Trump fears spark ‘rethink’ of US exposure among big investors

Good morning and welcome back to FirstFT. Today we’re covering:

• Big investors’ shift from the US

• Trump’s probe into Biden’s aides

• The collapse UK start-up Builder.ai

• Big Tobacco’s new nicotine hit

Big institutional investors are shifting away from American markets as they “rethink” their US exposure.

Why is this happening? President Donald Trump’s erratic trade policy has shaken global markets in recent months, sparking a sharp sell-off in the US dollar and leaving Wall Street stocks lagging far behind European rivals this year. Trump’s “big beautiful bill”, which the Congressional Budget Office yesterday forecast would add $2.4tn to Washington’s debt over the next decade, is escalating fears about the US debt mountain.

Where are investors looking? Europe. Yesterday Apollo Global Management became the latest US investor to outline ambitious investment plans for Europe. It plans to invest $100bn in Germany. Investment groups such as Blackstone and New York-based Neuberger Berman have also cited the region’s relative stability, while Caisse de dépôt et placement du Québec, Canada’s second-largest pension fund, has said it would cut US exposure and increase investment in the UK, France and Germany.

Here’s more on how Trump has shaken confidence in American assets and what else we’re keeping tabs on today:

• White House: Donald Trump welcomes the new German Chancellor Friedrich Merz to the Oval Office for their first face-to-face meeting. The German chancellor’s visit comes as the US-EU rift deepens.

• Interest rates: The European Central Bank is expected to cut borrowing costs after Eurozone inflation fell below its 2 per cent target. The decision comes a day after Bulgaria was given the green light to join the euro.

• Lex Greensill: The Australian financier is set to make his first public courtroom appearance since his eponymous lending company collapsed, in a London court case brought by a Credit Suisse fund against SoftBank.

• Companies: Long queues have formed outside stores around the world for the launch of Nintendo’s Switch 2 games console. Companies reporting results today include Broadcom, Brown-Forman, Lululemon Athletica and Victoria’s Secret.

Five more top stories

1. Donald Trump has launched a probe into aides of Joe Biden for allegedly concealing his mental decline. The investigation follows the release of a book last month by journalists Jake Tapper and Alex Thompson that contains damaging revelations about Biden’s declining mental and physical acuity. Read more on Trump’s latest effort to seek retribution against political foes.

2. Vladimir Putin plans to retaliate for Ukraine’s drone attack on Russia’s bomber fleet, Trump said after an hour-long phone call with his Russian counterpart. The US president called it “a good conversation” in social media posts, but added that it was “not a conversation that will lead to immediate Peace”.

• More on Russia: Moldova’s prime minister has warned that Moscow wants to install a pro-Kremlin government and deploy 10,000 troops in a separatist region on Ukraine’s border.

3. Trump’s trade war is an even tougher challenge for emerging market policymakers than Covid-19 was, a top IMF official Gita Gopinath warned. The fund’s first deputy managing director said the unpredictable impact of tariffs would make it particularly difficult for central bankers to support their economies. Read her full interview with the FT.

4. Wise, the foreign exchange fintech, has become the latest company to switch its primary stock market listing from London to New York. The company was founded by Estonians Kristo Käärmann and Taavet Hinrikus in London in 2010 and launched on the London stock market with great fanfare in 2021, with a valuation of close to £9bn. Here’s more on its decision to switch listing.

• More financial industry news: Citigroup has laid off 3,500 technology staff in mainland China as part of a push to cut costs and streamline its global operations.

5. Donald Trump’s administration has said Columbia University no longer meets the standard required for accreditation due to its violation of federal anti-discrimination laws, sharply escalating its pressure on the institution. The action threatens Columbia’s access to tens of millions of dollars in tuition fees from government-backed student grants and loans to support students.

News in-depth

When Builder.ai raised more than half a billion dollars from some of the world’s top technology investors, including Microsoft and Qatar’s sovereign wealth fund, it had a simple pitch: it could use artificial intelligence to make building apps “as easy as ordering pizza”. But this week, the London start-up formally filed for bankruptcy in the US following an internal investigation which found evidence of potentially bogus sales. The FT spoke to former employees and reviewed documents to go inside the collapse of the UK tech unicorn.

We’re also reading . . . 

• US debt: An activist Treasury issuance strategy under Joe Biden has continued under Trump and is spreading internationally, writes economist Nouriel Roubini.

• Joe Biden: The former US president has become a scapegoat for a long-standing problem in his party, writes Janan Ganesh: a tolerance of obvious election losers.

• Akio Toyoda: More than 20 people who know the scion of Toyota’s founding family speak to FT Magazine on his rise — and the strains in his reign over a vast empire.

Chart of the day

In just a few years, nicotine pouches have taken off everywhere from Premier League locker rooms to Wall Street trading floors, gaining something of an anti-establishment reputation that has made them a cause célèbre for the Maga movement. The growth in sales of products such as Zyn and Velo is astonishing, but the health implications are little understood. Regulators around the world are cautious, but cigarette companies have seized on the trend. Can pouches save Big Tobacco?

Take a break from the news

A 120-year-old Japanese stationery company has launched a self-declared “micromotivation” device — a gizmo that attaches to your pen or pencil to measure how much handwriting you have done (and pit your progress against everyone else). Leo Lewis explains how it works, and what it says about our obsession with self-quantification.