Good morning from the Financial Times. Today is Monday, February 10th, and this is your FT News Briefing. China has hit the U.S. with new tariffs. And Wall Street dealmakers are starting 2025 off on the wrong foot. Plus, more companies are turning to Bitcoin to boost their share prices. I'm Kasia Brasalian, and here's the news you need to start your day.
Beijing is retaliating against Washington when it comes to trade. China's embassy in D.C. said on Sunday that tariffs had gone into effect and will target about $14 billion worth of goods. U.S. energy exports and farm equipment will face levies between 10 and 15%. The move is China's response to President Donald Trump's tariffs that kicked in last week. Now, markets had been hoping for a deal like the ones that Trump hashed out with the leaders of Canada and Mexico. But it didn't happen.
Trump has said he's in no rush to negotiate with Chinese President Xi Jinping, and he warned that more measures might be coming. Wall Street was hoping that 2025 was going to be the year for mergers and acquisitions. Dealmaking had slowed under President Joe Biden, and Donald Trump came into office promising a more business-friendly approach. But so far, M&A has had a rocky start to the year.
Here to explain why is James Fontanella-Kahn. He's the FT's U.S. finance editor. Hey, James. Hi there. So first of all, just how bad is it for M&A right now? The decline in M&A was... pretty deep in January, especially compared to the last 10 years. On average, we would have around 1,300 deals at the start of the year. Some years it's a bit higher, some years a little lower, but generally above 1,000.
The first month of 2025, deal-making is under 900 deals. And what's interesting here is that by looking at the actual number of transactions, we get a better sense of... How many people are willing to get to the table and get a deal done? And the number is down 30% from last year, and it's the worst start in a decade. All right, but is it really fair to blame President Trump here? I mean, he's only been in office for a few weeks. Well, actually, it is. The minute he won the election...
Every banker on Wall Street, every corporate lawyer on Wall Street was telling us it's going to be wild. Everybody wanted to do a deal and couldn't do a deal. under Joe Biden, kind of started reworking on deals that had been put on pause, and they were ready to strike. But soon after Trump came into actual power, there was a wave of executive orders. And that kind of really spooked a lot of chief executives.
Well, let's unpack the hesitancy in dealmaking. I mean, which sectors are being hit the hardest? So consumer has been hit really hard. Healthcare has been hit really hard and even energy. And it's funny because if you look at the energy numbers on dollar terms, they're still kind of over.
last year, but that's because one single deal, a nearly $30 billion transaction involving Constellation and Calpine has skewed the entire data. But if you look again at the number... of transactions that's down by about 25 percent yeah that's a big slump so what would give wall street more confidence right now Wall Street wants certainty, volatility, turmoil. That's really what kind of spooks anybody trying to get a deal done. And at the moment, we...
don't really know, is inflation going to be up? Is inflation going to be down? Are interest rates going to go up? Are interest rates going to go down? Are tariffs going to happen or are tariffs not going to happen? They just want to know. Please take a decision. Stop kind of whiplashing. And that is really what is concerning them. All right. So markets are clearly looking for a little bit more stability. And do you think that this M&A decline will make Trump a little bit more cautious?
It's very hard to sway or predict what Trump will do. What we do know is that he cares immensely about the stock market going up. And this kind of uncertainty does not help the stock market. A lot of dealmakers who are sympathetic to the Trumpian cause, who see him as overall a pro-growth president.
told me that we need to give him a bit more time there's a lot of uncertainty at this stage but things will settle once we get over the raft of changes and then things might get better so generally there is Still quite a lot of optimism out there. But as one of my kind of best sources put it to me, he said like, at the beginning, it was all about animal spirits. And now it's more about cautious optimism. James Fontanella-Kahn is the FT's U.S. Finance Editor. Thanks, James. Thank you.
French President Emmanuel Macron is promising to invest over a hundred billion euros into artificial intelligence in France. He made the announcement ahead of the AI Action Summit, which kicks off today in Paris. And it's meant to signal that the country is serious about being a big player in this cutting edge technology. Europe has been lagging behind the U.S. and China in development of AI because of a lack of funding and unclear regulations.
