TheChek News Flow

WSJ : A 1970s Soviet Spacecraft Is About to Fall Back to Earth

A 1970s Soviet Spacecraft Is About to Fall Back to Earth

The Cold-War relic was headed for Venus when it malfunctioned and ended up orbiting Earth for decades

A Soviet spacecraft launched in 1972 is falling back to Earth after 53 years. It is expected to enter the Earth’s atmosphere early Saturday morning, but exactly where is unclear.

The spacecraft, Kosmos 482, was meant to travel to Venus, but malfunctioned shortly after liftoff and entered an elliptical orbit around Earth, where its intact landing vehicle has remained. The lander is only 3 feet in diameter, but contains a heat shield that could help it survive a plunge to Earth.

“This was built to be rugged and withstand Venus’s atmosphere,” said Cathleen Lewis, curator of international space programs and spacesuits at the Smithsonian Institution’s National Air and Space Museum.

Ground-based satellite dishes have been tracking the object for months, but pinpointing the exact location of its re-entry is difficult. This week, various estimates from the U.S. Space Force placed the object over the Gulf of Oman, northeast Africa and Borneo, locations that are thousands of miles apart.

The growing amount of orbiting space debris is a concern. More than 54,000 objects greater than 4 inches are orbiting Earth, while more than 1,200 re-entered the atmosphere in 2024, according to a March 31 report by the European Space Agency.

Most of these objects burn up in the atmosphere, but larger items sometimes hit the ground. In 2024, a 4-inch long piece of the International Space Station tore through the roof of a Florida family’s home. The same year, a 3-foot diameter chunk of material from a SpaceX capsule landed harmlessly on a remote trail near a campground near Asheville, N.C.

The U.S. Space Force doesn’t predict whether falling objects will hit the ground or burn up, according to Ladonna Davis, a Space Force spokeswoman for the agency.

Kosmos 482 was part of a pair of ships launched to Venus in March 1972. Venera 8 launched four days earlier and landed successfully on Venus. Lewis said the former Soviet Union’s space agency often launched identical pairs of spacecraft in case one failed.

Kosmos 482 broke apart before leaving Earth’s gravitational pull. Dutch astronomer Ralf Vandebergh said he has been tracking the object since 2010. Most of the pieces of the spacecraft, he said, including its booster rocket, have already fallen back to Earth.

Images taken in 2024 show an elongated object attached to the spacecraft’s lander, raising speculation that it could be a dangling parachute originally designed to slow the descent in the Venusian atmosphere, Vandebergh said. If it is a parachute, that could slow its descent to Earth, he said.

Lewis, a historian of the Soviet space program, said she is curious about Kosmos 482 and its condition.

“I want to know what does come down and who retrieves it,” she said. “Russia has the right to claim anything that they launch.”

WSJ : How Airlines Are Trying to Win Over Private-Jet Passengers

How Airlines Are Trying to Win Over Private-Jet Passengers

Air France-KLM doubles down on luxury travel amid industry uncertainty

As travel outlooks dim for many airlines, with the Dow Jones U.S. Airlines Index losing nearly one-quarter of its value this year, some carriers are trying to double down on passengers willing to pay more.

In the video above, we took a look at how airlines are prioritizing first class at a time of increasing uncertainty for the industry.

WSJ senior video journalist Michael Tabb spoke with Air France-KLM AF 0.27%increase; green up pointing triangle Chief Executive Benjamin Smith about the airline’s efforts to appeal to high-end travelers, and specifically target customers who previously flew private jets.

Here is a partial transcript of the interview, lightly edited for clarity and length.

Tabb: Who is your first-class “La Première” product for, and how much demand is there for a seat that costs at least $11,000 for a round-trip flight from New York to Paris? Particularly after you’ve invested so much in upgrading business class.

Smith: What’s increased a lot are the number of leisure customers that are looking for a luxurious experience when they fly. We’ve always had a portion of the customers that fly La Première who are not flying for business purposes that have the means and they want that kind of experience. Now we see an explosion in that. So this is replacing, also, some of the people who have actually moved down to business class because they can’t justify the cost [of first-class].

We have people that are flying because they don’t like the optics of a private jet. And then we have some people now that like the product so much that they actually buy four seats just for one person because they want to have that full privacy and they find it better than actually taking a private jet. So this is all kind of new.

Tabb: Are you actively tracking the private-jet market?

Smith: These are all new customers for us, so it’s not something we do today.

But we are getting, every week, customers that we didn’t have in the past and they’re telling us we love this product. It’s complete privacy at the airport. There’s no friction—get onboard and we have fantastic service. The seat’s great.

And it’s still much cheaper. Like, if you’re going from Los Angeles to Paris and buying four seats in La Première, it’s still significantly cheaper than taking a private plane. Now we don’t have people doing that every single day, but there are some people that actually do that. But two people wanting to come to Paris for a luxury trip, for many they actually find very good value for money.

Tabb: Do you think this boom in luxury travel spending will last? Are you concerned that, after all this investment, this could be derailed by a stuttering global economy?

