Aurelia Butler

FININVESTBerlusconi, who made his name by building a media empire in the 1980s and as owner of European soccer champions AC Milan, used Fininvest, a family holding company with assets worth 4.9 billion euros ($5.3 billion) at the end of 2021, to manage his interests.Before his death, Silvio owned 61.3% of Fininvest, while Pier Silvio and Marina Berlusconi, his two children from his first marriage, each owned a 7.65% stake.Barbara, Eleonora and Luigi Berlusconi, his other three children, together owned 21.42% of Fininvest.Marina Berlusconi has been chairwoman of Fininvest since 2005.MEDIAFOREUROPEFormerly known as Mediaset (OTC:MDIUY), Italy’s top commercial broadcaster MediaForEurope (MFE) is controlled by Fininvest, which owns a 48% stake. Its chief executive is Pier Silvio Berlusconi.It operates free-to-air TV channels as well as streaming services in Italy and Spain. It also owns movie production and distribution company Medusa and holds a 40% stake in privately-held Italian broadcasting tower group EI Towers.MFE had consolidated revenues of 2.9 billion euros in 2021.It is the single biggest investor in German TV group ProSiebenSat.1Media., with a 29.9% stake.French media giant Vivendi (OTC:VIVHY) holds some 23% of MFE, mostly through a trust dubbed Simon Fiduciaria.MONDADORIFininvest owns 53% of Italy’s leading publisher, Mondadori, which dominates the domestic book market.Marina Berlusconi has been Mondadori’s chairwoman since 2003. She also sits on MFE’s board.BANCA MEDIOLANUMFininvest owns a 30% stake in the 6 billion euro Italian asset manager Banca Mediolanum.AC MONZAAfter selling AC Milan in 2017 in a 740 million euro deal, Fininvest bought smaller soccer club AC Monza the following year. The team won promotion to Italy’s Serie A league in 2022 for the first time and ended their debut season in the middle of the table.($1 = 0.9281 euros) More

“We are heading for a downturn and it varies region to region,” said Benjamin Jones, director of macro research at Invesco. “There’s a lot of debate and my degree of confidence is quite low.”Here’s a look at what some closely-watched market indicators say about global recession risks:1/ KICKING THE CAN DOWN THE ROAD? The World Bank just raised its 2023 outlook as the U.S. and other major economies have proven more resilient than forecast, though it said this year will still mark one of the slowest for growth in the last five decades. Goldman Sachs (NYSE:GS) lowered its odds of a U.S. recession in the next year to 25% from an already below consensus 35%, given easing banking sector stress and the debt ceiling deal which it sees resulting in only small spending cuts. The International Monetary Fund, meanwhile, no longer expects a UK recession this year. A Reuters poll anticipates a modest euro area rebound.But the outlook is souring. The World Bank expects 2024 growth to take a bigger toll than previously expected as higher interest rates and tighter credit bite. Talk of stimulus in China to support the economy is growing. Global economic data is delivering negative surprises at the fastest rate since September, a Citi index shows. 2/ MONEY’S TOO TIGHT (TO MENTION)European Central Bank chief Christine Lagarde says rate hikes are now forcefully feeding into bank lending.Lending growth slowed further in April after banks in the first quarter reporting falling corporate demand for loans hit the highest share since 2008 and lending standards remained at their tightest since the 2011 euro zone debt crisis.U.S. regional bank stocks have recovered ground since the March rout and deposit outflows have eased. But banks were reporting a widespread tightening of lending standards by the end of the first quarter, even before the full impact of the banking crisis was felt. Deutsche Bank (ETR:DBKGn) notes that historically, the Federal Reserve starts to ease policy when the willingness to lend as measured by an index in the closely-watched Senior Loan Officer Opinion Survey nears zero.That measure is now deep in negative territory, not a great sign. 3/ JOB CUTSLabour markets across developed economies remain tight, but jobs cuts are rising. According to global outplacement firm Challenger, Gray & Christmas, job cuts announced by U.S.-based employers rose 20% to 80,089 in May. Britain’s biggest broadband and mobile provider, BT Group (LON:BT), said last month it would cut up to 55,000 jobs by 2030 – potentially over 40% of its workforce. Telecoms giant Vodafone (NASDAQ:VOD) plans to cut 11,000 jobs globally over three years.Invesco’s Jones noted a lot more U.S. companies were talking about layoffs in their first quarter earnings.”The tone of that starts to make me worry,” he said. 4/ WHAT DEFAULTS? Companies are starting to feel the pinch from tighter lending conditions and costlier funding. Deutsche Bank expects an imminent default wave, with a peak in the fourth quarter of 2024. It forecasts peak default rates on U.S. loans will near an all-time high at 11.3%.So far, markets seem little bothered. The risk premium on U.S. and European junk bonds has gone down to early March levels after rising sharply on bank turmoil. Keeping markets supported, say analysts, are investors’ defensive positioning and decent corporate earnings in the first quarter, though this may change soon. 5/ IF NOT NOW, WHEN?Traders no longer expect a Fed rate cut this year, a far cry from the over 50 bps they bet on in March.They still see U.S. rates falling to around 3.9% by September 2024, from 5%-5.25% currently. So the U.S. Treasury yield curve remains deeply inverted, meaning longer-dated borrowing costs are lower than shorter-dated ones — a gold-plated recession signal. “If the curve continues to invert, it may be a sign of the market believing that more aggressive rate hikes than were previously predicted will be followed by earlier and faster rate cuts,” said SEB chief European rates strategist Jussi Hiljanen. More

