Aurelia Butler

The US Treasury said it would halt Russia’s ability to make debt payments in dollars through US banks as world leaders sought to punish Moscow for the apparent mass killings of unarmed civilians in Ukraine.Emmanuel Macron urged a ban on Russian oil and coal imports while Joe Biden called for a war crimes trial following evidence Russian soldiers had committed atrocities in the town of Bucha, north of Kyiv.“There are very clear indications of war crimes,” Macron said in an interview on France Inter radio on Monday.Ukraine’s president Volodymyr Zelensky toured Bucha and other suburbs of Kyiv with foreign journalists yesterday as international investigators began to gather evidence of the killings.The decision by the US Treasury to not permit dollar debt payments to be made from Russian government accounts at US financial institutions will bring Moscow a step closer to a possible default on its obligations to international investors.“Russia must choose between draining remaining valuable dollar reserves or new revenue coming in, or default,” a US Treasury official said.More on Ukraine: Energy: Berlin has seized Gazprom Germania, the subsidiary of the Russian group operating some of Germany’s largest natural gas storage facilities.Oligarch under fire: Alexei Mordashov made his fortune in steel and has interests in coal, gold, travel and media. But after being targeted by EU and UK sanctions, one of Russia’s richest men is fighting to keep his most prized assets.Superyachts: Spanish authorities seized a $90mn yacht belonging to Russian oligarch Viktor Vekselberg following a US request. A vessel said to be owned by Roman Abramovich left a Turkish marina after a Financial Times report that the port’s UK-listed operator risked violating sanctions.Opinion: Viktor Orban’s election victory in Hungary will be greeted with delight in Moscow, Beijing and Mar-a-Lago — and with dismay in Brussels and Kyiv, writes Gideon Rachman. Vladimir Putin’s catastrophic failure in Ukraine is embarrassing to Xi Jinping, says Jonathan Haslam, emeritus professor in the history of international relations at the University of Cambridge.Are you from Ukraine? Do you have friends and family in, or from, Ukraine whose lives have been upended? Or perhaps you’re doing something to help those individuals, such as fundraising or housing people in your own homes. We want to hear from you. Tell us via a short survey.Thanks for reading FirstFT Americas. Here’s the rest of today’s news — GordonFive more stories in the news1. Musk becomes Twitter’s biggest shareholder Twitter shares closed up nearly 30 per cent yesterday after Tesla chief executive Elon Musk disclosed a stake in the social media network worth $2.9bn. The purchase, equivalent to 9.2 per cent of the company’s shares, comes a week after Musk said he was giving the idea of buying a social media company “serious thought”. Alphaville has a explainer, naturally, in tweets.2. Pandemic windfall The chief executives of Pfizer, BioNTech and Moderna enjoyed a combined pay package of more than $100mn during the pandemic, reflecting the huge success of the vaccines developed by their companies. Albert Bourla of Pfizer, Ugur Sahin of BioNTech and Stéphane Bancel of Moderna also saw their paper wealth grow thanks to share price increases driven by investor enthusiasm.3. Schultz halts Starbucks buybacks Howard Schultz pledged to suspend Starbucks’ share buyback programme as he began his third term as the US coffee chain’s chief executive. The decision came as Starbucks faces a growing unionisation movement in its home market, rising wage and commodity costs, and potential threats to international growth.4. UN report on global warming delayed by top polluters Tense negotiations involving the US and China delayed a landmark UN report that concluded that the narrow window to limit global warming would require the phasing out of fossil fuels, an electrified energy system, carbon storage and lower methane emissions.5. Silicon Valley’s Sequoia Capital names new leader One of Silicon Valley’s oldest and most successful venture capital firms, Sequoia Capital, is changing its leadership. Roelof Botha, a partner at Sequoia who leads its US and European operations, will assume the firm’s leadership in July taking over from billionaire investor Doug Leone, who will retire aged 65.The day aheadUkraine crisis Volodymyr Zelensky will address the UN Security Council after accusing Russian forces of committing war crimes in towns surrounding Kyiv before retreating to concentrate on their campaign in the south and east of the country. Moscow said it would present “empirical evidence” to the meeting proving its forces were not involved.ISM Services: The Institute for Supply Management’s non-manufacturing index is expected to jump to 58.4 in March from 56.5 in February, according to economists polled by Refinitiv. The ISM Services index fell for a third consecutive month in February as the Omicron-led wave of coronavirus slowed down growth. Trade: The US trade deficit is forecast to narrow to $88.5bn in February from $89.7bn in January, according to economists polled by Refinitiv. Separately, data from Statistics Canada are expected to show Canada’s trade surplus increased to C$2.9bn in February from C$2.62bn in January, according to a Refinitiv survey.Federal Reserve speakers Fed Governor Lael Brainard will speak at a Minneapolis Fed conference to discuss how inflation affects workers and families. New York Fed president John Williams will participate in a discussion hosted by The New York Times on “Health and the Economy.”What else we’re readingWill Amazon workers’ victory trigger broader change? The number of US employees in a union has halved in the past four decades. But the victory for workers in the Staten Island Amazon warehouse, who last week won the right to form a union, suggests that trend could be changing, argues Sarah O’Connor.

