FT : Soeur brings French style to London

Soeur brings French style to London
A first UK boutique signals global ambitions for the affordable Paris-based brand

In Paris last summer for the couture shows, I made time for a brief shopping pilgrimage. While the world’s 0.01 per cent perused hand-embellished eveningwear, my between-show treat was a snatched detour to the more reasonably priced Soeur boutique.

The city is brimming with shops offering their own vision of La Parisienne, but for me, Soeur’s mix of clean shapes, workwear fabrics and retro prints has an easy cool that stands out. I recommend it to anyone else who wants a change from APC, likes Toast but finds it slightly granola, or aspires to Phoebe Philo, but isn’t rich, edgy or willowy enough.

But now I can spend my free moments in Paris eating a baguette instead of shopping, because Soeur has just opened its first London boutique. Investment fund Style Capital took an 80 per cent stake last September, and aims to accelerate the brand’s international growth. Soeur’s sales have grown by 40 per cent a year for the past two years, and hit €52mn in 2023. For context, at 10 year-old French mid-market brand Sézane, sales rose 30 per cent year on year in 2022. As luxury prices soar, for many shoppers the contemporary (or affordable luxury) space feels extra relevant.

But for those French fashion fans who might have fallen under Sézane’s spell but haven’t come across Soeur, what does the brand bring to la table? It was founded in 2007 by French sisters Domitille and Angélique Brion and now has 50 standalone boutiques or shop-in-shops (41 in France, nine international) as well as 520 wholesale locations globally. Angélique, who was on the finance side, is “no longer involved operationally but is very much involved as a shareholder”, says Domitille, who has always been more focused on creative direction.

On a Zoom call with Domitille and managing director Freja Day, talking from their headquarters overlooking the Louvre in Paris, the pair explain the brand’s vision. Brion feels more comfortable talking in French, so Day is translating.

Creative director Brion says the brand encapsulates everyday elegance. “It’s sophisticated cuts for a woman who wants to feel elegant throughout the day, who doesn’t necessarily want to dress up on a Saturday and dress down on a Sunday. The way that we see [ French style] is this idea that the same garment can be worn during the day or night, depending on your attitude, and how you accessorise it.”

Ah yes, the never-ending topic of French style, how to crack it and how it’s evolving. Cornerstones of the French look — sharp blazers, trenchcoats, and dresses worn with plimsolls and the air of someone who spends their day browsing second-hand copies of Sartre on those bookstalls alongside the Seine — are still frequently spotted in the wild. But now greater experimentation has gained a foothold alongside these timeless classics.

Brion acknowledges that “French fashion is much more on the street, more accessible, and there’s more individual expression. The aesthetic is more polarised, and there’s more diversity: there are people who will follow the current fashion trend like Kim Kardashian, and others who will be more classically French who are maybe less visible on social media.”

Soeur is much more in the timeless than trend-led camp, helped by retro cultural references such as New Wave cinema and unfussy classics such as roomy summer shirt dresses and masculine blazers. However, Brion emphasises that “we are a fashion brand. We have the idea that each season you can update a little bit, rather than going in one direction.” A stylish Paris-based friend who wears it says she sees it as “chic-casual” and “bohemian”, while noting that “it’s very particular universe doesn’t suit everyone”.

The spring/summer collection has gone big on a laid-back, oversized feel, featuring wide trousers in cream twill and denim, long airy smock dresses in checks, chocolate silk and faded florals, and androgynous blazers and workwear jackets.

If Frenchness is one strand of Soeur’s appeal, another is the affordable pricing. For next season, wide linen twill trousers are £260, while a structured leather shoulder bag is £425 for the larger size. It’s one of a cohort of French brands, including Sézane, Sandro and Maje, that have carved out a space at the contemporary level that falls between the upper echelons of the high street and designer.

Day believes “there is space in the middle for a high-quality product . . . good materials combined with true serious design work around the pattern and the cuts. We have a big team of patternmakers who come from all the big luxury houses.” When I mention a Soeur kaftan dress I bought on eBay, Brion enthuses about a special machine in which the brand invested to create the stitch that holds the neckline on this particular garment closed.

Quality and attention to detail made up part of the brand’s appeal for Roberta Benaglia, chief executive and founding partner of Style Capital, which has previously invested in Golden Goose and Zimmermann. She confirms on a separate call that the price positioning is crucial to the plan to take Soeur from a brand that’s well known in France to an international name. “Wholesalers were pushing us to have a brand in our portfolio that was smarter in terms of price point, because what they are seeing is that luxury is too expensive today, with the growth of the prices after Covid,” she says.

Federica Levato, senior partner and EMEA leader of fashion and luxury at consultancy Bain & Company, says that in general: “The contemporary market has been pretty dynamic for the past 10 years. We see a great opportunity for this segment . . . as luxury brands increase prices, these brands have an opportunity to be a more authentic value proposition to customers and really understand them.” She cautions, however, that for brands that mainly cater to local markets, going global without the marketing budgets of big luxury houses will be more of a challenge.

Benaglia was also drawn to Soeur’s strong digital performance — it makes 35 per cent of its sales online — but the team is still enthusiastic about physical retail. According to Day, “it gives a context to the brand. OK, we are not a mom-and-pop shop, but we visit the stores often and get to know our customer — it’s what makes our work engaging.” She says there is a type of “VIP customer who used to shop at Phoebe Philo for Céline and has moved towards us for minimal wardrobe essentials, which she combines with designs from higher-priced brands such as Acne and Jil Sander”.

Brion says the new shop, on Redchurch Street in east London’s Shoreditch, is more pared back than many of the other boutiques, using lighter wood and more concrete on the floors. They decided to open in the UK capital “because we love London, and to be here is to be on the international map . . . it’s a window to Asia and the US”.

