Aurelia Butler

One thing to start: JPMorgan Chase chief executive Jamie Dimon sat down with the FT for an exclusive interview on the trade war, Washington’s relations with Beijing and the future of America’s economic pre-eminence. And another thing: Nvidia has said it expects to take a $5.5bn blow after the US clamped down on the Silicon Valley group’s ability to export artificial intelligence chips to China.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: [email protected] today’s newsletter: How Wall Street miscalculated Trump 2.0Much of Wall Street relies on hyper-accurate models: elaborate Excel spreadsheets that are filled with endless variables.  Everyone from analysts to managing directors pride themselves on being able to foresee any possible outcome for a given investment, a deal or a hedge.But with Donald Trump’s second ascent to the White House, their ability to predict what the president might do next has come crashing down.Trump’s “liberation day”, which induced a global market freefall, has left some of the most influential figures on Wall Street shaken. Financiers who last time around had a seat at the table were left relatively powerless to rein in an epic economic miscalculation. In its wake, they felt an unsettling lack of influence inside the administration.As the FT’s Big Read reports, Wall Street made a miscalculation. Trump and other administration officials such as vice-president JD Vance and Treasury secretary Scott Bessent repeatedly said they wouldn’t cater to the country’s wealthiest citizens.Many thought those pledges were empty campaign promises. But when the tariffs rolled around, it was a turning point — a clear indication that Trump would never be Wall Street’s president.It leaves the finance sector in a vulnerable position. Corporate takeovers are down the most in about a decade, elite law firms have come under fire and consulting giants have lost government contracts.“We assumed that someone in the administration that had an economic background would tell him that global tariffs were a bad idea,” one Wall street executive said.Others were even more blunt. “This is the stupidest economic policy that the United States has ever come up with,” said Anthony Scaramucci, the founder of SkyBridge Capital and Trump’s former White House communications director.During Trump’s first administration, luminaries such as Stephen Schwarzman and Larry Fink were all members of a (shortlived) business task force called the Strategic and Policy Forum that underscored their ties to the president.Back then, they enjoyed a direct line to the Oval Office. But not any more. To influence Trump to walk back his most draconian tariffs, JPMorgan Chase chief Jamie Dimon made an appeal on Fox Business — rather than a one-on-one with the president.But high finance is now unable to sway Trump’s decision making. Instead, financial markets flexed their power and caused the president to retreat. “Trump is fine with Wall Street taking a hit,” said a person close to Trump. “But he doesn’t want the whole house to come down.”Private equity groups hit pause on dealsBuying and selling companies is oxygen to private equity executives. But the prospect of fresh air appears to have been snatched away from the world’s downtrodden dealmakers — and this time, by the very man they thought would fling open the windows.Following two years in which higher interest rates had brought much of the sector’s dealmaking activity to a halt, buyout executives and their advisers had been banking on Trump’s re-election in November to finally kick things off again.But the economic uncertainty that has unsettled so much of Wall Street accompanying his sweeping tariffs is also forcing buyout groups to halt dealmaking activity all over again. “There is a pause . . . it’s hard to price things,” said one top executive at a US firm. “People are worried a recession is coming.” Multiple advisers to private equity firms said they had seen bidders walking away from processes in the past two weeks, while another said dealmakers were “pens down”.Some late-stage deals have been signed over the past two weeks, including Silver Lake’s acquisition of a majority stake in chip designer Altera and KKR’s purchase of E45 moisturiser maker Karo Healthcare.But others have been postponed, including the auction by 3i of Audley Travel, which was paused in the weeks leading up to Trump’s so-called liberation day, according to people familiar with the matter.Deadlines for final bids for Boeing’s navigation unit have been pushed back several times, while an expected £4bn sale by buyout group Apax of insurance group PIB has taken longer than expected. Many will be watching to see what happens with Reckitt’s multibillion- dollar carve-out of its homecare brands, which has seen at least one firm trim its offer in recent days and some involved questioning whether a deal would go ahead at all.Many private equity firms have been relying on financial engineering in recent years to return cash to their investors without selling companies at undesirable valuations, in the form of borrowing against their portfolios or selling their assets to