FT : Rolls-Royce propels the case for thoughtful subsidies

Rolls-Royce propels the case for thoughtful subsidies
So ingrained is the habit that dishing out subsidies now levels, rather than distorts, the playing field

Subsidies for Rolls-Royce? At first blush the UK engine-maker’s request for government money looks absurd. Here is a successful FTSE 100 group — shares have more than doubled in the past year — set to spend as much as £1.5bn buying back its own shares. While it churns out cash, the UK government sits on a massive deficit.

But the real question isn’t whether subsidies should be eschewed altogether — that ship has truly sailed — but how to use them judiciously. Washington, after all, has gone from calling foul on other nations’ use of largesse to jumping in with both feet. Germany, witnessing industrial decline, is disbursing money across sectors; the EU is mobilising €100bn for clean manufacturing alone.

More pertinently, Rolls-Royce’s rivals are beneficiaries of government support; GE Aviation of the US even pocketed funds from the Welsh government for its maintenance and repair site in Nantgarw. Pratt & Whitney has received hundreds of billions of dollars from Canada. So ingrained is the habit that dishing out subsidies now levels, rather than distorts, the playing field.


Subsidies for Rolls-Royce? At first blush the UK engine-maker’s request for government money looks absurd. Here is a successful FTSE 100 group — shares have more than doubled in the past year — set to spend as much as £1.5bn buying back its own shares. While it churns out cash, the UK government sits on a massive deficit.

But the real question isn’t whether subsidies should be eschewed altogether — that ship has truly sailed — but how to use them judiciously. Washington, after all, has gone from calling foul on other nations’ use of largesse to jumping in with both feet. Germany, witnessing industrial decline, is disbursing money across sectors; the EU is mobilising €100bn for clean manufacturing alone.

More pertinently, Rolls-Royce’s rivals are beneficiaries of government support; GE Aviation of the US even pocketed funds from the Welsh government for its maintenance and repair site in Nantgarw. Pratt & Whitney has received hundreds of billions of dollars from Canada. So ingrained is the habit that dishing out subsidies now levels, rather than distorts, the playing field.

WSJ : Jane Street Accused of Insider Trading That Helped Collapse Terraform

Jane Street Accused of Insider Trading That Helped Collapse Terraform
The court-appointed administrator of Do Kwon’s Terraform Labs alleged that Jane Street used nonpublic information from Terraform insiders to trade

  • Terraform Labs’ administrator sued Jane Street, its co-founder, and employees, alleging insider trading hastened the crypto empire’s collapse.
  • The lawsuit alleges Jane Street used nonpublic information from Terraform insiders to front-run trades, including a May 2022 TerraUSD withdrawal.
  • Terraform’s May 2022 collapse, when TerraUSD lost its dollar peg, caused a $40 billion crash and triggered wider crypto failures.

The administrator winding down Do Kwon’s Terraform Labs has sued Jane Street, alleging that the high-speed trading giant engaged in insider trading to profit unlawfully from and ultimately hasten the crypto empire’s collapse.

Todd Snyder, the plan administrator appointed by a bankruptcy court, is seeking damages from Jane Street, its co-founder Robert Granieri, and employees Bryce Pratt and Michael Huang.

In a heavily-redacted complaint, the administrator alleged Monday in Manhattan’s federal court that Jane Street used material nonpublic information from Terraform insiders to front-run trading that sped up Terraform’s demise.

Terraform collapsed in May 2022 when its TerraUSD cryptocurrency, a so-called algorithmic stablecoin, lost its peg to the dollar. A sister token called Luna also plummeted to near zero within days of the depeg. Their $40 billion crash hurt hundreds of thousands of investors worldwide, some of whom lost their life savings nearly overnight. The implosion also triggered a chain reaction that toppled companies across the crypto sector, ultimately culminating in the collapse of Sam Bankman-Fried’s FTX exchange.

Terraform filed for bankruptcy in January 2024 and a wind down trust was formally established later that year. Kwon, the brash entrepreneur who founded Terraform in 2018, is serving a 15-year prison sentence after pleading guilty to two criminal counts in August.

