Aurelia Butler

This article is an on-site version of our Disrupted Times newsletter. Sign up here to get the newsletter sent straight to your inbox three times a weekToday’s top storiesThe US said Israel had “no intent to reoccupy Gaza” after its war with Hamas. Follow our full coverage of the conflict here.Former European Central Bank president Mario Draghi warned that the EU would not survive as anything other than an economic bloc unless it deepened its integration, as he forecast a recession in Europe by the end of the year. Draghi has been tasked by the European Commission to prepare a report on how the EU can restore its competitiveness. 2023 is set to be the warmest year ever after an “exceptional” October. The UN secretary-general blamed governments for “runaway climate carelessness” by failing to cut fossil fuel production.For up-to-the-minute news updates, visit our live blogGood evening.Strap yourself in: it’s now less than 12 months to go until a momentous US presidential election with huge ramifications for the rest of the world.First, the latest political news. President Joe Biden will be cheered by Democrat wins in last night’s clutch of state and local elections, thanks partly to voter support for abortion rights, after polls showing his approval ratings on the slide. The focus now turns to his possible Republican challengers at the third primetime TV debate in Miami tonight. Frontrunner Donald Trump will (again) be conspicuous by his absence, opting instead for a campaign rally on the other side of the city. Trump will be cheered by news that the biggest donor of rival candidate Ron DeSantis — the space-exploring property baron Robert Bigelow — is considering backing him.A win for Trump next November would change the world, says chief economics commentator Martin Wolf in his latest column. Wolf argues a Trump victory would be a blow for democratic norms at home, citing plans such as replacing career civil servants with loyal servants of the president, as well as abroad, weakening the trust on which US alliances are based at a time when the world is wracked by geopolitical tensions.For the world economy, Trump’s plans for a 10 per cent across-the-board tariff on all imports could lead to retaliation and do huge damage to the World Trade Association, Wolf says. Equally important is the potential impact on global efforts on climate change, especially the possible reversal of clean energy measures in Biden’s Inflation Reduction Act. FT Alphaville separately rounds up what another round of Biden vs Trump might mean for investment.As our Big Read explains, the election is likely to turn on whether American voters believe they are better off with Biden. The president is betting everything on Bidenomics, his personal economic blueprint, founded on trillions of dollars of public investments, a focus on middle-income voters, an aggressive approach to competition policy and a decisive break from 40 years of “trickle-down” economics. Before last night’s elections at least, polls suggest many voters remain unconvinced, even with inflation falling and unemployment at its lowest level in decades. Part of the problem for Biden is that even as Americans’ wages increased, the gains since 2021 did not keep up with inflation until this summer, putting a big squeeze on household budgets. At the same time, consumer prices for many items remain high, even though the speed of increases has slowed. You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.In the meantime, fears are growing that election-related misinformation and disinformation could play a significant part in next year’s White House race. Biden last week issued an executive order on labelling AI-generated content in a bid to tackle “fraud and deception”, including deepfakes, while Meta, owner of Facebook and Instagram, said today that advertisers would have to disclose when they digitally create or alter political adverts to run on its platforms, including audio or video meant to depict an event that has allegedly occurred. With user-generated disinformation also in the spotlight, one thing looks certain: social media moderators have a busy year in store.Need to know: UK and Europe economyBank of England governor Andrew Bailey said it was “too early” to talk about cutting interest rates. UK gilts rallied sharply yesterday after the BoE’s chief economist had suggested cuts might be considered in the middle of next year.The European Commission is set to recommend that member states open EU membership talks with Ukraine. Kyiv is carrying out a reform programme to align with EU standards even as it fights Moscow’s aggression.The EU is moving ahead with its ban on Russian diamonds, one of the few major Russian exports still untouched by sanctions. The UK imposed sanctions on Dubai-based oil trader Paramount and others with Russian ties. Academic Elina Ribakova argues US economic sanctions risk losing their effectiveness as a policy weapon unless enforcement is stepped up and the private sector complies with the rules.Portuguese prime minister António Costa, who has led the country since 2015, resigned