Year

Before Wegovy and Ozempic, the only truly effective treatment for obesity was bariatric surgery, which is expensive and sometimes risky. Now, the readily available drugs could have a profound impact on healthcare, society and our relationship with food. Lars Fruergaard Jørgensen, chief executive of Danish drugs group Novo Nordisk, the company that produced the game-changing treatments, is the Financial Times’ Person of the Year.

We’re also reading . . . 

• ‘If you can’t use your data, you can’t use AI’: Most companies are not ready to deploy generative AI at scale because they lack strong data infrastructure or the controls needed to make sure the technology is used safely, chief executive of the consultancy Accenture told the Financial Times in an interview.

• Nippon Steel/US Steel: US regulators are wary of foreign takeovers, so closing this $15bn deal may prove tricky, writes the Lex investment column. Members of the United Steelworkers union have also voiced dismay.

• University of Pennsylvania: The resignation earlier this month of Liz Magill has triggered a debate about the level of influence trustees have over students and faculty.

Chart of the day

Festive breaks are meant to be a time of recovery. They do not work out that way for all of us. For some, it means a desperate sprint to complete work projects before mass catering for fractious extended families. It is little wonder that some surveys suggest burnout is exacerbated by holidays such as the upcoming Christmas break. It is a particular problem in professional workplaces.

Take a break from the news

Over 130 years, Maxim’s in Paris has played host to everyone from Proust to Piaf, Cocteau to Callas, Delon, Gainsbourg and Birkin. Now the legendary restaurant off the Place de la Concorde has been given a makeover.

Additional contributions from Tee Zhuo and Benjamin Wilhelm