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Tariffs on goods may be a prelude to tariffs on money

Capital inflows could be the Trump administration’s next target

This month, many investors feel dazed and confused. No wonder: as the US government flirts with another shutdown and President Donald Trump intensifies his trade war, indices of economic uncertainty have skyrocketed above even the 2020 pandemic or the global financial crisis of 2008.

But the uncertainty could get worse. For amid all the tariff shocks, there is another question hovering: could Trump’s assault on free trade lead to attacks on free capital flows too? Might tariffs on goods be a prelude to tariffs on money?

Until recently, the notion would have seemed crazy. After all, most western economists have long seen capital inflows as a good thing for America, since they have helped to fund its $36tn national debt and business. For instance, Elon Musk, Trump’s adviser, has benefited from Chinese investment, some of which is private.

But some maverick economists, such as Michael Pettis, have long dissented from this orthodox view. Pettis sees these capital inflows as not “just” the inevitable, and beneficial, corollary of America’s trade deficit, but as a debilitating curse. That is because inflows boost the dollar’s value, foster excessive financialisation and hollow out America’s industrial base, he says, meaning that “capital has become the tail that wags the dog of trade”, driving deficits.

Pettis wants curbs, like taxes, therefore. And six years ago, Democratic senator Tammy Baldwin and Josh Hawley, her Republican counterpart, issued a congressional bill, the Competitive Dollar for Jobs and Prosperity Act, which called for taxes on capital inflows and a Federal Reserve weak-dollar policy.

The bill seemed to die. But last month American Compass, a conservative think-tank close to vice-president JD Vance, declared that taxes on capital inflows could raise $2tn over the next decade. Then the White House issued an “America First Investment Policy” executive order that pledged to “review whether to suspend or terminate” a 1984 treaty that, among other things, removed a prior 30 per cent tax on Chinese capital inflows.

This did not grab headlines, since Trump was “flooding the zone” with other distractions, notably on tariffs. But it spooked Asian observers and probably contributed to recent US stock market falls, as some investors preemptively flee.

In reality, a tax shift might not happen — or affect anyone other than the Chinese. Trump is (in)famously mercurial, which makes predicting future policy hard, particularly since his entourage is split into at least three warring factions: nationalist populists (such as Stephen Bannon), techno-libertarians (like Musk) and pro-Maga congressional Republicans. The last two factions might fight capital curbs, due to concerns about destabilising Treasury markets.

But Trump is also eager to use all available tools to bolster his leverage on the world stage. And Pettis’s ideas seem to be influential among some advisers, such as Treasury secretary Scott Bessent, Stephen Miran, the chair of the Council of Economic Advisers, and Vance.

This trio appears minded to reset global trade and finance, via a putative Mar-a-Lago accord, although their ambitions are on a grander scale than the 1985 Plaza accord. The latter “merely” weakened the dollar via joint currency intervention but Miran’s vision of a Mar-a-Lago accord includes a possible US debt restructuring too, which would force some holders of Treasuries to swap them for perpetual bonds.

Some well-connected financial analysts, like Michael McNair, also expect to see a sovereign wealth fund, backed by America’s gold reserves, that would buy non-dollar assets to balance capital inflows (like, say, Greenland’s resources). A third idea is imposing taxes on capital inflows in a wider sense. This might become the preferred approach if the idea of debt swaps leaves rating agencies threatening to downgrade US debt.

“[The trio’s] ultimate goal isn’t a series of bilateral [trade] deals but a fundamental restructuring of the rules governing global trade and finance [to remove] distorted capital flows,” says McNair. “Whether this approach succeeds remains to be seen, but the strategy itself is more coherent and far-reaching than most observers recognise.”

Let me stress that I am not endorsing this, nor predicting with any confidence it truly will happen. And it must be noted that Pettis’s theories provoke outrage among many mainstream economists. 

But Pettis is unrepentant. And critics should also note that the 2019 Baldwin-Hawley bill was not only applauded by conservative groups like American Compass, but some union voices too. Since it has populist appeal, it might yet fly.

Either way, the key point to understand is that a shift in economic philosophy is emerging that is potentially as profound as the rethinking unleashed by John Maynard Keynes after the second world war or that pushed by neoliberals in the 1980s. As Greg Jensen of the Bridgewater hedge fund recently quipped, paraphrasing Milton Friedman: “We are all mercantilists now.” Don’t expect that to be reversed any time soon.

Formula 1 is developing its entertainment, merchandise and immersive fan experiences to broaden its appeal and boost revenue

Formula 1 is ramping up its off-track commercial activities as the global car racing series leans into pop culture to pull in new fans, keep their interest and increase revenues.

F1, which is controlled by the US group Liberty Media and whose season starts this weekend, is betting on experiences, merchandising and retail as part of a wider strategy focused on crossing into the entertainment industry.

Under Liberty Media ownership since an $8bn takeover in 2017, F1 has reached new audiences by putting the focus on the drivers, showcasing their personalities through the likes of the Netflix docuseries Drive to Survive. 

