Good morning from the Financial Times.
Today is Wednesday, March 12th, and this is your FT News briefing.
U .S. equities were all over the place on Tuesday and Nissan is paving the way for a new CEO. Plus Citigroup is trying to dominate the buy -now -pay -later field, but it's kind of like, you know, Blockbuster trying to go into streaming, right?
This isn't their main business.
I'm Mark Filipino and here's the news you need to start your day.
It was like we saw two completely different stock markets yesterday.
In the first part of the day, the S &P 500 entered correction territory, meaning it had fallen 10 % since its peak that it hit less than three weeks ago.
The correction came after the U .S.
announced it would double the tariffs on steel and aluminum imports from Canada.
White House press secretary Caroline Levitt defended the moves.
First of all, when it comes to the stock market, the numbers that we see today, the numbers we saw yesterday, the numbers we'll see tomorrow, are a snapshot of a moment in time.
And as President Trump has said, we are in a period of economic transition.
But Tuesday's market activities had a dramatic act too.
By the closing bell the S &P 500 had a major bounce back but still ended the day down three -quarters of a percent.
The rebound happened around the same time as the news that Ukraine is willing to sign a 30 -day cease -fire with Russia, Washington would restore military aid and intelligence sharing with Kyiv as part of the deal.
Nissan CEO Makoto Uchida is getting out of the driver's seat.
In a press conference on Tuesday, the car manufacturer said that Uchida will step down on April 1st .
He'll be replaced by the current chief planning officer Ivan Espinosa.
It comes after the company reported dismal results and takeover talks with Honda collapsed last month.
Joining me from Tokyo to talk about it is the FT's Harry Dempsey.
Hey Harry. Do me a favor, first off just give us some background on Uchida being ousted.
How has Nissan done under his tenure?
So, if we go back to 1999, Nissan has basically been in a permacrisis since then.
And at that point, Carlos Ghosn took over.
And he ran the company for 20 years and he was cutting a lot of the costs out of the company.
But the financial performance was good.
Then Makoto Ichida took over in 2019 and the company faced many, many issues.
There was infighting in the wake of Carlos Ghosn leaving, but there was also coronavirus, semiconductor shortages, and then the Ukraine crisis.
The auto industry has faced problem after problem.
But layered on that, Nissan has had lots of its own issues, and it's had to rebalance its alliance with Renault.
It's come to a head in the last year that Nissan really has failed to invest in its future.
This year, there's been three profit downgrades.
And I think it's really become clear that Uchida had run out of road.
So Harry remind me listeners why those takeover talks with Honda fell apart.
So in December, Nissan Honda started talking about merging.
And the backdrop of the threat was that Taiwan's Foxconn had approached Nissan about taking a stake in the business.
and so Japan Inc was worried about Nissan being taken out of Japanese ownership and so Honda moved to try and bring these two companies together and initially they had thought about putting the two companies together under a holding company but then Honda pivoted to say it needs full control of Nissan as a fully owned subsidiary and Nissan balked at that idea, Ujida didn't like it and the takeover talks, they collapse then within just over 40 days.
So it's in the wake of those take -over talks collapsing and there being no clear partner for Nissan going forward into the future that Uchida leaves the company.
That brings us to Ivan Espinosa who will be replacing Uchida.
What's he like and what's his background and do we think that Honda's going to like him?
So Espinoza, he's currently the company's chief planning officer, but his background is really in the products.
The signal that I would guess Nissan is trying to send is that we believe that Nissan does have the right things within the company.
It just needs the guy who understands the products to be at the top of the company and really bring that out for customers.
And it also perhaps represents a break from the current management and so I think it could potentially be sending a message to Honda that they might not want to potentially enter back in discussions but Espinosa was asked in the press conference on Tuesday whether he would be open to re -entering discussions with Honda about merger and he declined to comment on it.
So that really is still an open question.
Harry, where do things go from here?
What are you looking for next?
