Economy

The deal would have brought six brands under one roof: Tapestry (NYSE:TPR)’s Coach , Kate Spade and Stuart Weitzman; and Capri’s Versace, Jimmy Choo and Michael Kors. But regulators sued to block the deal earlier this year, citing anti-competition concerns.Capri shares were down nearly 6% in premarket trading on Thursday. They have lost nearly half of their value since a U.S. judge blocked the deal late last month. Tapestry’s stock, on the other hand, was up 6%, as the company also announced a $2 billion share buy back.The merger was blocked last month after the U.S. Federal Trade Commission (FTC) argued that it would eliminate head-to-head competition between the top two handbag makers and create a massive company with the power to unfairly raise prices.The companies said on Thursday they mutually agreed that ending the merger agreement was in their best interest, as the outcome of the legal process was uncertain and unlikely to be resolved by Feb. 10, the deal deadline.”We have always had multiple paths to growth and our decision today clarifies the forward strategy,” Tapestry CEO Joanne Crevoiserat said.The company said it does not expect any acquisitions in the near term and has agreed to reimburse Capri’s expenses of about $45 million, incurred in connection with the merger.Tapestry, which halted its merger plans last week as it appealed the U.S. judge’s decision, has raised its 2025 profit forecast after posting strong quarterly results.Capri, on the other hand, has reported several straight quarters of sales decline since the deal was announced in August last year. More

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BENGALURU (Reuters) – The euro zone economy will be hit with tariffs from the incoming U.S. Trump administration early next year, according to a majority of economists polled by Reuters, all but ensuring a series of interest rate cuts from the European Central Bank. President-elect Donald Trump’s proposed across-the-board tariffs will have a significant effect on the euro zone economy over the coming two to three years, according to a strong majority of economists polled. They have also raised the risks of reflation in the U.S.”Many questions are unresolved, but for now the signs are for weaker growth, more likely disinflation and lower ECB policy rates,” said Greg Fuzesi, euro area economist at J.P. Morgan.”The threatened tariffs would be much bigger this time round and could come at any time,” he said. Nearly 85% of economists surveyed Nov. 8-14, 37 of 44, expected Trump’s proposed tariffs – a 10% universal levy on imports from all foreign countries and 60% on Chinese imports – to be implemented early next year.About the same proportion, 34 of 39, said the tariffs would significantly impact the euro zone economy in the coming years.Since Trump’s U.S. election victory last week, market pricing has swiftly changed towards fewer U.S. Federal Reserve rate cuts and more ECB reductions.Some ECB officials have shared similar concerns. Bundesbank President Joachim Nagel recently said the tariffs, if implemented, could cost Germany 1% in economic output and it “could even slip into negative territory.”Markets are now pricing around 150bps of ECB rate cuts between now and end-2025 against only around 75bps of Fed reductions, suggesting further challenges for the euro, which has dropped nearly 4% against the dollar since the election.Most economists in the Reuters poll predicted a total of at least 125bps in reductions from the ECB by end-2025, only a bit shallower than market pricing.Over 90% of economists, 69 of 75, forecast the ECB would lower its deposit rate by 25bps for the third consecutive meeting in December, with nearly 70%, 51, predicting two more cuts next quarter, bringing it to 2.50%.While many downgraded their 2025 forecast, poll medians still expect the economy will grow 1.2% in 2025 and 1.4% in 2026, unchanged from last month. That suggests there are further downside risks to those numbers. “There are a wide range of sub-scenarios which include a global rise in tariffs between the U.S., EU and China and a sharp increase in uncertainty around global protectionism is certainly significant,” said Henry Cook, senior economist at MUFG, who estimates a 0.4 percentage point hit to euro zone growth next year.Inflation, at the 2.0% ECB target last month, will average 2.2% this quarter but return to target next quarter. It is forecast to be around there through 2027.Nearly 70% of economists, 43 of 63, expected the deposit rate to be 2.00% or lower by the end of next year, a bigger majority than the 60% who said this in October. Among 44 common contributors in the two polls, 43% of economists, 19, downgraded their end-2025 rate forecasts.The ECB doesn’t have an estimate for the neutral rate, which neither restrains nor stimulates the economy, but a staff-published paper earlier this year showed a real rate of around zero – or about 2% in nominal terms – when adjusted for inflation.”Rather than the ECB policy rate returning to neutral in mid-2025 we now see the rate falling moderately below neutral by end-2025,” said Mark Wall, chief Europe economist at Deutsche Bank (ETR:DBKGn).”The rationale in part relates to the prospect of U.S. tariffs under a new Trump administration and in part a weaker underlying macro performance and the emerging threat of below-target inflation.”(Other stories from the Reuters global economic poll) More

