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Good morning from The Financial Times.
Today is Wednesday, March 26th.
This is your FT News briefing.
NVIDIA is worried about a crackdown in China and don't expect fireworks from today's U .K. spring statement.
Plus, we'll get into why investors can't help themselves when it comes to buying the dip.
You are Pavlov's dog.
the bell rings and you slobber.
I'm Mark Filipino and here's the news you need to start your day.
US chipmaker Nvidia is facing another hurdle in China.
Beijing has introduced environmental restrictions for new data centers.
they could prevent Chinese companies from buying NVIDIA's best -selling advanced chips.
And sources tell the FT that over the past several months Beijing has quietly discouraged the country's tech giants from purchasing those processors.
Now NVIDIA does about 17 billion dollars worth of business a year in China and the company is rushing to save that.
It's trying to arrange a with Beijing in the next few months.
Chancellor Rachel Reeves will deliver the UK's spring statement today.
She'll update the country on her adjustments to the ailing economy.
It'll probably be a bad look for the labor government.
The party has struggled to keep its election promises on the economy since coming to power in July.
The FT's Whitehall editor, Lucy Fischer, joins me now to talk about it.
Hey Lucy. Hi, Mark.
So Lucy, what are we expecting from Reeves today?
What is she going to tell us about the economy?
Well, it's not particularly upbeat news from H.
Reeves. We're expecting quite a gloomy picture of the UK economy, including flatlining with growth forecasts, perhaps, downgraded by as much as half since the autumn, higher borrowing costs and higher interest rates, which means, of course, that the cost of servicing UK public debt is more expensive.
Now we're expecting the £10 billion odd pounds of headroom that she left herself in the budget last autumn to have evaporated because of those economic conditions, and to find her budget essentially in the red.
So what we are expecting today is quite a deep package of cuts in order to make her books add up and to make sure that she's still fulfilling the ironclad fiscal rules that she set out in the lead -up to the election.
Even with those cuts, is Reeves going to be able to balance the books?
Well, we think she is for the moment.
What the government have confirmed is that there are no tax changes today.
There had been an attack line from the right wing party suggesting that this was turning into an emergency budget.
It isn't that, but it will be nonetheless very interesting to see whether she does any pitch rolling in her messaging about potential tax rises being needed in the autumn in order to continue to make her sums add up.
But for now, it's going to be a package of spending cuts, we think, in order to get her over the line.
Yeah, and I'm very curious about what the knock -on effects are going to be for labor because they promised no austerity ahead of winning the election.
But I'm not gonna lie, this looks a lot like a return to austerity.
How is it going to sit with the public?
Well, I think very uneasily in essence, the public voted for change.
They expect labor to pour a lot more money into public services.
And Keir Starmer made it a core pillar of his mission for his government to turbocharge economic growth, and that hasn't happened yet.
So the fact we've had £5 billion of welfare cuts and we're going to see some more of the details of where they're going to fall, which groups of people will be impacted today is significant.
Of course we've seen the aid budget slashed as well, albeit with that money going over to fund an increase in defense expenditure.
But we've seen the universal winter fuel payment for pensioners cut and the two child benefit cap retained, all of which are measures that traditional labor campaigners are very concerned about.
They see Keir Starmer as tacking rightwards, and some are even questioning privately whether this is a betrayal of labor values.
It kind of leads into my next question.
What does the rest of 2025 look like for labor?
I think it's going to be very difficult, particularly if Donald Trump's trade wars see the global economy take a turn for the worse.
That could also present more issues for the labor government in terms of their spending plans.
And again, we'll have to see what happens in the budget in the autumn.
system. But I think over the longer -term, there is a glimmer of hope for Rachel Reeves.
She has put into motion a raft of measures that could yet bear fruit on the economic growth front in the longer term.
And that includes overhauling the planning system in the UK to get the country building, especially houses, major changes to the pension sector, all aimed at trying to persuade investors to channel funds into longer -term British infrastructure and transport projects, and of course her drive to deregulate, which she hopes will catalyze growth as well.
So she'll be banking on those changes, making some difference to her economic outlook.
That's our Whitehall editor, Lucy Fischer.
Thanks, Lucy. Thanks, Mark.
Shell said yesterday that it's going to cut costs and spending, especially when it comes to clean energy.
It already started gutting renewables last year.
The UK Energy major also announced on Tuesday that it's going to boost the amount of cash it returns to shareholders.
This is all part of an effort to narrow the company's valuation gap with its US rivals Exxon and Chevron.
Shell is trying to make itself stand out by becoming the biggest trader of liquified natural gas in the world.
Investors were optimistic about the plan.
Shell's share price ended the day up a little bit more than one percent.
President Donald Trump's economic and spending policies have, as you've probably already heard by now, unsettled the U .S. stock market.
But try mentioning that to retail investors.
Mom and Pop have plowed nearly $70 billion into American equities this year, even though professional money managers are saying they might be getting cold feet.
My colleague Rob Armstrong has been looking into the moves and he's here with me now.
Hey Rob! It's great to be back on the show.
Good to have you. So talk to me a little bit about this split screen here.
What's going on? Well, the first thing is, it turns out to be quite hard to discourage the retail investor trading on like a Robin hood or some other app and they like to chase the big money and they've been chasing it really since the pandemic, the recent wobble in markets.
This just has not scared the stay -at -home trader.
So those are retail investors feeling really optimistic, but money managers, not so much?
Well, it is a question of feeling.
There's a very famous survey of institutional money managers, which is run by Bank of America's strategy team.
And the latest addition of that showed one of the biggest falls in bullishness about US stocks among institutional investors, the survey had almost ever seen enthusiasm kind of fell off a cliff.
However, if you actually look at what professional investors have been doing, there continues to be strong inflows of institutional cash into stocks.
So there's a kind of split between doing and feeling or sentiment and action.
Well, that's really interesting.
Is there something behind this idea of buying the dip right now, Rob?
Well, what's behind it is just history.
What we're seeing in terms of buy the dip is exactly what investors, whether institutional or individual, have been conditioned to do by recent history.
US stocks are what have worked better than anything else.
And once you are conditioned that way, you are Pavlov's dog.
The bell rings and you slobber.
Stock prices fall a little bit and you buy the dip.
Okay. That is quite the visual.
but when it comes to these individual investors, just how big of a role do they play in the wider market?
Certainly individual investors can make a difference in stock markets, especially on the individual names that they tend to focus on.
So individual investors like to buy the big shiny headline stocks we all know about, whether that's Tesla, or Microsoft, or in video or whatever.
And with those stocks, it's very clear that individual retail sentiment matters.
For the lesser known names, smaller companies, it's more the institutional investor that makes the difference because they're gonna be more sophisticated about what they buy, they know more of the ins and outs.
They're not just, as it were focused on those boldface names.
Got it. So how should I be thinking about investor sentiment across the board when it comes to US equities?
Retail investors are still buying the dip.
They still have that enthusiasm.
They've been making a lot of money for a number of years, and they think they can keep doing that.
The institutional investor recognizes that we are what feels like an inflection point, economically, publicly, policy -wise, and so forth.
So they say, when asked, I'm quite worried about this.
But just like the retail investor, they're still putting money to work.
Rob Armstrong is the FT's U .S. financial commentator.
He also writes The Unhedged Newsletter and co -hosts the FT's Unhedged Podcast. Thanks so much, Rob.
My pleasure. 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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