themselves. Dealmakers may now be breathing for air for some time to come. Credit markets creak under pressure While we’re on the topic of tariffs snagging all different facets of finance, let’s dig into another corner that’s been impacted: the junk bond and leveraged loan market. After Trump’s tariff announcement, eight straight trading days passed with dead silence in the world of high-yield bonds. It was a notable shutout that finally ended on Tuesday with the pricing of a relatively high-quality refinancing.High-yield issuance is way below April’s normal trajectory, and leveraged loans aren’t keeping pace either, according to data from the London Stock Exchange Group. This freeze in the market raises a question of how banks and lenders will finance transactions over the remainder of the year.Not only is there less investor appetite for risky debt, but banks are also showing reluctance to provide short-term bridge financing, which acts as a placeholder until longer-term financing is secured. “Everything has been on hold,” says Bob Kricheff, the head of multi-asset credit at investment firm Shenkman Capital Management. “Nobody is trying to price a deal in this environment.”Some banks, including Citigroup, Morgan Stanley and JPMorgan have pulled the plug on high-yield bond and loan deals that investors had so far been unwilling to back in traditional debt markets, said people briefed on the matter. While markets stabilised after Trump agreed to pause many new trade levies for 90 days, they are charging more to lend.And even after a subsidiary of liquefied natural gas producer Venture Global ended the drought in high-yield bond markets — the company borrowed $2.5bn on Tuesday — bankers and investors cautioned that it did not yet signal an all-clear for other borrowers who turn to the critical funding source for capital.Job movesGlobal Counsel has hired Sourav Bhowmick as director and lead for US and North America in its global investor services practice. He was most recently senior adviser at the Treasury department, and previously worked at Deloitte Consulting and Brunswick Group.Ares Management has appointed Richard Sehayek as co-head of Europe for alternative credit. He has been with the firm since 2023, and previously worked at KBC Financial Products.Fannie Mae has tapped Omeed Malik for its board of directors. He’s the president of 1789 Capital — which Donald Trump Jr recently joined as a partner — and founder and CEO of Farvahar Partners.Smart readsRecession risk There can be a large lag between the economy weakening and confirmation of an R-word event catching up, Lex writes. Wall Street might not be pricing in the real risk. Power struggles The billionaire Kwek family in Singapore has long been seen as a three-generation success story, Bloomberg writes. Then a father-son conflict exposed a rift. Taxman plight Employees at the Internal Revenue Service work their way through tax season as their agency is dismantled around them, The New Yorker reports. News round-upWall Street banks reap $37bn from Trump trading boom (FT)Activist Elliott takes $1.5bn stake in Hewlett Packard Enterprise (FT)Blackstone joins Vanguard to expand into individuals’ portfolios (FT)Hermès overtakes LVMH for luxury’s top spot after weak sales spark sell-off (FT)US wants to retain key tariffs on EU, say European officials (FT)Mark Zuckerberg admits he considered spinning of Instagram in 2018 (FT)Johnson & Johnson warns pharma tariffs could cause drug shortages (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 [email protected] 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

Two decades ago, German engineers used to joke among themselves about the prototypes for new cars presented by their Chinese joint venture partners, which in at least one case were cut and pasted from advertisements of German models.“They had no ideas of their own — they were just copying,” says a senior software executive at a German carmaker.The same engineer was recently presented with a wish list for a future vehicle operating system his company wants to develop. Point for point, it mirrored features that have been unveiled by Chinese electric-vehicle manufacturers. “We’ve come full circle,” says the executive, who declines to be named because of the sensitivity of the subject to the future of his company.Rattled by the advance of Chinese companies, the EU last year imposed tariffs of up to 45 per cent on EVs from the country. But in a new approach that is being developed both by Brussels and by the auto industry, Europe is also now seeking to take advantage of Chinese expertise. European companies are increasingly doing deals with Chinese rivals to prevent them from falling behind in the core areas — software, batteries and autonomous vehicle systems — that will drive the future of the automotive industry. Volkswagen, Mercedes-Benz, Stellantis and BMW have all signed agreements with Chinese groups to get access to technology. A new EU policy framework seeks to give these companies greater leverage in their dealings with China. In an “action plan” for the industry published last month, the commission is looking to require Chinese companies