Aurelia Butler

The Financial Stability Board (FSB), which comprises central banks, financial regulators and treasury officials from the Group of 20 (G20) major economies, set out the recommendations following a public consultation.”The interconnectedness of the global financial system makes it possible that a cyber incident at one financial institution (or an incident at one of its third-party service providers) could have spill-over effects across borders and sectors,” the FSB said in a statement.”Over the last decade, however, meaningful differences have and continue to emerge in the requirements and practices associated with cyber incident reporting.”The recommendations seek to remove barriers to greater harmonisation of incident reporting, and include an enhanced “cyber lexicon” to provide a wider range of common terms to increase convergence in reporting. More

In its Economic and Financial Document (DEF) published on Thursday, the Treasury confirmed its budget deficit targets at 4.5% of national output this year and 3.7% in 2024.But Italy’s fiscal gap is on course for a slightly lower 4.4% in 2023 and 3.5% next year under current trends, which allows a budget leeway worth 3.4 billion euros this year and 4.5 billion in 2024.”These resources will be used to support the purchasing power of employees in 2023, and will be allocated in 2024 to fund additional measures aimed at reducing the tax burden,” the DEF said.After declining to the projected 3.7% of GDP next year, the deficit is seen returning to the European Union’s 3% ceiling in 2025 and falling to 2.5% the following year.Italy’s public debt, proportionally the highest in the euro zone after Greece’s, is targeted in the DEF at 142.1% of GDP this year, but is set to decline to 141.4% in 2024, to 140.9% in 2025 and to 140.4% in 2026.($1 = 0.9075 euros) More

Germany is pushing Intel to expand its plans for a landmark €17bn chip plant in exchange for higher subsidies, in what is already set to be the country’s largest foreign direct investment since the second world war.The US semiconductor group is due to receive €6.8bn in subsidies from Berlin to build its mega fab, or manufacturing plant, in the eastern city of Magdeburg. People close to the company said Intel wanted subsidies to rise to at least €10bn, citing higher energy and construction costs. German officials said they could increase the financial support, but only on condition the group invested more. “It is logical that if the scale of the investment is increased, then the level of subsidy will also rise,” said Sven Schulze, economy minister of the eastern state of Saxony-Anhalt, of which Magdeburg is the capital.“We need Intel to meet us halfway,” said one German official.However, any requirement for Intel to invest more could add to financial pressure on the company at a critical time. It recently indicated that it would moderate capital spending this year after an unexpected slump in sales forced it to slash its dividend to save cash.The talks between Intel and the German government come at a time when the Biden administration is showering chipmakers with hundreds of billions of dollars in subsidies to increase manufacturing in the US. That has piled pressure on the EU to match such efforts or risk seeing investment drift away to America.German officials say subsidies for Intel’s project are being provided under the auspices of the European Chips Act, which aims to mobilise more than €43bn in public and private investments for the bloc’s chip industry, but which is still being negotiated. Confirmation will still be needed from Brussels that the financial support on offer complies with EU state aid rules. Intel announced in March last year that it would build its Magdeburg mega fab using the most advanced chip manufacturing technology.The plant is part of the company’s efforts to claw its way back to the forefront of the chip industry after falling badly behind Asian rivals such as Taiwan Semiconductor Manufacturing Company. It was designed to be the centrepiece of a decade-long investment plan that could eventually total €80bn, subject to demand and the availability of future subsidies.The venture is pivotal to EU ambitions to double its share of the global semiconductor market from less than 10 per cent today to 20 per cent by 2030. It is also central to German chancellor Olaf Scholz’s strategy of reducing his country’s dependence on Asian suppliers for advanced chips needed in everything from smartphones to electric vehicles.Since Intel announced it was building the mega fab, energy costs in Germany have soared, a consequence of Russia’s decision to cut gas exports to Europe in the wake of its invasion of Ukraine. High inflation has also had an impact on construction costs, prompting Intel to request more subsidies.The German government said talks were under way on how to resolve the wrangle over financial support for the factory. Intel declined to comment.The company said it shared the German government’s objective of “build[ing] a more globally resilient supply chain by strengthening Europe’s semiconductor manufacturing capabilities”. Intel added that since announcing plans for the Magdeburg fab, “disruptions in the global economy have resulted in increased costs, from construction materials to energy”. The company said it remained committed to the project and had signed a purchase agreement last November to buy land for the site. The German economy ministry declined to say whether Berlin was demanding a higher level of investment, saying only that talks were under way inside the government on “closing the planned project’s cost gap, which has increased significantly in the past few months”. More

