Aurelia Butler

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Target has warned that Donald Trump’s tariffs could cut into profits as it grapples with consumer fears over the state of the US economy and anger over its recent pullback from diversity goals.The big-box US retail chain said it expected “meaningful year-over-year profit pressure” in the first quarter that began on February 2, blaming a handful of factors including “tariff uncertainty” and a decline in net sales last month, as it reported fourth-quarter results on Tuesday.Anxieties have been rising across multiple industries as the US president increases duties on goods from China, Canada and Mexico. The largest US retail federation this week raised concerns that Trump’s tariffs and planned immigration curbs could be a drag on the economy.Target, with almost 2,000 stores, is vulnerable to tariffs as more than three-quarters of its sales come from general merchandise such as apparel, electronics and home decor, much of it imported. The company forecast comparable sales growth would be “around flat” in 2025, which would mark a third straight year of stagnant or declining sales. Comparable sales rose 0.1 per cent in 2024, just above Wall Street’s expectations.Fourth-quarter net profit came in at $1.1bn — near the high end of the company’s guidance and beating a Visible Alpha-compiled consensus of $1bn — thanks in part to sales of toys, electronics and apparel. Target last month reported stronger than expected traffic during the holiday season.But some consumers and advocacy groups have more recently called for boycotting Target after the company ended diversity, equity and inclusion initiatives. Surveys of US consumer sentiment also deteriorated in February, in part reflecting worries over the effects of tariffs.Target’s shares have declined 20 per cent in the past year, compared with a 17 per cent rise in the S&P 500 consumer staples index, as inflation-strained consumers spend less on discretionary goods. They fell a further 4.9 per cent on Tuesday.The retail chain has also encountered a tougher challenge from rivals such as Walmart, which is making inroads with the higher-income shoppers who traditionally visit Target.Footfall to Target stores slowed throughout February, outpacing declines at Walmart, according to Placer.ai, which aggregates location data from consumers’ mobile phones. Rick Gomez, Target’s chief commercial officer, said at an investor event on Tuesday that about half of the company’s merchandise is made in the US. China now accounts for about 30 per cent of items Target sells — down from 60 per cent in 2017, he said. Target has shifted more production to countries in the western hemisphere such as Guatemala, he added.“During February, we saw record performance around Valentine’s Day. However, our top-line performance for the month was soft, as uncharacteristically cold weather across the US affected apparel sales, and declining consumer confidence impacted our discretionary assortment overall,” said Jim Lee, Target’s chief financial officer. For the fourth quarter, Target reported a 1.5 per cent rise in comparable sales, matching a forecast that the company updated in January. The increase was driven by online shopping. Sales made inside stores open for at least a year fell 0.5 per cent year on year, while digital sales grew 8.7 per cent.The company’s net sales totalled $30.9bn, 3.1 per cent less than in the fourth quarter of 2023, which was one week longer under the retail industry calendar. Net profit dropped 20 per cent in a decline that was also exaggerated by the extra week.For the full year, Target reported an operating profit margin of 5.2 per cent, down from 5.3 per cent in 2023 and below management’s goal of 6 per cent. The company forecast a “modest increase” in its operating margin this year. More

This article is an on-site version of our FirstFT newsletter. Subscribers can sign up to our Asia, Europe/Africa or Americas edition to get the newsletter delivered every weekday morning. Explore all of our newsletters hereGood morning and welcome back. The US has imposed 25 per cent tariffs on imports from two of its biggest trading partners, Mexico and Canada. We’ll bring you all the reaction and here’s what else we’re covering today: Trump suspends Ukraine military aid Oil prices fall after Opec+ agrees to increase outputChinese EV maker BYD pledges to work with TeslaRecord number of Americans apply for UK citizenshipAnd have quirky meeting room names gone too far?Fears of a full-blown trade war are mounting after Donald Trump made good on his promise to slap 25 per cent tariffs on imports from Canada and Mexico to the US. He also imposed an additional 10 per cent tariff on imports from China.The introduction of the most serious trade measures since Trump returned to the White House drew an instant response from China. Beijing said it would impose a 10 to 15 per cent levy on US agricultural goods, including soyabeans, beef, corn and wheat, from March 10. Canada said it would immediately retaliate with a 25 per cent tariff on $30bn of US imports, and