Aurelia Butler

BUENOS AIRES (Reuters) – Colombia’s peso will likely stay weak on signs the central bank is turning to a wait-and-see approach on interest rates, combined with downside pressures from the currency’s mismatch against oil prices, a Reuters poll showed.The Andean nation’s currency is set to trade at 4,800 per U.S. dollar at end-June, 4.2% softer than 4,600 on Monday, according to the median estimate of 24 foreign exchange strategists polled March 31-April 4.The peso was one of the worst-performing currencies in the world last year, losing a fifth of its value as investors fretted about President Gustavo Petro’s push for changes after his victory in June’s presidential runoff vote.Officials at BanRep, as the central bank is known, last week raised the benchmark rate by 25 basis points to 13.0%, a more than 20-year high. “If March inflation behaves as expected, they suggested this could be the last hike,” J.P. Morgan analysts wrote in a report.”Still, they remain data dependent. We think this supports our underweight (view) for the peso, which has also decoupled from lower oil prices these past few weeks and offers good entry levels for shorts.””Shorting”, or betting against an asset on expectations its price will fall in the near future, was a winning strategy last year for investors and speculators who called the peso’s decline amid Petro’s reform drive to fight inequality.The currency has fared poorly for months even while Colombia’s central bank conducted an aggressive tightening cycle that added 1,125 basis points in rate increments since a pandemic-time low of 1.75%.Consumer prices rose at a yearly clip of 13.3% in February, the fastest since 1999 and more than four times the bank’s long-term target of 3%. But now inflation seems to have peaked, BanRep may well pause. Also, despite its falling trend, a recent uptick in the peso has left it relatively overvalued versus oil market prices that remain more than 30% below the highs of the first days of Russia’s invasion of Ukraine, despite this week’s recovery. Oil is one of Colombia’s top exports. The peso is up 5.4% since the start of 2023, outperforming the Brazilian real’s 4.5% gain, yet below Mexico’s peso advance of 7.8%, as sentiment over the direction of policy-making in Latin America’s No.1 and 2 economies keeps diverging.All three currencies are seen taking losses in one year – a 2.1% fall in the case of Colombia’s peso, 2.7% in Brazil’s unit and 6.0% for the Mexican currency, which in recent years has nevertheless confounded analysts’ pessimism.(For other stories from the April Reuters foreign exchange poll:) (Reporting and polling by Gabriel Burin in Buenos Aires; additional polling by Prerana Bhat and Indradip Ghosh in Bengaluru; Editing by Sharon Singleton) More

The Bundeskartellamt regulator has designated Apple a “company of paramount significance for competition across markets”, it said.”The company is – beginning with its mobile devices such as the iPhone – the operator of a comprehensive digital ecosystem with a high significance for competition not only in Germany, but also in Europe and worldwide,” said Bundeskartellamt President Andreas Mundt.On the basis of the regulator’s decision, it can target practices “that pose a threat to competition and practices and effectively prevent them”, he added.Apple said it would continue to work with the cartel office to understand its concerns but that it planned to appeal the decision.”The (cartel office’s) designation misrepresents the fierce competition Apple faces in Germany, and it discounts the value of a business model that puts user privacy and security at its core,” an Apple spokesperson said in an emailed statement to Reuters.The German authority has already declared Google parent Alphabet (NASDAQ:GOOGL) and Facebook (NASDAQ:META) owner Meta companies of paramount significance for competition across markets. More

US House Speaker Kevin McCarthy will host a high-profile meeting with Taiwan’s president Tsai Ing-wen in California today despite the risk of provoking fresh military exercises by China around the island.The meeting will mark the high point of a 10-day trip that has seen Tsai travel to New York as well as her central American allies Guatemala and Belize. But only 13 countries currently recognise Taiwan and they are coming under increasing pressure to switch allegiance to Beijing. Paraguay’s president last year called on Taiwan to invest $1bn in his country to help him resist “enormous” pressure to recognise China while last week Beijing hosted Honduras’s foreign minister for an official switching ceremony.Meanwhile, Taiwan’s former president Ma Ying-jeou has been visiting China while Tsai has been away. It is the first ever visit to the Communist country by a sitting or retired Taiwanese president.Today’s meeting will take place at the Reagan Library in Simi Valley in California and will be attended by a bipartisan group of 17 members of Congress.The deputy secretary-general of Taiwan’s presidential office, Chang Tun-han, quoted former US president Ronald Reagan yesterday as part of a rhetorical broadside that compared China with the cold war-era Soviet Union. “Evil is powerless if the good are unafraid,” Chang said, quoting from a 1983 speech by the late president.China’s consulate in Los Angeles late yesterday called Tsai’s trip “a political stunt”, adding that a meeting with McCarthy would be “another serious violation of the one-China principle” and would “undermine the political foundation of China-US relations”.China’s comments raise expectations of further military exercises to threaten Taiwan on a scale not seen since McCarthy’s predecessor, Nancy Pelosi, visited the island in August. Today’s Big Read is on Taiwan’s deepening political divide over the US and China. Here’s what else I’m keeping tabs on today:Macron-Xi meeting: Emmanuel Macron begins a state visit to China. Before leaving Paris, Macron spoke to Joe Biden about the forthcoming trip. Economic data: The Institute for Supply Management’s non-manufacturing index and the latest on the US trade deficit. Company results: Consumer goods company ConAgra will report third-quarter earnings.Passover: The Jewish holiday starts later today and ends tomorrow evening.As always, thank you for reading FirstFT. Let us know if you have any feedback at [email protected]. Five more top stories

