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President Trump and his advisers say his policies may cause short-term pain but will produce big gains over time. Many economists are skeptical of those arguments.Presidents usually do all they can to avoid recessions, so much so that they avoid even saying the word.But President Trump and his advisers in recent weeks have offered a very different message. Yes, a recession is possible, they have said. Maybe one wouldn’t even be that bad.Howard Lutnick, the commerce secretary, has said Mr. Trump’s policies are “worth it” even if they cause a recession. Scott Bessent, the Treasury secretary, has said the economy may need a “detox period” after becoming dependent on government spending. And Mr. Trump has said there will be a “period of transition” as his policies take effect.Such comments may partly reflect an effort to align political statements with economic reality. Mr. Trump promised to end inflation “starting on Day 1” and declared, in his inaugural address, that “the golden age of America begins right now.”Instead, inflation has remained stubborn, and while Mr. Trump has been in office less than two months, economists warn that his tariffs are likely to make it worse. Measures of consumer and business confidence have plummeted and stock prices have tumbled, attributable in large part to Mr. Trump’s policies and the uncertainty they have caused.“It’s the kind of language that you use when your policy isn’t going great and you can see that it’s actively harming people,” said Sean Vanatta, a financial historian at the University of Glasgow in Scotland.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

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Foreign investors have flocked to Nigeria’s markets in recent months, as the threat of a US trade war with larger developing economies has sent portfolio managers looking for cover in former crisis-hit frontier markets now on the rebound.The Nigerian naira is among the world’s top-performing currencies since November’s US election with a rise of more than 7 per cent against the dollar, as a turnaround in the continent’s most populous nation — and the lure of yields of 20 per cent to 25 per cent — trigger a rally in the local bond market following a massive devaluation.The rally in Nigerian assets reflects how “idiosyncratic” trades, or specific bets on countries coming out of currency crises or defaults, are in favour as investors are finding it increasingly hard to read how US President Donald Trump’s threats of tariffs will affect emerging markets as a whole.“Even though everyone is doing a rethink with Trump’s policies and the inflation impact, if at all, of tariffs, investors are looking for potential places to invest that might be able to be resilient to all of that going on in the background,” said Razia Khan, Standard Chartered’s head of research for Africa and the Middle East.Commodity-exporting frontier economies such as Nigeria are less integrated into the US economy than richer emerging markets that produce higher-value goods such as automobiles or electrical goods. That insulates the former group from wider tariff-driven sell-offs, said Alexis de Mones, debt portfolio manager at Ashmore, the emerging markets asset manager.“They don’t have high trade surpluses with the US [and] they are not as exposed to the noise from tariffs in general,” he said.Many of these countries are also coming off very difficult periods after high global interest rates in recent years led foreign investors to pull their money out, which exposed weak currencies and sent governments either to the IMF for help or forced drastic self-help economic policies.Egypt, Turkey and other countries that were hit by capital flight have enticed investors back in the past year with tough economic medicine to raise interest rates. Dropping unsustainable pegs to the dollar has helped drive double-digit returns on local currency bonds. Nigerian local currency government bonds have also performed well, especially in the past month. Many emerging market hedge funds produced their best returns in years by chasing these opportunities last year, and similar moves in dollar bonds of countries such as Argentina and Ecuador.“Foreign portfolio investors are thinking Nigeria could be the next Turkey,” said Charlie Robertson, head of macro strategy at FIM Partners. “There’s been proper change in the fundamentals of the Nigerian economy . . . two years ago, you had a currency that was uninvestable.”Nigeria’s stock market has gained about 4 per cent in dollar terms this year, better than many bigger markets. Nigeria had fallen off the radar for many international investors in recent years as controls on the naira made it difficult to extricate profits.Since President Bola Tinubu took office nearly two years ago, his government has removed fuel subsidies that had burned up foreign reserves, while the central bank removed a peg that propped up the value of the naira and increased rates to 27.5 per cent. The currency lost 70 per cent of its value against the dollar after two devaluations, but it has stabilised since November and is currently trading at what many observers believe is closer to its fair value, at 1,541 to the dollar.“There has been a series of economic reforms that have really made a difference in the tradability of Nigeria from a local currency assets point of view,” de Mones said. “Under the previous administration, the naira was kept at an artificially high level,” he said. “If you had invested in a prior period and you had to get dollars out, you had to get in the queue.”Despite the inflows of dollars from bonds bought by foreign investors, and a recovery in oil production to a four-year high last month, Nigeria’s gross reserves have fallen so far this year, to $38.5bn from $40bn. Investors said the drop was likely to reflect the central bank paying down debts that inflated the gross reserves measure. This would improve net reserves, but these are not published. Policymakers also appear to be targeting stability or slight appreciation in the naira, investors added.“I think they’re intervening to make sure the naira doesn’t come under a speculative attack,” said Bismarck Rewane, chief executive of Lagos-based consultancy Financial Derivatives. “My personal worry is that if oil prices drop or there’s a real reversal in gains from foreign portfolio inflows, the currency could be at real risk.”Inflation is also elevated at 23 per cent as of February, with higher food prices driving the high cost of living. “For the second leg of the trade, you need to see disinflation kick in,” said de Mones.StanChart’s Khan said: “We shouldn’t underplay the very real pain that ordinary Nigerians have felt through this liberalisation experience. The pain that people took may mean it takes a while longer before the benefits of all this are realised.”While the naira still appears cheap and insulated from trade risks versus other emerging markets, “it has become a more populated trade for foreign investors”, one manager said. “The more interest there is in these trades, the less idiosyncratic it is in terms of risk.” More