Whether or not Emmanuel Macron was right in principle to assert European strategic independence from the US during his trip last week to China, the suspicion the French president aroused in the EU has quite possibly left it further away than ever.Macron’s emphasis on keeping a distance from both Washington and Beijing in pursuit of the elusive “strategic autonomy” for the EU is hardly an innovation among European policymakers. European Commission president Ursula von der Leyen, who accompanied Macron on his trip, has said similar things, though overlaid with a much more China-sceptic tone. But enthusiasts for a geopolitical Europe need to acknowledge that a shortage of unity and trust inside the EU, rather than sinister manipulation by Washington and Beijing, is the main obstacle.We have already seen this play out in trade policy, one area where the EU has long had the power to act collectively. In the same way that there is nothing to stop European governments increasing military spending and playing a bigger geopolitical role, the EU could certainly increase its ability to use trade to project strategic influence. But while France has been keen to create new tools for intervention in trade and investment, other member states are aware that Paris’s views and interests are not necessarily those of the bloc as a whole.In recent years the European Commission has painstakingly designed a set of trade tools to assert the bloc’s geoeconomic heft. The most politically salient is the anti-coercion instrument (ACI), which will allow the EU to use a wide range of trade and investment measures to retaliate against bullying from trading partners. France has strongly supported all this activity, and has also advocated new centralised funds for the EU to pursue industrial policy.But the Commission will struggle to use this set of tools if there is opposition from other member states mindful of their export interests or mistrusting of the use of trade instruments to run a centralised strategic policy. Just days before Macron’s trip, the Commission gave in to pressure from some of the EU’s governments, including Germany, and handed member states a big role in determining the use of the ACI.Even with the China-sceptic Greens in Germany’s current governing coalition, Berlin instinctively shies away from confrontation that might damage German exports and investments abroad. There were also more principled objections from liberal member states including Sweden and the Czech Republic, suspicious of attempts to politicise trade policy and the potential for it to be overly influenced by particular governments.Macron himself has inadvertently helped fuel these concerns. In particular he alarmed some other EU governments a couple of years ago with an apparent volte-face over a flagship investment deal with China, leaving a legacy of wariness.The signing of the Comprehensive Agreement on Investment (CAI), for which negotiations had begun in 2014, was driven through by then German chancellor Angela Merkel’s administration literally in the last hours of 2020 as Germany’s six-month presidency of the European Council of member states came to an end. Having until just days beforehand (correctly) said that CAI did little to enforce labour rights in China — the promotion of European values supposedly being one of the deal’s motivating forces — France rapidly became an enthusiastic public advocate in the days before its signature. In an unusual protocol-busting move, Macron joined the videoconference where the deal was finalised along with Merkel, von der Leyen, European Council president Charles Michel and Chinese president Xi Jinping.Several other EU governments rapidly indicated they very much did not share France’s sudden confidence over human rights in the deal, and were alarmed by the threat it posed to diplomatic relations with the incoming Biden administration. Italy explicitly criticised Macron’s self-promotion in the videoconference.In the event, the ratification of CAI stalled in the European parliament over precisely these issues, together with some destructive diplomacy from Beijing whereby it put sanctions on a range of European policymakers. The episode left EU trade policy towards China drifting and leaking credibility, and lasting suspicion among other member states about the Franco-German attempt to drive through CAI and the possible commercial motives involved. Von der Leyen herself admitted recently the deal cannot be passed at the moment in its current form. If other EU strategic or geopolitical initiatives are not to suffer the fate of CAI, those leading them need to do more groundwork on building European unity. Macron’s intervention last week seems to have had the opposite effect. Trying to bounce a union containing disparate opinions into adopting a single approach to a defining global issue is not likely to get lasting [email protected] More

