Aurelia Butler

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldDonald Trump has gone awfully quiet about the stock market. In the early stages of his first term in office, it was one of his favourite topics of conversation on social media, and who can blame him? The benchmark S&P 500 index of US stocks climbed by 13 per cent from election day in 2016 to the end of the following February and rounded out the year with a smooth 20 per cent rise. This time around, it is somewhat different. US markets are up by a more sedate 2.5 per cent over the same timeframe, down hard from post-election highs, while markets in Europe have ripped higher and even China is starting to shake off its on-and-off “uninvestable” label.JPMorgan points out that in his first term in office, the president tweeted favourably about the stock market’s performance 156 times. Since 2024, his social media platform of choice has changed, but so has this topics: he has posted about it just once.“During his first mandate, President Trump was continuously posting on positive US economic developments in a large sense, with dozens of tweets about lower unemployment, higher stock market or the creation of a new factory in a specific state for instance,” the bank wrote. “This aspect has disappeared, as most of the current posts regarding the ‘US economy’ are on debt ceiling, government spending/efficiency or tariff benefits.”The second-term president clearly has time to bump up the tally of social media posts, having been in office for a little over a month. But the contrast with the start of the first term is striking. It reflects an increasingly clear pattern, which is that pretty much all the so-called Trump trades have now petered out. The mood in markets has darkened over the past week or so and the all-important narrative has soured. The nebulous market force of vibes, mood and narrative shouldn’t matter — but it does. A few weeks ago, Trump’s beloved import taxes were viewed as inflationary, and even as a marginal source of growth for domestic manufacturing. Now, a new narrative has taken hold — that they are likely to damage the economy and that some of the early inflationary forces were down to US importers front-loading purchases to avoid painful price hikes. Efforts to cut federal spending have been seen as a helpful dose of fiscal rectitude. Now they appear to risk sapping the fuel away from the economy.Short-term US data releases are also not helping the mood. Retail sales recently posted their biggest decline in nearly two years. Consumer confidence has fallen by the largest degree in four years. The rise in optimism among small businesses also appears to have peaked. Blaming all this on cold winter weather will get you only so far. Citi’s economic surprise index shows that US data releases keep on missing Wall Street forecasts, while Europe keeps on beating them. It’s not all bad for the US. “We remain bullish on the economic outlook,” wrote Torsten Slok at Apollo this week. “But we are very carefully watching the incoming data for signs if this is an inflection point for the business cycle.”Some content could not load. Check your internet connection or browser settings.The most popular trades centred around the new president are now clearly in trouble. “You are seeing the unwinding of the Trump trades,” said Jimmy Chang, chief investment officer at the Rockefeller Global Family Office. “The initial reaction after the election was that Trump means America first: higher growth, higher inflation, higher interest rates and a stronger dollar.” All of those convictions are crumbling. For good measure, add bitcoin to the list. It has dropped 26 per cent from its January high. Stocks have fallen by a substantial 4.5 per cent from the highest point of this month — from a high base, granted, but the contrast with a rare bright spot in European markets is stark. Jim Caron at Morgan Stanley Investment Management said he had been making the case for somewhat higher allocations to Europe since the start of this year, though even in Europe he has often been “laughed off” as an “optimistic American”. “What I find about this trade is that a lot of people hate it,” he said — a decent indication that more buyers are yet to arrive.In the US, it is telling that one of the biggest decliners among big listed companies is electric vehicle maker Tesla — the highest-profile commercial venture of billionaire-turned-presidential-adviser Elon Musk. Tesla sales are declining rapidly, especially in Europe. This might be partly due to increased competition but also a consumer backlash against Musk’s aggressive cost-cutting measures for the US government and unnerving political interventions. Its shares have dropped a hefty 40 per cent since mid-December.One Trump trade is still motoring along just fine, however: the rouble. The Russian currency has climbed nearly 30 per cent this year against the dollar, with little sign of a pullback. Make