The future of his business interests will likely depend on how he has chosen to distribute his 61% stake in family holding company Fininvest between his five children from two marriages. His eldest daughter Marina is expected to play a prominent role.THE ELDEST HEIRSThe eldest, Marina (born August 1966) and Pier Silvio (April 1969) have both been directly involved in running Berlusconi’s companies since soon after their father made his entry into Italian politics in the early 1990s.Marina, who chairs Fininvest, has been overseeing publisher Mondadori while Pier Silvio has been in charge of the TV business which has long been the jewel in the family’s crown.THREE YOUNGER CHILDRENBarbara (July 1984), Eleonora (May 1986) and Luigi (September 1988), the children Berlusconi had with his second wife, have not had any such high-profile executive roles in the management of their father’s businesses.Luigi assumed the task of representing his side of the family at Fininvest, where he is a board member, on the back of his focus on finance and wealth management.SILVIO AS “THE GLUE”People close to the family described Silvio Berlusconi as “the glue” who kept his children united, despite their age range and differing attitudes and ambitions.The big question is whether family unity can be maintained after Berlusconi’s departure and what impact that might have on the future of the TV business on which Berlusconi built his fortunes.SLIMMING DOWNIn recent years Fininvest liquidated assets which it deemed no longer strategic, from European soccer champions AC Milan to stakes in biotech firm Molmed and Italian merchant bank Mediobanca (OTC:MDIBY)The family holding company has confirmed its commitment to its TV business MediaforEurope, supporting plans to grow in Europe to resist the U.S. streaming giants through M&A deals.But it remains to be seen if this ambition will be sustained after the death of the founder. More

