This is an audio transcript of the FT News Briefing podcast episode: ‘Tariff uncertainty continues market volatility’
Marc Filippino
Good morning from the Financial Times. Today is Friday, March 7th, and this is your FT News Briefing.
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Donald Trump’s latest crypto project is turning out to be quite lucrative, and it has been an intense week in the markets.
Katie Martin
The confidence and the certainty have just gone. Investors can’t be sure that if Donald Trump says, this is what I’m going to do, that it’s going to actually happen.
Marc Filippino
Plus, EU leaders held an emergency summit in support of Ukraine yesterday. I’m Marc Filippino and here’s the news you need to start your day.
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Donald Trump’s memecoin is making him a lot of money. Trump launched the token before he returned to the White House in January. And the FT has found that it’s made him at least $350mn since then. But making that much money off crypto comes with some scrutiny when you’re president. Investors and ethics experts say the sale of crypto would basically let Trump channel anonymous donations. The White House and the memecoins website did not respond to requests for comment.
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Another week, another wild ride in markets. US stocks are down after Donald Trump’s tariffs sent investors in a tailspin and Germany set the global bond market on fire. Luckily, I have the FT’s markets columnist Katie Martin with me to help make sense of it all. Hi, Katie.
Katie Martin
Hi. I hope you don’t think I’m going to make perfect sense of it all. I’ll do my best.
Marc Filippino
No, no. I don’t know that there’s a way to do that, but let’s just take it bit by bit, chronologically.
Katie Martin
One thing at a time.
Marc Filippino
Let’s start in the US at the beginning of the week. Equities kicked off Monday already a bit down. And then Tuesday they really took a hit. That’s thanks to Trump’s tariff announcements, right?
Katie Martin
So if you remember, we went into 2025, every investor on the planet, certainly every investor that I spoke to, every strategist at an investment bank was saying American exceptionalism, American exceptionalism. The only way forward is to be as heavily exposed as you can be to US markets, because they’re going to outshine the rest of the world over the course of this year, because of the deregulation and the tax cuts that the new president is bringing in. This has gone very wrong. And it went particularly wrong over the course of this week. We had the confirmation that the tariffs were going to come through on Canada and Mexico. Then they were kind of delayed again. And we’re in this kind of fuzzy situation where we don’t really know what tariffs are in and what tariffs are out. And this uncertainty is really starting to eat away at US markets.
Marc Filippino
OK. Do you expect things to turn around now that those pauses have happened?
Katie Martin
No. I say no because the point is that now the confidence and the certainty has just gone. Investors can’t be sure that if Donald Trump says, this is what I’m going to do, that it’s going to actually happen. So what we’ve seen is that stocks have wiped out almost all of the gains that they saw after Trump was re-elected. Meanwhile, the market that is absolutely off to the races is stocks in Europe of all places. Nobody that I spoke to at the start of this year had a big European bet on and markets there or absolutely racing ahead. And this disparity is very unusual and it’s not a great market endorsement of Trump’s new agenda.
Marc Filippino
OK. I think we’ve spent enough time on America for now. Let’s move to Germany. (Yeah) We mentioned on the show yesterday that a high-stakes government debt deal. Basically, they broke the debt break, sent the bond market on a craze. Walk us through that.
Katie Martin
So there has been this idea running into the elections in Germany that happened recently, that maybe they would ease up on some of the restrictions that they impose on themselves on borrowing money and spending money. But nobody anticipated that Germany would be quite as aggressive as they have been. So they’ve said there will be pretty much unlimited scope for spending on defence, and there will be a massive fund €500bn for infrastructure spending.
Marc Filippino
And how exactly did markets react to that?
Katie Martin
So what we’ve seen is that German government bonds have fallen in price really hard. So the yields have rushed higher at the fastest pace in nearly 30 years. This is the market’s way of saying this is going to be really good for growth. And I think that’s interesting in itself, right? Because yes, the German government is going to be spending lots of taxpayer money. And normally that’s just seen as you know, government spending money that they don’t have and that it won’t really foster growth. In this situation, the market is taking a somewhat different view and saying that defence spending in and of itself should ripple through the rest of the economy and actually be quite supportive. So it’s a very different way of the market looking at this sort of fiscal spending.
Marc Filippino
Katie, one last question for you and this one’s a big one. Are we ever going to get a quiet week in markets?
Katie Martin
No. I thought you might appreciate a short, snappy answer. Sorry.
Marc Filippino
OK, well, we’ll just have to have you back on to do this all again.
Katie Martin
OK, fine. Fair enough.
Marc Filippino
That’s the FT’s Katie Martin. Thanks, Katie.
Katie Martin
Pleasure.