At a launch event in front of 15,000 people at the O2 Arena in London in February, all 10 teams presented their cars ahead of the new season. Music artists Machine Gun Kelly, Kane Brown and Take That performed, hosted by comedian Jack Whitehall under light displays and films that honoured F1’s history and connected it to the present.

The F1 75 event was another instalment in a series of immersive experiences being offered to fans. It comes on the back of the travelling F1 Exhibition, which showcases cars and other mementos from the sport’s history, and the gaming-bar business F1 Arcade, which is also backed by Liberty Media. 

F1 chief commercial officer Emily Prazer says the experiential approach was a “huge focus” in efforts to engage with fans and audiences outside the racetrack, in a cost-efficient and tangible way.

“Our sport — you need to be able to smell it, touch it and sell it to understand it,” Prazer says.

In another sign of the sport’s efforts to tap into the entertainment industry, F1 has backed a new film — titled F1 — starring Brad Pitt and scheduled for release in June.

The sport is in “Disneyfication” mode, says Paolo Aversa, professor of strategy at King’s College London, creating a world that provides different experiences and products to people from childhood to retirement, from toys and collectibles to merchandise and high-end hospitality.

“You first meet Mickey when you’re three, you meet the new characters of the franchise and you end up watching Marvel, then something more senior towards the end,” he says. “You can go to Disney theme parks and you can stay in the hotels. This is typical of American business models. Liberty Media knows this model very well.”

Disney-style theme parks, however, remain some way off. “I wish, that’s like my dream,” Prazer says.

Following a string of new deals in recent months, F1 has struck licensing partnerships with Lego Group and Mattel on new product ranges of toys and collectibles. The Lego collection ranges from entry-level Duplo to advanced Technic models, while Mattel is rolling out toy cars under its Hot Wheels brand.

Julia Goldin, global chief product and marketing officer at Lego, says the partnership will “surprise and delight fans” — with not just the products but also content or pop-up shops at Grand Prix events.

Lego’s “activation” video, portrayed Lego F1 cars racing around the Las Vegas Sphere — the city’s music and entertainment venue.

“It’s about enhancing the fans’ experience, giving them something to talk about, and something that will create a sense of awe,” Goldin said. “These are the kinds of things that build the brand for the future.”

Prazer agrees. “A lot of what we are focused on is how we continue to grow off the back of the success of Exhibition, Arcade and what we’re doing in Vegas.”

Under Liberty, F1 has widened its appeal from older, male petrolheads to a far more diverse audience, which skews younger and more female than before the takeover. The sport has built its global appeal with new races in the Middle East and the US, tapping into new fan bases and revenue opportunities. 

“People who watch the race live, beginning to end, will become the minority,” Aversa says. “Most people will enjoy F1 by playing with Lego, shorter summaries on social media, maybe watching the movie inspired by F1 or the Netflix series, which is more and more dramatised and less and less a documentary.”

In its 75th year, F1 is also finding new ways to produce the merchandise and memorabilia that fans want. In a move that complements F1’s existing licensing business, Prazer says the company has created its own wholesaler off the back of the F1 Hub, an initiative at the Las Vegas Grand Prix that featured exclusive merchandise collaborations, including one with the cartoon dog Snoopy, from the Peanuts comics.

The new Las Vegas Grand Prix — and Liberty Media’s decision to become the promoter for the event — is transforming the way F1 does business globally. The series now sends a product book to its Vegas casino partners a year in advance, allowing them to pick the merchandise they want to offer.

“We want to have quality control over what we’re selling — Formula 1 is a premium brand,” Prazer says. “We’re taking it really seriously. We’re not suggesting we’re ever going to take on Nike . . . but I think it helps us as we start selling into those retailers a little bit more.”

“Our biggest challenge is how to capitalise on it and be very thoughtful about what we do and don’t do,” she says. “The sport is on a roll and we’re getting inquiries on a daily basis, but we have to be really, really thoughtful [about it].”

HONG KONG, March 14 (Reuters) - Asia hedge funds weathered the March selloff in markets better than their U.S. counterparts, helped by the relative outperformance of Chinese stocks as global investors rushed into that market.

Asia-focused hedge funds posted an average 0.71% loss this month until the 10th, compared with a 2.6% drop for their U.S. peers and a 1.7% drop for global peers, a Morgan Stanley prime brokerage note dated March 12 shows.

While the market rout impacted Asia hedge funds, their year-to-date outperformance relative to the United States has expanded, pointing to how the region is becoming somewhat of a haven for investors fearing a U.S. recession.

“Asian equity long/short, especially single-country managers have been very strong this year," said Nick Silver, head of Asia Pacific prime services at BNP Paribas. "This region feels a little bit insulated from the recent market rout. "

Asian hedge funds that bet on stock rises and falls, tracked by Morgan Stanley, were up 2.8% year-to-date, while the U.S. ones lost 2.6%.

U.S. President Donald Trump's aggressive tariff policies have jolted global markets and triggered a steep sell-off in U.S. stocks.

Global hedge funds rushed to cut risk and losses, causing the largest two-day unwinding of stock positions in four years on March 7 and March 10, according to Goldman Sachs. The tech-loaded Nasdaq (.IXIC), opens new tab plunged 4% on Monday, its biggest single-day percentage drop since September 2022.