vowed similar action against a further $125bn of US goods 21 days later.Investors reacted with horror, selling risky assets as they priced in the risk of a global economic slowdown. Stocks in Europe and Asia fell, with carmakers, which have complex cross-border supply chains, being particularly hard hit. The falls on European and Asian stock markets follow a late sell-off on Wall Street, triggered by the White House announcement of new trade measures. The S&P 500 and Nasdaq indices had their worst session of the year. But futures contracts suggest a calmer open when trading begins in New York later this morning.Elsewhere, Mexico’s peso and the Canadian dollar were both trading lower against the dollar but against a basket of internationally traded currencies, including the euro, yen and pound, the dollar was lower. The US claims the tariffs were introduced because Mexico and Canada are not doing enough to stop illegal immigration and fentanyl flows across the US border. Here’s more reaction to the brewing trade war.Here’s what else we’re keeping tabs on today:State of the Union: Donald Trump will address a joint session of Congress for the first time since returning to power in January.Results: The impact of tariffs on businesses will be in focus when retailers Target, Best Buy, Ross Stores and Nordstrom report fourth-quarter results. Monetary policy: Federal Reserve Bank of New York president John Williams participates in moderated discussion in New York.Pre-Lent: Various celebrations including Carnival, Fat Tuesday, Mardi Gras, Shrove Tuesday and Pancake Day, are held across the world.On Thursday, join consumer editor Claer Barrett for a webinar on tackling debt to mark International Women’s Day. Register for free.Five more top stories1. The US is to suspend all military aid to Ukraine as Donald Trump seeks to increase pressure on Ukraine’s President Volodymyr Zelenskyy to make concessions and bring the conflict with Russia to a rapid end. The move comes after Friday’s White House confrontation between the two leaders and comments yesterday from the US president that Ukraine needs to be more “appreciative” of his country’s support. 2. Opec+ yesterday said it would proceed with a plan to increase oil production from April, in an unexpected move by the cartel that sent crude prices tumbling. The price of Brent crude, the international benchmark, dropped a further 1 per cent today to a five-month low of $70.60 a barrel. The price has now fallen more than 10 per cent from this year’s high.Saudi Aramco: The world’s largest oil company said this morning that technology from Chinese artificial intelligence company DeepSeek is “really making a big difference” as it reported a drop in annual profits.BP: The UK oil major plans to hire two new directors to help it pivot back to oil and gas after pressure from shareholders. 3. China’s leading electric-vehicle maker BYD has pledged to work with rival Tesla to combat petrol cars, while insisting that Beijing was “more open” to foreign business than the west. Speaking to the Financial Times, BYD executive vice-president Stella Li said: “Our common enemy is the internal combustion engine car.”4. Global government borrowing is expected to reach a record $12.3tn this year, as a rise in defence and other spending by major economies and higher interest rates combine to push up debt levels. The 3 per cent rise in sovereign bond issuance across 138 countries would take the total debt stock to a record $76.9tn, according to estimates by S&P Global Ratings. The higher borrowing comes as debt-servicing costs are rising.5. US-listed advertising group Stagwell is aiming to double the size of its business, in part through an aggressive strategy of mergers and acquisitions that seeks to capitalise on what it believes is upheaval at rival US and UK agencies. Mark Penn, the firm’s founder and chief executive, told the Financial Times he wanted to increase group revenues to as much as $5bn from $2.3bn in 2024. Read the full interview.Today’s big read© FT montage/Bloomberg/ReutersThe west’s waning appetite for international aid raises several questions, most immediately the impact on the world’s poorest and the possible implications for global health and security, including pandemic preparedness. Beyond that, it could weaken western influence in the so-called global south, particularly if China, Russia and others seek to fill the vacuum. What will aid look like in a crumbling world order?We’re also reading . . . Trump’s ‘kicking ass’: The suburban voters who propelled the president to a second term are keeping the faith as he tears up the rule book.Crypto: Lesser-known coins such as XRP and Solana soared on Trump’s plan to create a strategic reserve of digital assets. But what are these tokens, and who’s behind them?Global Insight: For many in Latin America Trump’s political instincts are reminiscent of the region’s strongmen or ‘caudillo’, writes Michael Stott.Mindless ‘machine-minders’: Generative AI is a tempting short-cut that can prevent university students from gaining foundational skills, writes Sarah O’Connor.Chart of the daySome content could not load. Check your internet connection or browser settings.The number of Americans applying for UK citizenship rose to the highest on record last year, driven by a late surge in the final months of 2024. Immigration lawyers said the record numbers of applicants were driven by UK tax changes and Trump’s return to power.Take a break from the news . . . From Death Star to Raccoon Feet, have quirky meeting room names gone too far? The practice can backfire, especially when clients or colleagues are not in on the joke.