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Good morning from the Financial Times.
Today is Tuesday, April 15, and this is your FT News Briefing.
The European Union wants to break off gas deals with Russia.
And China's President Xi Jinping is doing the rounds in Southeast Asia.
Plus the IMF is giving Argentina even more money, but this time is different.
I'm Mark Filippino and here's the news you need to start your day.
Brussels is looking into whether European companies can legally break long -term Russian gas contracts.
Sources tell the EFT that the European Commission is studying the contracts and seeing whether they can declare force majeure, you know, the unforeseeable act of god thing.
That way they can get out of these deals without having to pay an additional fee.
The bloc is struggling to cut off Russian energy imports and deprive Moscow of revenues that it's using in its war against Ukraine but one official said that using the war for this force majeure angle might not work.
The discussions are part of a road map meant to wean the EU off Russian fossil fuels by 2027, the plan is supposed to be published in the next couple of weeks.
Vietnam, Malaysia and Cambodia are incredibly dependent on exports to fuel their economies.
And in particular, they send a lot of goods to the United States.
But with tariffs from Washington, they may need to find new markets.
Enter China, whose President Xi Jinping is visiting the countries this week with a basic pitch. Beijing is open for business.
The FT's Ed White has been following the situation.
Hey Ed. Hi. All right, so it seems like U .S. tariffs have opened a big opportunity for China to grow its global influence.
Why is Xi starting his diplomacy in Southeast Asia?
Well, this trip looks quite hastily organized, obviously in response to these tariffs, but but also Southeast Asia is key to China from both a economic and a strategic point of view.
This is China's backyard. Trade and investment has actually been growing very strongly into Southeast Asia over recent years, so it's important clearly from Xi Jinping's point of view that he keeps the likes of Vietnam and Malaysia, these key regional economies, that he keeps these firmly onside.
Okay, so China is eager to keep and strengthen the relationships with these countries.
How How eager are these countries to deepen ties with China?
This is a tricky one.
We've spoken to experts about this question and I think there's a slightly mixed view.
So on the one hand, political leaders in the populations more broadly are, like in many places around the world, quite skeptical of becoming too reliant or too dependent on China.
On the other hand, China's presence as an economic force in the region is nothing new.
And we've actually seen over recent years that China has actually really been leading other rivals including the US and Japan in terms of having more investment into localizing manufacturing in Southeast Asia.
So if Xi Jinping is able to offer more of this kind of thing, I think that will actually be quite welcomed.
Yeah, right now they got these baseline 10 % US tariffs, but the so called reciprocal tariffs are paused.
And how difficult will it be for, you know, smaller countries like Vietnam to navigate this new trade environment with the US given all the uncertainty that we're talking about.
Well, we've already seen the US say that they're open to starting negotiations with these countries, but it's just very, very difficult to know whether that will last or whether the US President's position will change again.
What we sort of know more broadly is that in recent years, there has been a push by the Biden administration to stop countries partnering with China in certain areas.
So, this has been more about things like cutting edge technology, specific sectors that could end up in the hands of the People's Liberation Army, a bigger issue has also been that Chinese companies use places like Vietnam and Malaysia as a manufacturing base and that so that they can skirt existing tariffs on Chinese exports.
But what we're seeing now from the Trump administration is obviously clearly different to what we've seen before.
So it is difficult to say where this is actually heading.
So then is China actually well positioned to take advantage of this moment?
To be honest, I think this really remains to be seen.
So on the one hand, yes, China has some technologies, especially in kind of key decarbonisation areas like wind, solar, batteries, that will be welcomed by other countries in Southeast Asia.
But this idea that Beijing and Xi Jinping himself has been pushing, that China is like the best in for free trade and is upholding the International Trading Order as the US steps back, this is clearly quite a stretch. And I don't think anyone's really buying it.
But the other thing actually is that at the end of the day, you know, if Chinese exports to the U .S. really do drop significantly, there is going to be hundreds of billions of dollars of Chinese -made products looking for a new destination, and no one seems to have a good answer as to how Beijing really deals with that.