Donald Trump addresses supporters at his Mar-a-Lago estate in Florida hours after being arraigned in a Manhattan courthouse © Joe Raedle/Getty Images

1. Donald Trump launched a blistering attack on the US legal system and the judge presiding over his case in New York after pleading not guilty to 34 counts of falsifying business records. He also described the special prosecutor investigating his role in the January 6 riots as a “lunatic” and called the black local prosecutor probing his alleged attempts to overturn the 2020 election result in Georgia a “racist”. Catch up with all the FT’s coverage of yesterday’s events here.2. Jamie Dimon has criticised regulators for incentivising banks to load up on government securities and imposing flawed stress tests. In his annual shareholder letter, the JPMorgan boss also said the failure of Silicon Valley Bank and Credit Suisse risked undermining confidence in the banking industry.More banking news: The chair of UBS has said the takeover of Credit Suisse would entail “significant execution risks”. Colm Kelleher was speaking at the Swiss bank’s annual shareholder meeting.3. Johnson & Johnson has proposed an $8.9bn settlement to resolve tens of thousands of lawsuits alleging its talcum powder caused cancer in what would be the largest product liability settlement in bankruptcy history, according to lawyers. 4. ExxonMobil’s new low-carbon businesses could one day be more lucrative than its fossil fuel production, a top executive at the US oil major said yesterday, as it laid out ambitious plans to generate tens of billions of dollars from biofuels, hydrogen and carbon capture within a decade.5. Wisconsin has elected a new liberal judge to its highest court, tilting the bench’s balance of power in a vote that was widely seen as a test of sentiment on abortion rights in the Midwestern swing state. Just south of Wisconsin’s state border in Illinois, Chicago voters chose the progressive Democrat Brandon Johnson to run the third largest city in the US.The big interview

Ari Emanuel said of the WWE deal: ‘It’s very rare, when a global iconic brand becomes available. And when it does, you have to say yes’ © Amy Sussman/Getty Images

This week Ari Emanuel sealed a $21bn deal to acquire WWE and combine it with the mixed martial arts business UFC to create a combat-entertainment juggernaut. It is the latest bold transaction for Emanuel, who worked his way up from the mailroom at the CAA talent agency to become one of the most powerful people in Hollywood. Emanuel explained his reasoning for the deal when he spoke to the FT.We’re also reading . . . Opinion: The US risks reversing nine decades of hugely successful policy that lifted tens of millions out of poverty by waging war on trade, writes Martin Wolf. Somalia conflict: President Hassan Sheikh Mohamud told the FT he was confident his new military offensive against al-Shabaab would “defeat” the al-Qaeda-linked Islamist group.Tesla’s car batteries: The company is disrupting an industry dominated by China with a differently shaped power cell, making it cheaper to produce.Chart of the daySterling rose to a 10-month high against the US dollar yesterday, helped by recent signs of resilience in the UK economy, making the pound the best-performing developed market currency so far in 2023. The dollar index, which measures the currency against a basket of six peers, has declined 1.6 per cent since the start of the year. Take a break from the newsYou can make a decent Martini for a couple of quid. So why are prices soaring above £20? Alice Lascelles goes inside the madness of the £25 Martini.Additional contributions from Tee Zhuo and Emily Goldberg More

