Good morning from the Financial Times, today is Thursday, May 15.
This is your FT News Briefing.
The US market rally actually hurt some investors.
Plus, a major militant group in Turkey is disbanding.
I'm Mark Filippino, and here's the news you need to start your day.
Welcome. Some investors on Wall Street have been caught off guard by the market rebound.
They've been betting against the U .S. dollar and equity since the markets first took a tumble in early April.
That's when President Donald Trump announced his so -called Liberation Day tariffs.
Now, after China and the U .S. deescalated trade tensions earlier this week, that decision has come back to bite them.
Kate Duguid is the FT's U .S. Markets Editor and has been reporting on this.
Hey, Kate. Hi. So, Kate, give me a few more details here.
How were some investors caught flat -footed?
After President Trump announced the tariffs on April 2nd, the market went into owed -for drive betting on a recession in the U .S. as well as higher inflation.
And those bets kind of amounted to selling the dollar, selling U .S. stocks, and moving into traditional safe havens.
With the exception of treasury bonds, it was kind of what we were calling a sell America trade.
What's happened is that those bets haven't really paid off.
We have seen stocks rise as we've seen these kind of climb downs from President Trump as deals have gotten worked out.
And so what's happened this week is that a lot of traders were forced to cover their shorts and close out these positions that have been painful for the past month.
Tell me a little bit more about that.
How bad was it? What's the scale here that we're talking about for these investors who made bad bets?
You know, we don't have a dollar number, but it is the case that the S &P has erased all of its losses since the tariff announcement.
But it's also the case that it's still down about 4 % from the peak that it hit in February.
It is roughly flat on the year.
The dollar has risen in US government bonds have also dropped in price and risen in yield.
So the market is basically where it was before the announcement.
So that represents a massive round trip.
We've been mostly talking about equities, but I think the thing that really scared people was when the dollar weakened to the extent that it did.
How is it doing? Yes, so you're absolutely right that the dollar and treasuries were sold off during the tariff, the real tariff terror, if we can call it that, which is surprising because they're typical safe havens.
The dollar has basically recovered from there, though it is down slightly this week, after the Trump administration made clear that they are still interested in pursuing weak dollar policies, because they believe that this helps us companies with large presences abroad.
But it remains to be seen what direction the dollar actually takes, given that the administration's policy seems to be to lower the currency.
Okay, so the market has generally rebounded.
And, and while that's good for investors, there's still a lot of market volatility.
Kate, will people buy back into America and then potentially get caught flat -footed again?
I guess what I'm asking is, does this rebound show that there's confidence in America?
It shows that there's some confidence, but I think that you raise a really good point that investors may get caught flat -footed once again.
And there are investors who are holding off from buying back or making too big of an investment into the US tariffs are still in place.
We're still looking at slower growth and higher inflation this year.
The order of magnitude is maybe smaller than we were expecting a few weeks ago.
But it's still possible that something in financial markets could break.
The Trump administration has flip flopped a lot on these trade deals.
So it's entirely possible that investors are caught off guard again.
I do think That there probably has been some lasting damage done to US assets that treasury bonds that the dollar are may be seen as less safe than they once were.
But it remains to be seen how true that is once some of the dust has settled from these tariff negotiations.
Kate Duguid is the FT's US Markets Editor.
Thanks Kate. Thank you.
Coreweave had a killer first quarter on the public market.
The US tech company reported yesterday a 420 percent year -on -year rise in revenue that significantly beat wall street estimates.
The company leases computing capacity to tech groups building AI models and Nvidia as one of its biggest investors.
Coreweave's losses, however, were also bigger than expected, about 140 % higher than the same period last year.
The company listed its shares in March, but had to drastically downsize its initial public offering, that's because investors were concerned about its big debt burden and a potential softening of demand for AI infrastructure.
The Kurdistan Workers Party, known as the PKK, says it's going to disband.
The militant group has been in a conflict with Turkey for over 40 years, but on Monday, the PKK announced that it was, quote, ending the armed struggle.
Now the decision has major political end security implications for the whole region.
My colleague, John Paul Rathbone, is based in Istanbul and joins me now to explain the situation.
