Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

UK foreign secretary David Lammy has been accused of a diplomatic blunder after he suggested that Azerbaijan had “liberated” the disputed Caucasus territory of Nagorno-Karabakh.

The remark was made by Lammy on Monday in a new blog on the Substack website, where he plans to write more long-form pieces about world affairs and UK foreign policy.

“Azerbaijan has been able to liberate territory it lost in the early 1990s,” he said in the post. The sentence had not been removed or altered by Friday, despite sparking a wave of criticism.

The territory he was apparently referring to was Nagorno-Karabakh, an interpretation that has not been disputed by UK officials.

In September 2023, Azerbaijan launched a short but bloody military operation to seize the tiny mountainous enclave of Nagorno-Karabakh.

In some 24 hours of fighting, the Baku government restored its control over the territory, which had been held by Armenia or local Armenian leaders since the collapse of the Soviet Union, when a devastating war between the two historic enemies left it under Armenian control.

Though Baku seized territory that had been internationally recognised as part of Azerbaijan, the military action forced the entire Armenian population of the enclave — more than 100,000 people — to flee within a few days. Refugees spent days making a gruelling journey down the mountainside from Karabakh, leaving their homes and lives behind.

Many Armenians, who traditionally consider Karabakh a national and spiritual heartland, known to them as Artsakh, accused Baku of ethnically cleansing the region, something Lammy’s comment — and use of the word “liberate” to describe Baku’s military action — failed to reflect.

Britain has urged Azerbaijan and Armenia to engage in negotiations to end their long-standing conflict.

Conservative MP Alicia Kearns, former chair of the House of Commons foreign affairs committee, said on X that Lammy’s comments on a “vanity blog” appeared to be “contradicting long-standing UK policy” in a way that was “totally inappropriate and throws into question the foreign secretary’s judgment”.

The Foreign Office was forced to clarify on Friday that Lammy’s comment did not mark a change in the UK government’s stance on Nagorno-Karabakh.

Nonetheless, the Armenian government is formally seeking further clarification from the UK in the wake of Lammy’s post, an Armenian official told the FT.

US congressman Brad Sherman also weighed in on X, saying the remarks were “a stain on UK foreign policy”, as he accused the UK foreign secretary of having “endorsed ethnic cleansing”.

Laurence Broers, an associate fellow at the international affairs think-tank Chatham House, said: “It’s a real gaffe by the foreign secretary.”

Accusing Lammy of the “simplification and conflation” of developments in various post-Soviet states, Broers said the foreign secretary was “misreading the situation” regarding Azerbaijan, and “reinforcing the talking points of an autocratic regime”.

The EU parliament accused Baku of undertaking ethnic cleansing in the disputed territory last year. Azerbaijan has denied the claim.

Elin Suleymanov, Azeri ambassador to the UK, said: “I don’t understand why there’s so much response to this blog by the foreign secretary, because what [Lammy] said is absolutely true . . . It reflects the longstanding position of the UK government, which has always been supportive of the territorial integrity of Azerbaijan, and Armenia.

“For 30 years the territory of Azerbaijan was occupied by Armenian forces, and in 2020, Azerbaijan did liberate its territory.”

After the ceasefire in the region last September, Lammy urged on X that “Nagorno-Karabakh Armenians must be guaranteed safety and dignity”.

The title of the new Substack account is Lammy’s name rather than his ministerial title, but the blog was written by the foreign secretary in an official — rather than personal — capacity.

However, the Foreign Office refused to confirm if it had been reviewed internally within the department before it was published.

A Foreign, Commonwealth and Development Office spokesperson said: “There has been no change in UK policy. The foreign secretary supports the territorial integrity of both Armenia and Azerbaijan and is encouraged by both sides engaging in meaningful dialogue. The UK will continue to support their commitment to lasting peace in the region.”

Stay informed with free updates

Simply sign up to the US interest rates myFT Digest — delivered directly to your inbox.

