Aurelia Butler

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.US ports have become increasingly clogged as American consumers order record numbers of products from abroad. The port operators say only one thing can help — robots.Much of the work of unloading and processing cargo at US coastal ports, which handled nearly half of US trade in 2020, is done manually, even though overseas terminals such as those in Rotterdam and Brisbane have long been automated.Port operators are pushing to expand the use of robotics in a bid to reduce the cost of global trade. Here’s a look at how port automation works. How does cargo move through ports today?When container ships carrying everything from food to clothing to electronics arrive at all but three US ports, they are greeted by human workers.Operators sit in the cabs of conventional cranes, lifting 8-foot wide shipping containers off ships and sorting them in the dock yard, before transferring them to trucks or trains.Some US terminals have added technologies that allow workers to “semi-automate” the process, with operators controlling the cranes remotely from an off-site office, monitoring via video link but letting the system do most of the work, according to a survey by the US Government Accountability Office. Proponents of automation say that computer modelling allows semi-automated cranes to stack containers closer together and in a more optimal order than humans can, allowing more cargo to pass through the port faster.Other workers monitor containers as they enter and leave terminals. Some US operators have sought to automate this as well, deploying gate systems with radio frequency identification systems (RFID), barcode readers and cameras to identify and track trucks through the terminals.These tools, along with extended operating hours, have helped reduce backlogs at port terminal gates that can leave trucks idling for hours, causing road congestion and air pollution, according to the US Environmental Protection Agency.But even with these tools, US ports are struggling to keep up with a surge in imports, says Jean-Paul Rodrigue, a professor of maritime business at Texas A&M University, driving interest in full automation.“You can do all sorts of tricks, operations research, information technologies, management systems, better equipment, but at some point you’re going to need to automate to increase productivity,” he says. Could robots speed up port automation?Rotterdam port, one of the most automated ports in the world More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The writer is president of Queens’ College, Cambridge, and an adviser to Allianz and GramercyFinancial markets have witnessed a dramatic change that is overturning the consensus trades that dominated until early February of this year. Falls in US stocks and their under-performance relative to other countries reflect a remarkable turnaround in investors’ views about the economic outlook for America and Europe — and to a lesser extent China. What is less clear is whether the resulting mix of all this is favourable or unfavourable over the longer term. And that matters a lot for global wellbeing, inflation and financial stability.Three key factors underpin the recent 180-degree turn in consensus views on stocks, bonds and currency: growing worries over the US economy; a potential “Sputnik moment” in Europe driven by a possible change in Germany on fiscal policy and European funding; and hints of a more determined policy response from China. Belief in American exceptionalism has been eroded with not only US shares dropping but bond yields falling on growth concerns and the dollar weakening.Having dealt with a whiff of stagflation, markets are suffering a good old-fashioned growth scare due to a significant bout of US policy volatility. The uncertainties associated with the on-again/off-again tariffs on America’s major trading partners and allies such as Canada and Mexico were compounded by concern about the impact on employment and income of the ongoing public sector cuts.US government officials argue that these “disturbances” are small and should be seen as part of a bumpy journey to a much better destination — one of fairer international trade, great public sector efficiency, reduced fiscal dominance, and the unleashing of more powerful private sector entrepreneurship and activity. Indeed, according to them, it is only a matter of time before the journey itself improves due to lower energy prices, tax cuts and significant deregulation.The worry is that the bumpy journey may lead to a different, less favourable destination. The recent bout of US unpredictability risks robbing the US of one of its important and differentiating “edges” — long-term investor confidence in policy framework and decision making.Some content could not load. Check your internet connection or browser settings.US policy is also responsible for the markets’ sudden change of view about Europe that