Aurelia Butler

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Good morning. The Pakistan Muslim League-N has nominated former prime minister Shehbaz Sharif to be Pakistan’s next leader as it looks to end a stalemate following contested election results last week.The party, considered favourites going into the polls, got fewer seats than expected thanks to a surge of support for jailed former prime minister Imran Khan’s candidates, who ended up as the largest group in parliament.But with no one winning a majority, the PML-N began coalition talks with other parties. Those efforts advanced late Tuesday when a potential partner, the Pakistan Peoples Party of Bilawal Bhutto Zardari, announced that it would support the PML-N’s choice for prime minister.Sharif, the younger brother of veteran leader Nawaz, was prime minister between 2022 and 2023 during a turbulent spell in which Pakistan was beset by an economic crisis.Earlier in the day, Khan hit out at his political opponents via his sister, who spoke to the FT after visiting him in prison near Islamabad. The rival parties lacked a mandate to rule after the vote was marred by allegations of vote rigging, Aleema Khan quoted her brother as saying.“He said: ‘There’s no moral ground for them to make a government after having stolen other people’s seats’,” she said. Read the full interview — and follow Pakistan election updates on our live blog. Here’s what else I’m keeping tabs on today:Indonesia’s general election: More than 204mn Indonesians will vote for the country’s next president today. The latest polls suggest former general Prabowo Subianto has a chance of winning the 50 per cent of votes needed to avoid the election going to a second round in June.Economic data: The EU releases its preliminary fourth-quarter GDP and employment change estimate, while the UK publishes January inflation figures.India-Qatar ties: Indian Prime Minister Narendra Modi is set to hold bilateral meetings with Qatari emir Sheikh Tamim bin Hamad al-Thani in Doha. The meeting come days after Qatar released eight Indians sentenced to death last year for spying for Israel.Results: Sony reports third-quarter earnings.Five more top stories1. Exclusive: Latham & Watkins is cutting off automatic access to its international databases for its Hong Kong-based lawyers, in a sign of how Beijing’s closer control of the territory is forcing global firms to rethink the way they operate. A person with knowledge of the matter said the world’s second-highest-grossing law firm was now “treating Hong Kong as the same as mainland China”. Read the full story. 2. Exclusive: Japanese Prime Minister Fumio Kishida is intensifying efforts to meet North Korea’s Kim Jong Un, as he pushes for a diplomatic breakthrough with the dictator in a bid to save his faltering premiership. The summit would seek to secure the release of Japanese citizens abducted by North Korea decades ago, according to people familiar with the diplomatic talks — some of which are being conducted via a channel in Beijing.3. Joe Biden sharply rebuked Donald Trump for saying he would encourage Russia to attack Nato allies that did not spend enough on defence, as the US president pleaded for Republicans in Congress to pass a $95bn funding bill including aid for Ukraine. Speaking at the White House yesterday after the Senate approved the national security legislation with bipartisan support, Biden said about Trump’s comments: “For God’s sake, it’s dumb, it’s shameful, it’s dangerous, it’s un-American.” 4. Thailand’s former prime minister Thaksin Shinawatra will be freed after serving just six months of an eight-year jail term for graft and abuse of power, the government said yesterday. It was the second concession granted to the former leader since his return from exile last year. Thaksin is an ally of Prime Minister Srettha Thavisin, who belongs to the Pheu Thai party that is in effect controlled by the powerful Shinawatra family. Here’s the latest on Thai politics. 5. The head of Macquarie’s booming commodities business, who was paid more than JPMorgan chief Jamie Dimon and 75 per cent more than the Australian financial group’s own chief executive last year, is to leave this month after almost three decades. Nick O’Kane had been one of Macquarie’s most feted executives after a modest bet on the US energy trading market was transformed into its largest and most profitable division.News in-depthIlluminate USA’s 1mn sq ft solar panel factory in Pataskala, Ohio will employ more than 1,000 More