Marc Filippino
The European Central Bank cut interest rates again. They’re down a quarter point to 2.5 per cent. It is the sixth time the bank has cut rates since June. Now the ECB did signal that it probably won’t keep up that pace. From here on out, the central bank is likely to slow down reductions, saying that monetary policy isn’t so restrictive any more. Although the ECB once again scaled back its economic growth forecast for 2025, while saying it’s also expecting slightly higher inflation for the year. So long story short, it’s complicated.
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Leaders from the European Union gave the green light yesterday to increase new defence spending. They also doubled down on their support for Ukraine. This all happened at an emergency summit in Brussels yesterday. Here to walk me through the developments is my colleague, Henry Foy. Hey, Henry.
Henry Foy
Hey, Mark.
Marc Filippino
So let’s take this step by step, Henry. Starting with the developments on defence. What sort of initiatives is the EU looking at?
Henry Foy
So this week, the European Commission, which is the civil service of the EU, if you like, came out with a list of ideas they said would help European countries increase their defence spending. Two are really eye-catching. The first is a creation of a new loan instrument that would essentially loan out €150bn to countries to spend on defence that would be loaned against the EU’s common budget. It’s quite a big step for the EU to be sort of funding weapons production with the EU budget money. And the second step is to essentially say, OK, we have rules governing how much you’re allowed to take on as deficits each year, and how much your debts are allowed to be. We’re going to scrap those rules when it comes to defence spending. And for the next four years. You can spend as much as you like on defence, and we essentially won’t calculate that when we come to assess whether or not your debts and your deficits are fair.
Marc Filippino
Yeah. You kind of spoke to this already, but how big of a deal are those two initiatives? I mean, is this a sea change for Europe?
Henry Foy
It’s a sea change in a number of ways. So on the debt and deficit rules, the EU has a number of countries who are known as the frugals. They like countries to be more fiscally constrained. These are the Germans, the Dutch, the Danes, the Finns. So for them to say, do you know what, we should scrap these rules for defence, that is quite a big deal. And Germany has made a real, real shift this week in saying we’re going to spend loads more on defence. And also we don’t mind if our EU allies, who we’ve been pretty strict with in recent years on their deficits, break those rules in order to spend more on defence. And then on the loan side. Yeah, it’s pretty extraordinary to be in a world where the EU is saying, look, our budget, which has a very strict rule that says the EU budget cannot fund weapons to say, OK, we’re going to borrow money against this budget in the market, loan it out to our member states. It really does go to the heart of how big a change we’re seeing in the EU when it comes to defence right now.
Marc Filippino
Now, when it comes to supporting Ukraine, what did leaders at the summit have to say about that?
Henry Foy
So Volodymyr Zelenskyy, the Ukrainian president, came and joined the leaders for lunch and then they had a debate on what they should say in a joint statement. Viktor Orbán, Hungary’s pro-Russian prime minister, had said he would not agree any language supporting Ukraine in response to US President Donald Trump’s shift towards that conflict. So the other 26 said, fine, we don’t care that you’re going to veto this. We’re going to issue a statement by ourselves as 26, it’s important for us to come out and show that we are with Zelenskyy. We support him even as the American relationship with Ukraine gets more and more strained.
Marc Filippino
Henry, it’s been a week now since the EU got this wake-up call from Zelenskyy’s tense meeting at the White House with Donald Trump. Do you think the bloc is adequately heating it?
Henry Foy
I think they definitely understand the gravity of the situation. I think they completely realise that they are dealing with an America that is totally different from anything they’ve seen for decades. I think what we’ve seen this week indeed shows that many, many European capitals are realising this is a once in a generation moment, that things have really changed. But I think it remains to be seen whether or not they go the whole way in addressing what is really quite a seismic shift in transatlantic relations.
Marc Filippino
What is the whole way? What would you consider the whole way?
Henry Foy
Talking to officials at the summit yesterday? What we were told is that even this €150bn loan facility, that’s between 5 to 10 per cent of what the EU needs to spend. In addition, on defence, they also, of course, may well need to spend a huge amount of money on the reconstruction of Ukraine or the defence of Ukraine without US support. So enormous amounts of money we’re talking about here, Mark. And I think that is the sea change that Europeans have to realise. They can no longer rely on America. And so this is all on them. So I think it’s going to take a lot more of these meetings, a lot more of these moments where European leaders realise they’re going to have to change the way they’ve looked at their own safety.
Marc Filippino
Henry Foy is the FT’s Brussels bureau chief. Thanks, Henry.
Henry Foy
Thanks so much.
Marc Filippino
You can read more on all of these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back next week for the latest business news. The FT News Briefing is produced by Sonja Hutson, Fiona Symon, Lulu Smyth, Ethan Plotkin, Kasia Broussalian and me, Marc Filippino. Our engineer is Joseph Salcedo. We had help this week from Katya Kumkova, Michael Lello, Peter Barber, and Gavin Kallman. Our executive producer is Topher Forhecz. Cheryl Brumley is the FT’s global head of audio, and our theme song is by Metaphor Music.