Hey, JP. Hi, Mark. Good to be here.
Good to have you. So, first, just give me some background on the PKK.
What's the history there?
The PKK is an armed group, and it's been designated a terrorist organization by Turkey, the United States, the European Union.
It was founded in the late 70s as one of the many Kurdish groups that were pressing for greater rights for the Kurdish population in Turkey, which is currently about a fifth of Turkey's 80 million -strong population.
And they live largely in the southeast of Turkey.
Now, we should probably mention, J .P., that this peace deal was announced just as a lot of political upheaval is happening in Turkey.
What does that say about how this will affect the domestic situation for President Recep Tayyip Erdogan?
So normally, something like this would be received with elation.
But there hasn't quite been that since in Turkey at all.
It's been very cautious, and there are several reasons for that.
First is that multiple attempts at cease fires and demonization have failed in the past. So will this one work?
The second aspect is that Erdogan, who is a extremely skilled politician, he wants to run again for another term when his current term expires in 28.
But to do that, he needs to change the constitution.
And to change the constitution, he needs more parliamentary votes.
And one way of doing that is to get the Kurdish voters to ally with him.
So the main opposition party, whose presidential candidate was put in jail in March, they of course, they welcome the peace process.
But there's also concern a what does it mean for opposition and Erdogan's growing authoritarianism.
And b what does growing authoritarianism mean for the peace deal?
Yeah, tell me more about that.
Because this peace deal between Turkey and the PKK, uh, it kind of came out of nowhere.
How was it negotiated and what's actually in it?
Well, militarily, the PKK were on the back foot.
The Turkish military had pretty much pounded them out of the country.
So they were in a position of weakness.
And then in October, this ultra -nationalist right -wing ally of Erdogan, a very interesting man called Bachelli made this extraordinary and surprise gesture towards the PKK, when he suggested they should negotiate for peace.
Now this took everyone by surprise.
All the negotiations that happened subsequently have taken place behind a wall of secrecy.
And that's why nobody really knows how effectively it will be implemented, because there are no details, all of that has been left till after the ceasefire, instead of in most peace processes where it happens before.
So there's been a lot of stick so far by the Turkish state.
And now there needs to be the carrot to make it all happen.
Now we've just been talking about Turkey.
But what would lasting peace mean for the region as a whole?
So the end of a 40 year war anywhere is going to be a big deal.
The 40 ,000 people have died in this conflict.
It's cost billions in lost revenue and damage.
It's worth remembering that there are Kurdish populations in Iraq where they're holed up in tunnels there.
And they've also got segments of Kurdish populations in Syria, where in this complicated mosaic of Middle Eastern affairs, they've been allied with US forces against the fight against Assad.
So if you stabilize Turkey, that also can help stabilize Iraq and can also help stabilize the situation in Syria.
John Paul Rathbone is the FT's Turkey correspondent.
Thanks, JP. Thanks.
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.
market with easy -to -use tools, zero -dollar commissions, and a wide range of investments.
And now, there's even more to love.
Get access to industry -leading research and insights from Morgan Stanley to help guide your decisions.
Open an account and get up to $1 ,000 or more with the qualifying deposit.
Get started today at etrade .com.
Terms and other fees apply.
Investing involves risks.
Morgan Stanley Smith Barney, LLC, member SIPC.
E -Trade is a business of Morgan Stanley.
This podcast is brought to you by Aura.
By the time you hear about a data breach, Your information has already been exposed for months.
On average, companies take 277 days to report a breach. That's nine months where hackers have access to your personal data.
That's why we're thrilled to partner with Aura.
Aura is an all -in -one digital safety solution that monitors the dark web for your phone number, email and social security number, sending real -time alerts if your info is found.
It also includes a VPN, password manager and data broker removal to help keep you safe.
For a limited time, Aura is offering a 14 -day free trial plus a dark web scan to check if your personal information has been leaked.
All for free at Aura .com -safety.
That's Aura .com -safety to sign up and protect your loved ones.
That's A -U -R -A dot com slash safety.
Terms apply, check the site for details.