hours after prosecutors issued arrest warrants and raided government buildings in a corruption investigation relating to several high-profile business ventures.Radical centrist Pieter Omtzigt could become the new Dutch prime minister after his three-month-old New Social Contract party jumped to the top of opinion polls ahead of the November 22 election. Need to know: Global economyCentral banks are split on how to respond to a possible jump in energy prices should the Israel-Hamas war escalate. For now, at least, the situation remains relatively calm, with oil prices giving up their gains since the hostilities began.The latest in our Economists Exchange series features former Federal Reserve economist Claudia Sahm on talk of a US recession, the battle to beat inflation and the difficulties of forecasting. US beef prices hit a record high as droughts in the south and west turn green pastures into dust fields and fuel higher feed costs. Scientists say the US is facing its worst dry spell in 1,200 years.Falling pork prices, a heavily weighted component in China’s consumer price index — an update of which is due tomorrow — could push China back into deflation. In better economic news, the IMF upgraded its outlook for Chinese growth.China is still the “billionaire capital of the world” but the number of super-rich has fallen, reflecting the property crisis and economic slowdown. Bottled water king Zhong Shanshan tops the Hurun Research Institute’s rich list for the third straight year.The World Bank warned that high US interest rates were causing a “silent debt crisis” in smaller emerging economies. Debt interest payments as a share of government revenues are at their highest level since at least 2010.Need to know: businessAmazon Prime members will be able to access benefits from US healthcare provider One Medical, for a fee, as the ecommerce company looks to expand in the $4tn industry. Google and some of Europe’s largest telecoms operators urged Brussels to designate iMessage as a “core” service that would require Apple to make the chat app fully compatible with rivals. Currently, only Apple users are able to communicate via iMessage, making its texts a key factor in retaining iPhone owners’ loyalty.Lloyd’s of London pledged $50mn to global development projects, as part of a programme addressing lasting inequalities from the transatlantic slave trade that it enabled. It has previously rejected calls to compensate descendants.UK bellwether retailer Marks and Spencer announced its first post-pandemic dividend as strong food sales drove an increase in first half-profits from £208mn to £326mn. Survey data suggests UK grocery inflation has slowed to single digits for the first time in 16 months.PwC plans to cut up to 600 jobs in the UK, starting with a voluntary redundancy programme. The firm was the last holdout against significant British headcount reductions among the Big Four accounting firms. The battle for ownership of Manchester United is well into extra time, almost one year since the Glazer family said it would consider new investment into the club, a sale, or other transactions. Shareholders are not amused. The US is following Europe and Australia in allowing consumers’ financial data to be shared easily, making it simpler to switch bank accounts and sign up for a range of financial products. Read this and more in our new special report: Next Tech Growth Markets.The World of WorkWhat does the bankruptcy of WeWork mean for other flexible office providers? The business failed to escape the combined forces of expensive leases it had signed before the pandemic and weak occupancy rates as hybrid working gained popularity.The UK is experiencing a severe shortage of ADHD medication. How can sufferers cope — and what can their managers do to help? Isabel Berwick speaks to specialist Dr Uthish Sreedaran, and ADHD patient, coach and author Leanne Maskell to find out in the new Working It podcast.While you have your headphones on, check out the new Behind the Money podcast with US labour and equality correspondent Taylor Nicole Rodgers discussing if we’re in for a new era for American’s trade unions. Some good newsUK regulators have authorised the use of a drug that could help prevent breast cancer in women. Anastrozole, which has hitherto been used to treat the disease, can now be used as a preventive treatment for post-menopausal women at moderate or high risk of developing the disease.  