Smith: I’ve been in the business 34, 35 years through many different crises and travel is one of the first things to be affected when prices go up or there’s uncertainty or there’s instability in parts of the world. What we’re seeing, though, is that luxury travel seems to be very resilient. Now, this is not huge amounts of capacity for us, but it’s a big, big investment and a big impact on our brand. So if it got to the point of not being profitable, it’s not that difficult for us to say, OK, we’re going on some airplanes to remove La Première and increase the business-class cabin size or remove business-class seats and increase the number of economy-class passengers.

But this product and investment, I think it fits our brand. I think the Paris market is extremely big. It does fit into many of the other hospitality industries that are here that have positioned themselves in that same area.

There’s a lot of people who want to travel, they’ve reprioritized it and they want to do it in comfort. So we believe it’s there to stay.

FT : Donald Trump proposes to raise income taxes on wealthy Americans

Donald Trump proposes to raise income taxes on wealthy Americans

Move would breach Republican orthodoxy and comes as president seeks to pay for broader fiscal package

Donald Trump has proposed raising taxes on the wealthiest Americans, in a breach of Republican orthodoxy that he hopes could pay for broader tax breaks being debated in Congress.

The US president proposed an increase in the tax on people earning more than $2.5mn a year to almost 40 per cent, as he began talks with congressional Republicans on the details of a new fiscal package he hopes to pass this year.

“The president is considering allowing the rate on individuals making $2.5mn or more to revert from 37 per cent to the pre-2017 39.6 per cent. This will help pay for massive middle- and working-class tax cuts, and protect Medicaid,” a person familiar with Trump’s thinking said on Thursday, referring to the government healthcare plan for low-income households.

Trump’s proposal would mark a major break from the traditional Republican low-tax approach to high earners — and drew criticism from some rightwing groups who said it was more akin to a Democratic policy.

It comes as the White House and Republicans on Capitol Hill try to accelerate the fiscal package, which would extend Trump’s sweeping 2017 tax cuts, which are set to expire next year.

The tax bill is Trump’s highest legislative priority on the economy but has been overshadowed early in his second term by the global trade war he launched on April 2, which included an array of high tariffs imposed on US trading partners.

The negotiations among Republican lawmakers have also revealed disagreements over how to pay for the tax cuts and other measures in the package.

As well as considering higher taxes for the wealthiest households, Trump has also signalled his willingness to end the preferential tax treatment of hedge fund and private equity profits known as “carried interest”, in a potential blow to Wall Street.

Alongside the taxes on financiers and wealthy Americans, however, lawmakers are also considering raising the “Salt cap”, a move that would allow property owners to deduct as much as $30,000 in state and local levies from their tax bill.

The current limit of $10,000 was set in Trump’s 2017 tax package. The new limit would amount to a significant tax break in many prosperous US neighbourhoods.

“It’s still an ongoing discussion amongst the members, and I think we’ll find the right point,” Mike Johnson, the Republican House Speaker, told reporters.

Trump’s consideration of an increase in taxes for the wealthiest Americans drew a swift backlash from conservative anti-tax groups.

“Raising the top tax rate to 39.6 per cent is a Kamala Harris proposal. She lost the election to President Trump. No need to adopt her tax hike,” said Americans for Tax Reform, which opposes all tax increases.

FT : Soaring gold prices test mettle of luxury watch brands

Soaring gold prices test mettle of luxury watch brands

Amid buoyant consumer demand, watchmakers are under pressure to pass on costs or turn to alternative materials

After a year of soaring gold prices, makers of luxury watches have been left with a heavy precious metal headache. Where a year ago procurement teams were buying gold at about $2,300 an ounce, now the figure is around $3,300 an ounce, a 40 per cent increase. With stock markets still volatile, few analysts are forecasting a correction.

Luxury watch companies are reliant on sales of gold watches. According to the Federation of the Swiss Watch Industry, last year watches made in precious metals, including materials such as platinum, accounted for almost 40 per cent of total Swiss watch exports by value but only 2.7 per cent by volume.

Many brands have passed costs on to consumers. Rolex, the Swiss watch industry’s largest watchmaker, increased the prices of its gold watches by 8 per cent at the beginning of this year, following two price increases in 2024. A second increase is expected next month.

Others have made swingeing cuts to their inventories, withdrawing hundreds of gold models from the market. According to data gathered by Geneva-based marketing agency Digital Luxury Group, in the first three weeks of April, the average price of a Cartier watch available on the brand’s US website fell 30.4 per cent, following a 63.8 per cent inventory reduction, as higher priced gold watches were withdrawn.

DLG also observed that price increases since US President Donald Trump’s tariff announcements in early April became more pronounced, peaking at a 17.5 per cent price rise for watches over $100,000. Rose gold watches were affected most sharply, with prices increasing 23.5 per cent against an inventory drop of 16.4 per cent, marking a dramatic shift in balance.

Smaller brands are trying to keep up. “We’re using the gold we bought last year now, but we’re not reordering unless it’s essential,” says Edouard Meylan, chief executive of independent Swiss watchmaker H Moser & Cie, noting that demand for rose gold watches remains high and that “over the past few weeks we sold a lot of gold watches to people wanting to invest”.

