Economy

The Treasury secretary urged executives and entrepreneurs to look beyond the Trump administration’s trade agenda.Treasury Secretary Scott Bessent urged skittish global business leaders on Monday to ignore President Trump’s economic naysayers and ramp up investment in the United States, defending an economic agenda that economists warn will slow economic growth and exacerbate inflation.Speaking to executives, entrepreneurs and policymakers, Mr. Bessent argued that the Trump administration’s economic plans go beyond trade policy and will pay off in the long run. He urged them to also focus on Mr. Trump’s plans to cut taxes and regulation, which he said would spur job creation and output.“Tariffs are engineered to encourage companies like yours to invest directly in the United States,” Mr. Bessent said in remarks at the Milken Institute Global Conference in Los Angeles. “You’ll be glad you did — not only because we have the most productive work force in the world. But because we will soon have the most favorable tax and regulatory environment as well.”His comments came just hours after Mr. Trump ordered up new tariffs on foreign film producers, a decision that left many in Hollywood puzzled about how such a tax would work.The Treasury secretary has been working to ease concerns among investors that Mr. Trump’s trade plans will destabilize the global economy. Last month the president levied tariffs on countries around the world and escalated a trade fight with China, which sent financial markets plunging.Since then, Mr. Bessent has been racing to negotiate trade deals with dozens of countries. He has also signaled that the China tariffs are not sustainable, offering hope that Mr. Trump would soon begin negotiations to lower them.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

This article is an on-site version of our Swamp Notes newsletter. Premium subscribers can sign up here to get the newsletter delivered every Monday and Friday. Standard subscribers can upgrade to Premium here, or explore all FT newslettersRecently I’ve begun to think perhaps I’m too much of a gloom and doomer about the US economy and its place in the world. I was struck recently by a couple of pieces, one by Joel Kotkin on UnHerd, arguing that we shouldn’t conflate American government with American people, or America, the place. The former may be wildly dysfunctional now, but it hasn’t stopped the dynamism of US businesses, entrepreneurial zeal in America (still much higher than in Europe), or the fact that the checks and balances of the US system (which are admittedly being tested right now) remain the best alternative to Chinese authoritarianism.I would agree with this (unless Europe gets its act together, launches eurobonds, and really integrates and becomes a political entity capable of anchoring the global economy and defending liberal democracy). I was struck at an investor conference I attended last week at how, despite the political turmoil in the US, American business is just getting on with things: reassessing risk, rejiggering supply chains, and realising that Donald Trump is temporary (barring a true constitututional crisis in which he refuses to leave after his second term). Of course, there were huge worries about tariff uncertainties and the rule of law and the general economic and political uncertainty created by the US president. But there was also the can-do attitude that has always made the US the most dynamic country in the world, a place where you can still strive, fail, fall, dust yourself off, get up and try again tomorrow with the belief that things will get better. The conference I attended was in Florida by the way, and people didn’t seem nearly as pessimistic there as they are in New York. I am planning to devote more time this summer to getting out and talking to Main Street businesses and real people in red state America about how they see the current moment.I was also struck by Andy Haldane’s piece in the FT last week entitled “The rise of the panicans”, which posits that we’ve all become too hysterically negative about the state of the world, and the US in particular. Haldane, who I would put right up there as one of the smartest economists in the world, rightly points out that many of us in the media and in financial circles have become “24/7 catastrophisers”. It’s a point that came home to me this past Friday, with the new US employment numbers coming in much stronger than expected. Now, we know jobs are a backward-looking indicator. And we also know that the real effects of tariffs, including inflation and supply shortages, won’t really hit for a few weeks (the last pre-tariff ships are sailing into port right now). Finally, China is looking more open to trade talks, which buoyed markets late last week.I’m lucky to have my colleague Ed Luce back in the seat as my respondent today (don’t get too excited, this is a one-off!). So, Ed, my question to you is this: do you think predictions of a dismal summer in which inflation spikes and the economy falls into recession may turn out to be flat-out wrong? I know you, like me, have been down