© FT montage/DreamstimeThank you for reading and remember you can add FirstFT to myFT. 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This article is an on-site version of our Trade Secrets newsletter. Premium subscribers can sign up here to get the newsletter delivered every Monday. Standard subscribers can upgrade to Premium here, or explore all FT newslettersAnother week in which we’re on the brink of the biggest trade war since the 1930s and it’s not even in the top two issues facing the world. The US has switched geopolitical sides and is now backing Russia against western Europe on Ukraine. The dismantling of America’s federal government and the country’s guardrails against autocracy continues apace. And you’re telling us the North American auto industry might grind to a halt? Get in line and wait your turn, dude. In today’s newsletter I’ll look at the threats that have returned against Canada and Mexico, and also reflect on a truly boneheaded bit of policymaking, the UK’s decision to savage its aid budget. The Charted Waters section, which looks at the data behind world trade, is on the recent performance of US stock markets.Get in touch. Email me at [email protected] week it’s Mexico and Canada. We think.In case you’ve lost track, let me sum up. Tomorrow (March 4), the suspension of the 25 per cent tariffs on Canada and Mexico a month ago will expire. On March 12, the 25 per cent global tariffs on steel and aluminium imports are due. In early April, the bogus “reciprocal” tariffs will apparently be unveiled. Also Trump says he’ll put 25 per cent tariffs on EU imports, which may or may not be the “reciprocal” ones. And on Saturday he announced a new investigation into the national security implications of relying on timber (known as “softwood lumber”) from Canada, escalating a long-standing US-Canada trade dispute. Trump has previously said he’s looking at tariffs on softwood lumber of — wait for it — 25 per cent, his go-to number.I appreciate all the attempts to analyse these instruments systematically, but that implies a degree of coherence I don’t think the process has. In Trump’s mind they clearly all blur into each other. Last week, he said the Mexico and Canada import taxes would be imposed in April. White House officials subsequently tried to clarify what he meant, but they didn’t seem to know either. I said the Trump presidency would be very hard on news reporters, and kudos to Reuters and Bloomberg for accurately reporting the chaos rather than logic-washing it.Anyway, the idea subsequently emerged from the fog that the Mexico and Canada tariffs are back on for tomorrow, though possibly at less than the original 25 per cent, together with another 10 per cent on China. But the administration has moved on from pretending the levies are merely aimed at fentanyl and immigration. With respect to fentanyl, Reuters quoted commerce secretary Howard Lutnick last week as saying: “They have to prove to the president that they’ve satisfied him in that regard. If they have, he’ll give them a pause, or he won’t.” All clear? Good.On cue, a new potential condition for holding off the tariffs has miraculously appeared. Treasury secretary Scott Bessent has had another bright idea after his wheeze for gradual tariffs was rejected. He now says Canada and Mexico should build a “Fortress North America” — his actual chosen expression, not a pejorative description — by joining the US in putting import taxes on goods from China. Will this forestall the tariffs tomorrow? “We’ll see.”While there’s no reliable logic in all these real and threatened actions, there’s certainly a consistent pathology. Trump trade policy is a stew of multiple flavours of tariff spiced with illogical and shifting rationales and steeped in a simmering broth of protectionism and resentment. Anyone in the administration can try adding something to the pot, though what actually gets served up on any given day is at the whim of the president.So how to respond? Last month, Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau did a pretty good job of threatening to retaliate and instead agreeing a symbolic deal on fentanyl. But what Bessent (who claims Mexico is already on board) is asking for is much more dangerous — essentially to copy and paste US tariff policy towards China at the whim of Washington.There is alarming precedent for this. Under pressure from the White House, Canada last year matched the Biden administration’s tariffs (it called them “surtaxes”, which fooled no one) on Chinese electric vehicles, steel