While its figures do not include watches, the World Gold Council says demand for gold from the jewellery sector fell from 538.5 tonnes in the first quarter of 2024 to 434 tonnes in the same period this year. Overall global demand increased 1 per cent year on year, driven by an uptick in gold investment of 170 per cent.

“I’m cancelling all the gold that isn’t 100 per cent necessary because I don’t know how to price it and because at the moment gold watches carry the highest risk with the least margin,” Meylan says. “I’m focusing on steel and ceramic.”

For others, the only option is to keep increasing prices. “We increased prices at the end of last year and we all have to increase prices again,” says Romain Marietta, chief products officer at Zenith, one of LVMH’s Swiss luxury watchmakers.

For both Moser and Zenith, gold watches account for around 20 per cent of annual volumes, but 30-35 per cent of sales. “The price of white gold in particular has become too high for serial production products, and now even for limited editions,” says Marietta. “You end up with a retail price that isn’t competitive with the major brands producing gold watches in volume.”

Luca Solca, a senior analyst at research company Bernstein covering global luxury goods, expects rising gold prices to create clear winners and losers. “The most desirable brands will be able to plough through this — Rolex, for example,” he says. “Lower brands in the consumer pecking order will have to adjust to lower volumes. ‘Rightsizing’ will be the name of the game — that is, cutting costs and reducing capacity.”

Previously, it had been thought buyers of high-ticket luxury items were less price sensitive than buyers of entry-level products but, according to Marietta, there are signs that has changed. “We thought the higher segment would be untouched and the real diehard collectors that can afford these watches would not be price sensitive,” he says. “But we have to rethink and pay attention to price sensitivity.”

Marietta says Zenith has turned its attention to developing models in metals such as platinum and tantalum, both of which are rarer and more difficult to machine than gold and might offer better margins. The brand’s main launch this spring was the GFJ Calibre 135, a 160-piece limited-edition watch in platinum that on an optional platinum bracelet carries a price tag of almost $100,000.

According to Oliver Müller, founder of Swiss luxury consultancy LuxeConsult, the cost implications for brands are even more severe than they first appear because a gold watch case is machined from a gold bar weighing five times the end-product. Scraps retain their value and can be recycled, but the upfront outlay is punitive. “Brands have to compensate not just for increasing raw material prices, but also increasing financial costs,” he says. “This has a significant impact on cash flow.”

As gold prices increase, some retailers say demand for gold watches shows no signs of slowing. “In our market, we find demand for precious metal watches relatively inelastic,” says Mohammed Seddiqi, chief executive of Ahmed Seddiqi, the largest watch and jewellery retailer in the UAE. “Clients who are keen collectors and aficionados continue to acquire gold timepieces.”

While some makers have said they will reduce volumes of gold watches, Seddiqi says he expects brands will fulfil his orders. “We remain certain that the supply will remain consistent based on the demand for watches,” he says. “Currently, we have a regular influx of watches with regular shipments being fulfilled.”

Analysts suggest brands will need to focus on innovating around other, or even new, precious metals. “One solution would be to avoid precious metals and concentrate on other materials,” says Müller. “Richard Mille is the epitome of leveraging plastic to the value of gold. But then you risk losing market share at the high end, which is still the strongest market segment. Alternatively, you reduce the amount of gold in your watches by, for example, extruding components. This would help alleviate the cash flow burden.”

Meylan forecasts some significant material shifts. “White gold will die because steel is cheaper and more fashionable, while we may have to replace gold with materials such as palladium and tantalum,” he says. “In time, gold watches may become as expensive as platinum watches as scarcity increases.”

But working with alternative metals may not cut it. “From our experience, clients looking to acquire a gold watch will always purchase a gold watch irrespective of if there are platinum, palladium or tantalum versions,” says Seddiqi. “Their decision-making is not usually driven by alternative options.”

Another effect of rising gold prices could be a spike in pre-owned prices as buyers look to take advantage of a dip in the market that, according to Morgan Stanley, has experienced 12 consecutive quarters of decline. But Charles Tian, founder of the WatchCharts pre-owned market tracker and co-author of Morgan Stanley’s quarterly market reports, says the secondary market has yet to experience any significant shifts due to the rising price of gold. “The main reason for this is simply that the value of the gold in the watch is not substantial enough relative to its overall market value. Even with gold being up 40 per cent in the past year, this most likely translates to no more than a 10-15 per cent increase relative to a watch’s overall value.”

He notes that gold watches, specifically Rolex models, have outperformed steel models over the past five years, increasing at median values by 32.3 per cent, compared with 26.4 per cent for steel. Even so, he adds, the cooling in the secondary market over the past three years since the pandemic-induced watch investment rush that sent prices rocketing means buyers are not zeroing in on the category today.