Finally, why does Brion believe Soeur can expand? “Maybe it’s a bit pretentious to say this but we feel like there’s a lot of potential; we are not done yet. It’s not necessarily about being the next Sandro or similar . . . but we feel like there is a Soeur customer in Seoul, there’s one in London, there’s one in Shanghai probably. And we want to dress her.”

>>> Weekly Market Update

Weekly Market Update: Risk-on sentiment prevails despite mixed data and earnings reports

Rates and stocks moved higher in a holiday shortened trading week for the US. Central bankers used the Davos forum to push back on the markets' current optimism for 2024 rate cuts. Economic data mostly supported that message as well. US manufacturing numbers were mostly subdued but December US retail sales and housing starts/permits, in particular, were stronger than most expectations. Weekly jobless claims came in below analyst estimates yet again. UK CPI was hotter than expected, as inflation there accelerate for the first time since last spring. Chinese stimulus expectations also underpinned sentiment after officials in Beijing confirmed they were discussing CNY1T in ultra long-bond issuance to fund various projects.

Geopolitical hotspots remained a concern, but markets largely looked past any expected lasting effects. Houthi fighters continued their intermittent attacks on ships in the Red Sea, drawing reprisals from the US and UK in Yemen. President Biden confirmed the US would continue preemptive air strikes against Houthis weapons systems. Russian stepped up missile attacks on Ukraine residential areas as President Zelenskiy attempted to solidify support in Davos. By Friday, NATO was said to be mobilizing 90K troops for the largest military drills since the Cold War next week. Meanwhile in Asia, North Korea conducted a test of an underwater nuclear weapons systems after fresh long range missile launches earlier in the week. Davos also saw lots of officials hand-wringing over the consequences of a second term for former President Trump after he easily won the Iowa caucus and remained well ahead in the New Hampshire primary polls. The Dollar index touched its highest levels since early December, while Bitcoin reversed and moved lower. Oil prices were little changed along with gold. The US 10-year yield backed up ~20 bps on the week to finish around 4.15%. For the week, the S&P hit all-time highs, adding 1.2%, while the DJIA rose 0.7% and the Nasdaq was up 2.3%.

In corporate news, financials were heavily featured among the earnings reports this week, and some tech names continued to shine. The regional banks took their turn at reporting quarterly results, and many still look shaky almost a year after the mini-crisis in the sector. Discover Financial posted disappointing results as well, as its charge off rate nearly doubled to over 4.1% for the quarter. Some other financial firms fared better, including The Travelers, which blew out earnings expectations and affirmed long term guidance, and Ally Financial, which beat estimates and announced the divestiture of its POS financing business. Humana slashed its FY23 forecast on higher medical costs, dragging down the healthcare sector. Advanced semiconductor names benefited from strong guidance out of Taiwan Semiconductor and Super Micro, sending a number of companies in that sector to fresh all-time highs. M&A news featured two big deals falling apart: A federal judge blocked Jetblue’s acquisition of Spirit on antitrust grounds, pushing Spirit toward a restructuring, and the European Commission is reportedly preparing to deny Amazon’s plans to acquire iRobot.


WEEKEND
(TW) TAIWAN’S RULING DEMOCRATIC PEOPLE’S PARTY (DPP) WILLIAM LAI WINS PRESIDENTIAL ELECTIONS WITH ~40% OF VOTES (AS PREDICTED BY THE POLLS); DPP party did NOT win parliamentary majority, but won unprecedented third consecutive presidential term
ALK Confirms FAA extended grounding of Boeing 737 MAX 9 indefinitely; FAA requires more data from Boeing before
(CN) CHINA PBOC CONDUCTS CNY995B VS. CNY900BE IN 1-YEAR MEDIUM-TERM LENDING FACILITY (MLF) AT 2.50% VS. 2.50% PRIOR
(US) Senate Majority Leader Schumer on Stopgap spending bill: House & Senate to release stopgap spending bill to Mar 1st and Mar 8th (from current Jan 19th and Feb 2nd, as speculated earlier in the weekend)
AAPL Said to offer up to 5% discounts for some products in China, including iPhone 15, for the first time in few years ahead of Chinese New Year - press citing company website

MON 1/15
(US) Fed’s Bostic (dove, voter): Inflation could “see-saw” if Fed cuts rates too soon; The descent towards 2% target is likely to slow in the months ahead; Taking a closer look at liquidity conditions
Qatar pauses its gas shipments through the Red Sea and Suez Canal - press
(DE) German army reportedly considering the possibility of a Russian attack on NATO's eastern flank as early as 2025 - Bild
(US) Reportedly Pres Biden and other senior US officials are becoming increasingly frustrated with Israeli PM Netanyahu and his rejection of most of the administration's recent requests related to the war in Gaza – Axios
PAGE.UK Q4 Trading Update: Gross Profit £237M v £253Me, -8.9% y/y (cc); Trims outlook citing macro-economic uncertainty persists
PAGE.UK Exec: Early 2024 shows reasonable activity; No further deterioration in US business - post earnings comments
US federal scientists conclude Marijuana should be removed from the US's most restrictive Schedule 1 category of drugs - NYT
(US) Houthi Negotiator*: All ships in the Red and Arabian Seas are safe, except vessels headed to Israel; We do not want escalation, we regret US and UK's militarization of the Red Sea
(US) On a House GOP conference call Sunday night, House Speaker Johnson said Congress can’t solve the crisis at the border until Trump or another Republican is in the White House; This could signal the end of the road for U.S. aid to Ukraine, a major Biden administration priority - Punchbowl
RIO.AU Reports Q4 Pilbara Iron-ore Shipments 86.3Mt, v 86.7Mte, -1% y/y; Notes US economy is slowing down with labor market cooling; China economy stabilized earlier in Q4
(US) Former Pres Trump projected to win Iowa Caucus (as expected); With ~90% of vote counted, Trump has 50.9%, DeSantis has 20.0% and Haley 19.0%; Vivek Ramaswamy suspends Presidential campaign - media outlets
(CN) China reportedly told some institutional investors not to sell stocks; China regulators reimposed stock-selling restrictions on securities to stabilize the stock market - FT