and aluminium. While the Biden administration worked in a more logical and predictable way than does Trump, the episode shows the damage it did, normalising coercive protectionism and encouraging the likes of Canada to join the US in showing disdain for WTO rules. Trump’s plans are a progression from Biden’s actions rather than a pure aberration. There’s a temptation to give Trump what he wants provided it’s limited to a few products. But why would Sheinbaum or Trudeau think it would end there? Why imagine that any deal with Trump will stick? The fentanyl deal has lasted just a month. Ironically enough, given the opioid connection, going along with Trump is like joining a drugs gang — there’s the risk you have to keep doing crazier stuff to show your loyalty, and then you’re in too deep to leave. It’s a bit harsh expecting Canada and Mexico to provide a practical demonstration of just how damaging Trump’s tariffs will actually be by simply refusing to go along. But if Trump is really prepared to risk the US economy by imposing high and sweeping tariffs, it’s hard to see that the stress test can infinitely be put off.The UK’s shameful retreat on aidIt’s been a very good week indeed for British Prime Minister Sir Keir Starmer. First, he apparently dodged Trump’s wrath over trade. Then he dealt with the fallout from the Trump-Zelenskyy catastrophe, hosting a summit at which Europe, at least rhetorically, showed itself united behind supporting Ukraine.But given Trade Secrets’ interest in aid and development, I can’t let pass his truly awful decision to cut overseas development assistance (ODA) from 0.5 per cent to 0.3 per cent of gross national income (GNI), ostensibly to fund increasing defence expenditure. Rather than systematically look at defence and development in the forthcoming spending review, it just shifts money from one arbitrary input target to another.It was a plan sprung at the last minute on the UK’s development minister, who quit on principle with one of the better resignation letters in UK politics. Less than three weeks earlier, UK foreign secretary David Lammy was chiding the US for cutting aid.The cynical, performative decision to sacrifice aid is a long way from the Tony Blair and Gordon Brown Labour governments, which assembled a coalition including campaigners, the military, celebrities and faith groups to build the case for ODA reaching 0.7 per cent of GNI. Brown, having also attacked Elon Musk for the US aid cuts, was rather more silent last week on his own party’s actions. The UK’s development campaigner community is currently in shock, not having seen this coming at all.So what happened since the last Labour government? Last week, just before the announcement was made, I talked on the FT’s Economics Show podcast with Minouche Shafik, former permanent secretary at the Department for International Development (also ex-IMF, World Bank, Bank of England, you name it). She was exceedingly gloomy that we could ever get back to the situation of 15-20 years ago, and cited the backlash against globalisation, fiscal pressures and a zero-sum view of international relations.That’s no doubt all true, but I can’t help feeling that the obsession with focusing on the volume of aid was unhelpful from the beginning. It meant huge amounts of effort going into meeting after meeting where ministers would make pledges of uncertain credibility. Brown in particular induced increasing cynicism with endless “bold new initiatives” that usually involved repackaging the same money.There wasn’t enough focus at the top of government on what the aid was doing or its quality. When the Conservatives started to cut ODA as a share of GNI, they began by diluting its definition, a process that has steadily worsened. Almost half of British “foreign aid” will now be spent within the UK, on housing and processing refugees.On this I think Shafik is right — we’re not going back to the days when aid had automatic public and political backing and it was just a question of pumping up the volume. Support for ODA will need to be built up again by showing what it can achieve. But it’s hard to imagine that happening under a government that treats the whole issue with such casual contempt.Charted watersIf it’s true that Trump’s policy is driven by movements in the stock market, he’s likely to be pretty concerned by the fall in US share prices in February. The fact that he’s still threatening tariffs despite this suggests the situation’s a bit more complicated than that.Trade linksThe FT reports that foreign exchange markets are increasingly dismissive of Trump’s threats over tariffs, suggesting possibly dramatic movements if he does impose them on a big scale.China’s ecommerce suppliers are rethinking how they do business after Trump temporarily stopped the tariff-free “de minimis” allowance and is threatening to end it permanently.Columbia University’s Petros Mavroidis argues in a paper for the think-tank Bruegel that Trump’s “reciprocal” tariffs aren’t actually reciprocal and are a terrible idea.Matina Stevis-Gridneff of the New York Times reports from the US-Canada border, where immigrants are increasingly coming out of the US rather than into it.Georgetown University’s Jennifer Hillman argues that the International Emergency Economic Powers Act (IEEPA) that Trump is using to impose most of his tariff plans is illegal, since Congress has not delegated the use of such broad powers to the president.The South China Morning Post looks at China’s new diplomatic strategy to bring the EU closer, arguing to European policymakers that the US has abandoned them.Trade Secrets is edited by Harvey NriapiaRecommended newsletters for youChris Giles on Central Banks — Vital news and views on what central banks are thinking, inflation, interest rates and money. 