FT : Pain trades are inevitable

Pain trades are inevitable

Financial markets can fall fast but investors should look for where longer-term problems may be brewing

It is easy to blame US President Donald Trump for the recent convulsions in global financial markets, and many do. But let us not forget that such setbacks are a regular occurrence. The S&P fell about 20 per cent in 2022, but the world did not end. It dropped almost 10 per cent last summer, a setback that most market participants have already forgotten.

My point is that spikes in market volatility should not be a surprise, even if the catalysts are. We can blame Trump this time round, or rate rises in 2022 or an unwinding last summer of Japanese carry trades where speculators borrow yen to fund bets in other higher-yielding currencies. Financial markets can go down fast. Get over it.

But that does not mean there are no “pain trades”. Falling asset prices first expose, and are then accelerated by, excess leverage. As popular strategies become more crowded in the good times, their underlying returns diminish. The only way to keep delivering is by adding more leverage.

However, these winning bets can quickly mutate into the next pain trade. Initial losses and rising volatility trigger so-called margin calls for more collateral. If investors cannot post extra capital then lenders liquidate their positions. Stop-losses — trigger points for automatic selling — exaggerate the doom loop, which continues until excess leverage is cleared out. Then the markets rebound, often as fast as they fell. But those picking up pennies too close to the oncoming steamroller get crushed. Markets have followed this familiar pattern since the Trump election victory last November.

So where is the pain this time round? Higher volatility has whipsawed momentum-chasing CTA funds, a sector that derives its name from its roots in a strategy pursued by commodity trading advisers. The SocGen Trend index, which reflects their performance, is down almost 10 per cent in the year to date.

Rumours abound of significant losses by hedge funds adopting the infamous “basis trade” strategy that seeks to profit from small differences in the price of US Treasuries and associated futures contracts.

Elsewhere, long-short equity hedge funds crept further into long positions as markets rallied after the US election. But, according to Morgan Stanley, they cut their net leverage from 50 per cent to 37 per cent in the market turmoil following Trump’s “liberation day”. The latest pain trade seems to be the rapid appreciation of Taiwan’s dollar, which is causing disarray among life insurance companies on the island.

It is always tempting to build a fundamental narrative around such moves in financial markets. Asset prices collapsed as investors priced in the implications of Trump tariffs and threats to Federal Reserve independence. They recovered as the president rowed back.

Indeed, there is much talk that falling markets forced him to blink. But I see these short-term asset price moves as more technical, reflecting inevitable pain among leveraged strategies at a time of rising volatility. “Traders moved to price Trump’s latest announcement on . . . ” might make for a good story but in my experience, traders only ever move to price in the behaviour of other traders.

It is too early to say that the markets have priced in the longer-term economic implications of Trump policies, especially as we do not really know what those policies are. For any of you who were clever (or lucky) enough to buy into the recent dip, well done. The S&P 500 is now up about 14 per cent from recent lows. But remember your profits came from buying off distressed sellers, not a fundamental view that Trump policies will be good for markets. It is much too early to make that call.

Short-term pain trades usually fade away once leveraged speculators have been shaken out. But longer-term ones can reshape the whole investment landscape. For example, the 2000-03 bear market caused so much damage to UK pension funds that, encouraged by well-meaning legislation, they radically cut their weightings in domestic equities.

Where might the longer-term pain trades be brewing now? One candidate is private equity. Investors in this asset class used leverage to buy companies on the understanding that they could sell them 5-10 years later, but the traditional exit routes have largely closed. Their lenders will not force the PE firms to sell, but their end-investors are getting impatient. This will not turn into the short-term car crash so familiar in public markets, but a slow-motion train wreck remains a distinct possibility. After all, pain trades are not just for traders.

FT : BP rivals run the numbers on a takeover of the struggling oil major

BP rivals run the numbers on a takeover of the struggling oil major

British company left vulnerable to a takeover after a sharp slide in its shares over the past year

The slide in BP’s share price has left the UK energy major vulnerable to a takeover as rivals weigh the opportunity to buy at a steep discount and put an end to its 116 years as an independent company.

Listed companies Shell, Chevron, ExxonMobil and TotalEnergies, as well as Abu Dhabi’s Adnoc, have separately run the numbers, according to industry sources and advisers, while oil trader Vitol could be interested in elements of the business.

A sum of the parts valuation suggests BP’s assets are worth in excess of £120bn, without including debt and liabilities, more than twice its current market capitalisation of £57bn, which follows a sharp slump in its shares over the past 12 months.

“The continued underperformance of BP makes it open to a takeover,” said a person close to the activist investor Elliott Management, which has built a leading stake in the company.

The M&A teams of major oil companies routinely assess the business case for big takeovers. And while any deal for BP would be complex, triggering competition and political concerns, the prize is significant.

BP’s oil and gas assets, including those in the Gulf of Mexico, and US shale business alone are worth $82bn, according to UBS analyst Joshua Stone — above its market value. But the UK company is weighed down by $77bn of debt and long-term liabilities, including those stemming from the 2010 Deepwater Horizon oil spill.

Shell

A deal for BP would be transformational for Shell, creating an energy giant pumping out close to 5mn barrels per day of oil and gas — more than ExxonMobil or Chevron. It would also have as much as a quarter of the world’s LNG market and a significant presence in the US.