TUES 1/16
(IR) Reportedly Iran’s Revolutionary Guard deployed in Yemen and playing a direct role in Houthi rebel attacks on commercial traffic in the Red Sea - Semafor
(CN) Chinese banks reportedly tighten curbs on Russia after US sanctions order; Chinese banks said to stop providing any financial services to the Russian military industry regardless of the currency or the location of the transactions - press
CARD.UK FY23 Trading Update: Strong Christmas trading performance with LFL store Rev +7.8% in Nov-Dec; Pretax ahead of market expectations, FY23 Rev £476.9M v £432.6M y/y
Leading mining group Rio Tinto warns US economy is slowing down with labor market cooling; Summary of recent profit warnings and comments on global consumer state made by European, Asian and US firms
(CN) CHINA CONFIRMS MORE STIMULUS WITH CNY1T OF SPECIAL ULTRA-LONG SOVEREIGN BONDS - PRESS [**Note: would be 4th such sale in the past 26 years]
(US) House and Senate negotiators have reportedly agreed on a ~$78B framework for a package of tax benefits aimed at businesses and low-income families - press
PNC Reports Q4 $3.16 v $2.99e, Rev $5.36B v $5.28Be
PNC Guides Q1 average loans stable q/q, NII -3% to -2% q/q, Rev -4% to -3% q/q - earnings slides
AXP Reports Dec Master Trust: Net Write Off Rate: 2.5% v 1.7% prior
GS Reports Q4 $5.48* v $3.47e, Rev $11.3B v $10.7Be
ANSS Confirms to be acquired by Synopsis in $35B cash-stock deal; Ansys shareholders to receive $197/shr cash and 0.3450 shares of Synopsys common stock; Expected to Be accretive to Non-GAAP EPS within second full year and substantially accretive thereafter
(US) JAN EMPIRE MANUFACTURING: -43.7 V -5.0E (lowest since May 2020 and lowest ever ex pandemic, below all analysts' estimates)
(CA) CANADA DEC CPI M/M: -0.3% V -0.3%E; Y/Y: 3.4% V 3.4%E
(US) Fed's Waller (voter, hawk): Will be able to cut the policy rate this year as long as inflation doesn't rebound or stay high
(US) NY Fed takes $583.1B (v $603.1B prior) in RRP program at 5.30%; 65 participating and accepted counterparties (lowest dollar amount since June 2021)
(CN) CHINA DEC INDUSTRIAL PRODUCTION Y/Y: 6.8 % V 6.6%E
(CN) CHINA DEC RETAIL SALES Y/Y: 7.4% V 8.0%E

WED 1/17
1211.HK Launches its AI-powered smart car system; Plans to add its “navigation-on-autopilot” feature**; Plans CNY100B (~$14B) investment to develop smart cars features - China press
(UK) DEC CPI M/M: 0.4% V 0.2%E; Y/Y: 4.0% V 3.8%E (1st acceleration since spring 2023); UK ONS notes acceleration was also driven by a rise in tobacco duty in late Nov
(EU) ECB'S CHIEF LAGARDE: ECB LIKELY TO CUT RATES BY SUMMER [*Note: first major central bank head to provide specific forward guidance on rate cuts]
DPW.DE CEO: Container imbalances may start to appear in Asia; Concern in Red Sea context is that extending shipping routes could lead to a shortage of containers
1919.HK Exec: COSCO sees spot shipping rates may stay higher-for-longer; COSCO has also had to redivert some services via the Cape to the US East Coast given Panama Canal drought issues; Not seeing much evidence of box shortages or port congestion yet
HLAG.DE Enters operational cooperation with Maersk, starting Feb 2025; Targets delivering schedule reliability >90% once fully phased in; Hapag-Lloyd will leave THE Alliance end-Jan 2025
MAERSKB.DK *CEO: SEES RED SEA EVENTS LASTING ‘A FEW MONTHS’; TIMELINE CAN ALSO BE LONGER - DAVOS
(IR) Iran and Pakistan conduct joint naval drill in Gulf and the Strait of Hormuz [~20% of world's total oil consumption passes through it]
JPM Head of Asset Management: JPMorgan faces 45B attempted hacks daily; This number doubled in just one year
CFG Guides initial FY24 NII -9% to -6% y/y, NIM 2.80-2.85% v 2.85% in Q4 2023; Significant NII contribution from Non-Core and swaps in 2025 and beyond - earnings slides
USB Credit quality normalizing to pre-pandemic levels; Increases in delinquencies for the Commercial portfolio this quarter were primarily administrative in nature; Well-positioned for 2024 and beyond - earnings slides
(DE) German Economy Ministry spokesperson: Effect of Red Sea attacks makes delivery times up to 20 days longer on individual cases in industrial production sector
PLD Reports Q4 Core FFO $1.29* v $1.26e, Rev $1.89B v $1.78Be
(US) DEC ADVANCE RETAIL SALES M/M: 0.6% V 0.4%E (biggest jump since Sept); RETAIL SALES (EX-AUTO) M/M: 0.4% V 0.2%E
(US) DEC IMPORT PRICE INDEX M/M: 0.0% V -0.5%E; Y/Y: -1.6% V -2.0%E
(US) Fed’s Bowman (voter, hawk): The Fed should seek comments on any revised capital plan; Fed's Basel III proposal needs substantive changes to adjust known deficiencies
(US) Mid Jan Manheim wholesale used vehicle Index at 201.9, -1% m/m, -10.3% y/y
(US) JAN NAHB HOUSING MARKET INDEX: 44 V 39E
(US) Atlanta Fed GDPNow: Raises Q4 GDP from 2.2% to 2.4%
AA Reports Q4 -$0.56 v -$0.99e, Rev $2.60B v $2.61Be
DFS Reports Q4 $1.54 v $2.50e, Rev $4.20B v $4.10Be
DFS Guides initial FY24 avg Net Charge-offs rate 4.9-5.3% v 4.1% end-Q4 2023; Total opr expenses up mid single digits - earnings slides
(AU) AUSTRALIA DEC EMPLOYMENT CHANGE: -65.1K V +15.0KE; UNEMPLOYMENT RATE: 3.9% v 3.9%E
(IR) Pakistan confirms to have conducted retaliatory airstrikes inside Iran - press