Russia Great Again, I guess.For US markets, to a large extent, investors are pulling off their favourite trick: looking at precisely the same information as before, and coming to a whole new conclusion about it. Sentiment is a fickle thing. But this feels like the week the Trump trades went on life support. The president might find it tough to talk them back up [email protected] More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldValeo and Forvia, two leading French car suppliers have warned they would be unable to absorb the costs of US President Donald Trump’s tariffs, which are set to hit Europe’s struggling automotive supply chain.Trump on Thursday threatened to impose 25 per cent tariffs on EU goods, including on the car sector. The threat comes as the industry waits for a US decision on similar duties on goods from Canada and Mexico. “There are no margins in the car industry and in particular among car suppliers to absorb even a part of these tariffs . . . I don’t know what the carmakers will do,” said Christophe Périllat, Valeo chief executive, on Friday.He added that the costs would be passed on to clients, a point reiterated by Patrick Koller, his counterpart at rival Forvia.Koller said at a results presentation that Forvia faced significant tariff risk for its operations in Mexico. “We’re almost absent in Canada . . . but we’ve got significant flows from Mexico to the US,” he said.The tariffs threaten to hit an industry already weighed down by a slowdown in demand for cars and an expensive transition towards battery-powered vehicles, amid growing competition from Chinese EV start-ups. Shares in Valeo dropped 15 per cent and Forvia fell almost a fifth on early trading on Friday. The businesses reported falling profits on Thursday evening and Friday morning respectively. Both businesses said that they expected largely flat sales in 2025.Shares in German automotive suppliers Continental and Schaeffler, which in recent years have shed thousands of jobs, on Fridays sunk nearly 2 and 3 per cent, respectively.Both business leaders said there were limits to how much they could adapt to tariffs, if Trump follows through on his threat to raise trade barriers with America’s closest neighbours. Despite the warnings from the executives, it is unclear to what extent the companies could negotiate higher prices with the carmakers they supply. They both work with European, Asian and American carmakers.“We can’t adapt in terms of industrial footprint or the footprint of our suppliers in the space of a few days or months; that takes years. In the US, we’ve got a historic base with experienced factories,” said Périllat.“Today, we’re trying to understand because it’s complicated and it changes every day,” he added.Europe’s automotive supply chain has seen increasing levels of job cuts as companies have turned to cost-cutting for survival. Lay-offs by European car suppliers doubled across the continent in 2024, according to figures from the European Association of Automotive Suppliers. Some 11,000 jobs were last year lost in the German sector alone, according to industry group VDA.Margins for traditional automotive suppliers fell an average of between 3 and 5 per cent in the five years to 2022, according to analysis by Lazard and Roland Berger, as companies took on large costs to develop products for electric cars and sales in Europe slowed drastically amid higher living costs. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.India’s economic growth has rebounded after bountiful harvests boosted rural consumption and the government of Prime Minister Narendra Modi ratcheted up spending.Government data on Friday showed India’s GDP grew 6.2 per cent in the quarter to the end of December from the same period a year earlier, offering some relief to Modi, who has recently sought to cushion the squeezed middle-class.Growth was up from the revised 5.6 per cent in the three months to the end of September, but below the 6.3 per cent forecast by a Reuters poll of economists and the central bank’s 6.8 per cent estimate.Even though India’s GDP has been expanding faster than any other major economy, the shine has come off after three previous consecutive quarters of slowing growth due in part to weak corporate investment and waning consumption among urban Indians who form the backbone of the economy.Many economists believe India needs to maintain around 8 per cent GDP growth to hit Modi’s goal of making it a developed nation by 2047 — the centenary of independence. On Friday, the government revised up its growth forecast for the full financial year ending in March by only 0.1 percentage point to 6.5 per cent.