US equity markets are expected to recoup some of their losses when trading begins in New York after minutes from the Federal Reserve’s last monetary policy meeting spooked investors.The minutes from the March 21-22 meeting revealed policymakers for the first time predicted a “mild” recession in the US, starting later this year. They also showed that several members of the Federal Open Market Committee considered freezing interest rates following the turmoil in the banking sector in the run-up to the meeting. Those policymakers that argued for a pause in rate rises wanted time to assess the impact of the bank collapses on credit conditions in the US economy, the minutes revealed. Ultimately, though the FOMC decided to press ahead with a quarter-point rise to a new target range of 4.75 per cent to 5 per cent, but the minutes helped send the benchmark S&P 500 down 0.4 per cent by yesterday’s close while the tech-heavy Nasdaq Composite dropped 0.9 per cent. Futures trading today indicates a small rise when trading resumes later.In addition to yesterday’s Fed minutes, inflation data illustrated the central bank’s aggressive tightening of monetary policy was bringing inflation down towards its 2 per cent target. The consumer price index rose 5 per cent last month, according to the Bureau of Labor Statistics, compared with 6 per cent in February. But core inflation, a closely watched measure that strips out volatile food and energy costs, rose 5.6 per cent year on year in March suggesting prices remained elevated in parts of the economy. Today, we get the release of the US producer price index, which tracks prices businesses receive for their goods. It is also expected to have slowed last month compared with the previous month. Here’s what else I’ll be looking out for today:Economic data: New applications for unemployment aid are forecast to have increased as the growth in the labour market slows. Earnings: Delta Air Lines is forecast to report revenues in its first quarter increased 28 per cent to about $12bn, according to Refinitiv estimates.Dominion vs Fox: Jury selection begins for voting-machine maker Dominion’s $1.6bn defamation lawsuit against Fox News.Five more top stories

SoftBank founder Masayoshi Son, left, and Alibaba founder Jack Ma © FT montage/AFP via Getty Images

1. Alibaba shares dropped more than 5 per cent earlier today in Hong Kong after the Financial Times revealed SoftBank had sold more than $7bn worth of shares in the Chinese company this year through prepaid forward contracts. Read more on the FT’s analysis of regulatory filings. 2. JPMorgan Chase is asking its managing directors to be in the office five days a week and warned other employees not to fall short of their “in-office attendance expectations”. The move underscores how Wall Street is working to pull staff back to the office having tolerated more flexible working following the Covid-19 pandemic.Related: JPMorgan was aware by 2006 that Jeffrey Epstein had been accused of paying cash to have “underage girls and young women” brought to his home, legal filings in New York yesterday alleged.3. Chinese exports surged last month, fuelled by sales of electric vehicles and their components, despite weak global growth. Customs data showed dollar-denominated exports expanded 14.8 per cent in March compared with the same period a year earlier after falling 6.8 per cent in January and February. 4. Marex is considering a New York listing as it looks to revive plans for an initial public offering, in the latest blow to the London stock market. The commodity broker cancelled a UK listing in 2021 with a targeted valuation of between $650mn and $800mn.5. Royal Bank of Canada was the fossil fuel industry’s top financier last year, replacing JPMorgan after extending $42.1bn in funding. Here’s why Canadian banks have become the industry’s “lender of last resort”.Atomic energy: With Germany’s last nuclear power plants set to close on Saturday, the country is torn over how to balance its energy crunch with climate obligations.Related: G7 climate ministers have challenged Japan’s plans for promoting ammonia as a low-carbon energy source, which critics say is unproven.The Big Read