THRS 1/18
CFR.CH Reports Q3 Rev €5.59B v €5.55Be, +8% y/y (cc); Americas Rev +8% y/y (cc) v +4.7%e
MAERSKB.DK *Reiterates it encourages its customers to prepare for there to be significant disruptions to the global network and complications in the Red Sea area to persist
TSM Reports Q4 (NT$) Net 238.7B v 226.4Be, Op 260.2B v 325.0B y/y, Rev 625.5B v 625.5B prelim
TSM *CFO: GUIDES Q1 REV $18.0-18.8B V $17.3BE; GUIDES FY24 REV STRONG; SEES REV CAGR 15-20% OVER NEXT SEVERAL YEARS; EXPECTS UTILIZATION RATE TO RISE FOR FY24 - EARNINGS CALL
WOSG.UK Cuts outlook assuming no recovery in consumer demand this FY; Despite a positive start to the early part of Q3 FY24, WOSG then experienced a volatile trading performance in the run-up to and beyond Christmas, as the challenging macro-economic conditions impacted consumer spending in the luxury retail sector
HUM Cuts FY23 $26.09 v $28.27e (prior: at least $28.25) citing higher medical costs/utilization and "more balanced" pricing; Reschedules earnings call to Jan 25th from Feb 5th; Expects individual Medicare Advantage (MA) growth of ~100K members, +1.8% y/y (prior: 'growth at or above industry growth level') - filing
TCOM CEO: Domestic China travel exceeded 2019 levels by over 50%; US still in top 3 travel destinations for China - Davo
(US) DEC HOUSING STARTS: 1.460M V 1.425ME; BUILDING PERMITS: 1.495M V 1.476ME
(US) JAN PHILADELPHIA FED BUSINESS OUTLOOK: -10.6 V -6.7E; Prices Paid: 11.3 v 25.1 prior
(US) DOE CRUDE: -2.5M V -1ME; GASOLINE: +3.1M V +2.5ME; DISTILLATE: +2.4M V -0.5ME
(US) NY Fed takes $618.2B (v $590.1B prior) in RRP program at 5.30%; 81 participating and accepted counterparties
(US) Office of the Controller of the Currency (OCC) Chief: OCC, Fed and FDIC are working on discount-window rule proposal, to push and "require" more banks to use the Fed's discount window at least once a year to reduce the stigma and be ready for troubled times - press
PPG Reports Q4 $1.53 v $1.50e, Rev $4.35B v $4.27Be; H1 conditions to remain subdued in US, Mexico; Believe European economic activity to stabilize in 2024 at current levels
SMCI Raises Q2 $5.40-5.55 v $4.48e, Rev $3.6-3.65B v $2.80Be (prior: $4.40-4.88, Rev $2.7-2.9B)
(JP) JAPAN DEC NATIONAL CPI Y/Y: 2.6% V 2.5%E; CPI EX-FRESH FOOD (CORE) Y/Y: 2.3% V 2.3%E (Core CPI slowest y/y growth since Jun 2022)
(US) New York Fed Report finds early delinquency rates rose for low-income borrowers in 2022 through Q3 2023, exceeding pre-pandemic levels
JBHT Exec: Guides initial FY24 Capex $800M-1.0B v $1.6B y/y; Not so much has changed in regard to the freight environment in early 2024; Seeing inflationary pressures in 2024, but mostly around its insurance premiums - conf call summary