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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Turkish inflation dipped below 40 per cent for the first time in 20 months as higher interest rates curbed consumption, setting the stage for the central bank to continue cutting borrowing costs when it meets this week.  Annual consumer price inflation slowed to 39.1 per cent in February, data from the Turkish Statistical Institute (TÜİK) released on Monday showed, down from 42.12 in January and in line with economists’ forecasts. This was the ninth successive monthly fall and the lowest level since June 2023. A decline in clothing prices and healthcare costs were the main factors in the slower inflation rate, the data showed. Turkey’s benchmark one-week repo rate is 45 per cent, and the central bank is expected to reduce it by 250 basis points when its monetary policy committee meets on Thursday, according to a Bloomberg survey.The bank has already cut the policy rate by 5 percentage points since December, saying that weaker consumer demand and expectations that prices would eventually come down had encouraged policymakers.The bank began sharply raising rates in June 2023 after Recep Tayyip Erdoğan, Turkey’s president, was re-elected and abandoned his policy of ultra-low borrowing costs to spur economic growth. Inflation peaked at 86 per cent in October 2022.But the long-running cost of living crisis is still causing pain in Turkish households, especially those earning the minimum wage, which is a net 22,105 lira ($606) a month.About 60 per cent of workers and pensioners in Turkey earn the minimum wage or within 15 per cent of it, according to Uğur Gürses, an economist and former central banker.“Very high inflation has eroded the disposable income of households [and hit] consumption. It will take more time for people who are still saying ‘our livelihood has not improved,’” Gürses said.  The inflation data follows the release of figures that showed the economy expanded by a faster-than-expected 3.2 per cent in 2024. A rise of 1.7 per cent in GDP in the fourth quarter brought Turkey out of technical recession after contracting in the previous two quarters, according to TÜİK.Mehmet Şimşek, the finance minister who was brought back into Erdoğan’s cabinet following the election, on Friday credited the “predictability” of the government’s policies and falling inflation for the growth uptick, saying investor confidence would continue to boost economic activity.Gürses said the moderate growth and downward inflation trend showed that the central bank’s reach had “strengthened” and that it would “probably” lower rates by 2.5 percentage points this week and again next month. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Eurozone inflation has fallen for the first time in four months to 2.4 per cent, underpinning European Central Bank rate-setters’ hopes that the recent uptick in price pressures is proving temporary. The February figure, down slightly from the 2.5 per cent rise in prices recorded for the year to January, was slightly worse than economists’ expectations of a fall to 2.3 per cent, according to a Reuters poll. However, two measures of underlying inflation also ticked down, which economists said would bolster the ECB’s confidence in lowering borrowing costs. Core inflation, a measure that excludes changes in food and energy prices, was down to 2.6 per cent in February, from 2.7 per cent — a level it has hovered at since September. Services inflation, a core gauge for domestic price pressures, also fell from 3.9 per cent to 3.7 per cent — the lowest level since April 2024. “The ECB will be relieved to see service price inflation finally easing,” said Diego Iscaro, head of European economics at S&P Global Market Intelligence, adding that he expected weak growth to drag down price pressures further over the coming months. Tomasz Wieladek, an economist at T Rowe Price, argued that despite sticky headline inflation, “the details are better than expected” and provide “the green light for further ECB cuts”.The central bank is set to meet later this week, with rate-setters expected to cut the benchmark deposit rate by a quarter-point to 2.5 per cent. The central bank targets inflation of 2 per cent over the medium term. It has cut interest rates five times since June amid expectations of weaker growth. The region is heavily exposed to tariffs on exports