(Reuters) – A look at the day ahead in Asian markets.If anyone was wondering what it would take to puncture the U.S. economic ‘soft landing’ hopes that have fueled investors’ risk appetite and gains across most markets this year, especially in tech and on Wall Street, they got their answer on Tuesday. An unwelcome upside surprise in U.S. inflation triggered a surge in bond yields, pushed expectations of the first Fed rate cut out to June, juiced the dollar – most notably for a break above 150.00 yen – and tanked global stock prices.The MSCI Asia ex-Japan index is now down four days in a row, and it could be five on Wednesday – the MSCI World index slumped 1.4% for its steepest decline since September, and the big three U.S. indices lost between 1.3% and 1.8%.The regional calendar on Wednesday is light – wholesale price inflation in India and presidential elections in Indonesia are the main events – and Chinese markets are still closed for Lunar New Year, although the offshore yuan could sell off.That’s a potentially choppy mix of political risk, below-average liquidity and widespread ‘risk off’ sentiment across Asia on Wednesday following the tightening of financial conditions and big moves across many markets on Tuesday.U.S. Treasury yields jumped as much as 20 basis points after figures showed that annual U.S. CPI inflation slowed to 3.1% in January and not the 2.9% economists had expected. Stocks tumbled.The reaction of Japanese stocks will be particularly interesting after the dollar smashed through the psychologically important 150.00 yen barrier to trade within sight of the all-time high of just under 152.00 yen reached in November last year and October 2022.The Nikkei played catch up on Tuesday following the long weekend and surged nearly 3% for its best day since November 2022. It goes into the open on Wednesday at a fresh 34-year peak and within 1000 points of printing a new all-time high. But although the weak yen has been one of the most important catalysts for Japan’s outperformance, its latest slide might take a back seat to Tuesday’s global equity selloff. On the data front, figures are expected to show India’s wholesale price index rose 0.53% year-on-year in January, with strong gains in food prices offset by fuel deflation.Wholesale prices have been flirting with deflation for almost a year, and another weak print on Wednesday could put the rupee under added downward pressure.The Indonesian rupiah, meanwhile, may be sensitive to domestic politics as the country goes to the polls.Defence minister Prabowo Subianto is frontrunner in the race to win power in the world’s third-largest democracy, but it is unclear whether he is on track to get the simple majority needed to avoid a runoff.Here are key developments that could provide more direction to markets on Wednesday: – India wholesale inflation (January)- India trade (January)- Indonesia presidential elections (By Jamie McGeever) More

Stay informed with free updatesSimply sign up to the More

(Reuters) – The U.S. Internal Revenue Service on Tuesday sued the Federal Deposit Insurance Corporation, asking a judge to determine how much the FDIC must pay to cover an estimated $1.45 billion tax debt owed by the failed Silicon Valley Bank.The FDIC, which seized SVB and its assets in March 2023, has denied the entire tax claim, according to a complaint filed in federal court in Washington. The IRS said the court should overrule the FDIC’s decision to deny the tax claim, and make a new determination on the validity and amount of taxes owed. The FDIC is acting as a receiver for the bank, gathering the bank’s assets and using them to repay SVB’s creditors. The IRS said its initial $1.45 billion claim was an estimated total for taxes due between 2020 and 2023, and that it was still reviewing SVB’s tax returns when it filed the claim. The IRS later learned that some of the employment taxes included in its claim have already been paid. The IRS and the FDIC did not immediately respond to requests for comment on the dispute. Santa Clara, California-based SVB became one of the largest bank failures in U.S. history when it collapsed on March 10, sending shockwaves through the regional banking industry in the U.S. and disrupting many tech startups that housed their cash at the bank.The FDIC has also been sued by SVB Financial, SVB’s former parent company, over its seizure of $1.93 billion in cash during its takeover of the bank.SVB Financial, which filed for bankruptcy after Silicon Valley Bank’s collapse, has argued the FDIC should repay cash that had been held in the parent company’s accounts because it had promised to fully backstop “all deposits” at the bank, even those over the $250,000 guaranteed by U.S. law. The FDIC disagreed, and has said that SVB Financial’s cash could be seized to cover the cost of bailing out the failed bank. More

WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen said on Tuesday that consumer price index data for January showed progress in the fight against inflation despite a surge in the cost of shelter that pushed up the index more than was forecast by economists.Yellen, speaking during an event at a Pittsburgh hospital, focused on the year-on-year CPI inflation figure of 3.1%, not the surprise 0.3% month-on-month surge in January.”This morning’s CPI report showed that, in January, the headline consumer price index fell to 3.1 percent. That’s six percentage points below its peak in June of 2022,” she said. “At the same time, the recession that many forecasters predicted we would need, to see inflation come down, hasn’t materialized.”The hotter-than-expected consumer inflation reading helped drive down stocks on Wall Street, pushing back market expectations for Federal Reserve interest rate cuts. The data was somewhat at odds with Yellen’s recent narrative that a “soft landing” for the U.S. economy was under way, with inflation tamed and wage growth outpacing prices pushed up by high post-pandemic inflation.LOWERING HEALTH COSTSYellen stuck to that line in her remarks at the West Penn Hospital in Pittsburgh, where she discussed efforts taken by President Joe Biden’s administration to cut healthcare costs.”We have made significant progress in our fight to bring down inflation,” with the prices of key household expenditures like gasoline, eggs and airline fares coming in lower,” Yellen said, adding that the U.S. economy continues to grow with a historically strong labor market.Yellen has traveled across the U.S. this year to promote Biden’s economic policies, from tax credits for household clean energy upgrades in Boston that were funded by the 2022 Inflation Reduction Act (IRA) to job training programs funded by the 2021 American Rescue Plan Act.In Pittsburgh, Yellen highlighted IRA provisions to allow Medicare, the healthcare program for seniors and the disabled, to negotiate prices for key prescription drugs, which is expected to reduce the deficit by more than $95 billion over a decade.Tax credits extended by the IRA have lowered health insurance premiums, saving an average of $800 a year for 15 million Americans, Yellen said. The IRA also caps Medicare beneficiaries’ insulin costs at $35 a month and an out-of-pocket cap on Medicare prescription drug costs is projected to lead to annual savings of $400 per person, she added.”Having affordable health care leads to stronger financial security for middle-class families. It saves Americans and our country money,” Yellen said. More

WASHINGTON (Reuters) – U.S. worker safety officials fined Elon Musk’s SpaceX $3,600 this month after an accident at its site in Washington state led to a “near amputation,” according to inspection records reviewed by Reuters.A Reuters investigation late last year found that Musk’s rocket company disregarded worker-safety regulations and standard practices at its facilities nationwide. Through interviews and government records, the news organization documented at least 600 previously unreported injuries of SpaceX workers since 2014.SpaceX has not responded to Reuters’ questions about any of the incidents, including the death of one worker and the injury of another who remains in a coma after his skull was fractured during a 2022 rocket engine malfunction. The company also did not respond to a request for comment about the new safety fine.Inspectors from Washington state’s Department of Labor and Industries discovered new safety violations at the company’s Redmond, Washington, site last December, in a visit prompted by worker complaints, according to state inspection records obtained by Reuters under an open records request. An agency spokesperson said that SpaceX can still appeal the decision.The inspectors concluded the site lacked a “thorough safety program,” adequate communication of work rules, and a system to “correct violations,” the records said. The “near amputation,” as inspectors called it, occurred after a roll of material fell and crushed a worker’s foot. Managers at SpaceX told the state inspectors that it was a one-time incident and the problem was fixed. Inspectors, however, found that employees were not required to wear steel-toe shoes, even though the rolls of materials they had to load into a machine had gotten heavier – increasing from about 80 pounds to 300 pounds (36 kg to 136 kg) each. The violation was described as serious given the risk of injury, an agency spokesperson said.One worker at the site told inspectors that “safety can get overlooked” because the company’s “goal is to make as much as we can in a short amount of time,” according to the records. The injured worker said the machine where the rolls were loaded “had been deliberately set up incorrectly for the purpose of increasing the production rate during the material loading phase.”The worker, who was not identified in the report, told inspectors that the matter had not been addressed and that safety officials at the company do not “have the reading comprehension nor the overall competency to implement a safety plan at the Redmond site.”In a separate incident reported less than 24 hours later, an unidentified Redmond employee was hospitalized for a broken ankle after they jumped off a dock during a fire alarm, which inspectors said the company could not have foreseen. SpaceX was not fined as a result. The Reuters report last year found that worker safety agencies fined the billionaire’s rocket company a total of $50,836 for various violations in the last decade.SpaceX’s history of injuries and regulatory run-ins underscores the limits of worker-safety regulation. Fines are capped by law and pose little deterrent for major companies, according to experts in U.S. worker safety. Federal and state regulators also suffer from chronic understaffing of inspectors, they said.The U.S. National Aeronautics and Space Administration (NASA), which has paid SpaceX more than $11.8 billion as a private space contractor, did not respond to questions about the matter. The space agency has repeatedly declined to comment on the company’s safety record, saying only that the agency has the option of enforcing contract provisions that require SpaceX to “have a robust and effective safety program and culture.”Last month, the wife of the worker who is in a coma after his skull was fractured filed a negligence lawsuit against the company. NASA and SpaceX have not commented on that complaint. More