Shell chair Andrew Mackenzie worked at BP for more than two decades, and Shell has considered a combination with BP several times in the past, including a proposed 2004 tie-up that ex-BP chief executive John Browne recently told the Financial Times would have been a “marriage made in heaven”.

Shell has spent much of the past two years improving its financial health. Chief financial officer Sinead Gorman told analysts last week that it was flush with “more than $35bn” of cash and “incredibly well-positioned” to strike deals.

For Shell, the most appealing element of BP’s portfolio would be the gas and LNG assets. Its chief executive Wael Sawan told the FT last week that he wanted Shell to be “the undisputed leader in integrated gas and LNG”.

But asked if he wanted to buy BP, Sawan replied that buying back shares was better value for his company’s investors.

Analysts are unsure of the merits of the deal. “We struggle with the maths,” said Biraj Borkhataria, an RBC Capital Markets analyst, who questioned whether Shell would want BP’s trading business, its refineries or its operations in Azerbaijan, India, Iraq and Abu Dhabi.

“Shell would be much better served to carry on with its [current] plan,” he added.

The integration of the two businesses, with very different cultures, would take several years, according to insiders at both companies, and there would probably be tens of thousands of job losses, a potential political problem for the UK government.

But the cost to Shell of sitting idle could be high. “Could they really stand on the sidelines and let someone else buy BP?” asked one investor.

ExxonMobil and Chevron

As US majors ExxonMobil and Chevron assess how a BP deal would stack up, they are entangled in their own high-stakes takeover drama.

An arbitration ruling is expected soon on Chevron’s $53bn deal for energy company Hess, which would give it a significant stake in the Stabroek block in Guyana, among the most valuable oil discoveries in decades. Exxon has argued that its ownership of a share in the same block gives it first refusal to buy the rest.

The result is that “Chevron and ExxonMobil are focused on Hess”, according to Andrew Gillick, at research group Enverus. But an adverse ruling for Chevron could force the US group to seek growth elsewhere.

Both US companies could be attracted by BP’s gas and trading businesses, and were able to pay a “hefty premium” compared with European rivals because of their higher valuations, said Michael Alfaro at hedge fund Gallo Partners.

Exxon’s chief executive Darren Wood told analysts last week that he was on the “constant lookout” for opportunities, especially as low oil prices left some companies with weaker foundations vulnerable.

Yet there could be political challenges to a transatlantic tie-up, according to Dan Pickering, chief investment officer at Pickering Energy Partners in Houston. “I would put the odds that Exxon and Chevron would make a run [for BP] at pretty low,” he said. One US-based banker said BP’s assets were not attractive enough for Exxon.

Exxon and Chevron did not respond to requests for comment.

Adnoc

Abu Dhabi National Oil Company has a close relationship with BP, dating back to the discovery of oil in the United Arab Emirates in 1958. BP owns minority stakes in Adnoc’s onshore and LNG business, and the pair have a joint venture in Egypt.

Bernard Looney, former BP chief executive, is on the board of an Adnoc subsidiary, and the Abu Dhabi company is keen to expand internationally, recently doing a string of multibillion-dollar gas and chemicals deals.

One oil industry veteran said that since Adnoc did everything from extracting oil to refining and trading oil products, there would be “linkages all along the value chain” with BP.

Two other industry sources suggested the UK government might be receptive to a BP deal if it was part of a broader investment plan by the UAE into UK assets.

But the relationship between the two countries was damaged by the furore around a 2023 Emirati-backed bid for the Telegraph newspaper, and Adnoc would be cautious about running into a repeat of the episode.

In 2015, the UK government under David Cameron warned it would oppose any attempt by a foreign company to buy BP. In recent weeks, BP has been sounding out people close to the government over whether Sir Keir Starmer would also seek to defend against a takeover, according to two people with knowledge of the efforts.

Adnoc declined to comment.

TotalEnergies

Patrick Pouyanné, the dealmaking boss of France’s TotalEnergies, may relish a swoop for a proud British oil company, and would be interested in BP’s gas and LNG assets, as the third-largest global LNG provider seeks to catch up with Shell.

But like Shell, Total is busy buying back its shares, and Pouyanné told analysts the company would have to compare the attraction of buybacks with whether it can “do a beautiful acquisition”.

TotalEnergies, which declined to comment, would be one of the few suitors with an interest in BP’s clean energy assets, since it is committed to growing its own renewable power business.

But elsewhere, analysts said it would be less keen on BP’s refineries, its US shale business or its US offshore wind assets, given the anti-wind stance of the Donald Trump administration.

Ahmed Ben Salem, an analyst at ODDO BHF, a French-German financial group, said Total might find easier deals to pursue elsewhere.

“What’s the point in buying a building if you’re only going to keep hold of a few apartments?” he said.