Retail sales increased 0.2% on the month, better than the downwardly revised decline of 1.2% the prior month but below the Dow Jones estimate for a 0.6% increase.
The so-called control group, which strips out non-core sectors and feeds directly into gross domestic product calculations, rose a better than expected 1%.
Also, the New York Fed’s measure of factory activity in the region posted an unexpectedly sharp drop for March.

Consumers spent at a slower than expected pace in February, though underlying readings indicated that sales still grew at a solid pace despite worries over an economic slowdown and rising inflation.
Retail sales increased 0.2% on the month, better than the downwardly revised decline of 1.2% the prior month but below the Dow Jones estimate for a 0.6% increase, according to the advanced reading Monday from the Commerce Department. Excluding autos, the increase was 0.3%, in line with expectations.

The sales number is adjusted for seasonal factors but not for inflation. Prices rose 0.2% on the month, according to a previous Labor Department report, indicating that spending was about on pace with inflation.
The so-called control group, which strips out non-core sectors and feeds directly into gross domestic product calculations, rose a better than expected 1%.
“Not a great report, but one still in positive territory despite how pessimistic consumers are about the future,” said Robert Frick, corporate economist with Navy Federal Credit Union. “But the main factor in consumer spending is consumer income, and that’s growing at a good rate and had an impressive leap in January.”
Online spending helped boost the sales number for the month, with nonstore retailers reporting a 2.4% increase. Health and personal care showed a 1.7% gain while food and beverage outlets saw a 0.4% increase.
On the downside, bars and restaurants reported a 1.5% decrease while gas stations were off 1% amid falling prices at the pump.

Sales overall increased 3.1% on a year over year basis, better than the 2.8% inflation rate as measured by the consumer price index.
One other downbeat note from the report was a steep revision for January, which originally was reported as a 0.9% decline.
The release comes amid heightened worries over economic growth, particularly as President Donald Trump engages in an aggressive tariff battle with leading U.S. trading partners. Economists worry that the tariffs will drive up inflation and slow the economy.
“Consumers and businesses are expected to pull back on spending when they’re unable to make informed decisions about the future of the economy and their place within it,” said Elizabeth Renter, senior economist at personal finance site NerdWallet. “Currently, direct economic policies and broad federal policies with indirect economic impact are in flux, making informed decisions difficult.”
Some indicators, such as the Atlanta Federal Reserve’s GDPNow tracker of economic data, are showing that growth could be negative in the first quarter, though the solid reading for control retail sales could result in an upward revision later today.
In other economic news Monday, the New York Fed’s measure of factory activity in the region posted an unexpectedly sharp drop for March.
The Empire State Manufacturing Survey posted a reading of -20 for the month, representing the difference between companies seeing expansion against contraction. The number indicated a drop from the 5.7 level in February and was well below the estimate for -1.8.
New orders posted a sharp slide, with the index tumbling to -26.3, down 14.9 points. Shipments also were off significantly. On inflation, indexes for prices paid and received also rose. More