A top Federal Reserve official has said he would support more aggressive interest rate cuts from the US central bank if the economic data deteriorates further, as he cautioned inflation is falling much faster than expected.

“If the data starts coming in soft and continues to come in soft, I would be much more willing to be aggressive on rate cuts,” Christopher Waller, one of the Fed’s governors, said in an interview with CNBC on Friday.

He added that if the data come in “fine” then he could see scope for the Fed to downshift to a quarter-point cut at the next meeting in November, a day after the November 5 US presidential election.

The comments from Waller, a leading voice on the Federal Open Market Committee, came two days after the central bank kicked off its first easing cycle in more than four years with a larger than usual half-point interest rate cut, which took the Fed’s benchmark rate to 4.75 per cent to 5 per cent.

His interventions underscore the Fed’s commitment to staving off a recession in the aftermath of the worst inflation shock in decades — a huge feat that many thought impossible at the onset of the crisis.

Fed chair Jay Powell on Wednesday said the larger than usual move was aimed at maintaining the strength of the US economy — not a response to the kind of crisis that necessitated bumper cuts in the past.

Waller on Friday echoed that sentiment, saying that in a “solid” labour market, the Fed was not “behind” in terms of offering relief to borrowers.

Waller was among officials who voted for the half-point rate cut, though his colleague Michelle Bowman dissented — the first time since 2005 that a governor has opposed a Fed rate decision.

Bowman on Friday explained her preference for a quarter-point cut, saying a “measured” pace would “avoid unnecessarily stoking demand”.

“I see the risk that the committee’s larger policy action could be interpreted as a premature declaration of victory on our price stability mandate,” she said, adding inflation remains above the Fed’s 2 per cent target and the economy is “strong”.

Waller said that recent data suggested inflation was “softening much faster than I thought it was going to” put him “over the edge to say, ‘look, I think 50 [basis points] is the right thing to do’.”

Waller had said before the quiet period ahead of this week’s Fed meeting that he was “open-minded” about the possibility of a larger cut, even as he suggested it hinged on there being further economic weakness.

Powell on Wednesday framed the cut as a “recalibration” of the Fed’s monetary policy settings given the downdraft in inflation and softening of the labour market.

Most officials project the central bank will make another half a percentage point worth of cuts over the two remaining meetings of the year.

Powell on Wednesday stressed the half-point cut should not be considered the Fed’s “new pace”, suggesting the central bank is likely to opt for a quarter-point reduction.

There is significant dispersion across officials’ estimates for rates this year and in 2025, when most officials forecast the policy rate will drop to 3.25 per cent to 3.5 per cent. Officials’ wide range of estimates suggest forthcoming meetings will like this past one will be a close call.

“We do have room to move, and that is what the committee is signalling through 2025,” Waller said.

Unlock the US Election Countdown newsletter for free

The stories that matter on money and politics in the race for the White House

Donald Trump’s chances of winning the southern battleground state of North Carolina in November’s presidential election have been threatened by explosive allegations of racist comments on a pornography website by Republican governor candidate Mark Robinson.

The furore around Robinson erupted on Thursday after CNN reported that in posts from 2008 to 2012 on pornography forum Nude Africa he called himself a “black NAZI!” and expressed support for “reinstating slavery”.

Robinson has vowed to stay in the race and in a short video posted on X he denied making the comments, blaming his Democratic opponent Josh Stein for “a story leaked by him” to the press.

The allegations about Robinson come as Trump is already under fire for being too close to the radical fringes of the Republican party.

The former president has faced calls to distance his campaign from Laura Loomer, a far-right social media influencer who has flown on his plane and accompanied him to events, and to disavow baseless claims that Haitian immigrants are abducting and eating pets in Springfield, Ohio. 

North Carolina is emerging as a must-win state for Trump. While it has voted for the Republican White House candidate in every race since 2008, Democrats are increasingly confident that the state is winnable.