FRI 1/19
(DE) German construction union IG BAU (~1M workers) said to be demanding a pay rise of over 20%, raising inflation fears - financial press
BAS.DE Cuts FY23 Rev €68.9B v €70.6Be (prior €73-76B v €87.3B y/y), EBIT €3.81B v €3.85Be (prior €4.0-4.4B); Notes Chemicals segment EBIT before special items in 2023 falls considerably short of average analyst estimates, among other things due to unplanned plant shutdowns, non-cash-effective impairments**
ABBN.CH Received US House Committee letter on strategic competition with China; States taking seriously
(EU) Reportedly EU preparing to launch mission in the Red Sea, expected to be adopted in Feb 2024; The new EU operation will accompany the British HMS Diamond - ShippingWatch
(US) NATO is mobilizing some 90,000 troops for its biggest military drills since the Cold War, called Steadfast Defender 2024 and starting next week - Axios
(CN) China cabinet said to have instructed heavily indebted local govts to delay or halt some state-funded infrastructure projects; Cites local govts' large debts and weaker growth prospects - press
(DE) Germany Defense Min Pistorius: Putin could possibly attack NATO in ‘5 to 8 years', according to our experts - Politico
HBAN Reports Q4 $0.27 adj v $0.26e, Rev $1.73B v $1.75Be; Believes the operating environment today is generally more constructive compared to last quarter; Customers are generally well positioned and are continuing to invest in their businesses
TRV Reports Q4 $7.01 v $5.01e, Rev $10.9B v $10.9Be
W To cut 1.7K jobs, or ~13% jobs globally; Now expect to deliver over $600M of Adjusted EBITDA in 2024 in a hypothetical flat revenue environment
MAERSKB.DK Implements temporary suspension of bookings to and from Asia/Middle East/Oceania/East Africa/South Africa to Djibouti port city, near the Red Sea on its Blue Nile Express service
ALLY Expect used vehicle values to stabilise in 2025 following three years of declines; Seasonally adj NCOs to peak in H1 2024; Guides initial FY24 NIM 3.25-3.30% v 3.35% y/y - slides
(US) Redfin: January is off to a slower-than-expected start for home sales, likely due to severe winter weather; US pending home sales rose 4.1% m/m in Dec (the biggest increase since September 2021); Mortgage rates posted the biggest monthly decline since 2008
(US) Fed's Goolsbee (non-voter for 2024); We are not off the Golden path, but have not reached the end of it either - CNBC
(RU) Russian troops reportedly plan a large-scale offensive in Ukraine in the summer 2024 - FT citing Ukrainian officials
(US) DEC EXISTING HOME SALES: 3.78M V 3.83ME
(US) JAN PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 78.8 V 70.1E
(US) Fed’s Bostic (dove, voter): Wants to make sure we're well on the way to 2% before cuts; Open to changing outlook on rate cut timing on if the data suggests it
(US) Weekly Baker Hughes Rig Count: 620 v 619 prior (+0.2% w/w)

>>> US Close Dow +1.05% S&P +1.23% Nasdaq +1.70%

Closing Stock Market Summary
The stock market closed this abbreviated week on a strong note on above-average volume at the NYSE. The S&P 500 closed at a fresh record high (4,839.81) with a 1.2% gain. The Dow Jones Industrial Average logged a 1.1% gain and the Nasdaq Composite closed 1.7% higher.

Strong mega cap and semiconductor shares were propping up index gains in the early going while the broader market traded more mixed. Semiconductor and mega cap stocks maintained their outperformance, but by the close, just about everything was trading higher.

The PHLX Semiconductor Index (SOX) jumped 4.0%; the Vanguard Mega Cap Growth ETF (MGK) closed 1.6% higher; the Invesco S&P 500 Equal Weight ETF (RSP) rose 0.8%; the Russell 3000 Growth Index saw a 1.4% gain; and the Russell 3000 Value Index registered a 0.9% gain.

Nine of the 11 S&P 500 sectors closed with a gain and five of them jumped more than 1.0%. In addition to the sectors that house mega cap components, the real estate (+1.0%) and financials (+1.6%) sectors saw the largest gains. The latter was helped in part by a sizable gain in Travelers (TRV 211.67, +13.32, +6.7%), which reported above-consensus earnings and revenue.
The gain in Travelers also offered a measure of support to the Dow Jones Industrial Average.

The only S&P 500 sectors to register a declined were consumer staples (-0.3%) and utilities (-0.1%).

Upside momentum in the stock market picked up steam as Treasuries pulled back from intraday high yields. The 2-yr note yield, which hit 4.42% earlier, settled seven basis points higher at 4.41% and the 10-yr note yield, which tested the 4.20% level, settled unchanged for the day at 4.15%.
  • S&P 500: +1.5%
  • Nasdaq Composite: +2.0%
  • Dow Jones Industrial Average: +0.5%
  • S&P Midcap 400: -1.5%
  • Russell 2000: -4.1%

Reviewing today's economic data:
  • December Existing Home Sales 3.78 mln (consensus 3.80 mln); Prior 3.82 mln
    • The key takeaway from the report is that high mortgage rates continue weighing on the overall level of activity, though they have not stopped prices from continuing to climb.
  • January Univ. of Michigan Consumer Sentiment - Prelim 78.8 (consensus 68.8); Prior 69.7
    • The key takeaway from the report is that the increase in sentiment was accompanied by another drop in year-ahead inflation expectations, which have returned to a level not seen in three years.

Looking ahead, Monday's economic data is limited to the December Leading Indicators Index (consensus -0.3%; prior -0.5%) at 10:00 ET.

FT : Martin Sellner: Austrian extremist stirs up political storm in Germany

Martin Sellner: Austrian extremist stirs up political storm in Germany
Far-right ideologue’s secret meetings with Alternative for Germany politicians and benefactors have caused uproar

For decades the political consensus in Germany, where the horrors of the Nazi past still weigh heavily, has held that extremist rightwing ideologies would never again become popular enough to succeed at the ballot box. 

Events over the past week, however, have thrown that into question. 

A meeting between senior figures in the far-right Alternative for Germany party — which has won the support of nearly one in four Germans, according to polls — and Martin Sellner, an Austrian extremist ideologue barred from the UK and the US on public safety grounds, have scandalised Germany’s political class and sent the country’s media into a tailspin. 

At the meeting first reported by the investigative news outlet Correctiv, AfD politicians and wealthy benefactors discussed mass deportations and other incendiary ideas with Sellner at an elegant lakeside villa, the Landhaus Adlon, in Berlin in November. Many see the meeting as a Rubicon: the AfD, they say, is radicalising, even as political support for it grows.