FT : Power prices surge in Portugal as it suspends Spain link after blackout

Power prices surge in Portugal as it suspends Spain link after blackout

Lisbon paused imports from its neighbour ‘as a precaution’ after catastrophic blackout on April 28

Portugal is enduring a dramatic surge in electricity prices after deciding to temporarily slash its power imports from Spain, whose grid collapse last week triggered a blackout across the Iberian peninsula.

Wholesale electricity prices in Portugal were nearly five times higher than those in Spain earlier this week as Lisbon halted imports from its neighbour. Usually the two countries pay roughly the same for power.

The Iberian peninsula functions as an “energy island” in which Portugal last year imported one-fifth of its electricity from its neighbour, but the power wipeout that began in Spain on April 28 has created tensions between the two countries.

In the aftermath of the still unexplained power outage, Maria da Graça Carvalho, Portugal’s energy minister, said her country was suspending electricity imports from Spain “as a precaution”.

Five days after the blackout, on Saturday, her country’s electricity prices began to climb far above those of its neighbour. The gap reached a peak on Tuesday, when Spain’s average wholesale price was €10.24 per megawatt hour but Portugal’s leapt to €47.92/MWh.

The price jump will not immediately hit most households or businesses that pay prices set in longer-term contracts.

REN, Portugal’s grid operator, told the Financial Times that the decision to “close the importation” from Spain was “made to ensure the safety of the Portuguese national electric system”.

Imports remained suspended on Wednesday. When REN restarted limited inflows from Spain on Thursday, the price gap narrowed. Spain’s average electricity price that day was €16.76/MWh versus €41.86/MWh in Portugal, according to OMIE, the Iberian market operator. OMIE’s “day ahead” prices for Friday showed the gap should narrow further.

REN has said it would limit import capacity to 1,000 megawatts per day up until May 12, a level that is less than one-fifth of Portugal’s maximum daily imports in recent years.

The grid operator stressed that although the “trade” in electricity had been paused, cross-border connections had remained open to facilitate the technical balancing of the Iberian system “if needed”.

Energy minister Carvalho told the FT: “A comprehensive and phased plan to fully normalise energy trade between the two countries is currently under development, with the dual objective of ensuring operational security and market stability.”

The Spanish and Portuguese electricity systems have been integrated since the 1980s. In recent years Lisbon has benefited from Spain’s rapid rollout of solar power plants, which has given it access to abundant cheap power.

“In Portugal we have been delayed in solar power generation compared to Spain,” said João Peças Lopes, a professor of electrical engineering at Porto university. “The electricity produced in Spain is cheaper than what’s produced in Portugal, so why not profit from it?”

It is common for spot electricity prices to fall to zero in the afternoon in Spain because the country produces so much solar power.

Armindo Monteiro, head of CIP, Portugal’s main business lobby, said his country “does not and should not live in electric isolation”, arguing that its access to low-cost Spanish power boosted its economic competitiveness. “But it is necessary to reflect on the appropriate and necessary security conditions for the current level of dependence,” Monteiro added.

A few minutes before last week’s blackout, Portugal was importing 35 per cent of its electricity from Spain, according to REN. Lopes noted that Portugal was using some of that electricity to pump water uphill at hydroelectric plants dubbed “water batteries”, which provide a form of storage.

After the blackout, Portugal was able to use those hydroelectric plants to restore power on its own. Spain had to rely on France and Morocco, via its interconnections with those countries, to get its system back online.

FT : US pushes financial regulators to backtrack on climate risk project

US pushes financial regulators to backtrack on climate risk project

Effort to weaken Basel committee task force comes as Trump administration steps back from environmental issues

US regulators are calling on the world’s financial rulemakers to downgrade a flagship project to tackle the risks of climate change in the latest sign of America’s retreat from environmental causes since Donald Trump became president.

Top officials at US financial watchdogs are seeking to weaken the power of a high-level task force set up in 2020 to examine climate change risks to the financial system by the Basel Committee on Banking Supervision, the standard-setter for global financial regulation.

The proposal to dilute the Basel committee’s task force is on the agenda for a meeting of the world’s top central bank governors and financial supervisors on Monday, according to three people briefed on the matter.

The move comes as the Trump administration has taken steps to force all arms of the US government, along with international bodies such as the World Bank and IMF, to ditch their focus on climate-related issues.

The four US regulators on the Basel committee — the Fed, the New York Fed, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation — are calling for the task force to be downgraded to a working group, according to two of the people briefed on the matter.

Some central bankers at the meeting are likely to argue against the US-backed proposal, according to one person familiar with Monday’s meeting. “It is not clear if there is enough support to pass it,” said the person.

Europe-based regulators are likely to be among those defending the task force after both the European Central Bank and the Bank of England recently called on the banks they supervise to step up their efforts to address climate risks.

The project is co-chaired by Kevin Stiroh, a senior New York Fed official currently seconded to the Fed board in Washington and who leads its climate supervision committee, and Frank Elderson, an executive board member at the European Central Bank.

Since being set up five years ago, the body has produced a number of reports, including proposals to establish a global framework for banks to disclose climate risks and a set of principles for banks and their supervisors to tackle threats from global warming.