entering the EU car market to enter joint ventures with European companies or license parts of their technology. Some content could not load. Check your internet connection or browser settings.If these efforts are successful, they would represent a striking turning point in recent economic history. For the past four decades, China has tried to use the promise of access to its market as a way to get foreign companies to transfer expertise and technology to its own companies — often much to the angst of the would-be investors. Now Europe is trying to use some of the very same tools to catch up with innovations from China. “It’s a change in the sense that it welcomes investment from abroad in a sector that has been one of the prides of European industrial development,” says Elisabetta Cornago, senior research fellow at the Centre for European Reform think-tank. “It’s also an acknowledgment that there is a gap between the European homegrown knowhow and what is available externally.”Executives in the sector agree the EU’s action plan for the automotive industry is a frank admission that European carmakers need the technological expertise of companies established decades later. “We overestimate ourselves but we definitely underestimated others,” says Robert Falck, founder and chief executive of Swedish start-up Einride, which became the first company globally to deploy a fully autonomous truck on a public road in 2019. “What we need to do is wake up to reality.”Raymond Tsang, an automotive technology expert with Bain in Shanghai, says after losing a third of their market share in China since 2020, foreign automakers simply “have no choice” but to partner with Chinese technology companies to have even a chance of survival.Einride became the first company globally to deploy a fully autonomous truck on a public road in 2019 More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The Argentine peso, Javier Milei told voters while seeking the presidency, was “worth less than excrement”. His solution? To replace it with the US dollar and burn down the central bank.Eighteen months later, Milei has instead persuaded the IMF and other lenders to stump up $42bn to help a reinvigorated central bank support the peso, on top of $44bn already lent. Plans to dollarise overnight have been replaced by a gradual evolution towards a “bimonetary system” featuring pesos and dollars. The peso’s new lease of life comes with greater freedoms. From this week, it will float against the dollar in a much wider band and most restrictions on buying foreign currency have been scrapped (though companies must still wait to send home profits from previous years).So, $86bn of international support later, will Argentines continue to view their national currency as bodily waste?The first response from financial markets was positive. Yet long-suffering investors might be forgiven some scepticism. This is the fund’s 23rd bailout of the serial South American defaulter and most of the previous 22 did not end well. One of Milei’s reform-minded predecessors, Mauricio Macri, promised to “change history forever” before being forced back to the IMF less than a year later for yet another rescue.This time there is an important difference. Argentina has a government that is serious about fighting inflation by living within its means. Even hardened cynics have been surprised at how firmly Milei has stuck to his pledge to slash spending and run budget surpluses, instead of the deficits to which Buenos Aires was addicted for decades, including under Macri.The libertarian leader has also unleashed a wave of deregulation in what was one of the world’s most closed economies, removing the state from myriad areas of business where it had intruded to raise costs without delivering benefits. He has been frank with voters about the pain they must endure before the economy is turned around.So far, so good. But despite the much-trumpeted progress on eliminating the deficit and staving off the risk of hyperinflation, other Argentine vices have proved harder to break. The central bank may not be printing pesos merrily to fund spending, as it did under previous Peronist governments, but the supply of money in the economy is still rising fast.Steve Hanke, professor of applied economics at Johns Hopkins University, points to rapid monetary expansion as a problem. Argentina, he says, “is not going to come close to hitting the consensus inflation forecast of 23 per cent for this year because the money supply is growing way too fast. Monetary policy is way too loose.” Prices jumped 3.7 per cent in March — the highest monthly figure since last August and an unwelcome reminder for Milei that the inflation dragon is far from slain. The decision to float the peso’s official rate has already led to an effective devaluation of about 10 per cent in just two days, putting further pressure on prices. In reality, neither the fund nor Argentina had many options. With Buenos Aires unable to build dollar reserves, the fund had little chance of being paid back the $44bn it had disbursed from the previous bailout. Milei could not continue with tight exchange controls that were deterring investment and distorting the exchange rate (some prices in Buenos Aires are approaching European levels).