on Trump for a long time, but are we giving him too little credit here? Could we see him pull a positive rabbit out of the hat over the next few months? Or is this entire column just a desperate effort on my part to say something contrarian?Recommended readingDespite my questions above, it’s worth reading Andrew Marantz’ piece in The New Yorker about whether the US is slipping towards autocracy. Marantz interviews people in Hungary and elsewhere who are closer to the question and compares their responses to what’s happening in America.Also on the cautionary side of things, our colleague Gillian Tett explores the coming corporate liquidity crunch. Caveat: it really does depend on how tariffs play out.If you are in Washington next week, make sure to go to the FTWeekend Festival! I’ll be there (along with Ed and many others), talking about trade, the rise of the Catholic right, where Democrats go from here, and much else. In preparation, check out our insider tips for what to do and where to go in the Beltway.In the meantime, I’m looking forward to the Metropolitan Museum’s new fashion exhibition on the history of the Black male dandy. See the FT’s review of it, here.Edward Luce respondsRana, I don’t remotely think it’s a desperate effort at contrarianism on your part. I also admired Andy Haldane’s characteristically thoughtful piece. What I drew from it was the positive role of panicked markets and indeed gloom-filled commentators in persuading Trump to pause his declaration of economic war on the world. In that sense, panicans are playing a constructive role. As Haldane put it: “The irresistible force of self-importance helped cause the US tariff spike, but the immovable object of self-preservation will be its undoing.” Clearly the markets are betting that Trump’s climbdown is real and will endure.I’m a lot more sceptical than market sentiment. My problem is not necessarily with the theory of rebalancing but with the person in charge of it. Put simply, Trump is a chaos agent. He believes that lightning strikes and unpredictability increases his negotiating leverage. That core part of Trump’s psychology is never likely to change. Which means that even if market optimism proves correct, and he retreats with a bunch of face-saving kabuki trade “deals”, nobody will trust him to stick to them. In the short term America’s trading partners will throw Trump a couple of symbolic bones — an LNG purchase deal here, restored orders for Boeing there, and lots of improbable US investment numbers from Japan and the Gulf. But in the medium term they will look for other deals and other markets.I have no idea whether the US will have a dire summer because that involves peering into Trump’s mind. But recession can easily be avoided if he climbs down.Your feedbackWe’d love to hear from you. You can email the team on [email protected], contact Ed on [email protected] and Rana on [email protected], and follow them on X at @RanaForoohar and @EdwardGLuce. We may feature an excerpt of your response in the next newsletterRecommended newsletters for youTrade Secrets — A must-read on the changing face of international trade and globalisation. Sign up hereUnhedged — Robert Armstrong dissects the most important market trends and discusses how Wall Street’s best minds respond to them. Sign up here More

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US policy uncertainty has rippled through rate-setting meetings across the world, as central bankers try to work out what a global trade war means for monetary policy. Stagflation fears are rising on the back of Donald Trump’s tariffs. And threats to central bank independence abound. Economics commentator Chris Giles, writer of the Central Banks newsletter, will join the FT’s Monetary Policy Radar reporters Elettra Ardissino, Joel Suss and Andrew Whiffin for a live Q&A on Wednesday May 7 at 10am ET/3pm BST.To take part, leave your questions in the comments section below this story. You can also endorse queries you would most like the experts to tackle. They will respond to readers in the comment field when the Q&A goes live. Add the event to your calendar here. More

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This article is an on-site version of our Unhedged newsletter. Premium subscribers can sign up here to get the newsletter delivered every weekday. Standard subscribers can upgrade to Premium here, or explore all FT newslettersGood morning. Warren Buffett announced over the weekend that he will step down as CEO of Berkshire Hathaway at the end of this year. Unhedged has plenty of thoughts on Buffett’s legacy, and will share them in the coming days. For now, let’s just raise a glass (or a mug, if you’re reading this at publication time) to the Oracle of Omaha. Email me: [email protected]. US jobs and market recoveryAfter a (deceptively) negative GDP print and a string of dire sentiment readings, there was a lot of market anxiety surrounding Friday’s jobs report. If the April numbers came in below expectations, it would be the hardest evidence yet that uncertainty and tariffs are taking their toll on the US economy. Didn’t