Recommended newslettersWorking it — Discover the big ideas shaping today’s workplaces with a weekly newsletter from work & careers editor Isabel Berwick. Sign up hereThe Climate Graphic: Explained — Understanding the most important climate data of the week. Sign up hereThanks for reading Disrupted Times. If this newsletter has been forwarded to you, please sign up here to receive future issues. And please share your feedback with us at [email protected]. Thank you More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.This article is an on-site version of The Lex Newsletter. Sign up here to get the complete newsletter sent straight to your inbox every Wednesday and FridayDear reader, By and large, in conversations with companies, bankers and consultants, Brexit comes up as a bugbear or a disappointment. So I was intrigued to learn there is at least one sector that still believes a post-EU Britain could “take back control”. Shipping companies are pressing the UK to continue to protect them from competition rules after the EU said it would axe its own exemption. The word “sovereign” has been bandied about. References to Britain’s naval history abound, together with the importance of maritime transport for this little island. Britannia, it seems, is still called upon to rule the waves. The maritime tussle centres on “consortia block exemptions”. Under such rules, shipping companies can strike deals to swap space, or even pool several ships on a particular route and operate them jointly. Co-operation in a competitive industry would ordinarily raise eyebrows at any anti-monopoly watchdog. Yet in this case, as long as a consortium’s market share remains below 30 per cent, it gets a free pass. Indeed, given the market share dominance of shipping giants such as MSC, Maersk and CMA CGM, regulators hoped that the ability to club together might help the small fry compete. This exemption is set to expire in the EU in April next year. After this time, companies will still be able to co-operate, but they will not receive automatic relief from ordinary rules.The UK, which has inherited the same legislation, is considering whether or not to follow suit. If it pursued a different path, it would still have to comply with EU rules for goods transported to and from the bloc, but not for goods transported directly from, say, east Asia. The fact that block antitrust exemptions exist at all underscores the special nature of business on the high seas. Ships are expensive and require a lot of upfront financing. They are quite slow-moving, too, which means you need a big fleet to operate a weekly service from Shanghai to Rotterdam. The bigger the ship, the lower the cost per tonne of transported goods. But empty space aboard benefits no one. That helps explain why liners have long sought to co-operate, rather than compete. The current block exemption rules are a remnant of agreements that date back to the 19th century. The first of these, the Far Eastern Freight Conference, was established in 1879 to govern routes from China and Japan to European ports. It was disbanded only in 2008. Competition authorities long judged that the benefits of co-operation would outweigh the potential cost of lower competition. Indeed, before 2020, the expense of shipping goods trended downward while maintaining quality standards. It is hard to prove that co-operation was the reason why maritime transport became more affordable. But if it was not, it clearly caused too little damage for anyone to feel strongly about banning it. This changed, in a spectacular fashion, after the pandemic. With demand switching from services to goods, there were suddenly not enough ships in the right places. The impact of shipping constraints on global trade is hard to overestimate. Spot rates were about six times higher on average by the end of 2021 compared with 2020, said the International Transport Forum. Two out of three ships arrived in port at least one day behind schedule, and pressed ships skipped port calls. Inflation galloped away. That experience flipped the burden of proof. The EU has not decided to axe the competition exemption because it believes shipowners conspired to raise rates. It just feels that, with the data it has, it cannot isolate evidence that the exemption truly benefits consumers.  That seems the right sort of lens through which to view antitrust exemptions. It isn’t hard to see why shipowners would squeal. The rule change comes at a time when the sector’s profitability is sinking on the back of a capacity glut. Yet the potential pitfalls of anti-competitive behaviour are clear. It should be allowed — unchecked — only if there is clear evidence that it is needed and that it will help consumers in the end. The UK’s competition authority should follow in the EU’s wake. Things I enjoyed this week I am a carbon-capture optimist and was encouraged to learn that BlackRock will invest $550mn in a direct air capture project. Elsewhere, as a frequent flyer disgruntled by rising fares, I have been following reports that politicians are looking into airlines’ high summer prices with interest. Have a good week,Camilla PalladinoLex writer*This story corrects a reference to the article about the BlackRock investment.If you would like to receive regular Lex updates, do add us to your FT Digest, and you will get an instant email alert every time we publish. You can also see every Lex column via the webpageRecommended newsletters for youDue Diligence — Top stories from the world of corporate finance. Sign up hereFree Lunch — Your guide to the global economic policy debate. Sign up here More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.German arms exports to Israel have surged in the past month, as Berlin steps up support for the Middle East country’s war against Hamas. Germany has