1. Fed decision aheadThe Federal Reserve is gearing up to unveil its latest interest rate decision this week, with investors widely betting that the U.S. central bank will push pause on a long-running policy tightening cycle.According to Investing.com’s Fed Rate Monitor Tool, there is a more than 79% chance that the rate-setting Federal Open Market Committee will vote to keep borrowing costs steady after its two-day meeting set to start tomorrow.The May labor market report, which has played a central role in the Fed’s decision-making process, pointed to a gradual acceleration in unemployment in the world’s largest economy. The increase could soften the pressure on businesses to bump up wages, further assisting the Fed in its bid to bring inflation back down to its 2% target.But there is still an outside chance that the bank could decide to lift rates yet again, this time by 25 basis points. Much will likely depend on the latest consumer price index due out on Tuesday. Economists predict that the reading will rise by 4.1% on an annual basis last month, cooling from the prior level of 4.9% in April.2. U.S. futures gainStock futures on Wall Street pointed higher on Monday as traders gauged the prospect of a pause in Fed rate hikes and eyed the upcoming release of key U.S. inflation data.At 05:00 ET (09:00 GMT), the Dow futures contract gained 57 points or 0.17%, S&P 500 futures added 14 points or 0.33%, and Nasdaq 100 futures rose by 77 points or 0.53%.The main indices ended the prior session in the green, highlighted by the benchmark S&P 500 edging closer to its highest level since August. The broad-based Dow Jones Industrial Average also inched up by 0.13% and the tech-heavy Nasdaq Composite climbed 0.16%.Dealmaking was subdued on Friday, with daily trading volumes hitting its lowest mark since last October, in a sign that investors were keeping to the sidelines ahead of the Fed’s much-anticipated announcement.3. Goldman Sachs cuts oil price estimateGoldman Sachs has lowered its price estimate for Brent crude to under $90 per barrel by the end of 2023 after two previous reductions to its forecast in the past six months.The move comes after a series of weak data points out of China, the world’s biggest oil importer. Producer prices slumped at their fastest clip in seven years last month, while exports, imports and factory activity also slipped.As a result, worries abound that China’s nascent recovery from harsh COVID-era restrictions that started in the first quarter may be waning. This would be a major development for oil markets, which had been expecting the country’s post-pandemic rebound to fuel a surge in demand this year.Elsewhere on Monday, Iran’s supreme leader said Tehran was open to a deal with the West over its nuclear program. The statement suggested that the market may potentially be flooded with additional supply if sanctions on Iranian crude exports are lifted, weighing on oil prices.By 05:03 ET, U.S crude futures dropped by 2.76% to $68.23 a barrel, while the Brent contract fell by 2.43% to $72.97 per barrel.4. Goldman sees an “L” ahead for China’s property marketAnalysts at Goldman Sachs also published a fresh take on the outlook for the sputtering real estate sector in China, predicting that the industry will likely see a so-called “L-shaped recovery.”This would mean that the property market, which has been hit in recent years by a series of defaults and weak homebuyer demand, is expected to see only a slow rebound.Goldman flagged that such a trend could further stymie activity in the world’s second-largest economy. The property sector accounted for about a quarter of China’s overall gross domestic product as recently as 2021.The investment bank’s note took a toll on big Chinese real estate firms on Monday, with Hong Kong-listed Country Garden Holdings Company Ltd (HK:2007), Poly Property Group Co Ltd (HK:0119), Guangzhou R&F Properties Co Ltd (HK:2777), and Sunac China Holdings Ltd (HK:1918) all posting losses.5. A Swiss banking giant arisesUBS Group AG (SIX:UBSG) announced that it has formally completed its takeover of smaller rival Credit Suisse Group AG (SIX:CSGN), creating a Swiss banking behemoth responsible for overseeing a $1.6 trillion balance sheet.Executives at UBS confirmed the deal in a series of open letters published by media outlets, saying that the tie-up would lead to both opportunities and challenges. But they emphasized that the entity will enjoy a boost in clout, particularly in wealth management, which will help solidify Switzerland’s place as a major hub of the finance industry.The takeover was the product of government-sponsored negotiations in March, when global bank ructions hit Credit Suisse and threatened the stability of the Swiss financial system. UBS has worked quickly to seal the deal, bringing it to a close in less than three months, as it hopes to shore up confidence in Credit Suisse’s clients and employees. More

European carmakers have warned that they stand to lose €4.3bn and cut production by almost 500,000 electric vehicles unless Brussels agrees to delay the imposition of tariffs between the EU and the UK. The European Automobile Manufacturers Association (Acea), an industry group, said China would be the biggest beneficiary if the EU does not agree to a British request to push the changes back from 2024 until 2027.From next January, electric vehicles shipped between the UK and the EU face 10 per cent tariffs unless at least 45 per cent of their parts by value are sourced from within the two regions, under terms set out in the post-Brexit Trade and Cooperation Agreement (TCA). But Acea argues that the industry needs more time to wean itself off batteries that are still imported from China, South Korea or Japan — despite a push to build factories in Europe.“Money is being spent to support electrification and the building of a European supply chain is accelerating. But it needs time. We have all been too optimistic,” Sigrid de Vries, director-general of Acea, told the Financial Times. “We are not asking to change the TCA . . . we just need more time.” She said the group estimated that EU-based companies would pay €4.3bn in tariffs and lose sales between 2024 and 2027, resulting in about 500,000 fewer vehicles being made. “The UK is the number one export market for European carmakers. A quarter of EVs go to the UK,” she said.Maroš Šefčovič, the EU commissioner responsible for UK relations, said in May that the bloc would not budge because it wanted to encourage carmakers to invest in domestic battery-making capacity. But he has asked Acea to submit evidence of the likely damage to the industry. The commission said it had “taken note of Acea’s estimates” but defended the TCA rules as a means to “develop a strong and resilient battery value chain in the EU”, according to a spokesperson. “Any issues regarding the TCA and its operation can be raised by either side in the bodies that were set up by the TCA.”The level would be set at 22 per cent of sales for cars and 10 per cent for vans in 2024, rising sharply to 52 per cent and 46 per cent, respectively, by 2028. De Vries pointed out that the US has also offered vast subsidies to vehicle producers to make batteries and electric models as part of the Biden administration’s $370bn Inflation Reduction Act, making Europe a less attractive option. Investment plans in Europe have also been held back by Russia’s invasion of Ukraine, which increased energy and raw material prices, and in previous years the Covid-19 lockdowns that disrupted supply chains.Without a postponement, China would be the big winner, De Vries said. She said models made there are paying tariffs but can already undercut EU rivals, which have a higher cost of production and less access to the critical raw materials used in batteries. In the UK, Chinese-made vehicles accounted for a third of EV purchases in 2022, 15 times the proportion in 2020.“You are giving China sales by levying these tariffs. Lost market share is very hard to get back,” De Vries said.