Union leader Chris Smalls, a former employee at the Amazon site, celebrates the unionisation with workers © Andrea Renault/AFP/Getty Images

Blockchain-powered broker Sam Bankman-Fried looks more like a student who has just rolled out of bed than the boss of an international cryptocurrency exchange valued at $32bn. But the 30-year-old chief executive of FTX has a futuristic vision for finance based on new protocols being built on blockchains, the distributed ledger technology underpinning cryptocurrencies.A taipan’s memories For those interested in the inner workings of Hong Kong Inc, as well as a melancholy reminder of how much both the territory and China-US commercial relations have changed for the worse in recent years, the autobiography of former Jardine Matheson and Hutchison Whampoa executive Simon Murray makes fascinating reading.Why are a leader’s first 100 days so important? Is an action-filled first 100 days a good idea? Not necessarily, say leaders who have been through them. Much depends on the state of the organisation you are taking on. Discover what’s shaking up the world of work with our latest newsletter, Working It, from work & careers editor Isabel Berwick. Sign up here to receive the first edition this week.The fastest growing companies in the Americas The third annual ranking of the region’s businesses this year — perhaps unsurprisingly — places a US medtech business in the top spot. The full report and analysis will be published on April 28.Audio BooksFrom comic, compelling reflections on ADHD and autism to pure escapism in Paris, Alex Clark rounds up the best new audio books — including an epic celebration of Terry Pratchett. More

Pension — or property? As the cost of living increases, it’s getting harder for younger workers to achieve one of these financial goals — let alone both.In this week’s episode of the Money Clinic podcast, presenter Claer Barrett meets 28-year-old Ashley, who works in the tech industry and dreams of owning his own home.Currently renting with friends in east London, he is well aware that the average first-time buyer deposit is now more than £57,000 and over double that in the capital. The time needed to save a deposit leaves his cash at the mercy of rising inflation — yet the investments he has made into a stocks and shares Isa have had a very mixed performance. And how does he square saving for retirement with all of this?

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Podcast guests Paul Johnson, director of the Institute for Fiscal Studies and Jason Butler, the financial expert and FT columnist, have lots to say about the financial challenges facing younger investors, and tips about devising a long-term financial strategy. To listen, search for Money Clinic wherever you get your podcasts, or click on the embedded link above. If you would like to be a future guest on Money Clinic podcast, please email the team via [email protected] or follow Claer on social media @Claerb. More