In Asia, that unwinding also affected some multi-manager funds trading in Japan, forcing them to unwind their crowded bullish bets on Japanese stocks, according to sources familiar with the matter.

But the casualties were mostly in U.S. investments, they said.

Morgan Stanley estimates that year-to-date hedge fund purchases of Chinese stocks are almost double that in the September 2024 market rally, as losses on Wall Street accelerated investors' capital rotation.

Hong Kong's benchmark Hang Seng Index (.HSI), opens new tab - where many major Chinese companies are listed - is up about 20% since Trump entered the White House in January.

Hedge funds are also keen to re-enter the South Korean market once a short-selling ban is lifted on March 31, Morgan Stanley said.

Their positioning in Asia has been extremely light, meaning investors are able to be nimble and have less difficulty in getting out of consensus long positions and crowded shorts, Silver said.

"People have been able to move around a lot quicker here," he said.

Dario Vitale is joining from Miu Miu as there are reports his former employer, Prada Group, is in talk to potentially buy Versace from Capri Holdings.

MILAN — Fashion’s current spinning wheel on Thursday caught up Donatella Versace, who was named chief brand ambassador of the fashion house she has helped grow on her own for the past 28 years, following the death of her beloved brother Gianni.

On Thursday, Versace said the designer would be succeeded by Dario Vitale, named chief creative officer, effective April 1.

Vitale was previously Miu Miu’s ready-to-wear design director and left the company in January.

As first reported by WWD in December, sources said the contract of Donatella Versace, who held the role of chief creative officer of the Italian brand, was up in February. In her new role, she will dedicate herself to the support of Versace’s philanthropic and charitable endeavours.

In 2018, Donatella Versace reached a $2.1 billion deal to sell her family’s company to Michael Kors Holdings, which subsequently changed its name to Capri Holdings. Sources said Prada Group is in exclusive due diligence with Capri about buying both Jimmy Choo and Versace and have about mid-March to conclude a deal, if one is finalized. Prada could in turn flip Jimmy Choo to another buyer to focus on Versace.

Wall Street seemed to view the Versace news as a positive, sending Capri’s shares up 8.3 percent on Thursday to close at $21.12.

WWD reported in January that sources believed Vitale was headed to Versace, even before speculation about Prada eyeing Versace emerged. Was a potential deal in the cards even before Vitale left Miu Miu? If the deal does materialize, it’s safe to say Prada will be interacting with a designer they feel comfortable with.

“Today’s announcements were part of a thoughtful succession plan for Versace,” stated John D. Idol, chairman and chief executive officer of Capri Holdings. “Since 1997, Donatella has led the creative vision for the house of Versace and played an integral role in the company’s global success. He added that the designer “will continue to champion the Versace brand and its values.”

Idol described Vitale as “a strong design leader, and we are confident that his talent and vision will be instrumental to Versace’s future growth.”

Donatella Versace has been fundamental in spearheading the brand. In addition to her work as a designer, she has acquired A-list popularity on social media, and is widely recognized for her philanthropic work, her support of the marginalized and her initiatives to sustain the rights of the LGBTQIA+ community. She has also supported young designers such as Christopher Kane, who designed Versus with her for years, Jonathan Anderson and Anthony Vaccarello, attending the latter’s show for Saint Laurent on Tuesday night in Paris.

To wit, on Thursday, she said that “championing the next generation of designers has always been important to me. I am thrilled that Dario Vitale will be joining us, and excited to see Versace through new eyes. I want to thank my incredible design team and all the employees at Versace that I have had the privilege of working with for over three decades.”

In her new role, she said she would “remain Versace’s most passionate supporter. Versace is in my DNA and always in my heart.”

Concluding, she underscored that “it has been the greatest honor of my life to carry on my brother Gianni’s legacy. He was the true genius, but I hope I have some of his spirit and tenacity.”

Sources said Idol and Donatella Versace have often clashed over the strategy for the brand, further fueling the speculation over the designer’s contract renewal.

Vitale said he was “truly honored ” to join the company and “to be a part of this special and powerful fashion luxury house created by Gianni and Donatella.” He paid tribute to the brand’s “unique heritage that has spanned decades and has shaped the history of fashion. I want to express my sincere thank you to Donatella for her trust in me, and for her tireless dedication to the extraordinary brand that Versace is today. It is a privilege to contribute to the future growth of Versace and its global impact through my vision, expertise and dedication.”

“Versace’s decision to bring in Dario Vitale reflects a growing trend in luxury fashion: moving beyond traditional in-house succession to secure leadership with a proven track record in brand transformation,” said Roberto D’Incau, fashion headhunter, Lang & Partners. “His tenure at Miu Miu demonstrated his ability to merge creative excellence with commercial success, a rare and highly sought-after talent in today’s industry. If he can channel that expertise into Versace’s universe—without diluting its unmistakable identity—this could be one of the most significant creative shifts of the decade.”