If the Basel committee dilutes the importance of its flagship climate project it is likely to prompt uproar among environmental groups.

“It’s the wrong move at the worst possible time,” said Benoît Lallemand, secretary-general of the lobby group Finance Watch.

“Disbanding the Basel committee’s climate task force would send the absurd signal that climate risks are no longer a concern for financial stability, just as extreme weather, credit losses and asset repricing accelerate,” he added. “This regressive decision would undermine the credibility of the BCBS and its role as a standard-setter.”

In January, the Fed left the Network for Greening the Financial System, a central banking club for researching climate risks that is housed by the Banque de France. Jay Powell, Fed chair, denied at the time that the decision reflected the Trump administration’s stance on climate issues, saying it was “really not driven by politics”.

Kevin Warsh, seen as one of the frontrunners to replace Powell once his term as Fed chair ends in May 2026, last month attacked the US central bank’s involvement in issues such as climate change and inclusion — though he acknowledged it had now “changed its tune” by leaving the NGFS in January.

Asked this week whether the Fed should focus on climate change, Powell distanced himself from the subject, saying its “role on climate is a very, very narrow one”.

“It’s a real danger for us to try to take on a mandate like that, which [has a] very narrow application to our work,” the Fed chair said. “If you go for things that are really not in your mandate . . . then why are you independent?”

The Basel committee, the Fed, the OCC, the FDIC and the New York Fed declined to comment on Monday’s meeting.

The Fed has also come under pressure from US banks over its so-called Basel III endgame proposals for banking capital requirements, based on rules global regulators agreed at the Basel committee a decade ago.

US lenders believed the original proposals were too draconian and threatened to sue the Fed, prompting it to drop them. Michael Barr, the Fed’s vice-chair for banking supervision, has since quit that role while remaining on its board. Barr has recently been replaced by Michelle Bowman, who is expected to release less stringent guidelines soon.

>>> US After Hours Summary: Busy earnings session; PINS +15.6%, GDOT +14.9%, TMD

After Hours Summary: Busy earnings session; PINS +15.6%, GDOT +14.9%, TMDX +13.5%, TTD +11.8%, LYFT +7.8%, MCHP +7.8% higher on earnings; GMED -17.2%, REAL -11.7%, ZIP -8%, EXPE -7.8%, MNST -1.9% lower on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: LASR +16.1%, PINS +15.6%, GDOT +14.9%, TMDX +13.5%, AMN +13.2%, ST +12.4%, MITK +11.8%, TTD +11.8%, PSIX +11.7%, NGVC +9.8%, PODD +9.6% (also authorizes new $125 mln share repurchase program), CLFD +9.1%, NET +8.5%, TOST +8% (also announces deal with Topgolf), ABL +8%, LYFT +7.8% (also increases share repurchase program to $750 mln), MCHP +7.8%, MNR +7.6%, ICUI +7.2%, AVPT +6.9%, RXT +6.9%, CARG +6.6%, FOXF +6.4%, PUBM +5.9% (also increases share repurchase authorization by $100 mln), PRTA +5.6%, AMPX +5.6%, TWNP +5%, TXG +4.3%, CRNX +4%, LNT +3.1%, ZD +3%, CLNE +2.9%, FNKO +2.9%, DIOD +2.7% (also authorizes new $100 mln share repurchase program), MCK +2.3%, SYNA +2.2%, FROG +2.1%, TXRH +2.1%, YELP +2.1%, NTRA +2%, SPT +2%, VCTR +2%, TKO +1.9%, DKNG +1.8%, WEST +1.6%, ZYME +1.6%, OLO +1.5%, RUM +1.5%, HUBG +1.3%, VREX +1.3% (also receives $25 mln in orders for inspection systems), WPM +1.3%, XIFR +0.8%, MP +0.6%, POST +0.3%, AGO +0.1%, SGHC +0.1%

Companies trading higher in after hours in reaction to news: CRVS +46.6% (new interim data from phase 1 trial evaluating soquelitinib), PHX +20.7% (to be acquired by WhiteHawk Income), MAT +3.6% (names new CFO), ICHR +2.3% (CEO buy shares), MODG +1.7% (announces deal with TOST), WY +1.5% (authorizes new $1 bln share repurchase program), HRTG +1% (full placement of reinsurance program), ECL +0.6% (names MCD exec to board), HSTM +0.5% (authorizes new $25 mln share repurchase program), AA +0.5% (names new non-executive Chairman)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: IOVA -42%, WOLF -23.4%, RCEL -20.4%, ORGO -18.5%, GMED -17.2%, DCGO -16.7%, FIGS -12.2%, PCRX -11.7%, REAL -11.7%, EXFY -10.5%, KODK -10.3%, INOD -10.2%, HROW -9.7%, XPOF -9.5%, AAOI -9.4%, GRND -9.4%, ONTO -9.2%, SG -9%, AFRM -8.9%, CVRX -8.7%, FLWS -8.3% (also names new CEO), ZIP -8%, EXPE -7.8%, HUBS -6.9% (also authorizes new $500 mln share repurchase program), OUT -5.9%, SOUN -4.8%, ARLO -4.3%, ASTH -4%, CLSK -4%, GSAT -3.7%, BILL -3.5%, COIN -3.5% (also files mixed securities shelf offering), MTUS -3.4%, COMP -3.4%, RKLB -3% (also to launch Neutron for U.S. Air Force), ILMN -2.9%, QXO -2.9%, SOLV -2.6%, AKAM -2.4%, BBDC -2.3%, AUR -2.3%, DV -2.1%, MARA -2.1%, MNST -1.9%, SUZ -1.9%, BHF -1.4%, FNV -1.4%, TREX -1.4%, DBX -1.3%, RKT -1.3%, RNG -0.8%, AHR -0.7%, ALRM -0.6%, TMCI -0.5%, ATGE -0.4%, EVH -0.3%, PARA -0.3%, INGM -0.3% (also increases dividend), OS -0.1%, PBA -0.1%