to the US, which US President Donald Trump is set to introduce in the coming weeks. While investors still expect two additional rate cuts by the end of the year, some are bracing for a temporary pause in April after hawkish rate-setters warned that the ECB should not “sleepwalk” into too many cuts.Vincent Stamer, economist at Commerzbank, said lower service price inflation should lead to further declines in core prices, adding that the expected ECB rate cuts were “not in danger”. The euro, which had already been strengthening on the day, was up 0.8 per cent at $1.046.Executive board member Isabel Schnabel said last month that inflation risks were increasingly becoming “skewed to the upside”, while borrowing costs had eased a lot. Schnabel told the Financial Times that the central bank should “now” start to debate a “pause or halt” to rate cuts. More

This article is an on-site version of our FirstFT newsletter. Subscribers can sign up to our Asia, Europe/Africa or Americas edition to get the newsletter delivered every weekday morning. Explore all of our newsletters hereGood morning and welcome back to the working week. Thanks to all my colleagues who covered for me last week while I took a break. Here’s what’s on the agenda for today: Ukraine peace talks latest An exclusive Deutsche Bank storyCrypto prices jumpThe triumph of Anora at the OscarsAnd Utah’s new members-only ski resortDifferences have emerged between Britain and France over a peace proposal for Ukraine as the European allies try to salvage a diplomatic process that was left in tatters following Friday’s disastrous meeting between Volodymyr Zelenskyy and the US president and vice-president in the Oval Office.European leaders met in London yesterday to discuss ways to “stop the fighting” in Ukraine and build a “coalition of the willing” to secure a ceasefire. French President Emmanuel Macron told the Le Figaro newspaper that he and British Prime Minister Keir Starmer had proposed an initial truce between Russia and Ukraine “in the air, at sea and on energy infrastructure” that would last one month.But UK officials later said the one-month truce was not “a UK plan” and that there were “various options on the table”. Zelenskyy also rejected calls for Ukraine to agree an immediate ceasefire.The French and British leaders are hoping a deal would involve US cover for European troops deployed to secure any ceasefire in Ukraine. Starmer said after Sunday’s summit that while Europe “must do the heavy lifting”, the “effort must have strong US backing”.The European plan would also see Zelenskyy signing a proposed deal to provide the US with a share of revenues from some of Ukraine’s mineral reserves, giving Washington an economic stake in a peace settlement. Trump had wanted Zelenskyy to sign the agreement in Washington on Friday but it was left unsigned after Trump ejected the Ukrainian president from the White House following their dispute in the Oval Office.Vladimir Putin’s spokesman today said western unity was falling apart after Friday’s extraordinary spat. Dmitry Peskov said the argument showed Ukraine’s leader “doesn’t want peace, he wants the war to continue”, according to Interfax. Here’s more on the diplomacy to rebuild relations between Europe and America.More on the war in Ukraine: Shares in European defence companies jumped at the start of trading today as investors bet governments across the continent would have to raise their military spending. Nord Stream 2: An ex-Stasi officer and close friend of Vladimir Putin has been talking to US investors about restarting a gas pipeline linking Russia and Europe. More on that Oval Office meeting: The relationship between Donald Trump and Volodymyr Zelenskyy has been damaged beyond repair, writes Ben Hall.And here’s what else we’re keeping tabs on today:Tariffs: Postponed US tariffs of 25 per cent on imports from Mexico and Canada are due to take effect from midnight but commerce secretary Howard Lutnick said yesterday the president was still deciding on the level. Markets: The euro and European defence stocks were the biggest gainers as trading got under way in Europe and Asia. US stocks were expected to open flat when trading resumes later on today. Economic data: S&P Global releases February Manufacturing Purchasing Managers’ Index data for Canada and the US. The Bank of Mexico releases the results of its poll of private sector analysts’ predictions for growth, inflation and exchange and interest rates. Monetary policy: Federal Reserve Bank of St Louis president Alberto Musalem speaks on the US economy and monetary policy at an event in Washington.Jes Staley: The former Barclays chief executive will begin to try and clear his name and overturn a lifetime ban at a trial starting in London. The FT has been given a copy of Staley’s opening statement. Five more top stories1. Exclusive: Deutsche Bank clashed with the European Central Bank throughout 2024 over concerns the German lender may be underestimating how many loans would sour, people familiar with the matter told the Financial Times. The ECB flagged concerns over Deutsche’s