The writer is chief economist of G+ EconomicsCentral banks have made heroic efforts to achieve a rhetoric of normality in bringing rates up from emergency lows. But this comes in a world still gripped by the Covid pandemic, while coping with a war in Europe and dislocated commodity markets.This is a Herculean task, beyond the capacity of most central bankers, to avoid economic disaster and enable a soft landing into a new normality.Much more is asked of central banks today than in the early days of Covid. Back in 2020, their policies could focus on the objective — without any reliable forecasts — of achieving a speedy bounce in global nominal gross domestic product to a self-sustained, full-employment recovery.But now, after the global vaccination programmes and waves of new virus mutations over the past year, the banks face the unenviable task of feeling their way towards a “new different” for economies. Bankers wish to avoid stifling a self-sustained recovery without allowing accelerating inflation to take hold.A margin of error was inevitable. So great was the early Covid economic shock — and the costs to society and public finances — that central banks felt compelled to calibrate policy to restore growth potential.This remained the aim, even as the social effects of government Covid mitigation and supply-chain disruptions wreaked havoc on consumption and investment across sectors and geographies. Inflation volatility followed, matching the stop-go growth shocks.Lack of visibility about the duration of the pandemic — or what typical labour markets and trade links would look like — meant policy needed to lean toward risk mitigation.After all, higher inflation can be an interim policy choice when central banks have plenty of room to respond by raising rates. Also, in a young recovery, higher prices can act as an economic rebalancing mechanism to incentivise expansion of supply capacity and broaden the growth base from consumption to investment. While hardly a risk-free strategy, interest rates are a tool that’s available.Secular stagnation, however, does not offer a policy choice. The depression-size pandemic shock was preceded by a decade of weak investment and productivity growth, following the global financial crisis and the last great recession. Moreover, policy interest rates already sit at zero, after a decade of quantitative easing, making it hard to provide the necessary stimulus.The magnitude of the risks that central banks face as a result of Russia’s war on Ukraine, however, is of a very different order, both for long-term inflation and growth potential.The west’s unprecedented sanctions against Russia have taken the largest exporter of energy, plus key industrial and agricultural raw materials, off the financial grid of the world.Boycotts by western consumers, businesses and governments mean banks have stopped financing Russian trade, while ports refuse to unload cargoes.As physical disruptions appear, coping with higher-for-longer energy costs will become as important to managing economies’ health as managing supply. In effect, these cost surges amplify the stagflationary shock of Covid supply-chain distortions.Surging global supply costs mean central banks now have even less power to bring down decade-high consumer price readings. They also cannot easily provide stimulus to businesses further down supply chains that are forced to ration production. Finally, it is harder to restore the spending power of consumers enduring a speedy erosion of their pandemic savings and living standards.Rerouting Russian exports, and global commodities trade, will dictate new, longer supply routes, and new, higher global trade prices — in a word, deglobalisation.That means a lasting shift towards a higher equilibrium for raw material prices, and a structural step change in what businesses and households spend on energy, metals and food.With oil prices already far above all major central banks’ targets for price stability, the only way to lower inflation is via demand destruction.But this means an impossible trade-off, at a time when government budgets face surging financing costs and households struggle with their own finances.With the global financial system becoming ever more fragile in a high inflation, high debt and geopolitically insecure world, managing in the “new different” while avoiding extreme economic volatility will be policymakers’ greatest challenge yet. More

It seems a long time ago that world markets were riding high on a wall of new money created by central banks, sustained by enthusiasm for the efficiencies and advantages of global trade.Many bulls in markets reasoned that we were in a golden era, where countries and companies would specialise at what they were best at, and countries would remove more of the remaining barriers to allow free and fair trade between the five continents.New fleets of huge container ships, new deep water ports and large-scale plants sprang up to make the global trade vision more of a reality. China became the factory of the world while the US was the champion of the internet, data and social media.Now everything seems to have changed. Donald Trump, the former US president, was the first to mount a serious challenge by pointing out that China did not play by the rules when it came to respecting intellectual property and granting fair access to its own market. He raised doubts by stressing the need for the advanced democracies to keep sufficient control of the essentials for survival and for defence. Then the Covid pandemic ripped apart supply chains and closed factories that people relied on for just-in-time deliveries; airliners were parked given the restrictions on travel.This year, Russia’s unprovoked invasion of Ukraine has led democracies to reappraise their dependence on Russian oil and gas as they worry about their purchases financing the war. President Joe Biden now leads demands for moral and political issues to shape the pattern of trade.For some time I have been examining the consequences of the pursuit of greater national and regional economic self reliance. The US has “Made in America”, the EU is auditing its digital and resource needs, and China has long followed an economic model where it secures many of its essential supplies from home production or friendly sources. Overall world output and efficiency will drop compared with a pure free trade model, but there will be new winners as some countries and regions succeed in building new capabilities to replace imports.