“Today’s data reiterated that growth has bottomed out in the September quarter,” said Anubhuti Sahay, head of India economic research at Standard Chartered, adding that the “broader narrative” of a “cyclical slowdown and weak private sector investment remains intact”.Net foreign investment during April to December fell to about $1.2bn, down from $7.8bn over the same period in the previous year, according to central bank data. India’s stock market has also experienced an exodus of overseas funds.Modi’s government is attempting to bolster the economy through tax breaks announced in this year’s budget for middle-class Indians, who have been squeezed by stagnant wages and high inflation. Growth in government spending reached 8.3 per cent, up from 3.8 per cent in the previous quarter. The GDP expansion was also propped up by rural and festival season spending.“There are some short-term factors which are driving growth up,” said Dhiraj Nim, India economist at ANZ Research in Mumbai, adding that policy support would be needed on a “sustained basis” to further shore up the economy.The Reserve Bank of India under new central bank governor Sanjay Malhotra this month lowered headline borrowing costs for the first time in five years to support growth, cutting the benchmark repo rate 0.25 percentage points to 6.25 per cent.The rupee has also come under sustained pressure and Malhotra has cautioned that India faces heightened external risks since US President Donald Trump came to office.Modi’s recent trip to Washington to meet the president was partly seen as an attempt to cement India’s growing ties with the US, but also to prevent punishing reciprocal tariff barriers on exports, including medicine and textiles. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Warehouse leasing was once an unremarkable function of logistics — a boring business defined by efficiency rather than strategy. Not any more. Now it is a new front in the US-China economic skirmish.Chinese ecommerce groups and third-party logistics providers have been aggressively buying up warehouse space across the US since Donald Trump started his second term in the White House. They accounted for a fifth of net new leases in the US through the third quarter of last year, according to Prologis. In New Jersey alone, Chinese logistics groups leased 5.6mn square feet of space last year, triple that of 2023.One driver of this expansion is changing strategies of ecommerce and logistics groups such as Shein, Temu, Alibaba’s Cainiao and JD.com. It is not just that more consumers are using their services — though that is a factor too. It is also that they are trying to get ahead of regulatory shifts that could disrupt their low-cost, high-volume business model. Reliance on Chinese imports now calls for meticulous planning — and a whole lot of warehouses. At the heart of this model is the de minimis loophole, which exempts packages under $800 from duties when they enter the US. Between 2018 and 2021, two-thirds of all de minimis packages came from China, with $149bn worth of them coming from mainland China over that period, according to the US Customs and Border Protection. Last year alone, the value of these shipments reached $64.6bn. But Washington’s stance on de minimis is increasingly hostile. Trump’s early 2025 tariff package, which briefly revoked the exemption before a policy reversal reinstated it, means Chinese ecommerce groups need to hedge their bets. For platforms such as Shein and PDD owned Temu, the US is too critical a market to leave exposed. If shipping directly from China becomes too unpredictable, the best alternative is to stockpile inventory in US warehouses before tariffs go up, ensuring goods already inside the country remain shielded.This shift is a big win for Chinese logistics groups. As ecommerce groups transition to bulk imports, increasing demand for cross-border warehousing and localised fulfilment means higher-margin, recurring revenue for companies such as JD Logistics, Kerry Logistics and Sinotrans, which specialise in supply chain management.If de minimis is restricted or eliminated, Chinese sellers will have to ship more inventory in bulk rather than individual duty-free parcels, meaning higher demand for freight and distribution solutions, boosting freight forwarding revenues for logistics companies.Warehouses are no longer just storage spaces — they are strategic footholds, buffers against political volatility. Each new lease bolsters the position of Chinese logistics groups, providing a hedge against shifting tariffs and trade rules. If imported goods are the new battleground, then warehouses are the [email protected] 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. Today I’ll be covering:Trump and Starmer’s joint press conferenceCitigroup’s $81tn ‘near miss’Sterling’s strong rebound against the dollarAnd how the Tate brothers won US backing for their releaseDonald Trump has suggested Britain could avoid tariffs, during a warm joint press conference yesterday in which the US president said he was working on a trade deal with the UK.Trump said his UK counterpart Sir Keir Starmer was a “very tough negotiator” and was “working very hard” to dissuade him from imposing levies on Britain. Starmer