now sees the potential at long last for a dramatic economic policy shift. Jolted by America’s treatment of long-standing security alliances and the change in its Ukraine policy, Germany is suddenly contemplating a relaxation of its long-held fiscal constraints. This could translate into increased defence spending, larger infrastructure investments and greater regional funding.Meanwhile, China is signalling a move towards a more potent mix of stimulus and reforms. Markets see this as essential to counter the growing threat of the Japanification of the Chinese economy which was highlighted again in data on Sunday with both consumer and producer prices falling in February.On paper, this confluence of factors presents two possible scenarios for convergence among what was previously the good (US), bad (China) and ugly (Europe) of the global economy. The optimistic view anticipates an upward convergence of global growth, with Europe and China accelerating to get closer to the hitherto exceptional performance of the US economy. This would result in a higher overall level of global growth as a short-term US deceleration is more than compensated by the pick-up in China and Germany.The more pessimistic outlook would be a downward convergence featuring stagflation. This scenario would be due to delays in Germany’s policy implementation; China’s continued struggle to balance stimulus and reforms; and a US economy decelerating towards stall speed amid low consumer confidence, job insecurity, a corporate wait-and-see approach on investment, and the stagflationary pressures of tariffs.While it remains unclear which path the global economy will take, absolute and relative price levels in markets suggest expectations that are slightly more weighted to favourable convergence over the long term. This implies a belief in Europe’s ability to overcome its fiscal inertia, China’s capacity to navigate its policy challenges and the resilience of the US economy despite its current disturbances. The bet is that the global economy is still likely to escape the clutches of stagflation and achieve a more balanced and sustainable growth trajectory. We should all hope this is right. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.What do bankers and care home workers have in common? They are both more likely than your average employee to have volatile pay packets that gyrate over the course of a year.A newly available UK data set, which comes from HM Revenue & Customs payroll records on more than 250,000 working-age people between 2014 and 2019, has raised the lid on a hitherto hidden aspect of the world of work: the stability — or otherwise — of people’s pay from one month to the next.Unpredictable shifts are a well-known problem for people on zero-hours contracts, but this group only accounts for 3.3 per cent of those in employment. Analysis of the new payroll data by the Resolution Foundation think-tank shows that 14 per cent of continuously employed workers experienced four or more months in a year where their earnings deviated from their monthly average by 25 per cent or more. In other words, volatile pay is surprisingly prevalent in the British economy. The phenomenon is most common at the bottom and top of the wage ladder, accounting for 30 per cent of people in the bottom pay decile and 18 per cent of those in the top.This is a useful reminder not to conflate “instability” with “insecurity”, nor to assume it is necessarily a problem. We can safely assume that investment bankers can cope with the ups and downs that come from bonuses and so forth, for example.That said, it is a concern that volatile pay is most prevalent among the lowest-paid workers, who are the least likely to be able to build up savings to cushion the shocks. Nest Insight, the research arm of the UK state-backed pension fund, tracked 51 low-and-moderate income households in England and Scotland, which experienced on average a little over £500 in volatility each month. The research found that people in this position were vigilant and ingenious money-managers. They developed all sorts of coping mechanisms, from informal circles of friends and family who would supply short-term loans to one another, to moving money between multiple accounts to ringfence and pay for bills. But Sope Otulana, Nest Insight’s head of research, told an event hosted by the Resolution Foundation, at which I also spoke, that the sheer effort and stress was wearing people out. One couple in the study, who both had volatile incomes, made 170 transactions each month on average just between themselves, in an attempt to keep all the plates spinning.There are two ways to approach a problem such as this: tackle the root cause, or help people cope with the effects. On the former, the government is pushing through legislation to make employers give low-paid workers a right to a contract that reflects their regular hours, and compensate them for cancelling shifts last-minute. The advantage