PARIS (Reuters) -France’s labour unions will keep up their fight against a planned rise of the legal retirement age, they said on Wednesday, after a meeting with Prime Minister Elisabeth Borne failed to end months of gridlock over a deeply unpopular reform.Wednesday’s talks were the first high-stakes meeting between the government of President Emmanuel Macron and union bosses since nationwide protests and strikes against the legislation started in mid-January. The talks, ahead of a new day of walkouts and marches planned for Thursday, lasted about an hour. Union leaders were united in saying the meeting had been a failure.”We decided to put an end to this useless meeting…The prime minister has chosen to send us back to the streets,” said Sophie Binet, the newly elected first woman leader of the hardline CGT union, France’s second biggest.The government says it is necessary to raise the retirement age to 64 from 62 for most workers to balance the pension budget in years to come. The unions say the money can be found elsewhere. Borne told reporters that she was open to further talks but that she would not backdown on the retirement age.CGT activists hung a banner reading “64, it’s no” from the top of the capital’s Arc de Triomphe monument.Laurent Berger, head of the more moderate CFDT trade union, the country’s largest, called for workers to join en masse Thursday’s strikes and street protests. He said the vast majority of people opposed the pension system change and that public opinion was not shifting. The unions’ determination to fight it was unwavering, he added. Labour representatives complain they are not being listened to despite weeks of protest marches and unrest against the pension overhaul.”We will not come back to the negotiating table as if nothing had happened”, said Cyril Chabanier, president of the CFTC union, reading out a joint statement after the meeting.Chabanier said the unions told Borne the only way out of the deadlock was for the government to withdraw the reform.Macron’s decision to ram through the legislation without a final vote in parliament last month only added to the fury of unions and the wider public.Opponents of the bill will now be waiting for the Constitutional Council to give its verdict on the bill on April 14. The council has the power to strike down the bill – or parts of it – if it considers it breaches the constitution, but it rarely rejects entire bills. More

“Is capitalism dead?” asks Albert Edwards, which is as exciting a combination of words as you’ll read today. The current thing exercising SocGen’s global strategy “team” is the record-high profit margins in developed markets, particularly the US:After working in finance for over 40 years I had felt there wasn’t much that could surprise me. Yet I find the unprecedented levels of corporate Greedflation in this economic cycle astonishing. The latest release of US whole economy profits data delivered another shock to my weakening confidence that the capitalist system is working as it should. . . . Companies have used first the pandemic and then the war in Ukraine to ‘profiteer’. At a time when social cohesion is already fraying at the edges, I think the sight of companies generating super-normal profit margins in a crisis can only inflame social unrest. This is a big issue for policy makers that simply cannot be ignored any longer. But what to do?We summarised the gist of Edwards’ argument last month, to which his latest adds some reflections in favour of price controls and windfall taxes. Disregarding the lessons of the 1970s, with their failed price and income policies, may be necessary because “something seems to have broken with capitalism,” he writes.The starting point this time is Bureau of Economic Analysis data that showed US fourth-quarter non-financial profit margins still running very hot relative to cost pressures, which was in contrast to market data that had suggested a cooling:As per the above, labour shortages and higher commodity prices usually squeeze margins as an economy heads towards recession. That’s what companies have been reporting, but it’s not what the BEA data are saying.The adjustments BEA makes to get an underlying picture of corporate profitability are to remove the profit and loss effects of inventory management, and to put depreciation on an economic rather than an accounting basis. Edwards suggests also narrowing the view to domestic profit only, reasoning that local profit is what drives the local business investment cycle.This measure — which BEA terms profits from current production — suggests US underlying profitability has been clinging to a record high:“One key feature of the BEA whole economy profits data is that it LEADS the stockmarket data, partly because smaller unquoted companies have no pressure to massage their results higher,” Edwards writes — which got us thinking. Which companies are we talking about? Who’s still over-earning, who’s massaging, and where might price controls bite hardest?Here’s a very simple screen of margins across more than 1,000 global large-caps (Excel format, Bloomberg data). We’ve taken the quick and dirty approach and used only reported net profit, where the previous periods are the year-ago figure rather than annualised. Anyone contesting the value of this methodology is invited to share their own. The screen shows net margins recently returning to a long-run average of 13.5 per cent, having been suppressed during the 2017 tech nonsense then inflated through the late-stage pandemic. But on a granular view it also shows 52 per cent of global companies are still earning above their 10-year average margin, with the average excess of 2.15 percentage points. Trend outliers are the obvious ones. There are startups that have recently hit breakeven (Tesla, Uber, Palo Alto) and unprofitable startups that have been reducing cash burn (Snowflake, Workday). There are pandemic stories (Moderna, AirBNB, Hapag-Lloyd) and restructuring stories whose net profit comparison is probably not like-for-like (Prudential, GE, Emerson Electric). There are also lots of banks and energy companies, whose current margins are either hyper-cyclical or inexcusable depending on your politics.Here’s a horrible scatter chart that shows the distribution…… and another that tops and tails from +20 to -20 percentage points: The above shows if nothing else that profiteering’s easy to talk about from the top down, but very difficult to pinpoint. Our (admittedly very crude, as price controls tend to be) methodology offers only weak evidence that companies across the board have been over-earning relative to historical norms. And the outliers it highlights would be writing letters to the editor if we were to accuse them of anything, because mitigating circumstances abound. That’s why we’ve taken the coward’s approach and turned the data over to you. Slice it however you wish and report any interesting findings in the comment box. The future of capitalism may or may not depend on it.Further reading:— Greed: bad, actually (FTAV)— Central bankers warn companies on fatter profit margins (FT) More