credit risk management and its risk models on multiple occasions last year. Olaf Storbeck and Florian Müller in Frankfurt have more details.2. Eurozone inflation has fallen for the first time in four months to 2.4 per cent. The February inflation number, which is down from 2.5 per cent in the year to January, will underpin European Central Bank rate-setters’ hopes that the recent uptick in price pressures is proving temporary. This is a developing story.3. Anora, an independent film about a brief, ill-fated romance between a sex worker and the son of a Russian oligarch, took home the Best Picture prize along with four others at the 97th Academy Awards last night. Mikey Madison beat favourite Demi Moore to the Best Actress award for her role in the low-budget movie about the sex worker community. Christopher Grimes in LA has more.4. Cryptocurrency prices jumped yesterday after Donald Trump named the tokens that would be included in a US strategic reserve, providing a jolt to an industry that has cosied up to the White House. Crypto traders believe something akin to Fort Knox for gold would offer legitimacy to the asset class. Here’s more on the tokens on Trump’s list.5. Mark Walter, the billionaire chief executive of Guggenheim Partners, and Thomas Tull, the former owner of Legendary Entertainment, have formed a $40bn holding company to make large bets on artificial intelligence. Here’s more on the billionaires’ new venture.Today’s Big Read The Chevrolet Silverado has been one of America’s most popular pick-up trucks since it was launched almost three decades ago. But the General Motors model, which costs roughly $40,000-$70,000, relies on one of the most complex, international and interconnected automotive supply chains, meaning the iconic vehicle could now become one of the biggest victims of Donald Trump’s trade war.We’re also reading . . . US Congress: America’s first branch of government should be acting as a check on Trump’s power grab, writes our editorial board. Instead, it has been missing in action.Premier League: Richard Masters, chief executive of the world’s most-watched football league, speaks to the FT on keeping the peace between its 20 ultra-competitive clubs.Nuclear energy: Countries want to squeeze more electricity from ageing power plants to help meet global demand, but the strategy has its own challenges.Management: Elon Musk isn’t the first boss to ask staff to list top five things at work, writes Pilita Clark, just the worst.Chart of the daySome content could not load. Check your internet connection or browser settings.Wall Street has raced ahead of international rivals over the past decade and a half. But a recent pullback in tech shares has underlined the growing nervousness around soaring valuations in a market that has swallowed an ever larger share of global investors’ allocations. Stephanie Stacey and Mari Novik look back at the rise of the US stock market and assess the concentration risks worrying investors. Take a break from the news . . . Reed Hastings, the billionaire founder of Netflix, has created a members-only ski resort on Utah’s Powder Mountain. He is walking a gentrification tightrope — and a ski industry in flux is watching every step.Some of the homes at Powder Haven, the resort’s private enclave More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.There are some things in global finance which you really shouldn’t look at too closely if you value your sanity. Repo and money markets would definitely be one. But even the banking system’s funding arrangements are benign compared to the Lovecraftian horror of their IT outsourcing, because there’s no central bank to guarantee a happy ending. As one senior bank supervisor put it a few years ago, there is no such thing as a database provider of last resort.In other words, Hell is empty, and all the demons are in the ECB Outsourcing Register. The annual “horizontal review” from the ECB’s Banking Supervision committee was published last week. Do you want to know what proportion of “critical functions” are not compliant with basic regulatory guidelines? It’s just under 10 per cent. The average number of “critical” service providers per large bank? Fifty-eight per cent. What’s the average number of subcontractors on the average banking industry outsourcing contract? Four and a bit. What proportion of critical outsourcing providers would be “easy” to replace in the event of a problem? Just 17.7 per cent, although the good news is that the proportion which would be “impossible” to replace is now 8.6 per cent — the remainder are apparently “difficult”.© ECBWhatever the opposite of “setting your mind at rest” might be, that’s what it does to consider the extent to which the European banking system (and it’s unlikely that the US or UK are any better) relies on a complicated web of supply chains for software-as-a-service, offsite data centres and other euphemisms for “other people’s computers”. It’s all driven by the growth of cloud computing, of course — cloud now makes up more than a fifth of the total, having grown 13.5 per cent in the last year (and the ECB’s report is based mainly on data as of the end of 2023, so it is likely to be even more important now).