“The Achilles heel of the Milei programme was the lack of reserve accumulation and the out of line exchange rate,” says Alejandro Werner, a former senior IMF official now at Georgetown University. “That had to be fixed and this is a good deal to fix it, given the political context.”Milei fears what a higher inflation rate would do to his prospects for crucial midterm elections in October, where he needs to win a lot more seats in congress to have a chance of cementing his reform programme in law.Yet the fund persuaded him to scrap most exchange controls now and float the peso in a wider range, even if the upper limit is lower than some in the IMF would have liked.“The currency conundrum the government was facing delivered no cost-free exit,” says Alfonso Prat-Gay, a former economy minister and central bank president. “This is the least bad option in the short term and probably the best for the medium term.”Whether last week’s IMF deal persuades Argentines that their pesos are worth holding, rather than hastily scooping up and disposing of, remains to be [email protected] More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldA cornerstone of demand in the $1.4tn US junk loan market is under pressure to sell very risky debt, as President Donald Trump’s trade war sparks fears of recession and ratings downgrades.Collateralised loan obligation vehicles, which own roughly two-thirds of US riskier corporate loans, may need to slash exposure to weaker borrowers most vulnerable to tariffs and recession because of the potential threat of rating downgrades, according to analysts and investors. The heightened pressure on CLOs is the latest sign of how fears that Trump’s tariffs could sharply slow US growth are rippling through the corporate debt market. Borrowing costs have risen sharply in recent weeks for riskier bonds and loans, while the rate of new issuance has also cooled.“Whether it’s a recession, a mild recession, a slowdown in growth — at the minimum, we’re going to have a slowdown,” said Roberta Goss, head of Pretium’s bank loan and CLO platform. “That will have implications across the credit markets — and in leveraged finance, that’s going to result in elevated defaults and elevated downgrades over the course of the next year.”Goldman Sachs lifted its default projections for US loan borrowers sharply last week, anticipating a 12-month trailing default rate of 8 per cent for leveraged loan issuers by the end of this year — up sharply from a previous estimate of 3.5 per cent.CLOs package up leveraged loans — which are typically extended to borrowers with high debt burdens — into different risk categories, before selling them in slices to investors. The vehicles have held up well during previous periods of economic strain, and issuance was strong at the start of this year, signalling healthy demand for the market. However, analysts have warned that risk mitigation mechanisms within CLOs could push managers to reduce their holdings of very low-quality loans in the near future — potentially curbing access to funding for the most highly leveraged, weakest borrowers.“I do think [CLOs] will start selling if it becomes clear that early April’s tariff regime becomes the status quo for a long period,” said James Martin, senior credit strategist at UBS.While Trump backed down from his “reciprocal” tariff blitz last week, announcing a 90-day hiatus for non-retaliating countries, an escalating trade war with China and erratic policy developments have put economists and investors on notice for a possible growth slowdown.“Right now, the focus is what the rating agencies will do,” said Pratik Gupta, head of CLO research at Bank of America. While “they haven’t downgraded anything yet, I think those are coming”. CLOs have limits on how much debt rated triple-C or below — the bottom end of the credit quality spectrum — they can hold, with a typical threshold of 7.5 per cent of all assets for CLOs that hold public-market or “broadly syndicated” loans. While recent data from BofA showed that the average US CLO held about 6 per cent of its assets in triple-C-rated debt, well below that ceiling, Gupta anticipates that if current tariff announcements hold, an increase in ratings downgrades can push this figure to 7.7 per cent “in the near term”.A jump above that 7.5 per cent ceiling could flip protective switches within CLOs, leading to risk assessments that might ultimately cut off cash flows to investors in the lowest-quality tranches of the CLO, known as “equity”, in order to redirect payments to investors higher up the capital structure. Such a scenario could, some market participants said, reduce the appeal of CLOs for investors in the riskiest tranches.For now, strategists said that CLOs had a decent “cushion” and should still be able to absorb several downgrades until they reached the stage of needing to sell loans aggressively. They added that the path ahead for CLO managers would be determined to some extent by the next stages of Trump’s trade war and how far tariffs were ultimately imposed.Still, against a backdrop of rising recession fears, some market participants said they were already seeing managers beginning to “clean up” their portfolios to avoid being stuck with overflowing triple-C buckets — reducing their holdings of loans that could be particularly vulnerable to downgrade.