is that this will tackle not just zero-hours contracts, but also short-hours contracts, which only guarantee a bare minimum. The disadvantage is that it will be fiendishly complicated, and employers don’t like it. I have some sympathy for businesses, which have also been hit with higher taxes. But the new data underscores the need to rebalance some of the risk of fluctuations in customer demand from the shoulders of individual low-paid workers on to the books of employers.As for helping people cope with volatile pay, wouldn’t it be great if this was something the government safety net could do? Indeed, this was the initial intention of universal credit, which replaced six means-tested benefits and tax credits with a single household payment. It is paid monthly in arrears and is meant to respond swiftly to changes in income, earnings and circumstances. Before it was rolled out, I remember speaking to a farmer who hoped he would be able to recruit more British workers because UC would insulate them from the ups and downs of being paid by the piece for picking fruit.But if anything, it can have the opposite effect: people with unstable pay often find that UC exacerbates the problem. This is partly because of one-size-fits-all design flaws such as assessing income by the month, when many low-paid workers are paid by the week which means they have four pay packets in some months and five in others. The good news is that design flaws can be tweaked. Unlike many policy ideas, which often come with huge price tags, some technical changes here, such as converting non-monthly earnings into a monthly equivalent, could make a positive difference to people’s lives. Volatile pay isn’t always a problem, but in the places where it is, the answers are in reach.sarah.oconnor@ft.com More

One scoop to start: Bond fund group Pimco has recorded a 17 per cent paper profit on its portion of a £3bn emergency loan that it and other lenders are set to provide to ailing utility Thames Water.Welcome to Due Diligence, your briefing on dealmaking, private equity and corporate finance. This article is an on-site version of the newsletter. Premium subscribers can sign up here to get the newsletter delivered every Tuesday to Friday. Standard subscribers can upgrade to Premium here, or explore all FT newsletters. Get in touch with us anytime: Due.Diligence@ft.comIn today’s newsletter:Wall Street stocks take a hitPerella Weinberg’s messy disputeUK supermarket chains struggle under PECurtains for the Trump dealmaking boom?It was a painful Monday for Wall Street that will cut more brutally into hopes of a dealmaking boom.The S&P 500 index closed down nearly 3 per cent while the Nasdaq Composite dropped 4 per cent — its worst day in two and a half years. And a whole host of finance stocks, from private equity behemoths to top banks, were among the hardest hit.The wipeout has been the biggest one-day market hit inflicted on financiers since Donald Trump moved into the White House in January.It was only a matter of time before the administration’s aggressive trade policies hit financial markets. But the volatility is also putting a scare into the expectations of dealmakers, who had hoped for a boom in large takeovers, private equity activity and initial public offerings.The mood shift was palpable in New Orleans last week, where the US’s top bankers and advisers gather annually for a conference at Tulane University’s Corporate Law Institute. It wasn’t quite as festive this year.The administration has prioritised a muscular trade agenda. “Maga doesn’t stand for ‘Make M&A great again,’” said Treasury secretary Scott Bessent on Friday.Unsurprisingly, private equity and boutique banks were some of the hardest-hit stocks on Monday. Private credit titan Ares Management’s shares were down 9 per cent; boutique bank Evercore dropped 8 per cent.Yet some financial firms’ shares were saved from the worst in the final hour of trading in New York as investors appeared to swoop in and buy the dip. (We’re looking at you, PJT Partners).Right on the heels of Mardi Gras, the gathering at Tulane would’ve been the perfect venue for a celebration of global M&A’s blistering return. Instead, this year’s takeaway was a collective disappointment that the hotly anticipated Trump bump has failed to materialise.While Wall Street’s top brass try to figure out whether the volatility is temporary or risks worsening, some advisers have begun to grow bearish.One top banker thought there was now about a 40 per cent chance of a recession. “So much for animal spirits,” he added.That view is becoming the consensus after Trump said during an interview on Fox News on Sunday that he wouldn’t rule out a recession or a new burst of inflation.Some on Wall Street sought solace online. As Third Point founder Dan Loeb put it on social media platform X late Monday night: “We are born alone; we die alone and we navigate the Trump stock market alone.” Jefferies chief executive