Companies trading lower in after hours in reaction to news: CTLP -3.4% (partnership with Carnival Cruise), AUTL -3% (files for 54,584,250 ADS offering by selling shareholders), KROS -2.7% (responds to "misleading" statement from ADAR1), TERN -2% (files for $300 mln mixed securities shelf offering), QUBT -1.9% (names new COO), PRMB -1.5% (47.5 mln share offering by selling shareholders), IDA -1.3% (commences $450 mln share offering), MGM -0.4% (new employment agreement with CEO), VTRS -0.2% (files mixed securities shelf offering), WMS -0.1% (acquires River Valley Pipe), CNS -0.1% (reports April AUM), NHC -0.1% (increases dividend), CTVA -0.1% (files mixed securities shelf offering), CDTX -0.1% (files for $500 mln mixed securities shelf offering)

FT : Pakistan’s bellicose army chief is playing with fire

Pakistan’s bellicose army chief is playing with fire

At a time of crisis, the country is being led by a general not known for his restraint

On May 7, Indian jets targeted several sites deep inside Pakistan, killing 31 people according to Islamabad. The attack was expected, especially given that India’s Prime Minister Narendra Modi promised to punish the perpetrators of the April assault that killed 26 civilians inside Indian-administered Kashmir. Now, Pakistan’s Prime Minister Shehbaz Sharif has authorised his army chief to retaliate.

However, a further response runs the risk of escalating tension to a boiling point between the two nuclear-armed neighbours. This is happening at a time when geopolitical alliances are in flux. Unlike in past India-Pakistan wars when great powers restrained the warring parties, no one is seeking to hold them back now.

The US isn’t acting forcefully to lower the temperature between New Delhi and Islamabad. Although Donald Trump has offered his mediation services, there is no rush of senior US officials to the region. The rowdy boys have been left to fight alone with no headmaster present to march them to their respective corners. Other actors like Saudi Arabia and the UK may urge de-escalation but that won’t have the same effect as pressure from Washington.

In Pakistan, the public — unaware of militant training camps in their midst and conditioned to see Pakistan as the victim — is clamouring for retaliation. Whatever happens next will depend on one man: the country’s army chief, Asim Munir. Munir controls Pakistan’s strategic decision-making far more than the elected government led by Sharif. And he is not a figure known for his restraint.

One of the reasons that New Delhi believes that Pakistan-based militants were behind the April attack is because of a speech that Munir delivered a week earlier. In it, he referred to Kashmir as Pakistan’s “jugular vein” and vowed not to leave Kashmiris alone in their struggle for independence from India.

He also expressed the polarising view that Pakistan came into being in 1947 because the Hindus and Muslims of the subcontinent could not live together. In so doing, Munir has departed dramatically from the outlook of his predecessor, Qamar Javed Bajwa, who in 2021 spoke about burying the hatchet with India, mainly because in his estimation Pakistan couldn’t afford to fight a war.

Munir was once Bajwa’s head of the Inter-Services Intelligence (ISI), the military’s prime intelligence agency. Back then, he didn’t contradict his boss. Now that he’s in charge, he seems intent on taking the military back to its old posture of vying for control of Kashmir and treating India as the prime enemy.

Munir has a reputation for hewing to his religious and ideological beliefs and disliking being challenged. Indeed, some of his older colleagues recall him leaving the room when contradicted, even during informal conversations among officers.

He is now seeking to play the role of strongman in a country that has been riven by political divisions in recent years. Many Pakistani voters suspect Munir of manipulating the 2024 elections and helping to force the cricketer-turned-politician Imran Khan out of power. The ongoing conflict with India may have rehabilitated his image temporarily but, given the defence establishment’s dominance of the country’s institutions, it will also put pressure on him to prove the military’s might — in a real conflict against a larger neighbour at a time when the country is under huge economic pressure.

Controlling everything from politics to the economy makes Munir a powerful man, but he’s not a magician who can rescue Pakistan from its economic troubles. A war that pits him against Narendra Modi, another nationalist strongman, will complicate matters even more. The decision Munir must take now is whether to seek a dialogue with India to end the conflict — or get sucked into a greater strategic abyss.