“Jane Street abused market relationships to rig the market in its favor during one of the most consequential events in crypto history,” Snyder said in a statement. “On behalf of injured parties, we will pursue all avenues supported by the facts and the law against those who exploited their position and reaped substantial profits at the expense of Terraform Labs’ creditors.

“This desperate suit is a transparent attempt to extract money when it is well-established that the losses suffered by Terra and Luna holders were the result of a multibillion-dollar fraud perpetrated by the management of Terraform Labs,” said a spokesman for Jane Street. “We will defend ourselves vigorously against these baseless, opportunistic claims.”

By late 2018, Jane Street had signed up to trade directly with Terraform but its trading in Terraform’s tokens didn’t take off until February 2022, when Jane Street sent Bryce Pratt, a former intern at Terraform, to establish lines of communication with his former Terraform colleagues, according to the lawsuit.

Among Pratt’s communications with Terraform was a group chat he set up with his former colleagues, including a software engineer and the head of business development at Terraform. The group named the chat “Bryce’s Secret” and used it as a way to channel Terraform-related information back to Jane Street, per the lawsuit.

After Pratt started an email chain to introduce Terraform’s head of business development and Jane Street’s “DeFi” leaders, the parties began regularly communicating and discussing a potential Jane Street investment in Terraform, the lawsuit said. But Jane Street turned those communications into a back-channel source for material nonpublic information about Terraform and later used the confidential information it learned to pursue trades to maximize profits for itself, the suit said.

Specifically, on May 7, 2022, at 5:44 p.m. EST, Terraform withdrew 150 million TerraUSD from the Curve3pool, a liquidity pool where stablecoins—typically dollar-pegged cryptocurrencies—could be exchanged one for the other.

Less than 10 minutes after Terraform’s withdrawal, which hadn’t been publicly announced to the market, a crypto wallet that some analysts have linked to Jane Street withdrew 85 million of TerraUSD from the same liquidity pool, the complaint alleges.

The next day, Kwon said publicly that the 150 million withdrawal was meant to move TerraUSD to a new liquidity pool for stablecoins. However, the exact timing of activities associated with the new liquidity pool, including any withdrawals from the Curve3pool, wasn’t public knowledge, according to the lawsuit.

The lawsuit comes two months after the Terraform Labs plan administrator sued Jump Trading, which allegedly entered into a secret deal to prop up TerraUSD before the coin’s collapse, and later emerged from Terraform’s collapse with billions of dollars in gains.

After the May 7 trade, Jane Street continued to use confidential information, including what it learned from Jump Trading, to trade TerraUSD to reap more profits, the lawsuit said.

On May 9, while TerraUSD was depegged but not fully collapsed, Pratt set up a group message with Kwon, Huang and others at Jane Street, expressing the firm’s interest in bidding on either bitcoin or the Luna token. Kwon responded that Bill DiSomma, co-founder of Jump, should have reached out to Jane Street to discuss a fundraise for Terraform, according to the complaint.

Jane Street served as the career launchpad for both Bankman-Fried and Caroline Ellison before they left to found the hedge fund Alameda Research and FTX exchange.

WSJ : As War Enters Fifth Year, Ukraine Shows Russian Victory Is Anything but In

As War Enters Fifth Year, Ukraine Shows Russian Victory Is Anything but Inevitable
Small Ukrainian counterattacks demonstrate Russia’s struggle for a breakthrough

A Ukrainian counterattack in the southeast is pushing back Russian advances, demonstrating Kyiv’s forces retain fighting capability.
Russian military casualties total 1.2 million, with 325,000 killed, and advances are slow.
Western sanctions, tanker seizures, and U.S. pressure on India have driven down the price for Russia’s main grade of crude, known as Urals.

KHARKIV, Ukraine—A Ukrainian counterattack in the country’s southeast is chipping away at Russian advances there and demonstrating that Kyiv’s forces have got plenty of fight left as Moscow’s invasion stretches into a fifth year.