© ECBThe growing role of cloud contracts has meant that European banks are, more than ever, dependent not only on a small number of outsourcing providers (30 firms account for half the total spend), but on non-EU firms. Within these top-30 firms, slightly more than 50 per cent of contracts are with companies whose ultimate parent is a US corporation.© ECBWhich raises a bit of an issue for Europe, as it starts to worry about strategic independence in a world of heightened geopolitical tension. As Henry Farrell and Abe Newman pointed out in their book Underground Empire, the US controls a number of systems of “weaponised interdependence”, of which two of the most important are the global dollar banking system and the internet. However, it seems that the interaction of finance and distributed computing might have created a third; the Euro area banking system (including the payment rails over which any future central bank digital currency will have to run) is highly dependent on server farms which might be physically located in Europe, but whose owners might ultimately answer to a foreign power.If you’re looking for a crumb of comfort, it might be that the regulatory definition of a “critical function” in this context is quite expansive; it doesn’t necessarily mean that an executive order could switch off the whole European financial system. But the trouble with the system as it’s currently set up is that it’s practically impossible to say anything about the true level of risk with any degree of confidence.(* Editorial note to pedants: the FT style guide says data is singular.) More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Singapore has charged three men in a case suspected to involve Nvidia semiconductor sales that potentially breach US export controls, the government announced on Monday.The two Singaporeans and one Chinese national were charged last Thursday with fraud, after the government received a tip-off that servers containing the chips were being exported to Malaysia.“We assess that the servers may contain Nvidia chips,” home affairs minister K Shanmugam told a press briefing. “We will not tolerate individuals and companies violating our laws or taking advantage of their association with Singapore to circumvent export controls of other countries,” he added.Singapore’s role in the global supply chain of semiconductors has come under scrutiny in recent weeks, with US politicians raising questions about the potential leakage of restricted chips into China.Nvidia generated nearly a quarter of its sales through its Singapore office in the third quarter of 2024, making it the second-largest market after the US. But the company has said that almost all of this is invoicing other international companies through Singapore, with very few chips actually passing through the city-state.The fraud case relates to the sale of Dell and Supermicro servers imported from the US and then sold to a company in Malaysia.“The question is whether Malaysia was a final destination or from Malaysia it went to somewhere else, which we do not know for certain at this point,” said Shanmugam, adding that the Singaporean government had asked the US and Malaysia for assistance in its investigation.The three men were among nine people arrested last Wednesday as part of raids on 22 locations across Singapore, in which documents and electronic records were also seized. If convicted, they face up to 20 years in prison.Two of the individuals — Alan Wei Zhaolun, 48, and Aaron Woon Guo Jie, 40 — work at a company called Aperia Cloud Services as chief executive and chief operating officer, respectively.A 51-year-old Chinese national named Li Miang is accused of fraudulently claiming the end user of the items for which he was buying was a company called Luxuriate Your Life, a Singaporean computer equipment sales company.Their case has been adjourned until Friday. Neither Aperia nor Luxuriate Your Life responded to requests for comment about the case.On its website, Aperia said that “as Nvidia’s first qualified Nvidia Cloud Partner in south-east Asia”, it is “uniquely positioned with priority access to the highest performing [graphics processing units] available in the market”.The US government has been tightening restrictions in recent months on advanced semiconductors from American companies being exported to China.Separately, the EU last week imposed sanctions on a Singaporean chip distributor as part of its crackdown on companies helping Russia advance its defence and security sector.Splendent Technologies was one of 43 companies added to the EU’s list of entities under sanctions on the third anniversary of Russia’s invasion of Ukraine.The company did not respond to a request for comment, but added a message to its website saying that trading with Russia had been suspended.It is the second Singaporean company to be put under sanctions by the EU in relation to the Ukraine war, following the inclusion of a manufacturer of night-vision goggles in 2023. More