Stellantis, which owns brands including Peugeot and Fiat, has already said it could close a UK van factory if the tariffs take effect next year. But the EU sends far more cars to the UK than the other way round, and would therefore pay more.UK government ministers have held talks with EU counterparts and stress privately that a postponement would benefit London and Brussels.Last year, the UK sold 47,000 electric vehicles to the EU, worth €1.2bn.The EU has slightly increased market share since Brexit to about 47 per cent. In 2022, it exported 139,000 electric vehicles to the UK worth €5.1bn — which would amount to €510mn in tariffs once they kick in. But Acea predicts a big increase in exports to the UK as binding targets on manufacturers for zero emission vehicle sales begin in Britain next year. More

Good morning. The EU yesterday offered Tunisia more than €1bn in aid, in an attempt to avert an economic crisis in the country — and a desperate effort to stem the flow of migrants fleeing across the Mediterranean to Italy.Today, we hear from the anti-fraud officials already working to protect the hundreds of billions of reconstruction dollars forecast to flow into Ukraine, and take stock of Europe’s faltering trade relationship with Brazil.The accountantsEven as the war in Ukraine shows no sign of ending, efforts are already taking shape to ensure that reconstruction money is not siphoned off by fraudsters, writes Alice Hancock.Context: A joint study led by the World Bank estimated in March that $411bn will be required for Ukraine’s recovery and reconstruction needs over a decade. By comparison, the Marshall Plan — funding from the US to rebuild Europe after the second world war — amounted to about $150bn in today’s money.“A huge amount of money will be needed to rebuild Ukraine one day. The EU and Ukraine will have to work together to ensure the accountability of that money coming from [EU] citizens,” Ville Itälä, head of Olaf, the EU’s anti-fraud watchdog, told the FT.The EU has committed to setting up a Rebuild Ukraine fund composed of grants and loans but has not attached a figure to it. A reconstruction conference will be held in London this month.Ukraine’s president Volodymyr Zelenskyy has been quick to react to hints of fraud in his government as he continues to plead with western partners for support, while a fraud trial opening in London today pitting Ukraine’s largest bank against its former oligarch owners is seen as a key test of Kyiv’s anti-corruption credentials.Itälä said the difficulty with the reconstruction effort would be in ensuring that money coming from myriad international sources went to worthy projects: “With the Marshall Plan back then it was one donor, now it is many donors.”Olaf’s offices are busy: Andriy Kostin, prosecutor-general of Ukraine, visited at the end of April to discuss monitoring funds, and talks about Ukrainian access to EU funds dedicated to anti-graft efforts are continuing. Officials from the World Bank will be visiting this week, while Ukrainian officials are expected to come to Brussels to train with Olaf on fighting corruption soon.Last week, Ukraine set up a group, to be chaired by its deputy prime minister for science and innovation Mykhailo Fedorov, that will oversee the roll out of anti-graft digital tools across its government.With an eye to its future EU accession, Kyiv has also set in train work on a series of European Commission recommendations to fight fraud, including a state anti-corruption programme and a “de-oligarchisation” law.“Tailored legislation, strong anti-corruption institutions and digitalisation will foster the necessary trust and confidence of foreign governments, institutions and investors in Ukraine’s reconstruction,” said Vsevolod Chentsov, Ukraine’s ambassador to the EU.But Itälä warned that every caution had to be taken: “Where there is big money that needs to be spent quickly, fraudsters try to take advantage.”Chart du jour: Out of timeThe world’s remaining “carbon budget” will be exhausted in less than six years at current emissions levels, scientists have warned.Natural partners?Commission president Ursula von der Leyen lands in Brasília today for a tour of Latin American capitals as business groups warn that other rivals are usurping the EU’s trade relationship with Brazil, writes Ian Johnston.Context: Brussels called Latin America its “natural partner” last week as it kicked off a diplomatic push set to culminate in July with the first EU summit with Latin American and Caribbean states since 2015. In those years of neglect, rivals including China have consolidated their position in the region. Protectionism and fragmentation risk exacerbating the “unfortunate decline of the relevance of the EU-Brazil commercial relationship in favour of other major competitors”, warn Brazil’s national confederation of Industry, CNI, and lobby group Business Europe.Europe was once Brazil’s main trading partner but now lies in third place in terms of imports, behind the US and China. Brazil has also fallen behind India and South Korea in the EU’s ranking of trading partners.Bilateral trade between Brazil and the EU is rising, reaching a record high of nearly €90.5bn last year. But CNI and Business Europe warn that relations are “far below their full potential”.Ratifying the Mercosur trade agreement would bring the relationship “back on track”, the groups say. Negotiators should show “appropriate flexibility to reach a balanced, time-sensitive agreement that delivers for both societies”. But the EU is waiting for the Latin American bloc’s response to requests for stronger environmental commitments. Can von der Leyen’s visit break the deadlock?What to watch today Nato secretary-general Jens Stoltenberg visits US president Joe Biden.EU-UK Forum annual conference in Brussels, featuring European commission vice-president Maroš Šefčovič, from 1040am.Now read theseEntry curbs: The Netherlands plans to vet international students after some universities barred Chinese postgraduates on national security grounds.Ugly game: European football has become a plaything for Gulf monarchies, writes Simon Kuper.‘Red lines’: UBS is to impose nearly two dozen strict new rules on Credit Suisse bankers as it prepares to take over its ailing rival this week. More