With peace negotiations backed by President Trump stalled, Russia has sought to portray its victory in Ukraine as inevitable. But losses among the Kremlin’s troops now number well over one million, and its grinding offensives advance at a few dozen yards a day at best, according to a recent analysis by the nonpartisan Center for Strategic and Intelligence Studies and the conclusions of several European defense-intelligence departments.

Ukraine has embarrassed Russian generals’ claims of significant gains by largely clearing the city of Kupyansk in the northeast of Russian forces and retaking several villages in the southeastern Zaporizhzhia region.

At the same time, long-range strikes by Ukraine, Western sanctions and ship seizures are pushing down prices for Russian oil that are critical for Moscow to sustain its military efforts.

Seth Jones, president of the defense and security department at CSIS, said that is why Russian President Vladimir Putin is dangling economic deals in front of Trump—to tempt him to cut off support to Ukraine or try to force Kyiv to hand over territory that his army hasn’t conquered.

“That’s the big breakthrough in a war that his military is unable to win,” Jones said of Putin. “The real hope is that the U.S. will come to their aid.”

War dead
Russian military casualties total some 1.2 million, of which as many as 325,000 have been killed, more than double the numbers for Ukraine, according to CSIS. While Russia has long been able to attract volunteers to the war with large payments, there are signs that recruitment is now struggling to keep pace with casualties. Ukraine’s top military commander, Gen. Oleksandr Syrskiy, said last week that Russia wasn’t able to replace its battlefield losses in 2025.


Some Western defense officials have also concluded that Russian recruitment is on the slide. Over the past three months Russia has recruited 30,000 to 35,000 soldiers monthly, but more have been killed or wounded, according to a Western official.

While Russia has enough troops to keep up its current operations, the lack of troops is among the reasons Moscow might find it difficult to make major breakthroughs, some analysts say.

Ukraine, too, is struggling to raise enough manpower.

“There are some signs the Russians are not recruiting as much but they are still recruiting more than the Ukrainians,” said Maj. Gen. Pekka Turunen, the chief of Finland’s military intelligence.

The war has taken its toll, with Ukrainian President Volodymyr Zelensky acknowledging the deaths of 55,000 Ukrainian soldiers. The thin ranks of its infantry rely on explosive drones and artillery to hold Russian advances back. But offensives require more manpower to sustain the defense, and Ukraine is seeking to wear down Russian forces.

Ahead of the fourth anniversary of Russia’s full-scale invasion on Tuesday, the U.K.’s armed-forces minister, Alistair Carns, said Russia had been at war longer than in World War II and lost over 4,000 tanks, 10,000 armed vehicles and had its navy arguably destroyed by a country that never had a navy.

Slow motion
Russian advances in some of its major offensives are slower than the infamous Battle of the Somme in World War I, according to CSIS. In Chasiv Yar, a city on strategic heights in the eastern Donetsk province, Russia has advanced just over 6 miles at an average pace of approximately 16 yards a day.


Russia was only able to capture around 0.8% of Ukrainian territory last year, according to one Western official. Military intelligence in several European countries estimate that Russia will continue to make incremental gains on the ground but at a very high cost.

“I think this war continues like it has for a couple of years already,” said Turunen. “Both sides mostly keeping their positions, with very small steps forward by the Russians—progress but not on a big scale.”

Russian forces are mainly advancing on foot in so-called infiltration groups, small teams of no more than a handful of soldiers who sneak forward under artillery fire and attacks from drones and try to survive and await reinforcements.

The tactics are leading to heavy Russian losses and weak control over any land seized, giving Ukraine the chance to push back.

Striking back
It was early this month when reports began to circulate online that Ukraine was counterattacking in the Zaporizhzhia region, where Russia has held the upper hand in recent months. Russian military bloggers claimed a large-scale counteroffensive, but Ukraine’s military has since described the advances as tactical assaults.

Soldiers said they took advantage of Russian communications problems after Elon Musk’s SpaceX disabled Starlink for the Russian military in Ukraine.

Zelensky said his military had retaken some 115 square miles of territory. Analysts estimate the area is smaller and that Ukraine has mainly cleared the area of Russian infiltration teams.