Giovanna Brambilla, partner at Milan-based executive search firm Value Search, concurred, saying the appointment of Vitale “foreshadows a very interesting evolution for the brand.”

The designer, with his “creative vision but also constancy and determination,” contributed to evolve Miu Miu from a brand that was “essentially a fantastic creative exercise” into what it has become today: “a brand that women not only appreciate but love to wear.”

Vitale, she continued, “added concreteness to conceptuality,” with a distinctive creativity “for real women that want to feel unique.”

Brambilla believes the “exceptional results” Miu Miu reported over that past few years prove that creativity, “when channeled correctly, accelerates a positive performance,” and that quiet luxury is not the only road to success.

Rodgy Guerrera, founder of boutique head hunter Rodgy Guerrera & Partners, said she has known Vitale since his days as a student at Istituto Marangoni. “I have always liked him both as a person and as a professional: he is steady, reserved, has excellent taste and a great creative sensibility. I am sure he will breathe new life into Versace.”

Guerrera was confident Vitale will know how to interpret the vision of Gianni and Donatella Versace. “In my opinion he is the right person for this challenge and he will bring a fresher and more modern take to this great brand.”

Emmanuel Gintzburger, CEO of Versace, said “Versace is what it is today because of Donatella Versace and the passion she has brought to her role every day for nearly 30 years. The universal values she stands for and her love for uncompromised creativity anchored Versace far beyond a brand or a company. Working alongside her has been an incredible privilege and pleasure.”

Gintzburger expressed his confidence in the company “as we are well-prepared for the organization to write this new chapter for the house. Dario Vitale is a rare talent, who deeply respects the essence and values of Versace and clearly understands its growth potential.”

The CEO touted Vitale’s “experience and vision,” confident that it “will bring a new perspective to the brand. I am excited to welcome him in the coming weeks and embark on a new and ambitious journey for Versace.”

Donatella Versace was born in Reggio Calabria in southern Italy, the younger sister of Gianni and Santo. The company was founded in 1978 and, while Santo dealt with the business, Donatella started working beside Gianni and was also considered his muse.

She supervised campaigns by photographers such as Richard Avedon, Irving Penn and Helmut Newton, and in 1994 she became head designer of Versus.

She has helped build the brand by connecting luxury with the mood of the street, curious for novelty and leveraging a deep understanding of pop culture.

Besides supervising the successful Versace Home line, a pioneer in the segment as a fashion brand, she has been overseeing fine jewelry, timepieces, fragrances and the Versace interior design facility as well as the palazzo Versace hotels in Australia, on the Gold Coast, in Dubai and Macau.

In December 2017, the British Fashion Council bestowed her with the Fashion Icon Award during the Fashion Awards, and in June 2018, she received the International Award by the CFDA.

In September 2018, the designer received the CNMI Award in recognition of sustainability at the Green Carpet Fashion Awards.

The Georgian creative will wrap up his tenure at Balenciaga with a couture show on July 9. His successor has yet to be named.

Demna is leaving Balenciaga to become the new artistic director of Gucci, tasked with jolting the Italian fashion house out of its doldrums with a gust of strong creativity.

“Demna will bring to Gucci something exceptional. His way of defining fashion today is pretty unique, and this is what Gucci deserves and needs for the future,” said Gucci chief executive officer Stefano Cantino, speaking to a clutch of reporters summoned to the Paris headquarters of Gucci’s parent company Kering for the announcement.

“We are in agreement that Demna is one of the best creative directors of his generation, without any doubt,” he added. “He has proven his capability to reshape Balenciaga during his tenure, its identity and, of course, its fashion point of view.”

At Cantino’s side was Francesca Bellettini, Kering deputy CEO in charge of brand development, who noted Demna would wrap his tenure at Balenciaga with an haute couture show on July 9 and start at Gucci shortly after.

It has yet to be determined when the Georgian designer might unveil his first collection for Gucci.

Ahead of him lies “a holistic work around the brand,” Bellettini stressed.

She also brushed away all questions about Demna’s eventual successor at a house he’s made synonymous with hoodies, oversize tailoring, heavy-soled sneakers and hype collaborations — including one with Gucci in 2021.

Demna succeeds Sabato De Sarno, who exited Gucci in early February after a two-year collaboration. The fall 2025 fashion show in Milan on Feb. 25 was presented by the brand’s design office.

Thursday’s announcement came at the tail end of a fashion month rife with creative upheaval, and rampant speculation about who would ultimately land at Gucci, one of the most troubled megabrands in today’s luxury landscape.

Demna’s appointment sets the stage for another bumper crop of designer debuts, with Matthieu Blazy slated to show his first ready-to-wear collection for Chanel, and Jonathan Anderson said to be headed for Dior, though nothing is official yet.

Both Kering and LVMH Moët Hennessy Louis Vuitton, parent of Dior, seem to be placing bets in putting their strongest horse on their biggest and most crucial brands.

Other European brands with new designers yet to show their first collections include Versace, where Dario Vitale is succeeding Donatella Versace; Jil Sander, which just hired Simone Bellotti from Bally; Celine, now under Polo Ralph Lauren alum Michael Rider; Maison Margiela, which will now be helmed by Glenn Martens; Bottega Veneta, where Louise Trotter succeeded Blazy, and Carven, where Mark Howard Thomas succeeded Trotter as its director of design.