© FT montage/Bloomberg

Unlike with the bankruptcies of companies and individuals, there is no law governing insolvent countries — only a chaotic, ad hoc process that involves a hodgepodge of contractual clauses and tacit conventions, tortuous negotiations and navigating geopolitical expediency. This fragile patchwork could unravel completely owing to the emergence of a new, disruptive, opaque and powerful force in sovereign debt: China.We’re also reading . . . EY power vacuum risk: After the failure of Project Everest, the future of global chief Carmine Di Sibio and other senior executives hangs in the balance.2008 redux?: Fears of high interest rates leading to defaults on commercial property loans and solvency issues are greatly exaggerated, writes Megan Greene.Macron on Taiwan: The French president’s remarks that Europe should distance itself from tensions over the island have created an impression of disarray over the EU’s China policy.Chart of the dayInvestors are shying away from the riskiest US corporate debt as fears of an impending recession fuel a growing divide between the highest- and lowest-rated companies in the $1.4tn high-yield bond market.Take a break from the news

Shifting sheep off the Forgotten World Line © Jamie Lafferty

New Zealand’s Stratford-Okahukura railway was abandoned by regular train services long ago. Now known as the Forgotten World Line, you can drive your own “rail cart” (which is really a golf buggy converted to run on rails) across 82km of a rugged landscape and remote hamlets . . . and past an unforgettable pub.Additional contributions by Tee Zhuo and Emily Goldberg More

The EU has led diplomatic efforts to mitigate the impact of climate change. Its officials are aware that the switch to clean energy is probably the biggest challenge we face — and that if we fail to invest sufficient resources in the technology needed to enable it, the long-term impact on our planet would be catastrophic.Despite the jawboning, when it comes to capturing investment in green tech, Brussels may soon fall behind the US, a country that in 2020 formally withdrew from the Paris Agreement. So why is that?The EU’s Net Zero Industry Act — its response to President Joe Biden’s Inflation Reduction Act, the $369bn package of subsidies and tax credits that’s set to fuel the US’s clean energy boom — has been attacked by both businesses and commentators, who have accused Brussels of a lack of vision, clarity and cash. The EU, however, is not quite as far behind in the race as recent headlines might suggest. The region spent $180bn on energy transition in 2022, more than the $141bn invested by the US (though far less than the $546bn spent by China, which remains the world’s largest carbon emitter). But that lead over Washington looks set to shrink with companies now ditching the EU for the US, a trend the Net Zero Industry Act is unlikely to reverse. The bloc also faces competition from the Middle East, where states flush with petrodollars, such as Saudi Arabia, are unveiling giga-projects geared towards hitting ambitious targets for clean energy. So why does Brussels, with all its will, lack the wherewithal to back up its rhetoric with action? Here are three suggestions: triage, time horizons and trillions. Triage occurs when hospital staff, faced with an acute crisis and scarce resources, are forced to prioritise patients for treatment.When the pandemic struck and the world shut down, European capitals showed that they could cope in such emergencies. They did a tremendous job of pooling resources and quickly unveiling radical measures to mitigate the impact of the virus not only on the sick, but on jobs and businesses. The response was as impressive when the region was faced with an energy crisis triggered by Russia’s full-scale invasion of Ukraine. The bloc did not, as many had feared, freeze when Moscow turned off the gas pipes. Indeed, it has so far managed to avoid even a mild recession. While the clock is ticking on dealing with climate change too, the challenge it presents is altogether more chronic. Greening the power supply is a process that may well end up depending on technological developments that at present are in their infancy. Coming up with the right incentives will involve constant adaptation to innovation. More importantly, it will also require a determination to deliver despite policymakers having to deal with a seemingly ever-increasing number of what in the past might have been described as black swan events. The Net Zero Industry Act suggests the EU at present lacks the long-term focus the issue demands.Spurring investment in green technology is, therefore, a decades-long endeavour, lasting beyond the time horizon of short-term election cycles.In the abstract, policies to fight climate change should not present a problem for lawmakers: polls say the European public is far more concerned about global warming than citizens in the US. When it comes to the specifics, however, actions to green the economy have often led to discord. The challenge presented by electoral cycles is not confined to the EU. For all the praise (and investment) that the Inflation Reduction Act has garnered, there ought to be concerns over whether those subsidies and credits would survive a return to office by the Republicans in 2024. Then there’s cash. Europe is a prosperous region. Under its recovery fund initiative, the EU planned to issue a total of €250bn worth of common debt to green the economy. But greening energy will require trillions, and it’s difficult to see how Brussels can plug the gap. Unlike Beijing, it does not hold sway over who its lenders lend to. It cannot resort to direct support from the region’s money-printer-in-chief, with European law expressly forbidding monetary financing of fiscal authorities by the European Central Bank. Nor can it give tax breaks like the US — national governments are in charge of that.To boot, those governments with the desire and the fiscal space to offer tax breaks are constrained from doing so by Brussels’ rules on state aid, which block any support that gives companies in one member state a competitive advantage. While the EU has tried to loosen these state aid constraints through the Net Zero Industry Act, the fixes are considered too piecemeal to match the subsidies and tax credits on offer in the US. So far, too much of the EU’s response to climate change has consisted of spewing out so much regulation that corporations are overwhelmed. It would be better off learning from its successes in standing up to Russia and surviving Covid-19 and being more focused, nimble and ambitious — saying more with less, even if that means tearing up the rule book.Other readablesChina’s status as the world’s largest bilateral creditor has changed the game for countries in default. The Economist chronicles a new era of petrodollar power. Gillian Tett on economists’ embrace of everyday English. Numbers newsUS energy secretary Jennifer Granholm has said Washington could begin buying oil to replenish its emergency stockpile, just weeks after Opec+ announced production cuts. Her remarks led to a rise in the price of West Texas Intermediate. More