This article is an on-site version of our Trade Secrets newsletter. Premium subscribers can sign up here to get the newsletter delivered every Monday. Standard subscribers can upgrade to Premium here, or explore all FT newslettersHello. Incredibly, a week is coming up without a major US tariff deadline in it, but never fear, as long as Donald Trump is in the White House and commerce secretary Howard Lutnick is allowed on television the entertainment will continue. Further evidence that the Trump tariff policy is genuine chaos (as I thought it would be) and not a cunning plan arrived last week via anonymously sourced news stories of administration infighting, with Lutnick the main target of blame. “The only one who thinks it’s chaotic is someone who’s being silly” was the former Wall Streeter’s unconvincing response. Last week the first set of non-China Trump tariffs actually happened, the 25 per cent steel and aluminium duties. Today’s pieces are on the various responses to them, specifically from the EU, Canada and the UK. The Charted Waters section, which looks at the data behind world trade, is on how the US is dragging down forecasts for global growth next year.Get in touch. Email me at [email protected] EU’s well-oiled rebalancing machineThe steel and aluminium levies are entry-level Trump protectionism, placed on products whose markets have in any case long been distorted by state support and trade defence instruments (anti-dumping and anti-subsidy duties). They partly restored tariffs from Trump’s first term, which in the EU’s case were suspended after a deal with the Biden administration, and added a lot more. Brussels didn’t have to think too much about the response, pushing the button setting the machine of countermeasures in motion, reinstating the tariffs it had suspended during the truce and starting consultations on expanding them. The EU insists these tariffs are for “rebalancing” rather than retaliation. Classifying Trump’s tariffs as “safeguards” (which are imposed to deal with a flood of imports rather than those unfairly priced) allows Brussels to impose counter-duties immediately. Is that WTO-legal? Very dicey, but since the US has frozen the WTO Appellate Body that would rule on the issue, Brussels will keep doing it.The tariffs were as usual directed at supposedly politically sensitive areas, such as soyabean farmers in Louisiana, home state of the House of Representatives majority leader Mike Johnson. But as I’ve argued before, the retaliation game has changed. Supine Republican senators and congressmen are highly unlikely to make a big fuss about Trump’s trade war either privately or publicly.The real challenge for the EU is yet to come, in the form of responding to future bogus “reciprocal” tariffs or punitive duties on champagne or whatever Trump’s brains trust comes up with that day, which are currently scheduled for April 2, though frankly who knows?The moose that roared*“Wow, Canadians seem so placid and diffident, I didn’t think they’d react like this” said someone who’s never met a Canadian trade negotiator. If the US tariff war against Canada were a baseball game, you’d have to be wondering if Trump was doing a Shoeless Joe Jackson and deliberately losing it for money. On the face of it, his strategy appears to be to build up political resistance in Canada while undermining his own negotiating position and trashing the US economy. It’s incredible to watch.Sorry if this all seems obvious and repetitive, but let’s go through last week’s events to underline not just the destructiveness but the utter ineptitude. Once again, following the pattern with Colombia in the first week of his administration and then Canada and Mexico in the third and the seventh week, Trump threatened and then partially lifted or backed away from imposing tariffs.This time it involved threatening extra-high 50 per cent import duties on steel before retreating after speaking with Doug Ford, premier of the Canadian province of Ontario, who had imposed export taxes on electricity sales to the US. The first couple of times it took the Canadian prime minister to face down Trump; now it’s the head of a single province. By the summer Trump will be running scared of a jug of maple syrup.It’s a no-brainer for Canada to confront rather than placate Trump, since he demanded first the impossible and now the unconscionable. He’s moved on from targeting almost non-existent fentanyl smuggling to make a literally existential demand of annexing Canada, but without yet imposing the tariffs to impress on Canadians the cost of resistance. Trump has contrived to build a rock-solid political consensus against him in Canada and rocketed the relatively Trump-hostile Liberals back up in the polls. The same is true in Mexico, where President Claudia Sheinbaum is enjoying stratospheric popularity ratings.If you believe that this is all a cunning plan to strike fear into the hearts of trading partners and force them to sign the mythical Mar-a-Lago accord to realign the dollar and buy US perpetual bonds, it’s not going very well. Any Canadian leader who goes to Mar-a-Lago and agrees to appreciate the Canadian dollar and indefinitely lend money to the US is likely to be clapped in irons for high treason on return. *It’s a movie reference. Yes, film nerds, I know the premise of the original is actually a small country deliberately losing a war to the US, but some puns are too good to pass up.Britain takes the punch and decides to talkThe UK tried something a bit different in response to the steel and aluminium tariffs, that is do nothing. Given that tariffs mainly hurt the economies that impose them you might regard this as an economically optimal approach, frequently suggested by people like me who don’t have to get elected to anything.In practice it’s more likely to reflect simple pragmatism than a heart-warming return to the UK’s free-trade history. Compared with the EU, Britain is a small steel producer that doesn’t export much to the US. Certainly, an attempt to run a systematically more liberal trade defence policy under the Conservative government lasted about ten seconds when it came to protecting British steelmakers from Chinese imports.More interesting, and risky, is Sir Keir Starmer’s government’s idea of signing some kind of trade and tech deal with the US to keep the Trump tariff wolf indefinitely from the door. I assume this will be a cobbled-together set of unilateral announcements rather than an actual preferential trade agreement (PTA), which even under this spineless Congress would be a slow process. The obvious candidate, given that Starmer’s government seems to have fallen under the spell of the artificial intelligence salespeople, is that the UK will please Trump’s tech pals by weakening its plans for data and digital regulation.Even if you think this is a good idea (not my field, but my instinct is to be sceptical), the UK will get nothing back except a nonbinding promise to hold off tariffs or whatever other form of coercion Trump might favour in the future. They should first ask the Canadians and Mexicans how well agreeing the US-Mexico-Canada (USMCA) deal during Trump’s first term to forestall US trade aggression has worked out.This mini-deal seems to be strongly associated with UK ambassador Lord Peter Mandelson, about whose judgment over trade agreements I have already expressed reservations. My doubts were not dispelled when Mandelson appeared recently on the US Sunday morning political talk shows and so flatly contradicted the government line on Ukraine that he had to be corrected the next day by a minister. If you’re going to change your tech regulation plans, do it on its own merits. Don’t imagine that you’re going to get paid handsomely in durable trade concessions by Trump as a result.Charted watersGlobal economic growth is likely to slow next year, but note this is largely driven by the US (and Japan), while the EU economies are going to do pretty well.Trade linksThe trading system’s going to hell, as usual. And yet, as usual, actual goods trade growth looks OK just for the moment, according to the WTO.The FT examines how tariffs and cuts to federal employment are weakening the US economy.The Economist examines Europe’s potential leverage over the US in a trade war and concludes it’s bigger than you might think. Contrary to Trump’s wishes, automakers are not moving production to the US to beat his tariffs.Tej Parikh in the FT’s Free Lunch column argues that on a decades-long view Canada could be an economic powerhouse.The FT’s Unhedged newsletter argues that the dollar may have stopped being a barometer of Trump’s actions on tariffsTrade Secrets is edited by Jonathan MoulesRecommended newsletters for youChris Giles on Central Banks — Vital news and views on what central banks are thinking, inflation, interest rates and money. Sign up hereFT Swamp Notes — Expert insight on the intersection of money and power in US politics. Sign up here More