Alice Weidel, the AfD’s leader, has fired her closest adviser, who was in attendance. But that has not stopped the backlash. Rallies have been held all over Germany, with tens of thousands of people turning out in cities across the country to “march against fascism, old and new”. Calls to ban the AfD outright are now being made at the highest levels. 

Sellner is an unlikely threat to the German republic: a modish 35-year-old with a modest but ardent social media following, an enthusiasm for rap, a neo-Nazi past, and no actual political party, let alone jackbooted heavies, behind him.

He believes that societies are degraded by too much cultural mixing, and that unchecked multiculturalism is behind many of modern Europe’s problems.

Sellner’s signature proposal is “remigration”, which he says stands for forcibly removing immigrants who break the law or “refuse to integrate”, regardless of their citizenship status. Critics say it amounts to ethnic cleansing.

His oeuvre comprises niche political books, heavy with references to philosopher Martin Heidegger and lesser, more controversial idols of proto-fascist thought, such as Oswald Spengler and Carl Schmitt.

For those paying close attention, the young Austrian has for years been an unavoidable figure on the far-right activist scene in German-speaking Europe. And despite condemnation in the media, court-cases and government bans — he was barred from the UK in 2018 and the US in 2019 — his reach has only seemed to grow.

Natascha Strobl, a political scientist and longtime follower of the Austrian and the Identitarian activist movement for which he was once the spokesperson, said: “In one sense, Sellner and the Identitarians are an extreme fringe.”

But, she added, “Sellner has also been very successful. He understands well how to drive a media frenzy and how to get his ideas noticed.”

“The meeting [at Landhaus Adlon] was certainly not harmless,” Strobl said. “When you have someone like Sellner, openly networking with senior AfD politicians and managers and business people . . . that signifies something has changed.”

Sellner, who grew up in a comfortably middle-class household, fell into neo-Nazism as a teenager in the quiet town of Baden bei Wien, just outside the Austrian capital. His early beliefs were coloured significantly by Holocaust deniers in Austria and abroad.

At 17, Sellner was caught with a friend sticking a swastika on the local synagogue, along with the phrase “legalise it”. The two teens had been angered by the conviction of British historian David Irving for denying the existence of the Holocaust that year, according to a police record of their arrest.

At university, he studied philosophy and joined an extremist fraternity, Burschenschaft Olympia, which espoused more nuanced views and led him to distance himself from what he called the “youthful sin” of his crude Nazi sympathies.

Sellner and “new right” groups such as the Identitarians draw a distinction between their beliefs and neo-Nazism in claiming they make no judgments about the superiority of any race over another, though critics question their sincerity.

Sellner abandoned a law degree for what he considered his calling: politics. 

In 2012, he became a founding member of the Austrian Identitarian Movement, a new far-right nationalist group heavily influenced by France’s “Bloc Identitaire” and Italy’s neo-fascist movement “CasaPound”.

Like them, it sought to borrow from the techniques and actions of left-wing movements like Greenpeace. Sellner continues to cite Gene Sharp, the American political scientist whose theory of non-violent resistance underpins most modern liberal and leftwing protest groups, as one of his biggest political influences.

The Identitarians, under Sellner’s careful choreography, gained media time with stunts such as scaling the Brandenburg gate in Berlin in 2016 to unfurl a huge banner calling for “secure borders”, capitalising on growing anti-immigrant sentiment.

In 2019, he married Brittany Pettibone, a Californian alt-right YouTube influencer.

Sellner was revealed to have been the recipient of a €1,500 donation from the New Zealand white supremacist Brenton Tarrant, who went on a rampage in March of 2019, killing 51 people at two mosques in Christchurch. Austria’s government initiated court proceedings against the Identitarians, accelerating the dissipation of the movement. Even the country’s hard-right Freedom party (FPÖ) turned against him.

During the Covid-19 pandemic, Sellner branched out into anti-lockdown and anti-vaccine messaging that fed the FPÖ and AfD discourse.

As the two populist parties have themselves grown more radical amid a cost of living crisis and the lingering social effects of the pandemic, Sellner’s cachet has risen. At the Landhaus Adlon, he was the star turn — and so was his “remigration” concept.

He argues this idea is backed privately by many Austrians and Germans who cannot voice public support for it, given their countries’ history.

The AfD itself champions aggressive measures to reduce immigration and supports the expulsion of convicted criminals and people with no legal right to stay, but has sought to distance itself from Sellner’s position. Weidel claimed the meeting at the Landhaus Adlon had nothing to do with her.

But many already detect the growing influence of new right ideas on the party — and note how much of Sellner’s language and concepts seem to be seeping into the party’s programme.

For now, the German furore appears to have served him well.

Hours after Correctiv published its story, Sellner mocked the media for sensationalising a meeting which according to him was not secret at all. He has also used the buzz generated around his name to promote his works, including his book Remigration — a proposal. A jury of German linguists said remigration was the “non-word” of the year 2023, saying it was used as a euphemism by right-wing parties.

“One of Sellner’s main ideas is that in order to be able to do something, you have to make it sayable,” said Bernhard Weidinger, a senior researcher of rightwing movements at the Documentation Centre of Austrian Resistance, a historical research institute in Vienna.

“‘Remigration’ is an example of how Sellner has played an important role in modernising far-right discourse. It’s about getting these terms, these narratives, these framings across to a broader audience. Or getting them into the public consciousness.”

FT : What does Iran want?

What does Iran want?
The Islamic republic’s direct strikes in Iraq, Syria and Pakistan in recent days suggest not a change of strategy but a change of tactics

The first sign that Iran felt the need to flex its muscles more directly after months of tension and hostility across the Middle East came when its naval forces last week dropped from a helicopter to seize an oil tanker off the coast of Oman.