Rich Handler replied: “We all need a hug sometimes.” Perella Weinberg vs Michael Kramer finally reaches courtWall Street’s ego-fuelled clashes are typically kept behind closed doors. Bitter text exchanges and awkward dinners with managers rarely see the light of day.Yet a decade-long legal battle between boutique bank Perella Weinberg Partners and a group of bankers the firm alleges plotted to start a rival group, has finally had its time in court over the past few weeks. And their heated exchanges have spilled out into the open.The crux of the fight is this: PWP has accused top restructuring banker Mike Kramer of improperly coaxing seven of the firm’s employees away to join a rival firm.After being fired, Kramer shortly thereafter formed Ducera Partners in 2015 with nearly all of the existing senior bankers in his restructuring group at his prior employer.Both sides are suing each other, and there’s a lot of money on the line. Kramer’s looking to recover more than $40mn in equity that the firm seized upon his termination, out of the nearly $100mn in total pay he accrued while working there over seven years.Meanwhile, PWP is seeking to recoup $40mn in damages stemming from the cost of hiring replacement bankers, plus bonuses it paid to Kramer and his dissidents around the time of their terminations.While the judge hasn’t made a formal decision, he has been sceptical about, first, the idea that PWP was damaged by Kramer’s alleged plot to start a new firm and, second, that the banker was unaware that his colleagues were taking steps to start a new firm.The trial included some star witnesses, including 83-year-old banker Joe Perella, who explained to the court how much Wall Street had changed since the 1980s.When he famously started his own boutique firm mere hours after resigning from First Boston Corporation, there were “no written agreements” prohibiting that sort of thing.“So they started tying people down with lockups and whatnot,” he said. “But that’s the world of today; that wasn’t the world in ‘88.”Supermarket chains and their private equity ownersGrocery stores have for decades attracted the interest of private equity buyers.But two of the UK’s largest recent takeovers — TDR Capital and the Issa brothers’ £6.8bn deal for Asda, and US group Clayton Dubilier & Rice’s £10bn acquisition of Morrisons — are struggling mightily.Both deals were struck amid an epic wave of takeovers between 2020 and 2021 when interest rates were low and markets were exuberant.They’re now burdened by heavy debt costs and high inflation, and their PE owners are facing financial pressure and questions over their large debt burdens, reports the FT.Grocers are volume-based businesses with low margins, meaning the underwriting is crucial. Such deals can either pay out or go sour quickly.In the past, PE groups such as KKR and Cerberus have made billions on the likes of Safeway and Albertsons by getting the timing right.But Asda and Morrisons face an uphill battle. The jump in interest rates in 2022 left the supermarkets paying hundreds of millions of pounds a year to service their debts. Both chains have also faced operational issues, which have eaten into their market shares.Some large PE executives now question whether grocery stores are a business worth their attention.“When you have 3 to 5 per cent ebitda margin, any swing you have hits you badly,” said the head of consumer at one major international buyout firm. “If you have those low margins and at some point any issue hits you, you don’t have any more cash flow to pay for your debt.”TDR and CD&R are still optimistic they can make money, partially by holding their bets longer. Their grocers have also embarked on asset sales, including selling and leasing back some of their properties, and refinancing deals.But thankfully for TDR and the Issa brothers, they only ploughed £200mn of their cash into the Asda deal.Job movesThe Wallenberg family has stepped up its succession planning: Jacob Wallenberg Jr, an executive at US start-up Ramp, will join the board of private equity firm EQT while Fred Wallenberg, a manager at industrial group Piab, will become a non-executive director of Investor, the main family investment vehicle.​​Barclays has named John Kolz as global co-head of equity capital markets. He joins from RBC Capital Markets.Davis Polk has hired Michael Diz as a partner for the firm’s mergers and acquisitions practice in northern California. He was previously co-chair of Debevoise & Plimpton’s M&A group in San Francisco.Clifford Chance has hired Joanna Nicholas as a partner for its global financial markets team as it expands its collateralised loan obligations work. She joins from Mayer Brown.Smart readsSecret stakes Wealthy Chinese investors are quietly funnelling money into Elon Musk’s companies using an arrangement that shields their identities from public view, the FT reports.