So one thing that would be really interesting to come out of this trip from Xi Jinping is to hear from local officials in Southeast Asia what he is actually offering on that point.
Ed White reports on China for the FT. Thanks, Ed.
Thank you. Goldman Sachs reported earnings yesterday, and like its Wall Street rivals, overall, the first quarter wasn't too shabby.
The bank blew past analysts' expectations, delivering a net income that was up 15 % from a year ago.
A lot of it was driven by all the equity trading.
Goldman and other big banks have been doing a lot of it because of the market volatility caused by the Trump administration's policies.
Traders reported their best quarter on record. But on the flip side, all the uncertainty has hit investment banking pretty hard. Fees fell 8 percent last quarter.
And what's worse, deal making isn't a real rut.
The number of new mergers and acquisitions announced since January is at its lowest in more than a decade.
So, first, just how badly does Argentina need this loan?
Yeah, I would say quite badly libertarian president Javier Millet, who took office about a year and a half ago, has been very successful at bringing down Argentina's inflation and also restarting the economy after quite a bad recession.
But what he hasn't been able to do is lift the country's very strict capital and currency controls.
And these controls basically limit how many dollars Argentines can buy and set a fixed exchange rate.
The But they also prevent new dollars from coming in because investors and exporters don't want to bring dollars into Argentina when they can't take them out.
So right now, Malay has fewer and fewer dollars to prop up the peso, which he has kept almost stable.
The markets have been putting more pressure on the government to devalue, which could have very damaging economic and political consequences for Malay.
So basically, Argentina really needed a big cash injection.
And they got it, right?
They got this 20 billion dollars from the IMF.
But what does Argentina need to do in order for the IMF to fork over the money?
Yes, so, from Monday, the government is relaxing its currency controls.
The peso will be allowed to float in a kind of narrow -band and the aim is to kind of test the demand for dollars and find a kind of new more acceptable exchange rate for the peso in the short term.
They're dollars, so Argentine individuals will be able to buy as many dollars as they want.
Companies will still have some restrictions.
The aim is to kind of slowly unwind all of these controls and kind of turn Argentina into a normal economy.
And the fund, the IMF is going to transfer Argentina 12 billion dollars today, and then a few more billion in a few months.
And the aim is to kind of have this confidence shock and tell markets that the government has enough firepower to defend the peso.
So hopefully we won't see like a run on the peso.
Kyra, what sort of risks does President Malay face in lifting these currency controls?
Yeah, so economists are quite happy about this plan, because they think that what Malay was doing before, maintaining the fixed rate for the exchange rate was too risky.
There are risks here, too.
The thing is, like, Malay's main achievement for voters in Argentina has been that he has lowered inflation quite dramatically.
And by relaxing the exchange rate, what you could see is kind of a spike in inflation.
And it will be very important to see how well Malay is able to explain that, you know, this isn't his program going off the rails because there are midterm elections in October where Malay really needs to do well to kind of continue his program.
You know I think the thing that really sticks out to me, Kyra, is that this isn't by far the first loan from the IMF to Argentina.
What does that ultimately say about the progress Malay has made on the economy?
Yeah, not at all. As you're right to say, Argentina has a very rocky history with the IMF.
But they're really hoping that this time will be different.
Millay is a very unusual Argentine politician, you know, he cut spending by 5 % of GDP in his first year and eliminated the fiscal deficit, I think what the IMF is saying now is Millay has done really well, much better than most people expected at the kind of first few phases of his economic plan.
He's actually changing things unlike previous efforts, if we can just help him with a currency issue, hopefully he will be able to stabilise economy in the long term and, you know, pay the IMF back for the billions that Argentina owes it, and, yeah, we'll have to see what happens.
That's the FT's Kirah Nugent.
Thanks so much, Kirah.
Thank you. You can read more on all these stories for free when you click the links in our show notes.
This has been your daily FT news briefing.
Check back tomorrow for the latest business news.
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