Last week, U.K. defense intelligence said that Ukraine had retaken about 39 square miles of territory from Russia in around two weeks during its counterattack in the Zaporizhzhia region near the city of Huliaipole.


Ukrainian officers say the main aim isn’t to reclaim land but to strike a weak spot for Russia’s military and force it to redirect its own forces from other areas of the front.

“We’re not focused on the deepest possible penetration,” Capt. Dmytro Filatov, commander of Ukraine’s 1st Separate Assault Regiment, told Ukrainian television. Instead, he said, the aim was “to force the enemy to deploy its reserves not where it plans, but where we plan.”

The Ukrainian success follows on from the recapture by Ukraine of the northeastern city of Kupyansk in mid-December. Russia had boasted of taking the city weeks earlier, but Zelensky recorded a dramatic video from the edge of the city to demonstrate Ukraine’s advance.

Drone advantage
Over 2025, Russia steadily built an advantage in medium-range drones that wreaked havoc on Ukrainian supply lines. One of the key elements has been the Molniya, or Lightning, drone, a cheap, fixed-wing unmanned flying vehicle with a range of more than 30 miles. Russia has used the drones to strike vehicles bringing fresh troops and supplies to the front lines, weakening Ukrainian front-line positions.


Russia also jury-rigged the drones with smuggled Starlink internet terminals, extending their range and allowing them to bypass Ukrainian electronic-warfare systems that are designed to knock them out of the sky.

But earlier this month, the disabling of Starlink curbed this battlefield advantage for Moscow. Ukrainian soldiers have noted a significant decrease in battlefield drone strikes as a result, as Russia is struggling to come up with a viable alternative.

Oil pain
Crude oil is the critical source of revenue for Russia’s war machine—and a key target for Ukraine and its allies to bring pressure to bear on Moscow.


Fresh Western sanctions, seizures of aging tankers, known as the shadow fleet, that Russia relies on for deliveries, and Trump’s pressure on India to pull back on purchases have driven down the price for Russia’s main grade of crude, known as Urals. That grade now trades at a sizable discount to the international benchmark Brent.

With oil such a critical source of budget revenues for Moscow, that is putting strains on the Russian economy.

“Before it looked like they were invincible in terms of the economy, with growing revenues and GDP. This is not the case any more,” said Janis Kluge, a researcher at the German Institute for International and Security Affairs.

FT : China is not dumping US Treasuries

China is not dumping US Treasuries
Ignore the amateur geopolitical strategists talking eloquently about the end of dollar dominance

China continues to buy US dollars at pace, and it is no doubt amassing additional holdings of foreign securities too. In December, its state banks and central bank bought more than $100bn of foreign exchange in the market. January purchases were only slightly smaller. 

If you are only looking at the balance sheet of the People’s Bank of China, this might not have been evident. The formal foreign exchange reserves of China’s central bank have not been rising rapidly, but do not be fooled. The dollars that China Inc bought in the market in the past few months are being warehoused by the country’s big state-owned financial institutions, which added the unprecedented $100bn to foreign assets in December and another $70bn in January.

These are huge, market-moving numbers. They showed beyond any reasonable doubt that China’s massive trade surplus once again flows through the balance sheet of its core state financial institutions.

Exporters now want to sell their dollars for renminbi to capture the renminbi’s expected appreciation (off a very weak level) rather than warehouse their export proceeds in Hong Kong, Singapore and other offshore centres. To offset that demand for renminbi, China’s state banks had to buy a ton of foreign exchange. The $100bn a month in purchases in December set a new record for intervention.


Yet rather than discussing where China Inc will warehouse all the foreign exchange that is now in the hands of the state, much of the financial world is talking about signs that China is diversifying away from the dollar and US Treasuries. That makes no sense.

To be sure, the number of Treasuries that Chinese investors hold in US custodians has fallen sharply over time. That reflects the relatively low share of dollars in China’s reserves (presumably under 55 per cent, the last disclosed number) as well the use of non-US custodians. And China has — since at least 2010 — gone to great lengths to try to limit its US holdings, and even greater lengths to limit its visible US holdings. That shift has meant that the correlation between China’s current account surplus, its reserve growth and its holdings of US bonds has broken down.