This major shift in strategic aims underpins the world outlook as markets seek to adjust to three major sets of changes. The digitalisation movement races on, accelerated by lockdowns. Today, more countries wish to regulate the leading tech companies and ensure they have sufficient access to the winning technologies of the digital revolution.There is also a rush into providing more microprocessor production capacity in a world short of electronic chips. The green revolution seeks to replace hydrocarbons as a prime source of energy against a background of countries wishing to remove Russia from their oil and gas purchases. The environmental, social and governance (ESG) investment movement wishes to reward companies which behave well, while some leading countries are now behaving badly, posing new moral and investment dilemmas for portfolio managers.Russia warns investors that there are risks in ignoring bad governance and a disregard for the rules of international conduct at the country level, as well as at the company share level in a portfolio. Maybe ESG should apply to states as well as businesses. Russia always looked cheap and was likely to make more money out of rising oil prices as the world recovery got under way, but it was easy to say no to such an investment given the obvious shortcomings of the government. That is what we did with this portfolio. Memories of South Ossetia, Syria and Crimea should have been fresh in investors’ minds before buying Russian stocks. I sold out of China in this portfolio when I saw the lurch in government towards an autocracy led by President Xi Jinping. While there may be moneymaking opportunities in the world’s second-largest economy, it is difficult to trust a state which is imposing new controls on its private property sector, rounding on successful entrepreneurs, and has clear aims to rearm and to advance its territorial reach and influence.The world is moving to shape itself into two major blocs. The Chinese bloc will include a Russia dependent on Chinese support and goodwill. It will stride on to create its own digital and internet architecture, it will spend a lot on weapons, and will reach out to as many non-aligned countries as possible along the Asia to Europe Belt and Road, and in the ring of islands between China and Australia. The US-led bloc will include Europe, the Five Eyes security grouping and parts of Central America.

Both blocs will court India, Brazil, and parts of Africa. The EU will seek to differentiate itself from some features of US policy but will remain reliant on Nato for its defence and will continue to need plenty of US technology in the digital, military and communications sectors.Inflation remains an urgent challenge in many advanced countries, with price rises hitting an alarming 9.8 per cent last month in Spain and trending considerably higher in the rest of Europe. The tough choice that still confronts central banks is how to curb inflation while not slowing economic growth too much.So far this year share and bond markets have fallen, mainly in response to the predictable surge in inflation on both sides of the Atlantic. The economic misery has been compounded by the bad news of the Russian war in Ukraine. The fund is down 4 per cent this year, thanks to the falls in holdings of world equities and in the specialist indices in both green and digital global technology.

After a good couple of years’ performance, these potential winners have also been hit by the move to higher interest rates and the uncertainties from supply disruptions. The fund’s fall has been limited by holding a quarter in inflation-linked bonds to provide some inflation protection and a quarter in cash which has the advantage of not going down in falling markets.In due course the bond market will bottom out when people think the main central banks have raised rates enough and have the mastery of inflation. That will be the time to put more of the cash to work.Sir John Redwood is chief global strategist for Charles Stanley. The FT Fund is a dummy portfolio intended to demonstrate how investors can use a wide range of ETFs to gain exposure to global stock markets while keeping down the costs of investing. [email protected]

The ‘Redwood fund’ — April 1 2022DescriptionWeightLyxor Core MSCI Japan (DR) UCITS ETF Dly Hedged GBP2.70%Legal & General Hydrogen Economy UCITS ETF1.80%iShares Core MSCI EM IMI UCITS ETF USD Acc1.80%Lyxor FTSE Actuaries UK Gilts Inflation Linked (DR) UCITS ETF5.30%iShares Global Clean Energy1.90%Legal & General Cyber Security UCITS ETF2.10%iShares Core MSCI World UCITS ETF GBP Hgd (Dist)21.90%Legal & General All Stocks Index-Linked Gilt Index Acc4.00%Legal & General ROBO GIobal Robotics and Automation UCITS ETF1.90%SPDR BofA ML 0-5 Yr EM $ Govt Bd UCITS ETF1.90%iShares $ TIPS 0-5 UCITS ETF GBP Hedged12.80%Vanguard FTSE 250 UCITS ETF GBP Dist4.20%X-trackers S&P 500 UCITS ETF6.00%X-trackers MSCI Korea ETF1.60%X-trackers MSCI Taiwan ETF4.20%Cash Account25.80%Source: Charles Stanley More