“Many managers are now proactively trying to front-run by selling risky B-minus names,” said Gupta, referring to loans rated just above triple-C. “Certainly, sales have picked up quite a bit . . . I think you are seeing increased trading activity across the board from the perspective of downgrade risk.”Pretium’s Goss added that in recent weeks the basket of US corporate borrowers whose debt was trading below 90 cents on the dollar — “representative of future triple-Cs and defaults” — had moved from 6 per cent to more than 10 per cent of the entire loan market, indicating that investors were reducing their holdings of riskier single-B-minus and triple-C-rated names.“That is exactly why people fear that there could be increased risk around restructurings,” said Gupta, referring to the process whereby distressed companies reconfigure their debt piles, typically to the detriment of existing lenders. 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Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldDonald Trump’s tariffs are forcing private equity groups to pause their dealmaking and focus on managing their existing portfolio companies, in a stark reversal of earlier expectations for a boom in activity under the new administration.One buyout executive at a top US firm told the Financial Times that economic uncertainty meant deals were being paused because businesses had become too difficult to value. “There is a pause . . . it’s hard to price things,” they said. “People are worried a recession is coming.”“Private equity will go really risk off for a while,” said the head of a large UK firm. “At times like this we become more focused on what we already have.”The comments mark a shift from the industry’s previous stance that the Trump presidency would unleash a wave of mergers and acquisitions after two years in which higher interest rates had forced executives to delay sale plans.Firms had come under pressure from their investors to start selling ageing companies and return cash, as well as to spend $1.2tn of money committed to their funds but not yet deployed. An adviser to private equity groups told the FT that, in the wake of Trump’s tariff announcements, however, “most of these guys are just pens down, let this thing settle”.Some late-stage deals have signed over the past two weeks, including Silver Lake’s acquisition of a majority stake in chip designer Altera and KKR’s purchase of E45 moisturiser maker Karo Healthcare.But others have been postponed, including the £600mn auction by British firm 3i of its portfolio company Audley Travel, which was paused in the weeks leading up to Trump’s so-called liberation day, according to people familiar with the matter.Deadlines for final bids for Boeing’s navigation unit have also been pushed back several times, while an expected £4bn sale by buyout group Apax of insurance group PIB has taken longer than expected. Dealmakers are closely watching the progress of Reckitt’s multibillion dollar carve-out of its portfolio of homecare brands, which had been expected to fetch offers of between $4bn and $5bn from private equity bidders.However, last week at least one firm trimmed its offer to between $3bn and $4bn, raising questions about whether a deal would go ahead at all. “Deals will get done, but people will be a bit more cautious,” said one top buyout executive involved in two ongoing processes. Buyout groups have instead sought to assess the potential impact of tariffs and wider economic difficulties on their sprawling portfolios.Wolf-Henning Scheider, head of private equity at Swiss firm Partners Group, said his team was working with the portfolio companies most exposed to China tariffs to work out how they could reroute supply chains. “We had taken already in the last six to 12 months some measures to prepare to shift [supply chains] where possible,” he said, because “the signs were pretty clear that something would happen”. Even though the majority of its companies had, at most, modest tariff exposure, Partners was seeking to model the impact of potential “further disturbances in the markets”, he said.Even before the current market disruption, firms had deployed a number of strategies to generate cash from assets they had not been able to sell at sufficiently attractive valuations. Some firms borrowed money against their fund investments to pay dividends using so-called net asset value financing. But investor resistance meant that buyout managers have more recently had to curtail the practice. The industry has increasingly turned to continuation vehicles as a mechanism to release funds. Private equity firms use the structures to sell assets to themselves while bringing in new investors, enabling them to cash out their initial backers. Apax, 3i, Silver Lake and Boeing declined to comment. Reckitt said it was committed to its strategy and that the process