But that does not mean that China’s state — broadly defined — stopped accumulating dollars. Rather, dollar asset accumulation has shifted from China’s State Administration of Foreign Exchange agency ($3.4tn in foreign exchange reserves, an estimated 50-55 per cent in dollars) to the state banks (about $3tn in assets, with maybe 70 per cent in dollars, according to my estimates from China’s own data for the commercial banks). 

Diversifying the use of China’s reserves initially meant handing over China’s reserves to the policy banks that support development or trade initiatives such as the Belt and Road projects around the world. Dollars that could have been reserves were used to fund “entrusted loans” and inject equity ($95bn in 2015). China does not report the size of the foreign currency balance sheet of China Development Bank and the Export-Import Bank of China, but independent estimates suggest total assets of about $1tn. 

More recently, the locus of foreign asset accumulation shifted to the state-owned commercial banks, which now have $1.65tn in disclosed foreign assets. That includes some renminbi-denominated loans, but the bulk of these foreign assets are in dollars and euros. The PBoC reports that the state commercial banks hold $450bn in foreign currency denominated securities and credit extended to other financial institutions. The state banks can take credit risk, but they must be straining at the scale of recent inflows.

Put simply, China has a $1tn current account surplus (only reported to be $735bn, but there is growing consensus that the reported number is understated). As such, it has to be accumulating a lot of foreign assets. 

Such a country cannot easily diversify away from dollar assets if it still wants to manage its currency against the dollar by selling the renminbi to buy it. That is all the more the case if it wants to cling to a weak currency to support exports at a time when domestic sources of growth are weak.

If Chinese state investors are not directly buying Treasuries, they are lending money to other global investors who are. That is the only way the global flow of funds can add up. Ignore the amateur geopolitical strategists talking eloquently about the end of dollar dominance and follow the money.

FT : Panama hands canal ports control to Maersk and MSC after ejecting Hong Kong

Panama hands canal ports control to Maersk and MSC after ejecting Hong Kong group
Shipping companies to temporarily operate terminals after Supreme Court ruling against CK Hutchison

Danish shipping giant Maersk and Swiss-based MSC are to take over the operations of two key ports on the Panama Canal after their Hong Kong-based operator was ejected last month, the Panamanian government said on Monday.

Panama’s Supreme Court last month annulled a contract with conglomerate CK Hutchison Holdings as operator of the Balboa and Cristóbal ports on the famous waterway after legal challenges.

The case stemmed from lawsuits dating back to 2021 and a government audit in 2025 alleging irregularities.

On Monday, the Panamanian government formally assumed control of the port facilities, including cranes, vehicles, computer systems and software, under a decree intended to guarantee their smooth operation until a new concession is awarded within 18 months.

Under the plan, two shipping groups will temporarily operate the ports. A unit of AP Møller-Maersk will oversee the Balboa port on the Pacific side of the canal while the port wing of MSC will run the Cristóbal port on the Atlantic side.

CK Hutchison said it had ceased operations at the terminals on Monday and described the takeover as “forceful” and “unlawful”. Maersk and MSC did not respond to requests for comment.

MSC was part of a consortium, also including BlackRock, that struck a deal last year to take a 90 per cent stake in the unit that runs the two ports.

The $23bn deal won praise from US President Donald Trump, who hailed it as a sign his administration was “reclaiming” the canal. But Beijing later insisted that China’s state-owned shipping giant Cosco should have a majority stake, prompting the buyers to reconsider.

Alberto Alemán Zubieta, a former administrator of the canal who has been appointed to lead a technical team to oversee the transition period, said the arrangement did not imply an expropriation of the machinery and equipment at the two ports.

“This is what is known as an occupation to guarantee that the ports can continue operating. We recognise that the equipment belongs to [a unit of Hutchison],” he added.

Labour minister Jackeline Muñoz said there would be “no lay-offs”.