Additional changes are also said to be looming at Loewe, Mugler and Jean Paul Gaultier, to name but a few.

To be sure, many eyes will be on Gucci, which has been losing steam since the 2022 exit of creative director Alessandro Michele, who ignited a renaissance at the brand that lifted it to nearly 10 billion euros in revenues — until the market grew fatigued with his exuberant, retro-tinged designs.

With De Sarno as Michele’s successor, the brand has been pursuing an elevation strategy and, as reported, management had been pinning its hopes on the introduction of new handbag lines, a shorter time to market and a streamlined distribution and offer.

However, De Sarno’s collections were met with mixed reviews and his timeless take on signature pieces did not gain enough traction for a turnaround.

Equity analysts have been pressuring Gucci to name a high-profile designer to help revitalize the brand and regain market prominence.

Gucci reported a 24 percent drop in organic revenues in the three months to Dec. 31, worse than the 23 percent decline forecast by analysts. In 2024, the brand accounted for 63 percent of parent Kering’s operating profit.

Most of Kering’s luxury brands also saw organic sales weaken in the fourth quarter. Saint Laurent was down 8 percent, and the “other houses” group, which includes Balenciaga and Alexander McQueen, reported a 4 percent decline.

Last month, Kering chairman and CEO François-Henri Pinault assured investors that the group had “reached an inflection point, and that after a year of stabilization in 2025 we will gradually resume a trajectory of steady and increasingly profitable growth.

“Gucci will come back. I have absolutely no doubts about this,” he added.

In a joint Kering-Balenciaga press release, issued Thursday after the close of trading on the Paris Bourse, Pinault said: “Demna’s contribution to the industry, to Balenciaga, and to the group’s success has been tremendous. His creative power is exactly what Gucci needs. As I thank him for everything he has accomplished over the past 10 years, I look forward to seeing him shape Gucci’s new artistic direction.”

For his part, Demna said: “I am truly excited to join the Gucci family. It is an honor to contribute to a house that I deeply respect and have long admired. I look forward to writing together with Stefano and the whole team a new chapter of Gucci’s amazing story.”

During the briefing, Bellettini and Cantino touted Demna’s capabilities.

Bellettini said Demna was immediately enthusiastic about Gucci and came up with a compelling proposal “to make the brand cool and relevant.”

The designer subsequently trolled through archives of the Italian brand, which dates to 1921, and liked what he saw.

“We believe in his capability of blending such a strong heritage with an incredible fashion touch,” Cantino said, also lauding Demna’s ability to interpret the contemporary culture and define “what is luxury today for young generations and, of course, for the future.”

Asked about Demna’s penchant for dark, dystopian themes and an underground sensibility, Cantino assured that the designer would not transpose his Balenciaga aesthetic: “His intention is to do at Gucci something that is right for Gucci.”

In retrospect, his fall 2025 show for Balenciaga, more approachable than usual, could be read as a demonstration by Demna that he can design a straightforward men’s suit, a luxurious woman’s coat and less bombastic accessories.

He even donned a black suit and dress shirt instead of his usual grubby hoodies and T-shirts for the backstage scrum after that show, declaring, “Maybe I’m like Demna version 2.0. Maybe I grew up enough to wear a suit as a designer.”

Cantino and Bellettini also took pains to describe the crucial groundwork laid ahead of Demna’s arrival, including production efficiencies, quality improvements, better delivery times and talent upgrades across the organization.

“Now the company is very ready to ignite, to sustain and to give very strong creativity the chance to shine,” Bellettini said.

Asked about De Sarno’s legacy at Gucci, she called his contribution “immense.”

De Sarno was an outside hire, recruited from Valentino, where he rose to the position of fashion director overseeing both men’s and women’s collections. The Naples-born designer also worked at Prada and Dolce & Gabbana earlier in his career.

At Gucci, De Sarno worked under three different CEOs — Marco Bizzarri and Jean-François Palus came before Cantino — and with a revolving door of marketing and communications executives including Robert Triefus, Susan Chokachi, Alessio Vannetti and now Valérie Leberichel.

In contemporary times, Gucci has typically promoted designers from within. Michele was an associate of one-time creative director Frida Giannini, who herself worked under Tom Ford, the designer widely credited with reviving the brand during his tenure from 1995 to 2004.

According to sources, contenders to succeed Demna at Balenciaga could include Pieter Mulier, who has heated up Alaïa to the boiling point, and Daniel Roseberry, so far the most successful creative director at Schiaparelli, having led the couture house into ready-to-wear.

Born in Georgia, Demna studied international economics at Tbilisi State University before he enrolled in Antwerp’s Royal Academy of Fine Arts, which spawned the original Antwerp Six in the early ‘80s.

He graduated with a master’s degree in fashion design in 2006, later that year collaborating with Walter Van Beirendonck, one of the Antwerp Six, on his men’s collections.