of separation was ongoing. Additional reporting by Madeleine Speed More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldDonald Trump has threatened to apply tariffs on critical minerals in a move that could increase tensions with China and open a new front in a global trade war that has rattled markets. In an executive order on Tuesday, the US president ordered the commerce department to study the critical mineral supply chains and come up with ways to boost American production while cutting reliance on imports.The investigation could lead to new tariffs being imposed. Trump’s announcement comes just over two weeks after his “liberation day” tariffs sparked days of market turmoil and warnings that the deepening stand-off with China could tip the global economy into recession. “President Trump recognizes that an overreliance on foreign critical minerals and their derivative products could jeopardize US defense capabilities, infrastructure development, and technological innovation,” the order read. The investigation threatens to trigger a new critical minerals trade war as the US tries to wrestle back control of a crucial industry that is dominated by China. It comes after China suspended exports of several heavy rare earth metals and rare earth magnets used in the defence, robotics and energy industries to buyers around the world.The Trump administration is following on from initiatives started during the Biden administration to reduce American reliance on adversaries for minerals and metals that are used in everything from electric car batteries to jet engines to missiles.Although the White House emphasised the importance of minerals and rare earths for military applications, any shortage could affect companies in sectors from energy to auto manufacturing.The Financial Times reported this week that the White House was drafting an executive order to enable the stockpiling of metal found on the Pacific Ocean seabed, as part of the broader effort to counter China’s dominance of rare earth supply chains.The probe would be carried out under Section 232 of the Trade Expansion Act of 1962, which Trump has used to launch investigations into chips, copper and lumber. He has also used the law to apply tariffs to autos, steel and aluminium.  The executive order said any resulting tariffs would replace any “reciprocal” tariff rates placed on these critical minerals, which could in theory lead to tariffs on those minerals being lowered instead of raised. The White House said the US remained “heavily dependent on foreign sources, particularly adversarial nations, for these essential materials”, arguing that it exposed the country to “economic coercion”.In a recent article in the Washington Quarterly, Evan Medeiros and Andrew Polk, two China experts, said Beijing had since 2018 expanded its set of economic tools to retaliate against the US and other countries. Instead of fighting tariffs with tariffs, Beijing has significantly expanded its coercive tool kit to include export controls on critical minerals. In December 2023, for example, China hit back at American efforts to cut its reliance on Chinese mineral supply chains by banning the export of critical rare earths processing equipment.Along with barring exports of rare earths this week, China recently banned exports to the US of gallium, germanium and antimony, in addition to other materials with military applications, the White House said. Last year, Beijing warned Japan that it would block exports of gallium, germanium and graphite if Tokyo aligned too closely with Washington on technology-related export controls. The US wanted to impose certain controls to make it harder for China to obtain advanced American technologies in the fields of semiconductors and artificial intelligence. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.US product design software company Figma has filed for an initial public offering that will test investor appetite for tech listings as Donald Trump’s tariffs roil global financial markets.Figma on Tuesday said it had confidentially submitted a draft registration statement with the US Securities and Exchange Commission, paving the way for an IPO. Market volatility unleashed by the president’s fast-changing tariffs policies has chilled the market for new US listings that many bankers had expected to explode back to life under a Republican administration after a three-year drought.Trump’s steep levies on trade have weighed on global equities markets, and US stocks in particular, as investors worry that they will knock the world’s economy. Several big IPOs were postponed after Trump launched his “liberation day” tariffs in early April, including a $15bn float of fintech Klarna and a $50bn listing for medtech company Medline.Cloud computing group CoreWeave went public in late March after slashing the size and value of its IPO amid wavering investor demand for artificial intelligence infrastructure. Shares in the company have gained just over 2 per cent.Figma said the number of shares and the price range for a potential public offering had not been determined. It was valued at $12.5bn in a share sale to employees and