happen: 177,000 jobs were added, well above the consensus forecast of 138,000, and the unemployment rate held steady at 4.2 per cent. The market rejoiced, with the S&P 500 up over 2 per cent. The 10-year Treasury yield bumped up 10 basis points as investors paired back expectations for Fed cuts.Indeed, the monetary policy implications are key. On Friday, markets went from betting on four 25 basis point cuts by year’s end to just three, as it looks like the labour market is not wilting in the current rate environment. That gives the Fed room to focus on inflation. The jobs report’s wage growth reading came in lighter than expected, too, only rising 0.2 per cent month-on-month. Standing pat on rates looks like the right decision. In this uncertain climate, it is tempting to be a bear about every single economic reading. And, in all honesty, there was a lot in the report to dislike. March and February’s readings were downgraded by 58,000 jobs in total. That brings the three month average down to 133,000. This may seem strong enough, but remember that the US labour market has grown a lot in recent years, and as such we may be below break-even jobs growth. Also, according to David Rosenberg at Rosenberg Research, around 40 per cent of the headline increase came from the “birth-death” model, the estimate of jobs created by new business formations and jobs eliminated by firm closures. The birth-death model has been a little off since 2020 — and was responsible for a historically large revision last year. Rosenberg reckons that, accounting for a birth-death skew and the downward revisions, April’s payroll report actually showed a decline of 11,000 jobs. But it is very hard to know how off the birth-death model is. But there were some real bright spots in the report, too. Over half of the job growth came from cyclical industries (private, excluding healthcare) — particularly warehousing, which could be a side effect of the recent surge in imports. 518,000 people entered the labour force, even with low migration. That suggests optimism about work prospects. And, despite concerns over Doge’s impact on the federal government, the rate of federal job losses slowed last month, and was revised down for March:On balance, Friday’s report was good news. Like the GDP report, it shows the US economy is standing strong. Yet, we are still on the precipice. The worst of the tariffs have not hit yet, and still could. Until they do, employers seem to be OK with growing their work force. That could change.ChinaChina is apparently open to trade talks with the US, and Trump is signalling flexibility on tariffs, too. If the signals reflect genuine intent, this is undoubtedly good news. But Unhedged is a bit sceptical on both fronts. Despite appearing open to negotiations earlier this year, ever since “liberation day” the Chinese government and the Chinese people have expressed determination to stand their ground; Trump and his trade adviser Peter Navarro have explicitly signalled unwillingness to negotiate with China in the past. But if China is softening its position, the most likely reason is that its economy is wobbling, while the US enters the tariff fight on the front foot (see above). According to official statistics, China’s economy grew 5.4 per cent year-over-year last quarter — above expectations and higher than China’s goal of 5 per cent. Chinese macroeconomic data should be taken with a grain of salt, however. Other indicators suggest softness. The Li Keqiang index, a popular proxy for China’s GDP that uses indicators ranging from train schedules to bank lending, expanded at 4.3 per cent year-over-year last month. Another alternative (and our favourite), the Capital Economics China Activity Index, put the growth rate at just 3.9 per cent. Whatever strength there was may have come from a surge in exports, as buyers in the US rushed to import Chinese goods ahead of tariffs. But to replace US demand in the coming months, China will need to find new buyers at home and abroad. That will be hard. Europe might erect its own trade barriers, and Chinese domestic consumption has not shown signs of life. Low foreign demand risks adding to China’s deflationary woes, too. China’s inflation looked better last month, with core CPI jumping above 0 after a month in negative territory. But if the manufacturing sector cannot find new buyers, domestic supply will increase and prices will drop further.Recent soft data has been even weaker. Consumer confidence is in the dumps. And China’s Caixin manufacturing PMI, out last week, showed that manufacturing contracted in March, driven by a collapse in the new orders reading, particularly new export orders. Inventory levels fell, too, in a sign that businesses are not feeling optimistic:For the past 9 months or so, China boosters have waved away these concerns, buoyed by the promise of economic stimulus. But the stimulus has been more of a pop gun than a bazooka. And it looks like even the pop gun could go silent soon. According to Zichun Huang and Leah Fahy at Capital Economics, the budget deficit grew by 40 per cent annualised in the