‘Druckonomics’ Stanley Druckenmiller has spent years quietly running his family office, the FT writes. Now one protégé is Treasury secretary, another is vying for Fed chair, and the billionaire’s views on the US economy have become far more consequential.In-your-face Lulu Cheng Meservey — who’s run communications for Anduril and Activision — is turning public relations into a public brawl, Business Insider reports. She’s ruffling feathers in the process.News round-upKPMG to merge dozens of partnerships in overhaul of global structure (FT)Failed TDR-backed finance firm ‘misrepresented’ performance (FT)Tanker carrying jet fuel for US Navy struck by container ship in North Sea (FT)European Commission raids drinks groups over possible competition law breaches (FT)Lloyd’s of London forecasts $2.3bn losses from LA wildfires (FT)Ex-Barclays boss Staley accuses regulator of ‘destroying’ his reputation with ban (FT)Glencore backs cobalt investment company planning to list in London (FT)Donald Trump bets propel Michael Platt’s BlueCrest to 15% gain (FT)NHS landlord Assura poised to accept £1.6bn bid from KKR consortium (FT)Ford to inject €4.4bn into debt-ridden German subsidiary (FT)Due Diligence is written by Arash Massoudi, Ivan Levingston, Ortenca Aliaj, and Robert Smith in London, James Fontanella-Khan, Sujeet Indap, Eric Platt, Antoine Gara, Amelia Pollard and Maria Heeter in New York, Kaye Wiggins in Hong Kong, George Hammond and Tabby Kinder in San Francisco. Please send feedback to due.diligence@ft.comRecommended newsletters for youIndia Business Briefing — The Indian professional’s must-read on business and policy in the world’s fastest-growing large economy. Sign up hereUnhedged — Robert Armstrong dissects the most important market trends and discusses how Wall Street’s best minds respond to them. Sign up here More

US President Donald Trump is pushing Prime Minister Narendra Modi to do what India for decades could not or would not do: lower the high tariff walls that have surrounded its economy since independence. Piyush Goyal, India’s commerce minister, was in Washington last week for discussions on a bilateral trade agreement meant to fend off Trump’s threat last month of reciprocal tariffs.While Indian officials say discussions are “advancing”, Trump on Friday said New Delhi had agreed to cut its tariffs “way down”. US commerce secretary Howard Lutnick said India needed to buy more defence products and lower its tariffs for the two countries to sign a “grand” bilateral deal. The US ultimatum has prompted what some analysts say is a broader realignment on trade by New Delhi, which has traditionally been a tough negotiator. India in February relaunched its long-running free trade agreement talks with the UK and pledged to complete an FTA with the EU within the year. “India’s political leadership understands the Trump disruption and the opportunity for reworking our relationships with the US, the EU and the UK,” said Raja Mohan, a visiting professor at the Institute of South Asian Studies in Singapore. “If there is political will, it is possible that India will soon have these three trade agreements that will reshape our ties with the west.”Already, Modi has promised to buy more US oil and gas, though it has closer and cheaper suppliers in the Middle East and Russia. The two countries also agreed to conclude the first tranche of a “mutually beneficial, multisector” bilateral trade agreement by autumn. But India, which has protected its industries fiercely since independence in 1947, has some of the world’s highest average tariffs, and the cost of cutting them will be politically sensitive, particularly in agriculture, where nearly half of Indians work. The negotiation could well fail, which could bring retaliatory tariffs as soon as April, Indian analysts said. Speaking to Fox News host Sean Hannity after his February 13 meeting with Modi, Trump said he told India’s prime minister: “Whatever you charge, I’m charging”. Some content could not load. Check your internet connection or browser settings.The Modi government has since 2014 signed FTAs with Australia, the United Arab Emirates and the European Free Trade Association. However, it has also since 2020 introduced tariffs to protect emerging industries such as solar equipment and electronics and support what Modi calls Atmanirbhar Bharat (“self-reliant India”), in an echo of past protectionist governments. In FTA talks with EFTA and the UK, the Modi government has been a hard negotiator, analysts said, demanding that its trading partners reduce their tariffs more than India does on the basis that it is growing faster and presents rich economies a bigger future market opportunity than they do. However, they noted that India’s trade stance vis-à-vis Washington has been meeker, perhaps reflecting America’s status as a strategic defence and economic partner. The US is India’s largest trading partner, with $129bn of mutual trade in 2024, though EU countries collectively account for more. The US’s India trade deficit reached more