He joined Margiela in 2009 after the maverick Belgian founder retired and was responsible for the women’s collections. In 2013, he moved over to Louis Vuitton, where he was senior designer of women’s ready-to-wear collections, initially under Marc Jacobs and briefly under Nicolas Ghesquière.

But it was his Vetements project — cofounded in 2014 with his brother Gurum Gvasalia — that thrust him onto the international radar with an impassive, alternative brand of cool.

He ignited a streetwear juggernaut that had a wide influence on fashion: Soon his extra-long sleeves and monster shoulders were all over the runways, and $800 hoodies with wry slogans or logos became covetable items for sneaker heads and fashionistas alike.

He joined Balenciaga in 2015 and did not change his stripes, gleefully and openly appropriated signposts of consumer culture, taking a sociological approach to analyzing what triggers consumer desire, and stretching the boundaries of what is considered luxurious and chic.

With black fingernails and facial scruff in his debut years, Demna was seen as a ringleader for all things underground and alternative, exalting the grittier elements of Paris in his collections, along with jolts of S&M and punk, seen in kinky face hoods and spiky sunglasses.

He stepped down at Vetements in 2019, stating that he accomplished his “mission of a conceptualist and design innovator at this exceptional brand.”

Armed with Balenciaga’s mightier budgets, he emerged as one of fashion’s consummate showmen, staging gripping runway spectacles in sets evoking submerged stadiums, a grand parliament or a giant pit of mud.

There were dark moments, however. Demna and the house of Balenciaga was engulfed in crisis at the end of 2022 and well into 2023 over advertising images that critics claimed condoned the exploitation of children.

Demna’s two-way collaboration Gucci in 2021 was characterized as “hacking” each other’s collection.

Michele unveiled a Gucci collection that included interpretations of the silhouettes and emblems of Demna’s Balenciaga, while Demna offered a range of “conceptual interpretations of Gucci‘s recognizable signatures as Balenciaga products.”

At the time, Demna told WWD what a thrill it was to “vandalize a bit” a Gucci tote bag with a message in black spray paint. “I had the pleasure of doing that on the prototype.”

Donatella Versace is stepping aside as creative director after friction with brand’s U.S. owner, who wanted her to tone it down

Donatella Versace’s decision to step aside as the creative director of the fashion house she inherited followed tensions between the Italian designer and the U.S. corporate chief who was trying to pump up sales by toning down her designs.

On Thursday, the company said Donatella, 69 years old, would be replaced after nearly three decades and just weeks after showing her latest vibrant designs on a Milan runway. The change comes as her American boss, John Idol, is exploring a potential sale of Versace. Italian rival Prada is interested, people familiar with the situation said.

Idol, a businessman who had built Michael Kors into a global brand, took over family-run Versace in a more than $2 billion deal in 2018. It was the centerpiece of his ambition to turn the company he runs, Capri Holdings CPRI 8.42%increase; green up pointing triangle, into a U.S. fashion conglomerate on par with European luxury houses. Idol told investors that Versace would more than double its annual revenue.

“The brand has a much bigger name than its annual sales,” Idol said during an interview when he took it over. “That creates a huge potential for us.”

The relationship, like so many American attempts to capture European high fashion, has frayed. When he bought Versace, Idol praised the Italian luxury house, saying it was synonymous with glamour and style. It didn’t take long for some Versace executives to describe their new U.S. boss in less flattering terms, calling him the “American cowboy” for his rough-riding ways.

The brand isn’t for everyone. Versace is known for its bright colors, bold Borocco printed silks and va-va-voom gowns, such as the green “jungle” dress with the navel-plunging neckline that Jennifer Lopez wore to the 2000 Grammy Awards. To appeal to a wider audience, Idol wanted the brand to tone down its signature looks, focus more on craftsmanship and add more elegant styles.

He wanted clothes that were more Palm Beach than South Beach, people familiar with the situation said. His ideas often clashed with those of Donatella, who as creative director had defined the brand’s looks since her brother Gianni’s 1997 murder.

From his Manhattan office and during frequent trips to Milan, the Capri chief weighed in on details large and small. He issued directives to remove men’s silk shorts from mannequins in Versace store windows, saying the look was too flamboyant. He looked for alternatives to its signature Medusa logo.

Idol pushed Versace to create a monogram similar to Michael Kors’s “MK”, Louis Vuitton’s “LV” and Chanel’s interlocking “C’s.” The design team came up with the Baroque V. And Versace expanded its use of a Greca pattern to adorn everything from handbags to coats, shirts and dresses. To elevate the brand, Versace raised prices.

Donatella respected Idol’s business acumen but felt he undermined her design authority. She shied away from direct confrontation and would excuse herself from meetings, some of the people said. She tried to deliver what the Capri chief wanted, but when some of his ideas fell flat with customers, she would revert to more traditional Versace looks. The outcome was a series of flip-flops that created confusion about what the brand stands for.

Speaking at a Vogue event in February the day before her latest fashion show, Donatella said: “Being told what to do, being told what’s going to sell…If you try to please too many people, too many managers, creativity is gone.”