first quarter. That is double the planned rate of fiscal expansion for this year, they write. In other words, China will need to borrow more — much more — than planned to keep the current level of stimulus, and even that has not been particularly effective. Given the government’s reluctance to expand borrowing in the past, more stimulus could be a step too far.Unhedged and various other commentators have observed that China may be in a better political position than the US for prolonged negotiations. Economically, however, it holds fewer cards. One Good ReadChinese diversification.FT Unhedged podcastCan’t get enough of Unhedged? Listen to our new podcast, for a 15-minute dive into the latest markets news and financial headlines, twice a week. Catch up on past editions of the newsletter here.Recommended newsletters for youDue Diligence — Top stories from the world of corporate finance. Sign up hereFree Lunch — Your guide to the global economic policy debate. Sign up here More

Welcome to FT Asset Management, our weekly newsletter on the movers and shakers behind a multitrillion-dollar global industry. This article is an on-site version of the newsletter. Subscribers can sign up here to get it delivered every Monday. Explore all of our newsletters here.Does the format, content and tone work for you? Let me know: [email protected] One thing to start: Consultant BCG has published its latest annual report on the state of the global asset management industry. Global assets under management grew 12 per cent year-on-year to a record $128tn in 2024. But the report also exposed the vulnerability of the industry: market performance drove 70 per cent of the $58bn in global revenue growth last year — versus 30 per cent from net inflows.In today’s newsletter:Warren Buffett to step down from Berkshire HathawayTrump’s top economic adviser struggles to assuage investors’ nerves US economy contracts in the first quarter Warren Buffett to retire from Berkshire HathawayWarren Buffett, the world’s most famous investor, is stepping down from the helm of Berkshire Hathaway after six decades.The 94-year-old — known as the “Oracle of Omaha” — said he would propose that Greg Abel take over the leadership of Berkshire at the end of this year, write Amelia Pollard and Stephen Foley.The death of his longtime friend and business partner Charlie Munger in 2023 increased speculation about when Buffett might step down. On Saturday afternoon in Omaha, the answer finally arrived.Abel, 62, whom Buffett had previously named as his eventual successor, is vice-chair of Berkshire’s non-insurance operations.Buffett said he had not given Abel or Berkshire’s other directors any advance notice, making the announcement at the very end of a historic 60th annual shareholder meeting in Omaha, Nebraska.Although Buffett is among the country’s richest individuals with an estimated net worth of about $168bn, he has maintained a folksy aura, attracting shareholders annually to Omaha for a weekend of festivities. He still only takes home a nominal salary of $100,000, as he has done for more than 40 years.Buffett has amassed thousands of devotees over the years for his investment prowess. According to research by LCH Investments, gains made by Berkshire Hathaway under Buffett’s leadership were 7.8 times greater than that made by the highest-ranked hedge fund manager. Berkshire’s annual general meetings tend to attract tens of thousands of people from around the world eager to hear his advice. Shareholders who return year after year develop friendships and networks, making the annual event a sort of reunion.Buffett’s decision to step down from the financial juggernaut certainly marks the end of an era, leading him to quip at the AGM: “That’s the news hook for the day.”Investors meet Trump’s top economic adviser Investors dislike uncertainty. The tariff flip-flopping in the US is a case in point, causing a sharp market sell-off that has left investors rattled.But when hedge funds and major asset managers recently met Stephen Miran, the top economic adviser to US President Donald Trump, nerves were hardly soothed, write Kate Duguid, Costas Mourselas, Katie Martin and Demetri Sevastopulo.Miran, chair of the Council of Economic Advisers, convened with top hedge funds and other major investors at the White House during which tariffs and markets were discussed. Two people in the meeting described Miran’s comments on the topics as “incoherent” or incomplete.Others, though, were more optimistic. Another person familiar with the event was encouraged by the administration’s approach to tax cuts and deregulation. About 15 people attended the gathering, including representatives from hedge funds Balyasny, Tudor and Citadel, as well as asset managers PGIM and BlackRock.The White House said the “administration officials maintain regular contact with business leaders and industry groups about our trade and economic policies.” It added that “the only interest guiding the administration and President Trump’s decision-making, however, is the best interest of the American people”.Trump’s trade policies have triggered intense