Global growth is expected to slow from 3.2% in 2024 to 3.1% in 2025 and 3.0% in 2026, according to the OECD. It had previously forecast 3.3% global economic growth this year and next.
The U.S.’s annual GDP growth is also projected to fall to 2.2% in 2025 and 1.6% in 2026 — down from earlier forecasts of 2.4% this year and 2.1% next year.
“A series of recently announced trade policy measures will have implications for the economic outlook if sustained,” the OECD said.

Both U.S. and global economic growth is set to be lower than previously projected as President Donald Trump’s proposed tariffs on goods imported to the U.S. weigh on growth, according to the latest estimates from the Organisation for Economic Co-operation and Development.
“Global GDP growth is projected to moderate from 3.2% in 2024, to 3.1% in 2025 and 3.0% in 2026, with higher trade barriers in several G20 economies and increased geopolitical and policy uncertainty weighing on investment and household spending,” the OECD said Monday in its interim Economic Outlook report.

“Annual GDP growth in the United States is projected to slow from its strong recent pace, to be 2.2% in 2025 and 1.6% in 2026.”
In its previous projections, published in December, the OECD had estimated 3.3% global economic growth this year and next. The U.S. economy had been expected to grow 2.4% in 2025 and 2.1% in 2026.
Mathias Cormann, secretary-general of the OECD, on Monday said that the uncertainty around trade policy was a key factor in the organization’s projections.
“There’s a very significant level of uncertainty right now, and you know it is clear that the global economy would benefit from increases in certainty when it comes to the trade policy settings,” he told CNBC’s Silvia Amaro.
In its report, the OECD said its latest projections were “based on an assumption that bilateral tariffs between Canada and the United States and between Mexico and the United States are raised by an additional 25 percentage points on almost all merchandise imports from April.”