than $45bn last year — less than half of the “almost $100bn” deficit Trump claimed at the White House, but the 10th largest of America’s trade partners. Some content could not load. Check your internet connection or browser settings.The tariffs India imposes on US goods are higher than America’s, in some cases by a big margin. While the gap for industrial products is 3.3 per cent, for agricultural products it stands at 32.4 per cent, according to the Global Trade Research Initiative (GTRI), a New Delhi think-tank. Before and after Modi’s Washington visit, India announced a round of largely symbolic tariff cuts on bourbon whiskey, luxury cars, and large motorcycles, the last to address a long-running Trump complaint about tariffs on Harley-Davidson. The two sides also agreed to increase US exports of industrial goods to India and Indian-manufactured products to the US and pledged to “work together to increase trade in agricultural goods”, reduce tariffs and non-tariff barriers and deepen supply chain integration. Some content could not load. Check your internet connection or browser settings.It is in agriculture that Modi faces the most politically sensitive challenges. India’s protected dairy industry, which enjoys import tariffs of 30-60 per cent, played a critical role in prompting the country to pull out of talks to form the Regional Comprehensive Economic Partnership the year before its ratification by 15 Asia-Pacific countries, including China, in 2020. The biggest dairy company Amul petitioned Modi’s government, warning that RCEP would hurt India’s approximately 100mn dairy farmers, many of them smallholders. India’s powerful farming lobby also forced New Delhi into a rare retreat on three farming bills meant to overhaul agriculture by staging mass protests in 2020-21. “There are certain sectors in which cutting tariffs could be problematic, notably agriculture,” said Biswajit Dhar, a former negotiator for India with the World Trade Organization and distinguished professor at the Council for Social Development.“The US-India joint statement mentions agricultural products, but the onus is on India to cut,” Dhar said. Lutnick said India had to “open up” its agriculture market.Some content could not load. Check your internet connection or browser settings.While India’s agricultural goods tariffs are higher, the US spends much more on subsidies, Dhar added. Indian analysts also believe that Washington may push New Delhi to open government procurement to US companies and remove restrictions on data flows — sensitive demands for a developing country that values its economic sovereignty. The trade talks promise to be fraught, they said.  “The best option for India is that we make tariffs on almost all industrial tariff lines ‘zero for zero’,” said Ajay Shrivastava, founder of GTRI, the research group. “But any discussion of agriculture has to be very nuanced, because it’s a livelihood issue for us.” More

Wall Street stocks tumbled as concerns over the economic effects of Donald Trump’s tariffs intensified and Tesla led a powerful sell-off in previously high-flying technology stocks. The S&P 500 index lost 2.7 per cent on Monday, after falling 3.1 per cent last week in its worst weekly performance in six months, as big US banks ditched their previous bullish forecasts for stocks this year.The tech-focused Nasdaq Composite sank 4 per cent, its worst day in two and a half years. The tech-heavy index is down more than 13 per cent from its December peak, leaving it in correction territory. “This big sell-off feels ugly, it feels nasty,” said Drew Pettit, an equity strategist at Citigroup. “We were coming off very high sentiment and very high growth expectations. All of this is just recalibrating to the new risks that are in front of us,” he said, referring to worries about the health of the US consumer and Trump’s aggressive trade policy.The sell-off spread to Asian markets on Tuesday, where Japan’s exporter-oriented Nikkei 225 index and Topix both shed 2.3 per cent in early trading. South Korea’s Kospi dropped 1.9 per cent and Australia’s S&P/ASX 200 declined 1.4 per cent. Hong Kong’s Hang Seng index fell 1.5 per cent.US tech stocks — which had driven Wall Street markets higher in the previous two years — were among the biggest laggards, extending a recent rout. Tesla, the electric-car company headed by Trump ally Elon Musk, plummeted 15.4 per cent. It has now given up all of those post-election gains and has fallen more than 50 per cent since its December high.Chipmaking giant Nvidia, which has been one of the biggest winners from recent investor enthusiasm for artificial intelligence, fell 5.1 per cent.Banks stocks also fell, with Morgan Stanley and Goldman Sachs slipping 6.4 per cent and 5 per cent, respectively. Shares in private investment groups KKR and Ares shed 6.2 per cent and 8.9 per cent, respectively. “What we’re seeing today is that people are selling what they own,” said Shep Perkins, chief