volatility in US equity and debt markets, with US government bonds selling off sharply after the president’s April 2 announcement of steep “reciprocal” tariffs.Other countries are now baring their teeth. On Friday, Japan’s finance minister publicly identified the country’s more than $1tn holdings of US Treasuries as a “card” in its trade negotiations with the Trump administration. China is also quietly diversifying from US Treasuries, as investors become increasingly anxious about US government bonds.Chart of the weekThe US economy contracted by an annualised 0.3 per cent over the first quarter, as companies in the world’s largest economy responded to Donald Trump’s trade war by rushing to import goods, writes Claire Jones.The fall in the GDP reading — the first since 2022 — was worse than economists’ most recent forecasts and compared with the 2.4 per cent rise for the fourth quarter.It was largely the result of companies’ rush to buy goods from abroad ahead of the US president’s sweeping tariffs, with imports rising at an annualised rate of 41 per cent.Many analysts argued that the headline GDP number was principally brought down by an extraordinary increase in the US trade deficit, rather than reflecting underlying trends.Morgan Stanley economists said the surge of imports ultimately contributed to inventories, consumption and investment — positive factors in calculating GDP that were not fully reflected in Wednesday’s data.“In effect, the imports don’t fully appear in the spending parts of the GDP accounts and therefore exaggerate GDP weakness,” they said.Some economists focus instead on other measures, such as investment and consumer spending.Wednesday’s figures showed that the sum of consumer spending and gross private fixed investment increased 3 per cent in the first quarter, up on the previous rate of 2.9 per cent.In a post on his Truth Social network, Trump suggested the figures had “NOTHING TO DO WITH TARIFFS”.Blaming former president Joe Biden, he added: “I didn’t take over until January 20th . . . When the boom begins, it will be like no other. BE PATIENT!!!”Five unmissable stories this weekBlackRock’s shareholders are being urged by proxy adviser Institutional Shareholder Services to vote against chief executive Larry Fink’s pay at the group’s upcoming annual meeting.Capital Group and KKR are aiming to launch new funds spanning private loans, corporate buyouts, and infrastructure and property deals in the latest tie-up between big traditional asset managers and private capital firms.Ministers in the UK are using strong-arm tactics to pressure pension funds to honour a proposed “voluntary” commitment to invest more in UK assets, according to industry figures. The Conservatives say the move smacks of “desperation”.Franklin Templeton is aiming to list $1.7bn of Uzbekistan’s state assets on international markets within a year, as part of a plan by the US investment group to put the central Asian country on the map for global investors. The late Pope Francis grappled with the opaque finances of the Vatican, a significant task that leaves a forbidding challenge for his successor.And finallySelf-Portrait, 1882-83 by Edvard Munch More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The head of the world’s biggest diamond company has expressed his confidence that the US will remove tariffs on the precious stones that he believes are of “no benefit” to the country.Al Cook, chief executive of De Beers, told the Financial Times there were “no US diamond mining jobs to protect” and that the company had held discussions with several governments about the matter.Tariffs were of “no benefit” to the US and “would purely be a consumption tax on the American consumer,” he said. “There would be no jobs created.”The US is the world’s largest market for diamond jewellery, accounting for about half of global demand, but has no domestic mining or known commercial deposits of the stones.The tariffs announced last month by President Donald Trump have thrown the diamond industry into turmoil and briefly brought trade in the gems to a “standstill”, according to market participants.The World Diamond Council, an industry group, warned today that $117bn in annual revenues as well as 200,000 American jobs in the jewellery sector would be at risk if the US did not remove tariffs on the stones.“Tariffs on diamonds would function as a consumption tax, raising prices on engagement rings, anniversary gifts, and other jewellery,” the group said in a statement on Monday that urged the White House to exempt the gems from the new import duties.Diamonds entering the US are subject to the 10 per cent tariff on all imported goods, and face a variable country-based levy that has been suspended for 90 days.Many raw materials were excluded from the tariffs, but diamonds were not — adding to the pain for an industry grappling with a downturn in demand and competition from synthetic diamonds, which can be manufactured at a fraction of the cost.De Beers chief executive Al Cook said: ‘People are confident enough that in the long term, diamonds will be exempted from tariffs’ More