Days later, it was the turn of the elite Revolutionary Guards to deliver a glimpse of their military capabilities. The guards lit up the night sky over Erbil in northern Iraq after launching a barrage of ballistic missiles at what Iran described as an Israeli “espionage centre”.

The Biden administration condemned the attack — which reportedly rattled the nearby US consulate — as “reckless”.

However, in Tehran, these actions were interpreted as part of the Islamic republic’s calculated response to Israel’s more than 100-day offensive in Gaza. The display of force was intended to send a warning message to the US, Israel and other regional powers, but conducted in a targeted manner, far from the front lines of the Israel-Hamas war.

“The series of attacks are definitely related to the war on Gaza and are Iran’s show of power as the sole and leading military power standing against Israel,” says Saeed Laylaz, an Iranian analyst.


The assaults were the first time Iran has directly unleashed its military since Hamas’s October 7 attack triggered the war with Israel, sending shockwaves across the Middle East.

From the outset, there were concerns in Israel, its western allies and among Arab states about how Iran and the myriad militant groups it backs might respond. Days after Hamas’s attack, US President Joe Biden warned Iran “to be careful”, before dispatching two carrier strike groups to the region as a deterrent.

In the months since, Iran’s leaders have chastised Israel and expressed support for Hamas, but have publicly stated their desire to avoid a regional conflict, and kept their forces out of the fray. The regime was content for its so-called Axis of Resistance, which includes militant groups in Lebanon, Syria, Iraq and Yemen, to lead the military response, launching missile, drone and rocket attacks against Israel, US forces in the region and global shipping.

Yet a series of hostile acts over the past three weeks, directed at Iranians as well as senior leaders of the republic’s proxies, appear to have compelled Iran to up the ante.

The first was an Israeli air strike in Syria that killed a senior Revolutionary Guards commander at the end of December. The following week, another Israeli strike killed Saleh al-Arouri, Hamas’s deputy political leader, in southern Beirut, a stronghold of Hizbollah, the Lebanese Shia militant movement that is Iran’s most powerful proxy.

On January 3, the next day, two suicide bombers killed almost 100 Iranians who had gathered in the southern city of Kerman to mark the anniversary of the US’s assassination of Qassem Soleimani, the republic’s most powerful commander. Sunni jihadist group Isis claimed responsibility for the attack, but only after Revolutionary Guards commanders suggested Israel was to blame.

Next, a US strike in Baghdad killed a senior commander of an Iranian-backed Iraqi militia, dealing another blow to the Axis of Resistance.

It was then that Iran began striking out directly. The guards described its attack on Erbil as a response to the “recent atrocities of the Zionist regime” as well as the killing of commanders of the guards and “resistance”.

Iran simultaneously launched missiles against Isis targets in Syria, in retaliation for the suicide bombings in Kerman. This week, it mounted a rare strike in Pakistan, targeting Jaish ul-Adl, another Sunni militant group. Islamabad responded with missile attacks against Pakistani separatists in Iran.

An Iranian official says Iran’s strikes do not represent a change in strategy but a change in tactics to make the US and Israel aware of the threat it could pose as long as the war in Gaza continues.

“Involving Pakistan and Erbil sends a message directly to the Israelis and the Americans, and the message is ‘don’t mess with Iran, and finish the war in Gaza’,” the official says. “Iran doesn’t want a direct war with Israel and the US. But we want to be seen and felt by the Americans — and show how nasty we could be.”

The strategy isn’t without risk, the official adds, but hardliners inside Iran believe the damage can be controlled. “From their perspective, a limited, calculated engagement could [also] give the message to Iran’s proxies that in hard times we are supporting them.”

Since its devastating 1980s war with Iraq, the Islamic regime has made proxies and asymmetrical warfare an integral part of its national security strategy, cognisant that it lacks the conventional weapons to match the US or Israel.

That network, which began with the birth of Hizbollah in the 1980s, has expanded over the past two decades as the 2003 US-led invasion of Iraq and the tumult triggered by the 2011 Arab uprisings reshaped the region’s dynamics.

United by an anti-US, anti-Israel ideology, the grouping has come to incorporate powerful Shia factions in Iraq; militias in Syria, where Iran intervened to back the Assad regime in that country’s civil conflict; Hamas; and Houthi rebels in Yemen, which have fought a nine-year war against an Arab coalition led by Saudi Arabia, Iran’s regional rival.

Each has responded militarily to Israel’s offensive in Gaza: Hizbollah has been locked in daily cross-border clashes with Israel; the Houthis have launched more than 30 attacks against merchant ships in the Red Sea, as well as drones and missiles at the Israeli port of Eilat; and Iraqi militants have fired more than 140 missiles and drones against US forces in Iraq and Syria.

Tehran publicly insists the militants are acting independently, but by opening multiple fronts, their actions have enabled Iranian leaders to project power and hostility to Israel, while distancing the republic itself from direct combat and reducing the risks of it being sucked into a broader conflict.

US officials, meanwhile, accuse the Iranians of being “deeply involved” in planning the Houthis’ assaults against shipping, saying they have provided drones and “tactical intelligence” to the group. Iran has long provided financial and military support to militants from Hizbollah and to Iraqi factions collectively grouped under the umbrella of the Popular Mobilisation Forces, or Hashd al-Shaabi.

“Iran is the head of the octopus and you see its tentacles all around from the Houthis to Hizbollah to Hamas,” Israeli Prime Minister Benjamin Netanyahu told reporters in Tel Aviv on Thursday.

Hamid-Reza Taraghi, a hardline Iranian politician, boasts that the post-October 7 hostilities have provided a “good military drill” for the axis.