investment officer at Putnam Investments. “And people own a lot of AI-related companies.”The latest jolt of volatility, which also dragged down markets in Europe and Asia, came after the US president on Sunday declined to rule out a recession or a rise in inflation as he dismissed business concerns over lack of clarity on his tariff plans.The White House on Monday said “we’re seeing a strong divergence between animal spirits of the stock market and what we’re actually seeing unfold from businesses and business leaders, and the latter is obviously more meaningful than the former on what’s in store for the economy in the medium to long term”.Still, business and consumer surveys have pointed to rising concerns over the economic outlook. Delta Air Lines late on Monday cut its profit and sales forecasts, citing economic “uncertainty”. Its shares dropped more than 13 per cent in after-hours trading. Some content could not load. Check your internet connection or browser settings.In Europe, where shares have outperformed the US this year, the Stoxx Europe 600 index lost 1.3 per cent, dragged down by banks and technology shares. Germany’s Dax, which hit a string of record highs last week after the country agreed a historic spending package, fell 1.7 per cent.US Treasuries rallied on Monday, as investors sought safe-haven assets. The 10-year yield, which falls as prices rise, was down 0.1 percentage points at 4.22 per cent.The Vix index, known as Wall Street’s fear gauge, climbed to its highest level since mid-December.Investors are concerned Trump’s on-off trade war is hurting the US economy, with Friday’s disappointing jobs numbers the latest in a run of weak data. Retaliatory tariffs from China on about $22bn of US goods, including agricultural exports, came in to effect on Monday.Over the weekend, Treasury secretary Scott Bessent provided little in the way of reassurance to worried investors as he acknowledged signs of US economic weakness. “Could we be seeing that this economy that we inherited starting to roll a bit? Sure,” he told CNBC. Trump and Bessent seem to be prepared for “some pain to reorientate the economy”, said Deutsche Bank’s Jim Reid. “Taken at face value, these quotes suggest that their pain level is higher than most would’ve believed a few weeks ago.”Goldman Sachs on Monday downgraded its growth prediction for the US economy to 1.7 per cent, compared with 2.4 per cent at the beginning of the year, as its trade policy assumptions have become “considerably more adverse”. The equity market falls of recent weeks mark a sharp reversal from the mood late last year and earlier this year, when hopes of deregulation and tax cuts under Trump fuelled a market rally.Instead, duties on goods from trading partners such as Canada, Mexico, China and the EU have led investors to rein in their bets and driven many into cutting risk.The S&P could drop almost 20 per cent from its current level if “growth falls off more significantly and recession becomes likely”, said Morgan Stanley’s chief US equity strategist Michael Wilson in a note to clients on Monday. “We are not there, but things can change quickly.”JPMorgan believes the index could fall as low as 5,200 — a near-10 per cent drop from current levels — owing to “trade uncertainty”, while analysts at Citi believe the fallout from Trump’s policies can push the S&P down to 5,500 points. In December, an average of 10 global banks expected the index to climb roughly 10 per cent in 2025 to about 6,550 points. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.UK retail sales registered only a modest rise last month and failed to keep pace with inflation, as bad weather and “cautious” consumers hit spending. The value of retail sales increased at an annual rate of 1.1 per cent in February, below the 2.4 per cent average of the previous three months, according to the British Retail Consortium. Non-food sales registered zero growth in February compared with the same month in 2024, data published by the trade body showed on Friday, below 2.5 per cent average annual growth in the previous three months.BRC chief executive Helen Dickinson said retail sales “saw more modest growth in February”, with fashion performing “poorly due to the gloomy weather throughout the month”. But she added that retailers were “hopeful the early March sunshine kick-starts spending on spring and summer wardrobes”. The value of sales growth, collected by the BRC with consultancy KPMG, was also well below the rate of inflation, which rose more than expected to 3 per cent in January. This indicates that consumers continued to cut the volume of goods they purchased as they have done throughout most of the cost of living crisis. Linda Ellett, UK head of consumer, retail and leisure at KPMG, said: “Consumers remain cautious with their spending and many are continuing to prioritise saving, travel and experiences.