So I think in the near term, Nissan is trying to execute a turnaround plan, which involves cutting 9000 employees, shutting down 20 % of production capacity, you know, this is quite a radical takeover plan.
So I think in the short term, can Espinoza deliver on this turnaround plan?
And can Nissan start to boost sales?
I would then say the second thing to look out for is what will the impact of Donald Trump's tariffs be?
Because Nissan it's one of the biggest car producers in Mexico and compared to other automakers It's got much less wiggle room to absorb or cope with any extra costs that come from tariffs And third is the company needs a partner in the long term So I think that long -term future for Nissan, that's the big question Harry Dempsey is the FT's Tokyo correspondent.
Thanks Harry. Thanks.
Citi Group has a plan.
And it's to be the top dog in this space called Buy Now, Pay Later.
That's the online installment payment service that customers use when they can't pay the whole amount immediately.
But Citi is entering a crowded space.
And a Big Player has an initial public offering looming.
The FT's outgoing U .S.
banking correspondent, Stephen Gandel, is here to talk about this.
Hey, Stephen. Hi. So, Stephen, where is Citigroup's Buy Now pay letter, or you know, it's called BPNL for short.
Where's this program at now?
They launched it about a year ago.
It's available in a little over 100 retailers that they've partnered with, and so it works that if you go to say Home Depot, That's one of Citi's retailers that they've partnered with.
You go to Home Depot and you go to buy something there.
Even if you're not a Citi client, there'll be a question at checkout.
It'll say, you could pay for this for now but would you like to pay for it over time?
What is, just out of curiosity, what does BNPL offer to customers that maybe a credit card doesn't?
Because I've got credit cards.
Right. You can play credit cards over time.
And the difference is interest.
For most buy now pay later loans, they're interest free.
There's a fee that's associated with providing the service, but usually the retailer will pay it.
It's something that they do to try to get more sales.
And so most buy now pay later loans are split over four payments, four monthly payments.
And as long as you meet those payments, you don't pay any interest, which is great.
It's a great savings for consumers who are used to paying credit cards.
And recently, the credit card interest rates have been quite high.
How does Citi want to go about dominating BNPL?
They have a different offering than these upstarts that they're going after, which is Klarna, and Affirm, and Afterpay.
The model for the fintech upstarts are very specific to a particular purchase.
When you're going to buy something at checkout, or online, instead of pay for the item right now you'd like to do it over time, using a Buy Now, Pay It Later Loan.
Citi, because it's partnered with well over a hundred retailers, they're going to give you a credit line on Buy Now, Pay Later that you can use at a number of different places and you can track your Buy Now, Pay Later loans across number of retailers.
The other thing that's a big part of Citi's strategy, which is different than the others, is they want to be a more responsible lender than some of these Buy Now, Pay Later upstarts.
Generally, the Fintechs that are in the business right now, they don't do credit checks.
And they also don't report how you do on these loans back to the credit rating agencies.
And so Citi plans to underwrite these loans more like what you would for a typical loan.
And this may be very attractive for retailers to partner with Citi because they don't want to sell to people who can't end up paying things.
They don't want people stuck in debt, right?
They want customers who end up happy with their product.
What are some of the biggest obstacles that Citi might be facing?
The biggest obstacles are that it's kind of like, you know, Blockbuster trying to go into streaming, right?
This isn't their main business.
We had news recently that one of the hot startups in this area, which the banks are concerned about, Clarina, is going to go forward with its IPO, and it's going to maybe value the company at about $15 billion.
And their whole purpose for being is to introduce people to Buy Now, Pay Later, allow them to manage their finances in a way they haven't managed before.
Citi, like some of the other banks, they're playing defensive.
They don't wanna blow up their existing credit card business.
And Citi and the other large banks, they have an advantage, because they have experience doing underwriting.
But they have a disadvantage, because they don't have as much experience in the app world and online space.
And social media life that these fintechs know very well.
Stephen Gandel is the FT's outgoing US Banking correspondent.
Thanks, Stephen. Thank you.
You can read more on all of these stories for free when you click the links in our show notes.
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