exported more than €300mn of sensitive military equipment and arms to Israel so far this year, a 10-fold increase since 2022, said a German government official. They added that 185 of the 218 licences granted this year were approved after October 7, when Hamas launched a surprise attack from Gaza, killing 1,400 people according to Israeli officials. German chancellor Olaf Scholz has emerged as Europe’s most hawkish advocate of Israel’s right to respond with overwhelming armed force against the Palestinian terror group, even as global concern has grown over high casualties and a deepening humanitarian crisis in Gaza. The federal government has created a working group of the foreign office, ministry of economic affairs and office for export control tasked with expediting Israeli arms requests, government officials in Berlin told the Financial Times.The licences cover a range of military materiel, not all of which is offensive, such as components for air defence systems. However, lethal munitions, worth about €20mn, have also been sent. The figures do not cover equipment for which licenses are not required, such as basic personal kit, protective personal armour or medical equipment. Germany has also prioritised such shipments to Israel.The economic affairs ministry, led by Germany’s Green vice-chancellor Robert Habeck, oversees the exports. The ministry declined to comment. “Israel has the right, enshrined in international law, to defend itself and its citizens against this barbaric attack,” Scholz told German lawmakers the week after Hamas’s attack in Israel. “There is only one place for Germany at this time, and that is by Israel’s side,” he added. Scholz said he had told Israel to ask him for “whatever support is needed”. Israel’s assault on Gaza aims to root out Hamas, which has ruled the coastal enclave since winning elections in 2007. Israel’s military has struck more than 14,000 targets in the Palestinian territory, said the Israeli military. Its campaign has killed more than 10,560 Palestinians, with 2,550 people reported missing, said Gaza’s Hamas-controlled health ministry on Wednesday.Israel said high civilian casualties have occurred because Hamas uses the local population as human shields, locating its command centres and military assets within or next to sites such as hospitals, apartment blocks, mosques and schools. The Palestinian group denied this.Group of Seven foreign ministers, meeting in Japan, called on Wednesday for “humanitarian pauses” in the bombardment to get vital aid into Gaza and to let foreign nationals — and potentially hostages — out. German foreign minister Annalena Baerbock said at the Tokyo meeting that attacks from Gaza continued “to oblige us to stand up for the protection of Israel, especially because the rocket fire from the terrorist organisation Hamas continues”. More

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(Reuters) -Warner Bros Discovery (NASDAQ:WBD) topped third-quarter profit estimates on Wednesday as the box-office hit “Barbie” helped offset a sluggish advertising market and a studios segment starved of content due to two Hollywood strikes.Although Hollywood’s film and television writers ratified a new, three-year contract in September, ending their 148-day work stoppage, members of the SAG-AFTRA actors union have been on strike since July, roiling the industry’s 2024 film slate and depriving media companies of new content to sell.The media company forged by the union of WarnerMedia and Discovery posted adjusted core earnings of $2.97 billion, above estimates of $2.92 billion, according to LSEG data. Overall third-quarter revenue of $9.98 billion was in line with estimates.The company reported free cash flow of $2.06 billion, compared with $1.72 billion in the prior quarter, as it spent less on production as a result of the strikes. This surpassed expectations for $1.74 billion, according to Visible Alpha.The results put the company “on track to meaningfully exceed $5 billion (free cash flow) for the year and contributing to our nearly $12 billion in debt paydown to date,” CEO David Zaslav said.Advertising revenue at its networks segment declined 12% to $1.71 billion as global conflicts and inflation create an uncertain climate for marketers.The company’s streaming unit posted an adjusted core profit of $111 million, compared with a loss of $634 million a year ago. Global average revenue per user in the segment rose 6%.Warner Bros Discovery had 95.1 million global direct-to-consumer customers at the end of the quarter, down from 95.8 million in the previous quarter. In May, it launched its Max streaming service – combining HBO Max’s scripted entertainment with Discovery’s reality shows. More

BEIJING (Reuters) – China’s economy is still in the stage of medium-speed growth of about 5%, and there may be the potential for it continue to grow at this rate for another five to 10 years, a Chinese central bank official said on Wednesday.China’s current macro policy focuses on ensuring short-term stability and balance, Liu Shijin, a China central bank adviser, told the Financial Street Forum in Beijing. More