“Nervousness about the economy is deferring other big ticket purchasing, but occasions and offers are still tempting shoppers into some impulsive spending,” she added.The economy grew only marginally in the second half of 2024, and employers have in recent months warned about job cuts following rises in the minimum wage and national insurance contributions. Announced in the autumn Budget, the increases will take effect in April. The BRC data chimes with figures from Barclays, which on Tuesday reported that consumer spending rose at an annual rate of 1 per cent last month. This is down from 1.9 per cent in January and also well below the rate of inflation. Barclays said spending on electronics bucked the trend, with growth of 6.7 per cent in February, citing “upgrades to home-entertainment” products bought between 2020 and 2021 and new product launches as possible contributors. However, most other categories, including supermarkets, sports and outdoor, and bars and pubs, reported outright contractions. The BRC and Barclaycard data add to evidence that low consumer confidence and concerns about the labour market are hitting household spending and economic growth. This is despite official figures showing that wages have outpaced inflation since mid-2023. Whether weak economic growth is the result of poor demand — which lessens underlying price pressures — or supply issues is a key question for the Bank of England as it weighs the future path of interest rates. BoE governor Andrew Bailey last week played down the risks of a self-reinforcing acceleration in price growth. “The demand weakness argument may be getting a bit stronger relative to last year,” he told MPs.Dickinson said the latest BRC data would leave many retailers “uneasy” as they braced for £7bn of new costs from the Budget and packaging levies in 2025.“The industry is already doing all it can to absorb existing costs, but they will be left with little choice but to increase prices or reduce investment in jobs and shops, or both,” she added.  Video: The shoplifting threat to the retail industry | FT Transact  More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldCanada’s Ontario province has hit US power exports with a 25 per cent surcharge as the nation steps up its retaliation against Donald Trump’s tariffs. The levy will have an impact on 1.5mn homes and businesses in Michigan, Minnesota and New York and cost families and businesses in the three states up to $400,000 a day, Ontario premier Doug Ford said on Monday. “On an average, this will add around $100 per month to the bills of hard-working Americans,” Ford said, adding that “until the threat of tariffs is gone for good, Ontario will not relent”. He also said that, “if necessary, if the United States escalates, I will not hesitate to shut the electricity off completely”.Ontario’s threat to the North American power grid highlights how the president’s tariffs on Canada and Mexico, the US’s two biggest trading partners, are taking a growing economic toll on the US economy. Trump last week imposed 25 per cent tariffs on most Canadian and Mexican goods, but eventually U-turned by creating a carve-out for those subject to the sweeping United States-Mexico-Canada Agreement. Several other Canadian provinces supply US states in the Midwest and west through cross-border transmission lines. The premier of the oil-rich province of Alberta, Danielle Smith, on Monday said the country’s oil hub would “continue to provide energy to the United States and support America’s vision of global energy dominance”. But she cautioned Canada should prioritise the expansion of infrastructure to export its crude to other markets in Europe and Asia. “We want to get more products from the west coast of Canada to the east coast as well and to the northern coast. We need to find new markets for that extra oil and gas, and we want to be a safe, secure and reliable supplier for European and Asian allies,” she said at S&P Global’s CERAWeek conference in Houston. The North American Electric Reliability Corporation, a regulatory body that monitors the reliability of the power systems in the US and Canada, warned last week that energy stability could be imperilled if the two countries restricted cross-border electricity and gas supplies in a trade war. “If some of the sabre-rattling around ‘turning off exports’ occurs, it could create a significant resource adequacy problem for the Canadian provinces that benefit from US exports as well as the [US] states along the border that benefit from Canadian imports,” said Jim Robb, Nerc’s chief executive. Ontario’s Independent Electricity System Operator confirmed it had implemented the charge Ford requested on all electricity exports to US jurisdictions.“As requested in the minister’s letter, the IESO is applying a charge of $10/MWh to electricity exports, which equates to a charge of approximately 25 per cent,” it said. The US consumed $2.1bn worth of electricity imports from Canada last year, according to BloombergNEF, a research group. More