confirmed yesterday that the two countries had decided to “begin work on a new economic deal with advanced technology at its core”.The move came a day after the US president threatened the EU with 25 per cent duties on its exports, and hours after he said he would push on with his planned tariffs against Mexico and Canada. Trump said the UK was a “very different place” from the EU.The allies did, however, fail to agree on US security guarantees for Ukraine. European leaders have urged the US to provide military cover for any peacekeeping mission in the country. But Trump said Americans working on a proposed minerals deal with Kyiv would serve as a sufficient deterrent against possible Russian attacks.Ukrainian President Volodymyr Zelenskyy is set to meet Trump in Washington today.‘Special’ Starmer: Trump, who has heaped scorn and tariffs on allies, adopted a new approach with the UK leader, lavishing praise on “fantastic” Britain.Chagos Islands: The US president signalled he would back the deal over the Indian Ocean territory negotiated between the UK and Mauritius, in a significant win for Starmer.Here’s what else we’re keeping tabs on today and over the weekend:Economic data: Canada reports its fourth-quarter GDP estimate.Ramadan: The Muslim holy month of fasting begins this weekend, with start times varying across the world.Oscars: The Academy Awards will be presented on Sunday evening. Vote for your favourites here.How well did you keep up with the news this week? Take our quiz.Five more top stories1. Markets fell across Asia and Europe this morning, extending a sharp US stock sell-off after Trump’s latest tariff threats added to investor concerns about the US economy’s health. Investors said a lukewarm response to Nvidia’s earnings had left the market vulnerable to bad macroeconomic news.2. Mexico has extradited 29 prisoners to the US, including a drug trafficker wanted since the 1980s, as Mexican President Claudia Sheinbaum tries to convince Trump that she is cracking down on criminal groups in an attempt to ward off tariffs.3. Citigroup credited a client’s account with $81tn when it meant to send only $280, an error that could hinder the bank’s attempt to persuade regulators it has fixed long-standing operational issues. Although the payment was missed by two employees, no funds left Citi, after a third employee detected a problem with the bank’s account balances. 4. OpenAI has launched GPT-4.5, a long-awaited update to the artificial intelligence technology that underpins its popular product ChatGPT. The company said the model experienced far fewer “hallucinations”, in which AI systems generate inaccurate information, than its predecessor. Here’s more on the latest Big Tech AI release. Microsoft: The company’s president Brad Smith has warned the Trump administration that chip export curbs will push allies to use Chinese tech.Grok: Elon Musk’s xAI is pushing its chatbot towards giving users more risqué answers than its risk-averse rivals, in a bid to attract users with adult content.5. Rightwing influencer Andrew Tate and his brother Tristan have landed in the US after Romania lifted a travel ban. The brothers, who are dual UK-US nationals, were being held on charges including human trafficking, sexual exploitation and money laundering. They have denied wrongdoing. Read the full story.News in-Depth© FT montage/Getty Images/DreamstimeIf anyone can take the long view on Donald Trump, it is 96-year-old Li Ka-shing, Hong Kong’s richest man. Li’s conglomerate and subsidiaries run a vast global empire spanning ports, retail, telecoms and infrastructure across the west. That includes operating two ports in the Panama Canal which have drawn concern from the US president, forcing Li to weather criticisms over links to China.We’re also reading . . . Quantum computing: Despite breakthroughs from Amazon and Microsoft, the industry is still a long way from building practical machines, writes Richard Waters.Investing: Some may feel tempted by the many new alternatives to index funds that are starting to dominate the market, writes Philip Coggan. But are they any good?Impoundment: The move used by US presidents to block public spending looks set to become Trump’s weapon in the budget wars, writes Gillian Tett.Chart of the dayThe pound has rebounded strongly against the dollar and the euro in recent weeks, as a reversal of so-called Trump trades hits the US currency and investors bet the UK economy may be faring better than previously thought.Take a break from the news . . . As with many life-long readers, the books that shaped Nilanjana Roy were not always pleasurable — but they were irresistible. Seeking out difficult books — “hard but necessary” tomes that refuse to be easily digested — can leave you fundamentally changed, and illuminate more revealing corners of the self.