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Equinor.co.uk. Good morning from the Financial Times. Today is Friday, February 7th. This is your FT News Briefing. Amazon is scared of a strong U.S. dollar. MAFT's Katie Martin tells us how investors might plan for a trade war. It's this constant experience of feeling like you're nailing jelly to the wall. Plus, fighting continues in the Congo over critical minerals. I'm Mark Filipino, and here's the news you need to start your day.
Amazon saw its share price drop as much as 7% in after hours trading yesterday. The e-commerce giant posted a weaker than expected outlook in its quarterly earnings. Amazon said that net sales will top out at $155 billion this quarter. That's well below the expected $158 billion. The company anticipates a, quote, unusually large, unfavorable impact from a strong dollar. Amazon Web Services also posted lower than expected sales last quarter.
This marks the latest in what has been a mixed tech earnings season. In case you're wondering, NVIDIA reports its fourth quarter earnings on February 26th. This week, U.S. President Donald Trump promised a tariff spree on goods coming from Canada, Mexico, and China. Only the last ones against China actually stuck, but this was not...
Exactly, shall we say, the most stable trading environment. So how should the markets operate in this climate? I've got the FT's Markets columnist Katie Martin to help me answer that. Hi, Katie. Hey, Mark. How you doing? I'm good. I'm very relieved and grateful because the pause on tariffs makes it a lot easier to get maple syrup and tequila. And what is life without those things, right?
I mean, it's a worse life. It's a much worse life. Absolutely. So take us through it. How did markets respond to the tariff back and forth? I mean, I think... You know, the market knew that he was going to ratchet up tariffs against China. But the Canada and Mexico thing, I think a lot of investors have been thinking.
Really? Like, these are friends and allies of yours. Are you really going to tariff them? And a lot of the commentary over the weekend on social media was, wow, markets are really not going to like this. And actually what happened when markets opened on Monday was... You know, there was a reaction. So stocks fell and the dollar rose a bit, which you would expect as a result of tariffs that you might assume are going to be inflationary. But the reaction was not that violent.
How much of a sell-off would we have had to see in order for maybe the president to take the market seriously that they were really upset about these tariffs? Because the S&P 500 fell.
1.4%, I think it was. Something like that at the open. So one of the big kind of catchphrases, if you like, that has been kicking around since Trump got elected is, well, he won't do anything too destabilizing with economic policy because he likes to see... stock markets going up and so the stock market acts as what you call like a vigilante you long talked about bond vigilantes and now there's this new phrase kicking around stocks vigilantes so
Trump is very focused on stock index levels, and the idea is that if markets really recoil in horror at something that he says or does, then that might give him reason to backtrack. Now, 1.4% on the S&P 500 is just not enough to do that. So my strong sense is that... If stocks had opened like 5% lower, then I think that would be enough to make him think, oh, I've overstepped the market and maybe I should backtrack. So then, Katie, why weren't investors bugging out more about the chaos?
So there was the idea among investors that either... he's bluffing, he's not going to do this at all. Or if he does bring in the tariffs, they won't last long because you're going to find, for example, auto manufacturers in the US start to suffer from tariffs with Canada and Mexico pretty quickly.
And that's obviously not the outcome that he's looking for. It's very difficult for investors to know, is this going to stick? Is he serious about this? But this example tells you that the market is right to call his bluff. Investors are... kind of in the state of paralysis, right? So how do markets brace themselves for more tariff uncertainty? I mean, how do you navigate this?
I mean, it's like, you know, how do you get an elephant into a car, right? It's with great difficulty. With its trunk, right? It threw the trunk. You're here all week. you know this is really hard so it's this constant experience of feeling like you're nailing jelly to the wall like do I move around my portfolio based on this or do I not and if I do
Am I going to end up losing more money as a result of having done it when he's going to change his mind like 24 hours later? It's really, really hard for investors to deal with. The safest thing you can do is spread your bets, whether that's across different asset classes, whether that's like bonds or equities or whatever it is, or different geographies. And one thing that I would say is that, you know, for all the talk that's out there about America.
exceptionalism and about how investing in America is the only way forward. Actually, European markets have been doing great. Even UK. So there is a kind of sense that, you know, investors are just trying to avoid putting all their eggs in one basket, which I think makes most sense. Katie Martin is the FT's markets columnist. Great talking to you, Katie. Angie. The Bank of England lowered its interest rates by a quarter point yesterday. It's now at four and a half percent.