If the tariff increases were lower, or applied to fewer goods, economic activity would be stronger and inflation would be lower than projected, “but global growth would still be weaker than previously expected,” the report noted.

Canada and Mexico, both on the receiving end of tariffs imposed by the U.S., saw their growth outlooks slashed dramatically. Canada’s economy is now expected to grow 0.7% this year, down from the previous 2% estimate, and Mexico’s is projected to shrink by 1.3% — compared to a previously estimated 1.2% expansion.
The OECD also updated its inflation forecast, saying price growth was set to be higher than previously expected, but would ease due to moderating economic growth.
“What we see is that inflation will continue to go down, but that inflation is expected to go down more slowly,” Cormann told CNBC. “What we are suggesting is that some of the measures in relation to trade, some of the measures in relation to tariffs, and the related policy uncertainty, certainly are having an impact on inflation.”
Headline inflation in the U.S. is now expected to come in at 2.8% in 2025 according to the latest figures, up from the 2.1% December estimate, while the projection for G20 economies has risen from 3.5% in December to 3.8% in Monday’s report.
“Core inflation is now projected to remain above central bank targets in many countries in 2026, including the United States,” the OECD added.
OECD head Cormann said central bankers should now “remain vigilant.”
“Certainly, if inflation expectations remain anchored, we do believe that in even major economies like the United States and the United Kingdom, there is scope for further policy easing,” he said, but pointed out that in some major economies the pace of inflation easing has slowed or inflation has picked back up.