The show was her last. On Thursday, Idol said he had hired Dario Vitale from Miu Miu to take over as Versace’s creative director. Donatella will become chief brand ambassador.

“Versace is in my DNA and always in my heart,” Donatella said in a written statement.

With sales of luxury goods slowing, European fashion houses are switching up their design talent. On Thursday, Gucci tapped Balenciaga’s artistic director as its next creative chief.

Sales of Versace have slumped recently, and Capri’s market valuation has fallen by more than half since the Versace deal closed. The entire company, including Michael Kors and the Jimmy Choo shoe brand, is now valued at roughly $2.3 billion—only slightly more than what Capri paid for Versace.

Idol told The Wall Street Journal on Thursday that he was confident in the vision he has set for Versace. “Our refined focus on luxury and craftsmanship is resonating with our consumers,” he said. “We recognize that brand evolutions take time and that challenges are inevitable along the path to success.”

Donatella had planned to become a teacher but instead joined her older brother when he founded the fashion house in 1978. She was his creative foil and oversaw Versus, a more affordable collection aimed at younger consumers.

She helped build the brand’s profile by cultivating relationships with celebrities and magazine editors. Her signature platinum blond hair and heavy black eyeliner made her as recognizable as some of Versace’s famous clientele.

After Gianni was shot to death on the steps of his Miami Beach mansion in 1997, Donatella assumed the creative helm. She struggled at first to find her footing and battled drug addiction. “I have a party girl image, but I’m a hard worker,” Donatella told the Journal in 2003. She eventually got clean in rehab.

She went on to create some of the brand’s most iconic looks, brought a sense of female empowerment to Versace and kept it relevant by featuring Madonna, Lady Gaga and Beyoncé in ad campaigns.

Versace’s finances were less glamorous. It was a small competitor in a world dominated by giants such as LVMH and Kering. To plug operating losses, the family sold Picasso paintings, the Miami mansion and boutique leases. It stayed under the family’s control until Capri came calling.

When Donatella first met Idol in early 2018, the family business wasn’t for sale. “I wasn’t thinking about selling but I talked to John,” she said at the time. She left a dinner in Milan persuaded that Idol could bring management expertise, especially in online sales and expanding the store footprint.

At first, the acquisition by Capri looked like a sweetheart marriage. Versace executives were excited by the prospect of a deep-pocketed parent bankrolling an expansion.

Although some had criticized Idol for cheapening Michael Kors by splashing its logo across products and opening too many stores, Idol insisted that Versace was different. He discontinued the lower-priced Versus line to court higher-end customers. “We will focus on the luxury part of Versace,” he said in 2018.

An early warning came soon after the deal closed, when Capri executives peppered meetings with American jargon. Designers would try to communicate their inspiration for the latest collection, and managers would ask about key performance indicators, or KPIs—a term that the designers weren’t familiar with, some of the people said.

During the Covid pandemic, Versace sales exploded when shoppers snapped up luxury goods while they were stuck at home. But its flashy looks soon ran headlong into the quiet-luxury trend that was gaining popularity, making it look out of step.

By the Fall/Winter 2021 fashion show, a new Versace look was on display. Models took to the catwalk in shades of black and brown. Handbags and clothes were covered in the Greca pattern. “You don’t come to Versace to wear brown,” one reviewer said at the time.

Donatella bristled at Idol’s interference, particularly because he had no training in design.

Idol held senior business roles at Ralph Lauren before becoming chief executive of Donna Karan in 1997. In 2003, he teamed with investors to buy Michael Kors and worked closely with its eponymous designer to turn it into a brand with $4.7 billion in sales at its peak in the fiscal year that ended in April 2016.

Those sales were falling when he agreed to buy Versace and change the name of the company to Capri—after the chic Italian island.

The dealmaking continued in 2023 when Idol agreed to sell the company for $8.5 billion to Coach owner Tapestry. As he fought an unsuccessful antitrust battle to close the Tapestry deal, Idol was also pushing his vision for Versace.

For the Fall/Winter 2023 runway show, models in black suits sashayed down the runway atop the Pacific Design Center’s parking garage in Los Angeles. There was hardly a print in sight. Idol touted the show as a success, telling analysts that it marked the full repositioning of Versace’s women’s clothing.

Fashion insiders and consumers had a different take. On social media, some said Versace was copying Balenciaga. Others complained about too much black and an Audrey Hepburn vibe.

The brand’s existing customers revolted, and it didn’t attract enough new ones. For the nine months through Dec. 28, Versace sales dropped nearly 20% to $613 million.

On a February call with analysts, Idol said he was pleased with aspects of Versace’s repositioning, including a reduction in markdowns, but added that mistakes were made. “While elevating the assortment, we removed too many unique Versace statement items,” he said.

The brand is introducing more items at less expensive prices, such as the $1,190 Tag Bag and $550 Galaxia sneaker.

Versace looked more like itself during its fashion show in Milan in late February. There was an abundance of beading, leopard prints and bright colors, including a long coral coat lined in gold and turquoise silk.

“With this collection, I am not following any rules,” Donatella wrote on Instagram. “Only the rules of the Versace DNA.”