Investing.com — The Federal Reserve has put the idea of a recession back on the agenda, and investors will study producer prices and jobless claims for further clues on the health of the U.S. economy. Elsewhere, shares of Chinese e-commerce giant Alibaba slumped on a report Softbank is set to dump the majority of its stake.1. Recession on the agendaSigns that U.S. inflation is cooling provided investors with a boost on Wednesday, but a lot of that goodwill evaporated after the minutes from the last Federal Reserve meeting showed that policymakers now expect a “mild recession” this year.The Fed officials expressed concern about the health of the country’s regional banks, suggesting that the next moves could depend on credit conditions.However, it’s important to remember that the Fed’s last meeting was held when the banking crisis largely triggered by the collapse of Silicon Valley Bank was in full flow, and conditions are less stressed now.The big U.S. bank earnings reports, starting Friday, will be studied even more carefully than before, but ahead of this comes more inflation data in the form of producer prices, which are expected to moderate from the same time last year, and unemployment claims, which are expected to inch higher than the prior week.2. Alibaba slumps on report of Softbank stake saleAlibaba’s (HK:9988) (NYSE:BABA) shares fell sharply in Asia earlier Thursday after a report in the Financial Times indicated that SoftBank (TYO:9984) (OTC:SFTBY) plans to ditch almost its entire holding in the Chinese e-commerce giant.The Japanese investment house has struggled with a severe downturn in its technology holdings over the past year, and has previously used its stake in Alibaba to generate cash. It has already generated just over $7 billion from Alibaba stock sales this year, after a record $29B selldown in 2022. This new move would leave Softbank with a holding in Alibaba of less than 4%, having at one point controlled as much as 34%.Alibaba’s announcement last month of plans to split the massive conglomerate into six units had been received well, boosting its share price after the prolonged weakness caused by around two years of intense regulatory scrutiny from the Chinese government.3. Futures edge higher; Delta set to report earningsU.S. futures traded marginally higher Thursday, as investors digested cooling consumer prices as well as the possibility of a recession later in the year.At 05:00 ET (09:00 GMT), the Dow futures contract had gained 20 points or 0.1%, S&P 500 futures inched up 4 points or 0.1%, and Nasdaq 100 futures added 12 points or 0.1%.Investors have more inflation data to study Thursday in the form of March producer prices as well as weekly jobless claims, but activity may well be limited ahead of the start of the quarterly earnings season on Friday, with the major banks taking the lead.Elsewhere, Delta Air Lines (NYSE:DAL) is scheduled to report its quarterly numbers, and analysts will be listening to what the carrier says about labor and fuel costs and travel demand. 4. China’s exports post surprise riseChinese exports unexpectedly surged last month, offering optimism that the second-largest economy in the world can recover quickly from the strictures caused by the country’s severe zero-COVID policy.Exports in March shot up 14.8% from a year ago, snapping five straight months of declines, with Chinese officials citing rising demand for electric vehicles for the surprise jump.Investors will now be looking to see how sustainable this improvement will be given the economic slowdown expected in the major export markets of the U.S. and the European Union in the second half of the year.5. Oil prices steady ahead of monthly OPEC reportCrude prices traded just below the flatline Thursday, with Fed talk about a possible recession [see above] taking the edge off the recent rally.By 05:00 ET, U.S. crude futures were down 0.1% at $83.19 a barrel, while the Brent contract edged down by 0.2% to $87.22 per barrel.The proximity to the release of the monthly report from the Organization of Petroleum Exporting Countries has also prompted caution.This is due later in the session and is expected to provide more cues on crude demand and supply after the cartel unexpectedly cut production earlier this month.Both benchmarks rose 2% on Wednesday to their highest in more than a month as cooling U.S. inflation data spurred hopes the Federal Reserve is likely to stop hiking interest rates.Traders largely overlooked an unexpected rise in U.S. crude inventories, as the bulk of this increase was driven by a release from the Strategic Petroleum Reserve. More