BERLIN (Reuters) – Germany’s federal government will significantly reduce its forecast for growth in the German economy to just 0.2% in a report due to be released next week, according to a source with knowledge of the matter.Factors contributing toward the depressed figure — down from October’s forecast of 1.3% — included low growth in the global economy and a German constitutional court ruling that blew a hole in the country’s budget, according to the source.The gloomy prospects for Germany’s economy in 2024 come after the country’s GDP shrank by 0.3% in 2023 under the pressure of high inflation, rising interest rates and a weak global economy.German business association BDI issued a similarly low forecast in mid-January for growth of 0.3%, warning that the economy was at a “standstill”.An economy ministry spokesperson said they could not comment on the numbers, adding the government would provide comment when the official report was published.Germany’s finance minister Christian Lindner said on Sunday that the coalition government planned to present a concept to strengthen Germany’s position as an industrial location this spring, after multiple warnings from both him and Economy Minister Robert Habeck that the country was losing its competitiveness on a global scale. More

(Reuters) -Federal Reserve policymakers waiting for more evidence of easing price pressures before they cut interest rates may find themselves waiting a bit longer, after a government report on Tuesday showed consumer inflation stayed elevated last month.The consumer price index was up 3.1% in January from a year earlier, down from its 3.4% pace in December but more than the 2.9% economists polled by Reuters had been expecting. Underlying core inflation, which strips out energy and food prices, rose 3.9% from a year earlier for a second straight month. That stickiness is not going to add to Fed confidence that inflation, while down from its 40-year-high in mid-2022, is truly on a path to its 2% goal. The Fed last month kept its policy rate in the 5.25% to 5.5% range, where it has been since last July, and while Fed Chair Jerome Powell noted progress, he also said March, when the policymaking committee next meets, would likely be too soon for the Fed to be sure it has won the fight with inflation. With the job market still strong – U.S. employers added more than 350,000 jobs in January, a report earlier this month showed – still-too-high inflation gives the U.S. central bank little reason to rush on rate cuts. After Tuesday’s inflation report, traders previously betting on a rate cut at the Fed’s April 30-May 1 meeting now see June as more likely.“If this keeps up with another month or two of inflation staying high, you can kiss a June (rate cut) goodbye and we’re probably looking at September,” said Peter Cardillo, chief market economist at Spartan Capital Securities. “It’s a hotter-than-expected report and it’s part of what the Fed has been alluding to when it says it’s too early to say that inflation has been beaten.”Speaking after the report both U.S. Treasury Secretary Janet Yellen and National Economic Council director Lael Brainard, both former top-ranking officials at the central bank, said they continued to see good progress on inflation.But while some of the more prominent pocketbook items did ease – gasoline prices fell 3.3% over the month – others, notably food, continued rising. A big part of the CPI’s strength in January was an acceleration in shelter costs, up 0.6% on the month from 0.4% a month earlier.The Fed targets 2% inflation by a different measure, the personal consumption expenditures price index, which gives less weight to the shelter component — moving some economists to predict that the CPI report won’t bust Fed confidence in inflation’s decline after all. Indeed the January report left some parts of the Fed’s disinflation story intact, with prices for goods continuing to fall. Excluding food and energy, goods prices dropped an overall 0.3% over the month, with clothing down 0.7% and used cars down 3.4%. But it also left Fed officials still waiting for a drop in housing inflation that many insist will arrive in coming months as new leases, less subject to the high rates of increase seen earlier in the pandemic, work their way into the government’s inflation index.The report also showed services inflation continuing to rise, with medical services up 0.7% and airfares up 1.4%.”This was a broad-based increase in core services that justifies the Fed’s “wait-and-see” decision,” said Inflation Insights’ Omair Sharif. “We had some good disinflation data over the second half of 2023, but it was never going to be a straight line down, and some bumps along the road were to be expected.” More