Semiconductor veteran and former board member Lip-Bu Tan has returned to the company in a time of great need. The path ahead is rocky.

They say Lip-Bu Tan is the best hope to fix Intel—if Intel can be fixed at all.

Tan’s selection as the chipmaker’s new chief executive was cheered by analysts, bankers and shareholders. He brings two decades of semiconductor industry experience, relationships across the sector, a startup mindset and an obsession with AI…and basketball.

He also comes with tricky China business relationships, underscoring Silicon Valley’s inability to sever itself from one of America’s top adversaries.

How Tan, age 65, will use his assets to resurrect Intel is on the minds of all industry watchers. Intel has gone from being one of Silicon Valley’s biggest innovators to a relic struggling to compete with superstar Nvidia and others in the age of artificial intelligence. Its stock has lost two-thirds of its value in four short years as Intel sat out the AI boom.

Intel shares were up more than 14% at market close Thursday from the previous day.

Tan will soon have to answer the most burning question about Intel’s future: whether he will break apart Intel’s design and foundry businesses. Manufacturing chips is an enormous expense that Intel can’t currently sustain, say industry leaders and analysts. Former board members have called for a split-up.

But a deal to sell all or part of Intel to competitors seems to be off the table for the immediate future, according to bankers. A variety of early-stage discussions with Broadcom, Qualcomm, GlobalFoundries and TSMC in recent months have failed to go anywhere, and so far seem unlikely to progress.

The company has already hinted at a more likely outcome: bringing in outside financial backers, including customers who want a stake in the manufacturing business.

Intel’s fortunes also rest in part with President Trump, who has signaled that he wants to unwind the Chips Act, signature legislation from former President Joe Biden to invest more than $50 billion in semiconductors. Intel would receive up to about $8 billion through the legislation, contingent on development of new factories which have faced delays.

Tan has likely no more than a year to turn the company around, said people close to the company. His decades of investing in startups and running companies—he founded a multinational venture firm and was CEO of chip design company Cadence Design Systems for 13 years—provide indications of how Tan will tackle this task in the early days: by cutting expenses, moving quickly and trying to turn Intel back into an engineering-first company.

“In areas where we are behind the competition, we need to take calculated risks to disrupt and leapfrog,” Tan said in a note to Intel employees on Wednesday. “And in areas where our progress has been slower than expected, we need to find new ways to pick up the pace.”

Intel declined to make Tan available for an interview.

Many take this culture reset to also mean significant cuts at Intel, which already shed about 15,000 jobs last year.

“He is brave enough to adjust the workforce to the size needed for the business today,” said Reed Hundt, a former Intel board member who has known Tan since the 1990s.

Tan’s first tour at Intel, as a board member from 2022 to 2024, ended in frustration, people close to him say. Although he cited time demands as reason for departing, company insiders believed Tan was fed up with the bloated workforce and the direction under then-CEO Pat Gelsinger. Tan’s return, then, signals an inevitable change in strategy.

Tan’s capabilities aside, Intel remains far behind in modern chip production, said Mark Rosenblatt, founder of Rationalwave Capital Partners. “And Intel’s balance sheet is not sufficient for the cost required to sustainably achieve it and scale the manufacturing needed to support it.”

Cadence was going through turmoil similar to Intel’s when Tan took over in 2009. He was able to refocus the business, push its services to the cloud and land new customers, including Apple. A company on the brink of delisting went on to return more than 3,000% in its share price during Tan’s tenure.

Tan, in public talks, has described how he approached reshaping Cadence’s culture to eliminate what he described as silos. “I tried to change it to a one-team culture,” Tan said in a 2018 interview with the Computer History Museum in Silicon Valley.

That approach harks back to what he calls his first love: basketball. Born in Malaysia and raised in Singapore, Tan aspired to be a professional basketball player, until his mother told him to “get a real job,” he said during a video interview in January.

Tan, who declared the arrival of generative AI as bigger than the invention of the web, has spent the past several years investing in AI startups across the globe. An Israeli AI company he backed, Habana Labs, sold to Intel for roughly $2 billion in 2019. He has often touted the potential for AI to revolutionize drug development, particularly for cancer.

Before he rose in the semiconductor industry, Tan was known as one of the first Silicon Valley venture capitalists to invest in Asia. Tan is founder and chairman of Walden International, a prolific investor in Chinese technology startups.

Tan was a big champion of China’s semiconductor sector in an era when U.S.-China relations were considerably rosier, including co-investing with a China state-owned asset manager.

Walden was an early investor in Semiconductor Manufacturing International, which the Commerce Department blacklisted for its alleged ties to the Chinese military in 2020. Walden sold its last stake in 2021. In 2023, the House Select Committee on the Chinese Communist Party sent a letter to Tan raising “serious concern” about Walden’s investments in China, including companies the U.S. had blacklisted. A subsequent report from the committee highlighted hundreds of millions of dollars of Walden investments that went to Chinese companies involved in military activities or human-rights abuses.

As word of Tan’s new role spread, one Chinese media outlet headlined the news: “Intel hires ‘the CEO with the best knowledge of China’s chip industry.’”