‘Reading Don Quixote’ by Célestin Nanteuil More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.More than 140 countries struck a deal on a strategy to raise and distribute billions of dollars to protect nature at a UN biodiversity summit that provided a “light of hope” amid rising geopolitical tensions and cuts to climate and science programmes by the US.The agreement about how they would contribute $200bn a year by 2030 that was committed in principle at a meeting in Montreal was met with applause and tears in the final moments of UN COP16 on Thursday at the UN Food and Agriculture Organization headquarters in Rome. It followed the collapse of a previous summit in Cali, Colombia, in November, when countries failed to agree a funding strategy.But a decision on the creation of a dedicated nature fund — one of the central issues of the negotiations — was postponed until 2028.Instead, delegates settled on a framework for financing conservation efforts through to the end of the decade, building on the commitment in Montreal in 2022 to halt biodiversity loss by 2030, including protection of 30 per cent of the planet’s land and seas. The next summit will take place in Armenia.“We have sent a light of hope that still the common good, the environment, the protection of life and the capacity to come together for something bigger than each national interest is possible,” said outgoing Colombian environment minister and COP16 president Susana Muhamad.“I find that remarkable in a year, 2025, when we are seeing so much political change globally, where actually fragmentation — conflict — is increasing,” added Muhamad, who has announced her resignation as Colombia’s environment minister but stayed in the post to oversee COP16. “The results of this meeting show that multilateralism works and is the vehicle to build the partnerships needed to protect biodiversity and move us towards peace with nature” said Astrid Schomaker, executive secretary of the Convention on Biological Diversity. A sticking point remained about which institutions should manage and distribute any funds raised, with developing countries arguing for the creation of a new dedicated biodiversity fund against the pushback from rich nations, in what national representatives and non-profit organisations described as a symbolic tussle over the imbalance of power and resources. Susana Muhamad had announced her resignation as Colombia’s environment minister but stayed in the post to oversee COP16 More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Thames Water customers have expressed shock at higher than expected annual increases to April’s bills as the struggling water group “front-loads” the impact of permitted regulatory increases. The utility, which supplies about a quarter of the UK population, was allowed by water regulator Ofwat to raise bills by 35 per cent by 2030. However, some customers have been flummoxed to receive bills that are 47 per cent higher than a year ago, as demands for payment landed on doormats and in email inboxes this week. Thames Water says the discrepancy arises because Ofwat’s stated increases apply to the total sum billed over the five-year period, and have been front-loaded this year to fund vital infrastructure improvements. Percentage increases should be flatter in the years to 2030, though water companies are permitted to adjust Ofwat’s figures in line with inflation.“It’s beyond scandalous for Thames Water to implement such huge financial increases,” said Ruth Hawkins, who was not prepared for the annual bill for her two-bed flat in Hackney to increase by 47 per cent from £432 to £639 this year. Difficulties fitting water meters in blocks of flats means Thames Water estimates her water consumption using the “assessed household charge”. This year, it has increased estimates of the volumes of water used by unmetered customers on this tariff. In addition, fixed annual standing charges for all water customers have increased to £191.71, making up a bigger proportion of bills for customers in smaller properties. Customers with water meters have also been surprised by the size of increases, although they have the option of cutting their consumption to reduce bills. Michael Martin, a financial adviser, said the annual bill for his home in Wimbledon had increased by 45 per cent this year to £1,186. “Since 2018, the total increase in my water bill is not far off the performance of the S&P 500 index,” he said.Rival bidders are currently circling the UK’s largest water utility as it struggles with a debt mountain of nearly £20bn and attempts to head off the threat of temporary renationalisation. Ofwat’s permitted 35 per cent increase to bills was much lower than the 53 per cent increase Thames Water had asked for. This month, it lodged an appeal with the UK competition regulator, meaning customer bills could yet surge even higher, though a decision is not expected until later this year.