“There is today more unity and co-ordination between the different groups of the Axis of Resistance and they help each other, putting their lives at risk to defend their co-fighters in different places,” he says. “The reason is they all follow one leader, Ayatollah [Ali] Khamenei.”

Iran’s President Ebrahim Raisi talks to a person injured in the Isis attack in Kerman. The jihadist group claimed responsibility for the attack, but only after Revolutionary Guards’ commanders blamed Israel © Iran’s Presidency/WANA/Handout/Reuters
Khamenei himself, Iran’s supreme leader, said this month the “resistance must keep its strength up and be ready, not falling for the enemy’s tricks, and, God willing, wherever possible, deliver a blow”.

Yet the groups within the axis are not homogenous, and each has their own national agenda. Hizbollah and the leaders of the Shia Iraqi factions have the strongest ties to Tehran. Hamas is a Sunni Islamist movement, while the Houthis, members of the Zaydi Shia sect, are less ideologically aligned with Iran than other groups. But their relationship with the republic has deepened after years fighting the Saudi-led coalition from their base in northern Yemen.

In recent months, the Houthis have been one of the most active members of the network, displaying their strategic value to Iran as they have severely disrupted global trade through the Red Sea and drawn the US and UK into combat. But the true extent of Iranian influence over the group is often debated.

Indeed, some in western capitals question how effectively Iran is navigating the crisis. “Iran hasn’t been the brilliant mastermind some perceive that is operating with a clear strategy, concrete objectives and clever manoeuvring,” says Ali Vaez, an Iran expert at Crisis Group. “A lot of its actions seem reactive, scrambling, short-sighted and impetuous.”

Contrary to what Iranian leaders say, he adds, the strikes against commanders in the guards, Hizbollah and the Iraqi militia have diminished Iran’s efforts to project regional deterrence through the axis, and put it “on the back foot”. His concern is that Tehran will turn to another avenue to up the stakes with the US — its nuclear programme.

Before the Israel-Hamas war broke out, there were tentative signs of movement in the west’s stand-off with Iran over its nuclear ambitions.

In September, the Biden administration and the republic agreed to a prisoner swap, which involved Washington unfreezing $6bn of Iran’s oil money. Alongside that deal, the parties discussed unwritten de-escalatory measures, including Tehran putting a cap on its aggressive nuclear expansion as it enriched uranium close to weapons grade. There had been signs that Iran was slowing the pace at which it was producing highly enriched uranium.

But the conflict dashed hopes of progress. Instead, a December report by the International Atomic Energy Agency said Tehran had increased its rate of production of uranium enriched up to 60 per cent purity — close to weapons grade — to levels reported in the first half of 2023. “I’m afraid Iran’s nuclear calculus could change, and in very problematic ways,” Vaez says.

The Iranian official says the increased enrichment was a message to the Biden administration after Washington informed Tehran that it would not discuss the nuclear issue until after the US election. “If America wants to wait, they should suffer the consequences, and the consequences are going to be increasing enrichment,” the official says.

A consequence neither side wants, however, is military escalation. The US and Iran are relying on back channels through states such as Qatar to try to prevent that outcome. Biden has also publicly stated he has sent warnings to Tehran, most recently cautioning it not to aid the Houthis.

Sanam Vakil, Middle East programme director at Chatham House, believes the regime will continue to be restrained because of its ultimate goal: self-preservation.

“Iran’s number one priority is Iran, and we should never forget that. Iran will not mobilise its own forces unless it is directly hit,” she says. “It isn’t this sort of mammoth, behemoth puppet master behind the scene, but actually also tactical and it has weaknesses — and the ability to be deterred.”

Instead, it will continue to rely on its proxy network to project power. “It has a forward defence strategy that it has put into place and has tried to push its perceived threats far away from its borders,” Vakil says. “But it’s important not to oversell Iran’s position in the region or its investments in the Axis of Resistance.”

A critical question, however, is whether the calculus in Tehran changes if a full-blown war erupts between Israel and Hizbollah — the proxy it has invested most heavily in, and which some see as indispensable to its patron.

“Hizbollah is not Hamas — Hizbollah is the Islamic Republic of Iran,” says the Iranian official.

CrunchBase : Quantinuum Raises $300M At $5B Valuation

Quantinuum Raises $300M At $5B Valuation

Quantinuum locked up a fresh $300 million equity fundraise at a pre-money valuation of $5 billion.

The new funding was led by JPMorgan Chase, with additional participation from Mitsui & Co., Amgen and Honeywell, which remains the company’s majority shareholder.

The Broomfield, Colorado-based company was spun out of Honeywell in 2021 and merged with Cambridge Quantum Computing. Quantinuum says it has now raised approximately $625 million.

“Financial services has been identified as one of the first industries that will benefit from quantum technologies,” said Lori Beer, global chief information officer at JPMorgan Chase, in a release. “As such, we have been investing in quantum research and our team of experts … have made groundbreaking discoveries, partnering with quantum computing leaders like Quantinuum.”

Seeing the potential
Investors have started to push more cash into quantum technology and computing — a level of computation much faster and at a level superior to modern computers in that it can perform many calculations at the same time — as its long-held promise seems to be nearing reality.

Last year, funding to quantum computing startups hit nearly $1.2 billion — per Crunchbase data — including quantum computing and networking startup Photonic raising a $100 million round that included an investment from Microsoft just last November.

That number dwarfed the less than $800 million raised in 2022 — making quantum one of the few sectors to see an increase in venture funding in 2023.

While it’s too early to say venture funding will again increase in the sector this year, it is quite evident investors see the potential in both quantum technology and its ability to produce big financial returns.