The deal allows Merck (NS:PROR) to take over development of LaNova’s LM-299, a drug candidate targeting a protein called PD-1, which prevents the immune system from killing cancerous cells. It also curbs levels of another protein called VEGF, which can encourage tumor growth if found in excess.Under the agreement, Merck will pay $588 million upfront to LaNova. The Chinese company is also eligible to receive up to $2.7 billion in milestone payments. More

NEW YORK (Reuters) – Federal Reserve governor Adriana Kugler said Thursday the central bank has made considerable progress in working to achieve its job and inflation goals, while stopping short of offering firm guidance over what that means for the near-term monetary policy outlook.“The United States has seen considerable disinflation while experiencing a cooling but still resilient labor market,” Kugler said in the text of a speech prepared for delivery before the 2024 Annual Meeting of the Latin American and Caribbean Economic Association and the Latin American and Caribbean Chapter of the Econometric Society, in Montevideo, Uruguay. But while there’s been progress on getting inflation back to the 2% target, Kugler noted there are likely to be ongoing challenges to further ease price pressures from housing factors and other factors. Meanwhile, Kugler said the job market has rebalanced itself and cooled.As for the monetary policy implications of the current landscape, Kugler said it would come down how the data performs. She did not say in her formal remarks whether she expected the Fed to cut rates again next month. The combination “of a continued but slowing trend in disinflation and cooling labor markets means that we need to continue paying attention to both sides of our mandate,” the official said. If inflation doesn’t retreat further “it would be appropriate to pause our policy rate cuts. But if the labor market slows down suddenly, it would be appropriate to continue to gradually reduce the policy rate.” More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldNow where have we heard these words before? Peter Mandelson, the former cabinet minister and EU commissioner now widely touted in Labour circles as the next ambassador to Washington, has pronounced that in navigating its relationship between the EU and a Trump-led America, Britain needs to “have our cake and eat it”.Mandelson is no Boris Johnson, so his adoption of the former prime minister’s cakeist Brexit mantra offers a hint of the government’s early thinking on how to respond to the new reality. The first days since Donald Trump’s victory have provoked strong opinions, most of which argue the UK must now do whatever the commentator already wanted to see happen.Left Remainers see a chance for closer ties with the EU in the horror of Trump 2. The free-trade Brexit dream is over and, with an unreliable Atlantic ally and looming trade war, the UK cannot risk being squashed between two blocs. On the environment, European security and maintaining multilateral order, the UK aligns with the EU. Keir Starmer may have ruled out rejoining its structures this parliament but policy can tilt faster towards regulatory realignment and security pacts. Brexiters are similarly excited. Here at last is that coveted UK-US free-trade deal, which could further push Britain out of the EU’s regulatory orbit. The UK has too many defence and trade interests to abandon the Atlantic alliance, so the only option is to double down on it. Throw in hawkishness on China and doubts over the stability of European leadership and the play is obvious.It is possible that Trump’s second term is so shocking that judgments change but choosing sides is not in Britain’s interest. Both alliances must be sustained. There is no benefit to being pulled further from an EU with which Britain has just begun to rebuild ties and no prospect of the UK walking away from the Atlantic alliance. In any case, all the grand strategies assume a degree of agency the UK may not have. So, in the words of one diplomatic source with an eye for a happy phrase, Britain must “relearn the art of the deal”. The nation’s diplomatic and