Trade policy tensions

The OECD linked much of its update to economic growth and inflation estimates to geopolitical and trade tensions — issues that have dominated markets in recent weeks and months.
“A series of recently announced trade policy measures will have implications for the economic outlook if sustained,” the OECD said, pointing to the tariffs imposed, or threatened by, Trump, and potential retaliatory duties imposed by its trading partners.
Trump’s tariff policies have been marked by uncertainty over recent weeks, as negotiations and retaliation threats continue. The president has flipped-flopped over when tariffs will be imposed, which goods they will apply to and how high they will be, although he insisted last week that he wasn’t “going to bend at all.”
“If the announced trade policy actions persist, as assumed in the projections, the new bilateral tariff rates will raise revenues for the governments imposing them but will be a drag on global activity, incomes and regular tax revenues. They also add to trade costs, raising the price of covered imported final goods for consumers and intermediate inputs for businesses,” the OECD said.
Asked if he agreed with U.S. President Trump’s position that his trade policies could involve short-term pain, but long-term benefits for the country’s economy, the OECD’s Cormann said that lower global economic growth and higher inflation would have “flow on consequences” for the U.S.
If trade tariffs were reversed, there would be a “positive impact” on global growth, and therefore also U.S. economic growth, he said.
Cormann said that it was important to keep markets open and ensure they are functional and to have “rules based trading system in good working order,” adding that any issues should be resolved through cooperation and dialogue.
“We would encourage everyone to engage with each other and to honestly and openly, work through the issues at hand and try and find the best possible way forward without having to resort to tariffs and other trade restricting measures,” he said. More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldDonald Trump is the Maga movement’s greatest asset and its greatest liability. The US president is a political genius. But he is also, in the memorable phrase, attributed to Rex Tillerson, his first secretary of state, “a fucking moron” when it comes to understanding policy.That tension between Trump the genius and Trump the moron is dangerous for the “Make America Great Again” movement that he created and leads. As a political actor, there is no denying that Trump has an intuitive genius that has enabled him to completely reshape American politics. Winning a second term in office by a decisive margin has given him absolute authority within his party. For now, Trump can do what he wants. The problem is that what he wants is likely to be very damaging to America.The most obvious example of the self-destructive nature of Trump’s policies is his obsession with tariffs. The US president cannot or will not understand that tariffs are paid by importers and that much of the cost will be passed on to consumers. He also regards unpredictability as a virtue. So tariffs are imposed, lifted and then reimposed, seemingly on a whim. The result is that businesses cannot plan ahead and that consumers and investors are panicking.In Trump’s first term, when his political authority was weaker and his advisers more conventional, the president’s aides were able to deflect some of his worst ideas. Officials sometimes ignored or reinterpreted his instructions, or even removed papers from his desk, in an effort to contain his instincts.But in term two, the president has surrounded himself with sycophants who want to “let Trump be Trump”. Howard Lutnick, his commerce secretary, assures us that Trump is “the most important, the smartest, the most capable leader in the world”. So the president can press ahead with policies that are likely to damage the majority of Americans in direct and tangible ways. Trump has done many outrageous things in the past, such as attempting to overturn the result of the 2020 presidential election. But few of his previous actions affected the daily lives of ordinary Americans. Causing a recession, higher inflation or a stock market crash would be different. Some 60 per cent of Americans own shares, often in their retirement funds. Many will be dismayed by the recent slump in share prices. Consumer confidence is also falling, as inflation expectations rise. The economy was rated the most important issue by voters in the last election. But Trump’s ratings for handling the economy have already turned negative. There may be more pain to come as cuts in the federal workforce ripple out beyond Washington. Possible cuts in social security or government-funded health benefits would also hit millions.Picking fights with America’s neighbours and allies might seem to fall into the category of issues that the average voter can shrug off. But threatening to annex Canada (another moronic idea) has started a needless trade war with a peaceable neighbour. If the Canadians retaliate by forcing up the price of exports of oil or electricity to the US, ordinary Americans will suffer. Tariffs on Mexico could also raise supermarket prices. Some 50 per cent of America’s imported fruit comes from Mexico. The profits of the big three US car companies could be wiped out by a 25 per cent tariff on imports from Canada and Mexico.The economic effects of Trump’s policies are likely to determine the future of his presidency. But Trump is also putting Americans at risk in other ways. Sacking FBI agents and intelligence officers — and appointing conspiracy theorists as director of national intelligence and head of the FBI — is a recipe for an eventual high-profile disaster. Putting another conspiracy theorist, Robert F Kennedy Jr, in charge of the health department creates another set of obvious dangers. Watching Trump unleash his inner moron on the American government reminds me of a prediction I heard from a prominent US businessman in January. “If Trump does half the things he’s promising to do, this whole thing will blow up. And it will discredit Maga for a generation.”The obvious mechanism for a blow-up would be a huge defeat for the Republicans at the next elections. But the midterms are almost two years away. Trump and his minions can do a lot of damage to America’s institutions, including the electoral system, in that time. If the administration begins to obviously flounder, Trump is likely to respond with a hunt for scapegoats and increased authoritarianism. But the experience in other damaged democracies is that even a partly rigged system can work well enough to inflict electoral defeats on far-right populists. Jair Bolsonaro lost the Brazilian presidential election in 2022 (and has been charged with attempting a coup afterwards). Poland’s Law and Justice party lost power in elections in 2023. Viktor Orbán of Hungary, who has been prime minister since 2010 and is much admired by the Maga movement, is trailing in the polls ahead of elections expected next year — as the Hungarian economy struggles. There were anti-Orbán demonstrations in Budapest at the weekend. Rightwing populists can often win the culture wars. But mishandling the economy is much harder to explain away. If Maga makes Americans poorer, Trump and his movement are likely to pay the [email protected] More