“For us to continue to deliver billions of litres of clean water and take wastewater away from millions of homes, it’s vital that we invest in our network and infrastructure over the next five years,” Thames Water said. “We’re already helping around 450,000 customers pay their bills, and by 2030, one in 10 households could be in receipt of support.”Thames offers a 50 per cent discount on bills for customers on low incomes who can prove their bill is more than 5 per cent of their net annual income.It also offers a single occupier tariff for customers without water meters who can prove they live alone, which could reduce annual bills by about 10-20 per cent depending on the number of bedrooms. However, this discount is not extended to single parents. “We would encourage any customer that is concerned about their ability to pay to reach out to us so we can assess the right package of support for their circumstances,” Thames Water added. Almost half of households in England and Wales struggled to pay for their water over the past 12 months, while more than 8 per cent of households — or 2.5mn people — were in payment arrears, according to research published by Ofwat in January.Ofwat said: “It is essential that all companies clearly communicate changes to bills so that customers fully understand how much they are expected to pay, and why this is the case.” More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.India and the EU have agreed to push for a trade agreement this year, European Commission president Ursula von der Leyen has said, renewing efforts to shore up ties in the shadow of tariff threats from US President Donald Trump.The commission chief is leading a delegation of senior officials to New Delhi this week aimed at bolstering the bloc’s relations with India. She added that the EU was “exploring a future security and defence partnership with India” along the lines of pacts with Japan and South Korea, which would cover areas including terrorism, maritime security, cyber security and attacks on critical infrastructure.While years of trade negotiations between the EU and India have failed to produce an agreement, Trump’s return to the US presidency has spurred impetus from Brussels to close trade deals.In a speech on Friday, von der Leyen said an EU-India pact would be “the largest deal of its kind anywhere in the world” and vowed talks would move ahead quickly.“I am very well aware it will not be easy, but I also know that timing and determination counts and that this partnership counts at the right moment,” she said.“This is why we have agreed with Prime Minister [Narendra] Modi to push to get it done during this year, and you can count on my full commitment to make sure we can deliver.”Since November, the bloc has signed a long-awaited agreement with the South American Mercosur bloc, refreshed one with Mexico and reopened moribund negotiations with Malaysia.Trump has attacked India, which has some of the highest import duties of any major economy, as a “tariff king” and has announced plans to impose 25 per cent tariffs on all imports from the EU.Von der Leyen said the potential of an India-EU trade agreement was “immense”.“Europe is already India’s biggest trading partner,” she told reporters. “Last year alone we exchanged €120bn worth of goods and over the past two decades our trade has tripled.”“Now more than ever the geopolitical context asks for decisive action,” she added.India and the EU began trade negotiations in 2007, but the effort foundered in 2013. Talks were dormant for almost a decade before restarting in 2022, but large differences remained on issues including access to the Indian market for European cars and spirits.India has also accused Brussels of over-reach in areas including environmental practices and labour rights.Tanmaya Lal, a senior official with India’s external affairs ministry, told a news briefing on Friday that leaders on both sides had decided the trade agreement had to be “finalised within the year”. “There is a clear direction now, which is always helpful when the negotiators meet,” he said. Modi’s government has been a tough trade negotiator, including with the UK and the European Free Trade Association, the bloc whose members include Switzerland, with which it signed an agreement last year.“The commission will be driving a hard bargain to make sure that we have an ambitious as well as a commercially meaningful free trade agreement that covers tariffs and non-tariff barriers,” said a senior EU official this week. “Of course, we are ready to respond to India’s requests as well.”During a visit by Modi to Washington this month, India and the US agreed to negotiate the first tranche of a “mutually beneficial, multi-sector” bilateral trade agreement by autumn.This came after Trump criticised India’s “unfair, very strong tariffs” and threatened to levy reciprocal measures if New Delhi did not lower theirs.This week, India and the UK also relaunched long-running talks on a trade deal, which began in 2022 but were put on hold last year as the two countries held parliamentary elections. More