Wall Street must speak up as Trump continues his attacks on Federal Reserve boss, says ALEX BRUMMER
The downgrade to British and global growth in the International Monetary Fund's World Economic Outlook report will come as no surprise.
Donald Trump's random 'Liberation Day' tariffs imposed on April 2, then subsequently watered down, shattered confidence in the world trading system.
It has plundered equity markets and placed nations, global companies and consumers on panic stations.
Britain may still grow this year, if the IMF is right, but output will be weaker than expected, reducing Labour's bombast about growth to rubble.
As worrying for the City and financial markets is the Fund's Global Financial Stability report. In the past it frequently has been laced with dire warnings.
But the latest assessment from the Fund's capital markets guru Tobias Adrian is, by IMF standards, almost apocalyptic.
All financial stability reports tend to be defensive in nature. The guardians of financial safety never want to be caught short again as they were before the Great Financial Crisis (GFC) in 2008.
If share investors would like to think the worst is over after the tumult this month, they should think again.
The IMF argues that 'valuations remain high in some key equity areas'. The Magnificent Seven tech giants, which have garnered such big support in recent times, are a case in point.
Apple's supply chain, so deeply dependent on China, has been exposed as fragile. It took a targeted personal intervention by the group's garlanded boss Tim Cook with the White House to get a temporary tariff derogation on laptops and phones.
Tesla faces boycotts across the world in response to Elon Musk's ravings.
Both Google-owner Alphabet and Facebook-controller Meta are facing caustic anti-trust challenges.
If anyone thought finance had been shielded from another GFC by the repairs made to bank capital, think again. Much risk now sits outside the most regulated institutions.
The collapse of Archegos Capital Management in 2023 could be the canary in the mine.
The IMF notes that the highly leveraged hedge fund and asset management sectors have grown so rapidly that they present a new 'nexus' of risk. Deleveraging could cause a spiral that will 'exacerbate' market turmoil.
Just to remind people, the UK is on the cusp of allowing the sale of the Royal Mail to Czech billionaire Daniel Kretinsky in a deal which piles on an extra £3billion of debt to the £2billion on the balance sheet. That is the height of folly.
An implosion among non-banks, such as hedge funds and private equity, could also ignite a crisis in the sovereign debt markets.
The Fund is particularly concerned about emerging markets. But the US itself and Britain are not immune.
The unwinding of popular, complex trades in US Treasuries could easily lead to selling pressure in American money markets as it did in the UK gilts market in the autumn of 2022.
Then the Bank of England had to step in to prevent what was described at the time as a cascade of insolvencies.
The exposure of US banks to under-regulated intermediaries such as hedge funds has surged from 6 per cent in 2010 to 16 per cent now.
That represents 120 per cent of regulated capital. Remember how easily Credit Suisse was undone in March 2023.
Despite the risks, the big beasts of Wall Street, such as Jamie Dimon of JP Morgan, have been oddly silent as President Trump has upped the ante in his attacks on Federal Reserve chairman Jay Powell, disgracefully describing him as 'a loser'.
Where is the leadership when Wall Street and the world needs it most?
Pepsi flattened
When it comes to the fizzy drink wars, Coca-Cola has outpaced Pepsi, which has sought to defend itself by weighing into the snack markets.
Pepsi, which dropped to third place behind Dr Pepper in the vast American market, has a new problem.
It moved much of its production of the secret concentrate ingredients – which it sends to bottlers who add the gas, water and packaging – to Ireland.
Pepsi was seduced by the Emerald Isle by 12.5 per cent corporation tax (15 per cent since October 2024).
Coke stuck with Atlanta. Now Pepsi faces tariff barriers around the world rusting away at margins. It has a nasty case of the yipes.
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He's ordering his favourite meal, cod and chips, and visits the takeaway once a fortnight. 'I usually get a small portion, but sometimes I get a large if I'm feeling hungry - I don't let the missus know though. 'I'm a truck driver so I go to fish and chips around the country, and this is the best one. 'The chips are excellent, and the batter on the fish isn't soggy and doesn't taste of old oil, which is what you get sometimes at other places. 'The prices are decent, and the portions are a really good size.' A regular portion of fish and chips costs £9.90 at Yarm Road Fish and Chips, 48p less than the national average of £10.38, according to the Office for National Statistics. The shop is able to keep prices affordable for customers because portion sizes are closely monitored and fish is cooked to order, which helps to minimise food waste. 'We're not shoving in chips and we weigh portions of fish so we can make sure our margins are right,' Will says. However, it has had to hike prices of all of its menu items by around 10% since 2020, when the cost of ingredients, energy bills, and staff wages all began to rocket. Despite the cost pressures, Yarm Road Fish and Chips is thriving, but other shops have been less lucky. Some 1,500 shops have had to close their doors over the past 15 years according to NFFF. Regular customer Scott Henderson, 56, who is a gas engineer from Blaydon, has come in to pick up his regular order of four cod bites, a side of curry sauce, and a fizzy drink for £6.50 at least once a week. 'It's good value and the staff are great, I know all their names and which football teams they support because I've been coming here for six years,' he said. 'The chips are chunky and cooked perfectly because they're crispy on the outside and fluffy on the middle, and the fish is always fresh. "The curry sauce you get from other places can be a bit like green water, but it has a bit of texture and spice here.' Donna Hodgson, 63, works at a nearby sheltered housing scheme and is here to pick up 12 portions of fish and chips for hungry residents. 'The fish is hot, light and fresh, and the batter is gorgeous,' she said. 'The staff are also lovely." Customers go wild for the free batter scraps that are dished out with every portion. 'Our customers either get a bag of them or we sprinkle it over the fish and chips. It's a real regional tradition, if you don't give out scraps you wouldn't do very well." Will says the secret behind the shop's great tasting cod is that the fish is frozen on the boat to keep it fresh and preserve flavour. Once the fish arrives at the shop, it's cooked to order and fried in beef dripping. To get the best flavour out of your meal, Will advises adding vinegar before the salt. I followed his advice, and it made a real difference to my meal. The vinegar is less overpowering this way, and doesn't mask the salty flavour you want from a fish and chips tea. My only regret is that I haven't been using his trick sooner - and I'll be sure to do it every time now.