All nine members of the Monetary Policy Committee voted for the cut, but a couple wanted to go further. and knock a jumbo-sized half point off rates. That's because they're worried about how stagnant the U.S. economy is looking. In fact, the BOE also revised its economic growth forecast on Thursday. The central bank now predicts that it won't even hit 1% this year. But at least the FTSE 100 was happy. The index hit a record intraday high on the prospect of rate cuts. Two-year gilts also rallied.
A long-simmering conflict is heating up in the Democratic Republic of Congo. In late January, a Rwandan-backed rebel group captured a strategic town in the eastern part of the DRC. Nearly a million Congolese have been displaced because of the recent fighting, while thousands have likely been killed.
Dino Matani is a former FT journalist and a Congo expert. Hey, Dino. Hi, good afternoon. So give me the lay of the land on this conflict. Who exactly are these rebel fighters and what do they want in Eastern DRC? Eastern Congo is home to dozens of rebel groups and predatory militia, but the most powerful one is the M23. This group is led by Congolese ethnic Tutsi commanders.
They say that they have been fighting to safeguard their ethnic community in Eastern Congo, which has for decades been subject to political exclusion, political persecution. And of course, a big part of the... International focus has been the role of Rwanda's army in this conflict. The Rwandan regime is led by Paul Kagame, himself a Tutsi, and so there is that commonality and shared interest between the rebels and Rwanda.
Yeah, what exactly has been Rwanda's role in backing this M23 rebel group? So Congo's tiny neighbor, Rwanda, which is about... 90 times smaller than the giant central african country has a formidable fighting uh force un investigators say that thousands of rwandan troops have been part of This M23 resurgence, the Rwandan government publicly denies it. But also this part of the country is an extremely mineral rich and resource rich.
part of the world. It's home to vast quantities of minerals on Congolese soil, which many of Rwanda's critics point to as the primary reason why Rwanda is involved now. So Dino, you mentioned these minerals. What are they used for? Why are they so sought after? So Congo is fabulously rich in terms of natural resources, and the key ones on the ground are tantalum, which is used, for example, in smartphones to improve the audio quality. There are also huge volumes of tungsten, which acts.
as a kind of heat sink and makes the phones vibrate, and tin, which acts as a solder on the circuit boards. There's also gold in Eastern Congo, vast quantities of gold. So these are important minerals which have become increasingly valuable in tight international commodity markets. Do we know whether Rwanda has been able to get access to these resources that we're talking about?
Yeah, over the last couple of years, there's been a constant struggle between Congolese forces and the M23 to control some important mining deposits. And for decades, these minerals have been... mined by hand by artisanal miners on the ground and during the cycles of war and control over territory these minerals have come under the control of armed groups and have flowed out via Rwanda. There's even a video clip of President Kagame talking last year where he more or less admits that
Rwanda is the major thoroughfare. Congolese mining minister Nicholas Kasadi had said that The country was losing probably about a billion dollars a year in minerals that were being illegally smuggled into Rwanda. And that figure, if true, is no doubt increasing now that the M23 control this much territory. Do you know to what extent... could the conflict in the DRC destabilize the region more broadly? Is that a concern?
Yeah, it's a very deep concern. Congo is at the heart of African stability and is recognized as critical to overall stability on the continent. I mean, in the 90s... During its civil war, it drew in several of its neighbors from east to west. And, you know, anti-Western sentiment is very strong at the moment. One of the most popular countries in the minds of Congolese. is Russia. And if you've seen what's been going on in other parts of Africa where...
instability has provoked popular discontent, which has then led to coups and then the advance of Russian mercenaries and militarized interest into the Congo. This is more the type of risk that we are probably looking at. So the West has a real... interest in making sure that this conflict doesn't spin out of control. Dino Matani is a researcher, writer, and consultant focused on geopolitics in Africa. Thanks, Dino. Thank you.
You can read more on all 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 Sonya Hudson, Fiona Simon, Lulu Smith.
Ethan Plotkin, Kasha Brusalian, and me, Mark Filippino. Our engineer is Joseph Salcedo. We had help this week from Neve Rowe, Sam Giovinco, Breen Turner, David DaSilva, Michael Lello, Peter Barber, and Gavin Kallman. Our executive producer is Topher. as Cheryl Brumley is the FT's global head of audio, and our theme song is by Metaphor Music.