Today’s top stories
Good evening.
It’s been quite the week in US politics. What started with an assassination attempt on Donald Trump ended with his confirmation as Republican presidential candidate and increasing speculation that incumbent Joe Biden might drop out of the race. So what can we expect on economic and business policy from a potential Trump presidency?
There were plenty of clues in Trump’s acceptance speech at his party’s convention last night as he repeated promises to slash taxes and renew trade wars if he gets another four years in the White House. The “America first” rhetoric was also voiced by his freshly appointed running mate JD Vance, who used his speech on Wednesday to hit out at politicians “in the pocket of big business”.
The anti-corporate rhetoric — underlined by a speech from Teamsters union boss Sean O’Brien at the convention — reflects Republican anger over companies’ adherence to environmental, social and governmental guidelines (as you can see in the new FT film).
The most eye-catching elements of the Trump-Vance economic agenda, however, are the proposed 10 per cent tariffs on all imports plus a 60 per cent levy on goods from China. Tax cuts are certain, although it is not clear which groups will benefit the most after some Republicans appeared keen to make the package less brazenly beneficial to the rich following Democratic criticism.
Deregulation is also likely to be a feature, with a rolling back of anti-pollution and anti-emission measures. Trump last night repeated his promise to “drill baby drill” to bring down energy prices.
Markets have already been adjusting to the prospect of a Trump victory.
There has, for example, been a revival of a popular hedge fund bet on Treasury yields, similar to the “Trump trade” that rocked markets after his 2016 victory.
Gold prices have hit record highs as investors seek safe havens from what could be a supercharged period of trade tensions and Bitcoin has surged on the belief that Trump would be a more crypto-friendly president (crypto bros consider Vance to be one of their own).
Trump’s utterances are still market moving (witness this week’s outburst at Taiwan “stealing our chip business”) but the overall impact of the Trump trade is “just a little lost and very messy” writes commentator Katie Martin — although she senses a consensus among investors that it will be inflationary. A Trump victory is also likely to reverberate more in markets outside the US, she says.
What would really upset the applecart though would be interference in the running of the Federal Reserve. On that score at least, investors can stay calm: Trump has indicated he would not remove Jay Powell as chair before the end of his term — although he has warned him not to reduce interest rates before the election.
Industry meanwhile is warming to Trump, especially in Silicon Valley, where figures such as Palantir co-founder Joe Lonsdale and the Winklevoss twins have donated $8.7mn to a Trump fundraising group since June. Since the assassination attempt, Trump has also received endorsements from the likes of Elon Musk, the world’s richest man. Rupert Murdoch’s once considerable influence over the Republican party meanwhile seems to be on the wane.
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Need to know: UK and Europe economy
UK wage growth slowed but remained above 5 per cent in the three months to May, fuelling doubts about the pace of interest rate cuts. Economists said the easing was “encouraging” but not enough to reassure more hawkish Bank of England policymakers that price pressures were under control.
Labour’s plan to build 1.5mn homes in England over the next five years could be hit by a shortfall of more than 150,000 skilled construction workers, the building industry’s training body warned. Flooding is also an increased risk as extreme weather becomes more common.
The UK “planned for the wrong pandemic” and was ill-equipped to respond to coronavirus as preparations for a no-deal Brexit had diverted the state’s attention from potential public health crises, the Covid-19 inquiry found.
The UK is targeting 11 more Russian-linked oil tankers with sanctions, as part of a western strategy to undermine the Kremlin’s ability to export crude.
Ursula von der Leyen has won a second term as president of the European Commission. Here are the five challenges she faces over her next five years, including the push for a capital markets union and an easing of competition rules.
Need to know: Global economy
A senior Communist party official said China’s economy needed more “proactive” stimulus measures to distribute growth more evenly among regions and industries.
Dozens of people have been killed in Bangladesh as escalating protests over jobs exposed widespread fury against Sheikh Hasina’s authoritarian government and deep economic distress.
Billions of dollars are being invested in data centres near Malaysia’s border with Singapore as companies take advantage of cheaper land and more abundant energy for computer infrastructure, while staying close to south-east Asia’s biggest financial centre.
Need to know: Business
Adidas pulled advertising images showing Bella Hadid promoting a sports shoe first launched in the year of the 1972 Munich Olympics after a public outcry about using the US fashion model, who has been accused of antisemitism by the Israeli government.
Some UK companies are expressing concerns about Labour’s overhaul of workers’ rights, billed as the biggest shake-up of employment law for a generation.
It’s set to be a record-breaking summer of transatlantic flying, in a test of demand on some of the world’s most lucrative routes. The number of flights scheduled from April to October is 7 per cent up on last year’s record, with huge demand from US travellers taking advantage of a strong dollar.
American law firms are bringing their long-hours, high-pay culture to the City of London. Our Big Read explains how they shook up the UK’s “magic circle”.
Environmental, social and governance investing has taken a big hit from poor performance, greenwashing scandals and a political backlash in the US. The new FT film investigates who’s to blame.
Science round-up
Do we really need to go back to the moon? That’s the subject of an FT Big Read as the US prepares for its first manned landing since 1972. Critics argue that predictions for a “lunar economy” are overstated.
A cell therapy development is offering new hope to those suffering from autoimmune diseases that do not respond to conventional steroid treatment and face the threat of multiple organ failure.
An anti-ageing therapy that can help mice live 25 per cent longer is now being tested on humans. The technique, which is based on the science that helps axolotl salamanders regrow severed limbs, is in early-stage trials for fibrotic lung disease.
Scientists are trying to unpick the “Ozempic babies” phenomenon: the anti-diabetes medication used for weight loss appears to be driving up pregnancies. Commentator Anjana Ahuja warns that the long-term effects of such wonder drugs need to be studied more closely.
And finally, here’s another instalment of our neat climate tech explainers, including methane inhibitors for cows.
Some good news
The No One Dies Alone movement is a global initiative that trains and supports volunteers to act as companions to people in the last hours of their lives. It is now mobilising to help those suffering social isolation and loneliness.
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