But Macron is hoping he can turn things around. One investment in France will come from the United Arab Emirates. Last week, it said it was going to put in as much as 50 billion euros in a new campus for data centers. The software service provider Strategy, formerly known as MicroStrategy, is inspiring a lot of copycats these days for what it's doing with Bitcoin, specifically hoarding it.
The company started an aggressive crypto buying spree back in 2020 to increase its share price. And the bet seems to have paid off. Now, strategy is inspiring a number of other companies to do the same. Niku Asgari is here to tell me whether there might be a catch. Hey, Niku. Hi. So what's the backstory to strategy and its interest in Bitcoin? I mean, why did the company start gobbling up all this cryptocurrency?
So Michael Saylor, the co-founder of the company, started this because he really believes in Bitcoin as an asset, as the future of money. He started buying Bitcoin slowly and now much, much more aggressively in a mixture of ways. So they raise equity from the stock market, from shareholders, and then use that money to buy Bitcoin.
And they've also started raising debt and various different types of debt and then also use that money to buy Bitcoin. They hold now just over 2% of all the Bitcoin in the world and they're the biggest corporate holder of Bitcoin. And as the value of the Bitcoin goes up... so does the value of strategy shares. All right, so what's the verdict? How has strategy made out under this approach? It's worked out incredibly well for them. I mean...
Strategy as a business, they reported their full year 2024 earnings last week, and they made about $464 million in revenue from the core of the business, the software stuff. But if you look at the share price, the valuation of the company is £84. billion dollars which is crazy that's such a huge disparity and that is really all down to the fact that investors are so happy and investing because of the bitcoin that it holds not because of the software stuff
And I mentioned that, you know, other companies are starting to copy strategies approach here. What kind of companies are looking into this and why? Yeah, there's a whole handful. So on one side, you've got Bitcoin miners, crypto specific companies that, you know, obviously believe in Bitcoin. And as part of their balance sheet, they are adding and holding.
Bitcoin. That's one thing. But then on the other side, and what I think is more interesting, is a bunch of companies that have nothing to do with Bitcoin. For example, one that I spoke to is KULR Technology. It's a small cap US company and they help. people like NASA and the US Navy manage their thermal energy equipment. They've started also doing this. I mean, there's a bunch of pharmaceutical companies, again, completely unrelated to crypto. They're fundamental businesses.
But in order to help scare off short sellers, maybe, who are in the stock, they've also started buying this because they see that holding Bitcoin has so far helped boost the share prices. But I have to imagine that this being Bitcoin, there have to be some concerns here. So what's the risk to this strategy? Yeah, absolutely. I mean, the huge overarching risk is if or when, depending on who you speak to, the price of Bitcoin collapses.
then the value of the company also collapses because really the value of the company is just tied to how much Bitcoin they hold. So think about strategy. I mean, no one really thinks about it as a software business anymore or cares about that side of the business. It's completely evolved into...
becoming just a huge pile of Bitcoin and that is where shareholders think that the value is. Well, what kind of precedent does crypto hoarding set for companies? I mean, do you think we're going to see more of it? Yeah, absolutely. I mean, I spoke to an investor who is specifically looking to invest in companies doing this, and he said he was knocking on doors of companies that he thought were suitable and, you know, small enough and their share price was the right sort of target.
to encourage them to do this. And I think, obviously, we've got the overarching, very crypto-friendly US under President Donald Trump at the moment, which just sort of boosts demand for crypto and boosts demand for Bitcoin. So I think don't be surprised. If you see more and more companies getting into this. Niku Asghari is the FT's digital markets correspondent. Thanks, Niku. Thank you.
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 tomorrow for the latest business news. AI, show me the best performing flexible savers. OK, that's a list of famously agile goalkeepers. So let's try something different. AI, can I see the latest share prices?
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