The writer is president of Queens’ College, Cambridge, and an adviser to Allianz and GramercyThe US Federal Reserve has three primary options for interest rates when its top policymaking committee meets this week. None of them is optimal, and the one that the Fed has guided the markets to expect could potentially be the least desirable. Furthermore, all three reflect broader challenges that require a significant supply-side improvement in the economy and institutional reforms.Based on guidance from a top Fed official, market expectations are that the central bank will “skip,” maintaining rates unchanged with an inclination to resuming hikes at the following meeting in July (similar to what Australia and Canada ended up doing).This approach is seen as providing officials with more data to evaluate the effects of the most concentrated set of rate hikes in decades. As a result, the implied market probability of a June hike has fluctuated around 20-30 per cent in the last week, having previously peaked above 70 per cent before the latest guidance.There are two issues with this approach. First, an additional month of data is unlikely to significantly enhance the Fed’s understanding of the effects of a policy tool that acts with variable lags. Second, recent data favours a hike for a central bank that has repeatedly insisted that it is “data dependent”.No wonder some other Fed officials favour a hike this week. Their viewpoint points to the series of data surprises, including most recently higher job vacancies and robust monthly employment creation, as well as the lifting of immediate concerns regarding the US debt ceiling and banking instability.But at least one Fed official believes that the May rate hike may have already erred on the side of being excessive as some forward indicators of economic activity have been signalling weakness. In this view, a pause would be followed by a rate cut as the next change.

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Much has been written about why the Fed finds itself in this uncomfortable situation. The most commonly cited reason is that the Fed misjudged the inflation threat for most of 2021 and first quarter of 2022 before being forced into 10 successive rate hikes.As a result, the Fed has experienced a significant erosion of its public standing and policy credibility. There has been a prolonged discrepancy between the Fed’s communication on the path of rates for 2023 and what markets expect. Moreover, a public disagreement has arisen between the Fed chair and the central bank’s staff regarding the likelihood of a recession. The Fed’s reputation has been further undermined by costly slips in bank supervision, lack of a suitable strategic policy framework, weak accountability, and susceptibility to groupthink.Given the multiple causes, the Fed is unlikely to resolve its predicaments any time soon. Moreover, unless the CPI inflation data due out on Tuesday shows significant weakness, its proposed course of action — the “skip” — would end up as the muddled middle option, rendering future decisions even more challenging.If the Fed is genuinely data dependent and truly committed to achieving its current inflation target of 2 per cent, it should raise rates by 0.25 percentage points and leave the door open for additional hikes. Recent data surprises, combined with the balance of risks associated with Fed’s policies, both suggest that this route is preferable to a “skip.”

However, if the Fed believes, as I do, that it is operating with an outdated inflation target due to significant changes on the supply side of the economy — and that the modification of the target requires a lengthy and delicate process — then it should opt for a pause with an inclination to cut when appropriate.This would allow the effects of the previous rate hikes to permeate through the economy, and reduce the likelihood of both undue damage to economic growth and unsettling financial instability.Recall that the Fed’s policy mistakes over the past two years and its institutional weaknesses are not the only factors that have undermined its effectiveness. Changing patterns of globalisation, the restructuring of corporate supply chains, the energy transition, and labour market mismatches all indicate that the Fed is operating with an inflation target that is probably too low for durable economic wellbeing.In this context, the current framing of the policy debate is overly narrow. It is more likely to confuse matters than to stimulate the type of deliberations that can rebuild the foundation for the Fed to contribute to high inclusive growth and financial stability. More