Hutchison has taken Panama to arbitration following the Supreme Court ruling and Beijing has warned that the Central American country will pay a “heavy price” for the decision.

Beijing has invested substantial sums in Panama since the country switched diplomatic recognition from Taiwan in 2017.

>>> US After Hours Summary: VIR +65.3% surging on earnings and trial results; MY

After Hours Summary: VIR +65.3% surging on earnings and trial results; MYGN +18.3%, SGHC +18.1%, KEYS +15.5%, MAX +14.8% higher on earnings; UCTT -12.5%, ZD -8.1%, HIMS -6.7%, PAY -5.3%, PRIM -5.2% lower on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: VIR +65.3% (also strategic collaboration with Astelas Pharma (ALPMY); also updated Phase 1 results for PSMA-targeting, PRO-XTEN dual-masked T-cell engager VIR-5500), MYGN +18.3%, SGHC +18.1% (increases dividend) KEYS +15.5%, MAX +14.8% (also increases share repurchase authorization to $100 mln), TARS +10.3%, DHC +8.9%, FWRD +7.8%, ADEA +6.9%, SIBN +6.6%, BWXT +5.4%, AESI +4.5%, IIPR +3.7%, VVX +3%, GLPG +2.2% (also advances cell therapy wind-down), ACVA +2.1%, BBBY +2%, VNOM +1.2% (also increases dividend; also increases share repurchase authorization by $1 bln), RHP +0.4%, SKWD +0.3%, OVV +0.3% (also new shareholder return framework)

Companies trading higher in after hours in reaction to news: BETR +3.7% (strategic partnership with Framework Ventures), EMPD +3.6% (shareholder calls for resignation of CEO and entire Board), IONQ +1.7% (selected to support Missile Defense Agency SHIELD IDIQ contract), ERO +1.5% (results of the preliminary economic assessment on the Furnas Copper-Gold Project), PSKY +1.3% (Paramount Skydance raises its offer for Warner Bros (WBD), according to Bloomberg), RCUS +1% (new data for its HIF-2a Inhibitor Casdatifan), FMC +0.9% (receives dual mode of action herbicide classification for rimisoxafen), BNC +0.6% (YZILabs Management responds to CEA Industries' proposed amendments to asset management agreement), BSX +0.6% (increases share repurchase authorization by $4 bln), CDW +0.5% (mixed shelf offering), DHT +0.4% (entered into a one-year time charter agreement at $105,000 per day for the VLCC DHT Redwood), IVR +0.4% (mixed shelf offering), NFLX +0.4% (Paramount Skydance raises its offer for Warner Bros (WBD), according to Bloomberg), THO +0.2% (to organize its North America RV OEM operations into two operating groups), AAL +0.2% (mixed shelf offering), WBD +0.2% (Paramount Skydance raises its offer for Warner Bros (WBD), according to Bloomberg), CLF +0.2% (appoints new lead Director), UBER +0.1% (to acquire SpotHero, bringing parking reservations onto the Uber app)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: UCTT -12.5%, ZD -8.1%, HIMS -6.7%, PAY -5.3%, PRIM -5.2%, CWEN -4.1%, INVX -3.5%, FANG -2.8%, KTOS -2.7%, BMRN -2.5%, EVER -2.2%, ERIE -2%, APLE -1.6%, OKE -1.5%, ALSN -0.7%, GNW -0.6%, BCC -0.2%,

Companies trading lower in after hours in reaction to news: TARA -19.2% (updated interim results from its ongoing Phase 2 open-label ADVANCED-2 trial assessing intravesical TARA-002), MGNX -10.3% (FDA places partial clinical hold on Phase 2 LINNET study of lorigerlimab), WHR -8% (stock offering), TNDM -5% (convertible notes offering), AVAV -1.6% (CFO to retire), ED -1.3% (stock offering), RDN -1% (mixed shelf offering), KDP -0.9% (updated financing plan for JDE Peet's acquisition), XP -0.5% (stock offering by selling shareholders), CRML -0.3% (stock offering by selling shareholders)