economic stance needs to be more transactional. Realpolitik will rule. That means minimising unwanted choices and advancing UK interests through ad hoc alliances built around specific goals. Tying America to a shared agenda will not be easy. Trump will be even less biddable second time around and the value of his anglophilia is overstated.With the US, Britain will lean on intelligence and defence ties as it seeks to keep America engaged in Europe. US demands for higher defence spending are a necessary and fair price for maintaining Nato and some of that can be spent in America. While arguing for free trade, the UK will also seek to minimise direct tariff disruption, and since its exports are services-led, its small goods surplus should push it lower down Trump’s targets. A full trade deal will not be the primary focus, but if a politically sellable agreement that does not limit opportunities with the EU is on offer, then of course Britain will take it. Some point to last year’s Atlantic Declaration between Rishi Sunak and Joe Biden as a template. Security — including the Aukus defence pact — defence technology, life sciences and artificial intelligence will be the overlapping areas of interest, and ones where the UK is closer to American regulatory instincts. With the EU, the focus will be on defence and energy security, data sharing, easing obstacles to market access and some form of youth mobility scheme. Starmer and David Lammy, foreign secretary, are working to reinsert the UK into EU structures, primarily via a new security pact. The UK is going to be buffeted by big power politics. It can neither afford to repel nor cosy up to China but it is already putting more diplomatic effort into Beijing while emphasising alliances with Japan and Australia.Relearning the art of the deal also means acting with more humility, coaxing rather than demanding, and avoiding jingoistic stances that win temporary cheers in the press but alienate potential allies. The UK must act as a middle power, outside of rival economic blocs, weaving between the EU and US, being a strong voice and building alliances for causes it supports, as it has with Ukraine and climate change.Recent Foreign Office reviews demanded by Lammy, who anticipated Trump’s win, have focused on economic diplomacy and on working with the global south (where the west has lost ground to China), while the Budget found more funding for the soft power of the BBC World Service.This then is a vision of Britain on its mettle. And if that all sounds a little familiar, there is a reason. For this is an updated vision of the freewheeling Global Britain that Johnson and the Brexiters championed. As then, such statecraft is easier to articulate than achieve but for now at least it may be the best available model.Before the US election, most in Labour saw a future in which they drew closer to the EU with the blessing of the White House and all worked together on shared security and climate goals.  The new president has changed that calculation. Labour remains too pro-EU to be pushed from its orbit. But in forcing the UK to adjust to a new and unwelcome world order, it may well be that Trump becomes the man who delivers the original diplomatic vision of Brexit.robert.shrimsley@ft.com More

BAKU (Reuters) – Developing countries need at least $1 trillion per year by the end of the decade to cope with climate change, economists told U.N. talks in Baku, where early efforts to reach a finance deal risk being overshadowed by diplomatic rows.Money is a focus at COP29 whose success is likely to be judged by whether it can agree a new target for how much richer countries, development lenders and the private sector must provide each year to help developing countries finance the transition to greener energy and protect against extreme weather.Reaching a deal is likely to be especially hard at a summit where the mood has been soured by disputes and pessimism about shifts in global politics. Donald Trump’s presidential election win has cast the United States’ future role in climate talks into doubt and tension between developed and developing nations has bubbled to the surface on the main stages and in negotiating rooms.”Parties must remember that the clock is ticking,” COP29 Lead Negotiator Yalchin Rafiyev told a news conference. “They must use this precious time to talk to each other directly and take ownership of building bridging solutions.” A previous finance goal of $100 billion per year, which expires in 2025, was met two years late in 2022, the OECD said in May. Much of it was in the form of loans rather than grants, something recipient nations say must change.Setting the tone at the start of Thursday, a report from the Independent (LON:IOG) High-Level Expert Group on Climate Finance said the