ISLAMABAD (Reuters) – Pakistan’s government on Thursday rejected a panel set up and headed by the chief justice that is due to rule on a draft law clipping his powers, claiming conflict of interest, the latest standoff amid months of economic and political turmoil.Prime Minister Shehbaz Sharif’s government is involved in a row with the Supreme Court over the holding of snap polls in two provinces where former leader Imran Khan had dissolved the local governments this year in a bid to force early elections.The government says it is not economically viable to hold snap elections first ahead of a general election due in October.Chief Justice Umar Ata Bandial on Wednesday set up a panel of eight judges, to be headed by himself, that on Thursday started discussing the draft law, according to the court’s cause list.The draft law, which has been passed by parliament and sent to the president for assent, cuts down the chief justice’s powers to constitute panels, hear appeals or assign cases to judges in his team, according to a copy of the bill.”We reject this panel,” Law Minister Azam Nazeer Tarar, flanked by all of the government’s coalition partners, told a news conference in Islamabad. “We expect that this panel will be dissolved today.” Tarar said there was clear conflict of interest and called on the chief justice to quit. A parliamentary finance committee on Thursday rejected a bill to issue 21 billion rupees ($73.87 million) in funds for the snap polls, Sharif’s aide, Ata Tarar, said. The chief justice has summoned government finance officials to his chamber on Friday to seek a reply on the funds, warning that non-compliance would have consequences.The row between the government and the judiciary comes amid economic turmoil, with record inflation and an acute balance of payments crisis, while talks with the IMF to secure $1.1 billion funding as part of a $6.5 billion bailout agreed to in 2019 have not yet yielded fruit. More