This article is an on-site version of our FirstFT newsletter. Subscribers can sign up to our Asia, Europe/Africa or Americas edition to get the newsletter delivered every weekday morning. Explore all of our newsletters hereToday’s agenda: Netanyahu plans to sack Shin Bet chief; tariffs complicate Fed’s job; Europe’s “peace dividend” ends; Alibaba’s AI pivot; and young people lose trust in the stateGood morning and welcome back to FirstFT. We start the working week with a look at the sanctions-proof bets investors are using as they seek profits from Donald Trump’s rapprochement with Vladimir Putin.What’s happening: Hedge funds and brokers have been scoping out how to trade Russian assets that have been shunned by the west but which they believe could rally sharply if the US president relaxes sanctions as part of a deal to broker a ceasefire in Russia’s war against Ukraine. Some are hunting for bonds of Russian companies that were considered almost worthless following the 2022 invasion of Ukraine, but which are now being marked up in some investors’ internal valuations. Others have been using Kazakhstan’s tenge as a proxy for the rouble because of the country’s economic ties with Russia, although such trades are hard to do in size. Why it matters: International markets for Russian assets evaporated following the invasion of Ukraine, as sanctions severed banks from the global financial plumbing and the country suffered a huge flight of capital. Russia’s central bank raised interest rates as import costs surged and labour shortages mounted, particularly as the Kremlin began a crash programme of war production. The rouble trade is a bet that this dynamic will reverse, particularly if Russians who fled the country in fear of being mobilised come back with savings that they stashed in Georgia, Armenia and other nearby nations.Here’s more on the significant risks these trades face, and we have more updates on the war and regional security below:Peace talks: Trump said he would be speaking to Putin tomorrow, as the US tries to broker a ceasefire deal. European defence: Trump’s threats have pushed neutral Switzerland to call for closer ties to Nato and the EU, its new defence minister has said.Here’s what else we’re keeping tabs on today:Economic data: The OECD publishes its interim economic outlook while Rightmove issues its UK house index.Nvidia: The chip giant’s five-day artificial intelligence conference starts in San Jose, California.UK regulation: Chancellor Rachel Reeves will discuss plans to restrict merger investigations by the competition watchdog when she meets regulators at Downing Street today.St Patrick’s Day: The feast day of Ireland’s patron saint is celebrated around the world. Joseph Kennedy III, former US special envoy to Northern Ireland, reflects on the region and its lessons for transatlantic ties.Join FT experts next Thursday for a subscriber-only webinar, as they discuss Ukraine’s future with Russia’s full-scale invasion entering its fourth year. Register for free.Five more top stories1. Benjamin Netanyahu said he would sack his domestic spy chief, one of the last security officials still in post since Hamas’s October 7 attack. The Israeli prime minister said he had “a continuing lack of confidence” in Ronen Bar, head of the Shin Bet intelligence agency, that “only grew with time”. Here’s why the move could spark more political turmoil.2. Uncertainty about Trump’s tariffs is complicating the Federal Reserve’s job, with the US central bank weighing fears they could stoke inflation or trigger an economic slowdown — or both. Economists warn that rate-setters risk relying too much on backward-looking data when they should be depending more on a “forecast framework”.3. Exclusive: European companies that have added a US listing often do not see an uplift to their valuations, the Financial Times has found, challenging claims made by some executives. But two-thirds of the 12 companies surveyed did enjoy greater liquidity in their shares after the move. Here’s more from the FT analysis.4. GE Aerospace chief Larry Culp received $89mn in pay last year, making him one of the highest-paid executives among US companies that have reported remuneration so far this year. Following GE’s break-up of its corporate enterprises, completed last April, the share price of GE Aerospace has risen 45 per cent. Read the full story.5. The US should use fees imposed on Chinese-built vessels to invest in its own shipbuilders, the new head of America’s maritime regulator has said. Louis Sola, who was appointed chair of the Federal Maritime Commission in January, told the FT that the US needed to offset China’s subsidies for its own shipbuilding industry and “fight fire with fire”.News in-depth© FT montage/Getty ImagesEuropean countries have collectively saved hundreds of billions of euros a year in recent decades — a postwar “peace dividend” — as they drove down defence spending and freed up resources for other priorities including their welfare states. But after Trump’s threat to scale back US support for Europe, the continent now faces a brutal reckoning as it embarks on a dash for re-militarisation.We’re also reading . . . Alibaba’s AI pivot: The Chinese tech giant is establishing a lead in a fiercely competitive sector and its billionaire founder Jack Ma is back in favour.Starmer and Reeves: The prime minister and his chancellor need to view the hard times coming upon Britain as an opportunity as well as a crisis, writes Martin Wolf.Democrats’ choice: The party needs to come up with a coherent policy stance if it wants to fight Trump, writes Rana Foroohar.UK’s welfare problem: Some 3.5mn working-age adults are trapped on health-related benefits with neither the incentive nor the support they need to enter employment.Chart of the dayYoung people in Greece and Italy are among the most dissatisfied with public services and confidence in institutions, according to an FT analysis of Gallup data. Experts have pinned the growing unhappiness on factors such as political polarisation, stagnating quality of life and difficulties in getting on the property ladder.Some content could not load. Check your internet connection or browser settings.Take a break from the news . . . Fancy a honeybun latte, or a spiced cold brew with cinnamon and chilli? Put down your americano and spice up your coffee orders with these kooky caffeine hits.The toffee apple pie coffee at Established in Belfast Recommended newsletters for youOne Must-Read — Remarkable journalism you won’t want to miss. Sign up hereNewswrap — Our business and economics round-up. Sign up here More