target annual figure would need to rise to at least $1.3 trillion a year by 2035 if countries fail to act now.”Any shortfall in investment before 2030 will place added pressure on the years that follow, creating a steeper and potentially more costly path to climate stability,” the report said.Behind the scenes, negotiators are working on draft texts, but so far early-stage documents published by the United Nations climate body reflect the huge range of views around the table.Some negotiators said the latest text on finance was too long to work with, and they were waiting for a slimmed-down version before talks to shape a deal could begin.Any deal is likely to be hard fought given a reluctance among many Western governments – on the hook to contribute since the Paris Agreement in 2015 – to give more unless countries including China agree to join them.The likely withdrawal of the United States from any future funding deal will raise pressure on delegates to find other ways to secure the needed funds.Among them are the world’s multilateral development banks such as the World Bank, funded by the richer countries and in the process of being reformed so they can lend more.Ten of the largest have said they would plan to increase their climate finance by roughly 60% to $120 billion a year by 2030, with at least an extra $65 billion from the private sector.On Thursday Zakir Nuriyev, head of the Association of Banks of Azerbaijan, said the country’s 22 banks would commit nearly $1.2 billion to finance projects that help Azerbaijan transition to a low-carbon economy. MORE DIVISION THAN UNITY        So far the conference – which many global leaders decided to skip altogether – has been marked more by division than unity.French climate minister Agnès Pannier-Runacher on Wednesday cancelled her trip to COP29, after Azerbaijan’s President Ilham Aliyev accused France of “crimes” in its overseas territories in the Caribbean.France and Azerbaijan have long had tense relations because of Paris’ support of Azerbaijan’s rival Armenia. This year, Paris accused Baku of meddling and abetting violent unrest in New Caledonia.”Regardless of any bilateral disagreements, the COP should be a place where all parties feel at liberty to come and negotiate on climate action,” European Union climate commissioner Wopke Hoekstra said in response, in a post on X.That followed Aliyev’s opening speech at the conference that accused the United States and EU of hypocrisy for lecturing countries on climate change while remaining major consumers and producers of fossil fuels.On Thursday, meanwhile, Argentina’s government withdrew its negotiators from the COP29 talks.Argentina’s President, Javier Milei, has previously called global warming a hoax. He is due to meet Trump, also a climate change denier, this week.When asked whether Argentina would withdraw from the Paris Agreement, Ana Lamas, undersecretary for environment for Argentina, who led the country’s delegation at COP29, told Reuters: “We are only withdrawing from COP29.” The COP29 Presidency described it as a matter between Argentina and the United Nations. More

Spain’s fourth most-read newspaper for general news said it would stop posting directly but would allow its journalists to maintain personal accounts. The editor, Jordi Juan, said he had suspended his own account.X did not immediately respond to a request for comment.The move follows Britain’s the Guardian, which also cited racism and conspiracy theories for its exit from the platform on Tuesday.The Barcelona-based newspaper, which has 1.7 million followers on the platform previously known as Twitter, said X lacked an “effective and reasonable” moderating process since Musk bought it in 2022.”Since the arrival of Musk to X, this platform has increasingly tolerated toxic and manipulated content thanks to the proliferation of bots,” Juan wrote in an editorial. “Ideas that violate human rights, such as hatred of ethnic minorities, misogyny, and racism, are part of the viral content distributed on X, where they gain virality and capture more user time to earn more money from advertising,” the paper added in a leader.La Vanguardia also cited U.S. President-elect Donald Trump appointing Musk as head of a new Department of Government Efficiency and the spread of disinformation by bots, from countries as far away as India, about the floods that hit the region of Valencia two weeks ago as reasons behind its decision.When Musk took over, he fired thousands of workers including many in the content moderation department, La Vanguardia said. X also left a European Union programme against disinformation in 2023, it noted.Critics say Musk’s hands-off approach has allowed lies and hate speech to spread on the platform. Musk has said he is defending freedom of speech. More