investors last year, with participation from existing investors including Sequoia and Andreessen Horowitz. It has raised about $333mn across seven funding rounds.A confidential filing with US regulators allows companies to privately move forward with their plans to list, before publicly unveiling their documents closer to pursuing a flotation.One person close to the listing process told the Financial Times that Tuesday’s announcement was a sign that Figma felt confident in the strength of its business despite the current market turmoil.In late 2023, the San Francisco-based company came close to being acquired by Adobe, which eventually abandoned its proposed $20bn acquisition following scrutiny from UK and EU watchdogs. Figma specialises in online software for designing apps and websites, while Adobe makes a broad range of digital marketing and creative tools, including Photoshop and InDesign. Regulators had been concerned that Adobe would take out a potential competitor and had pressed the companies to ensure a deal would divest overlapping operations, such as Adobe’s Illustrator or Photoshop, or Figma’s core product, Figma Design. More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldThe author is vice-chair at Oliver Wyman and former global head of banks and diversified financials research at Morgan StanleyWhat will the longer-term financial consequences of Trump’s tariffs be? We may be in a 90-day pause but the question remains urgent. A look back at Richard Nixon’s experience in 1971 could help investors understand what might happen next.Certainly recent events share some hallmarks with the “Nixon shock”, which occurred when the then president took the dollar off the gold standard, implemented a 10 per cent import tariff and introduced temporary price controls. This de-anchoring of the regime resulted in a period of global economic instability and uncertainty. It not only caused a loss in business confidence but led to stagflation. Nixon’s price and wage controls spectacularly backfired, triggering product shortages and helping to fuel a wage-price spiral. The whole episode was a pivotal contributor to the huge inflation of the ‘70s.As with Trump’s tariffs, Nixon’s were introduced to cudgel countries into changing the terms of trade to help reduce the US trade deficit. His biggest concerns were Japan and Germany. “My philosophy, Mr President, is that all foreigners are out to screw us and it’s our job to screw them first,” Treasury secretary John Connally had said to him.In today’s hyperfinancialised world, we have already seen that bond markets can force the hands of politicians far more quickly. It took four months in 1971 before Nixon’s tariffs were removed via the Smithsonian agreement. But the shock had already done enough to catalyse extraordinary changes in finance, leading to the creation of new instruments to bet on the direction of interest rates and hedge currency risk, including FX futures and options. The pain of stagflation in the banking system prompted a huge change in financial behaviour and financial regulation. Investors shifted asset allocation to gold and real assets to preserve value. Meanwhile corporates and depositors increasingly moved their activities from banks to bond markets. Bank lending as a share of total borrowing in the economy has been falling ever since. In short, modern finance was forged in the early 1970s. There are parallels as well for countries outside the US currently worrying about tariffs. Back in 1971 there was also shoddy treatment for the US’s closest allies. Nixon hit Canada with tariffs despite its currency already floating. Like Prime Minister Mark Carney today, Canadians didn’t back down and eventually the tariffs were removed. It could have been even worse: Connally had also wanted the US to withdraw from a long-standing pact with Canada on cars and auto parts. But Paul Volcker fixed that, according to his memoirs, by cheekily encouraging a State Department official to tear off the last page of every press release which mentioned it. Ultimately, the need to stabilise international relations with allies helped tip the balance away from the tariffs. Henry Kissinger, then the national security adviser, “grew concerned about the unsettling impact of a prolonged confrontation on allied relationships”. Nixon also put huge pressure on the Fed for expansionary monetary policy to offset the shock. William Safire, Nixon’s speechwriter, recounts how the administration kept up a steady stream of anonymous leaks to pressure Fed chair Arthur Burns, including floating one proposal to expand the size of the Federal Reserve, so that Nixon could pack the committee with supportive new members.At the end of it all, Nixon’s four-month tax may have helped facilitate dollar revaluation, but it fell short of the desired goals and had no discernible impact on imports. The move’s economic shockwaves, however, rippled through the decades. Even the creation of the euro stems from it. Might a digital euro or deeper European capital markets be next? It’s not yet clear but history suggests the fallout from this latest shock will be felt for years to come. More