Since Kamala Harris became the party’s candidate, the Democrats have been gaining ground in North Carolina, especially in more affluent college-educated suburbs. Trump is leading Harris in the state by 1.3 percentage points, according to the FT’s poll tracker. 

Robinson has been one of Trump’s closest allies and protégés in recent years. At a campaign rally in Greensboro, North Carolina in March, the former president endorsed Robinson and called him “Martin Luther King on steroids”, referring to the late civil rights activist and preacher.

“I think you’re better than Martin Luther King,” Trump said, then joked that Robinson might not consider it a compliment. 

During a campaign event in Wilmington, North Carolina in 2022, Trump said Robinson was “one of the hottest politicians in the United States of America”, and had “become a friend of mine”. Robinson was also given a speaking slot at the Republican National Convention in Wisconsin in July. 

Trump was scheduled to campaign in the state on Saturday.

Democrats have seized on the revelations. In a post on X, North Carolina governor Roy Cooper wrote that “Donald Trump and NC GOP leaders embraced Mark Robinson for years knowing who he was and what he stood for including disrespect for women and inciting violence. They reap what they sow”.

The CNN allegations included Robinson posting that “slavery is not bad. Some people need to be slaves. I wish they would bring it (slavery) back. I would certainly buy a few”, and that he liked “watching tyranny on girl porn”. 

The North Carolina Republican party said in a statement on Thursday that Robinson “has categorically denied the allegations made by CNN but that won’t stop the Left from trying to demonise him via personal attacks”.

Even prior to the CNN report, Democrats criticised Robinson as an extreme and toxic politician. 

“Mark Robinson is a very dangerous candidate for governor” Drew Kromer, chair of the Mecklenburg County Democratic party, said this week. “He will take away the status of North Carolina as one of the final places in the south where women can go to get reproductive healthcare . . . I don’t think people can fully appreciate the downstream consequences that would have on folks all over this country.”

Steve Cohen used to charter a yacht in the Mediterranean with friend and art dealer Larry Gagosian. But he never really switched off.

“We’d be in the middle of a wonderful dinner in Italy and he’d have to race back to the boat to trade,” said Gagosian, recalling how the hedge fund billionaire would have screens installed below deck to create a de facto trading floor.

“I said, Steve, I love you, and I love taking trips with you, but it’s not the most relaxing.”

However, after an investment career spanning almost half a century, Cohen, 68, announced this week he was stepping back from trading at Point72, the hedge fund he set up a decade ago, to focus on running the firm.

Point72 rose from the ashes of an insider trading scandal at its predecessor SAC Capital that cost $1.8bn to settle, with Cohen subsequently barred for two years from managing external investors’ money.

As the firm has grown rapidly over the past few years, the relative size of Cohen’s trading book has shrunk — a letter to investors this week said it was less than 1 per cent of the firm’s overall portfolio.

“He believes his strategic guidance and intervention will have a greater impact” than his individual trading on the firm’s investment performance, the letter said.

Cohen has many other interests, ranging from ownership of his beloved New York Mets and philanthropy supporting veterans and children’s health to an art collection worth more than $1bn that includes works by Pablo Picasso, Jeff Koons and Alberto Giacometti.

This week’s move underlines how Cohen is preparing Point72 to outlast him. The firm said he would be “taking a break from trading his own book”.

Born in 1956 and raised in Great Neck, New York, the third of seven siblings, Cohen credits playing poker at high school with teaching him “how to take risks”.

He began his investment career in 1978 trading options at brokerage Gruntal & Co before setting up SAC Capital in 1992, named after his initials.

The hedge fund industry was in its infancy and the early SAC was known for its cut and thrust atmosphere, juicy payouts for those who did well — and a disposable approach to talent.

Cohen was even known to fire people on the spot if they disappointed him, according to one person who used to work with him at SAC.

“Steve treated the business like a baseball team — if your shortstop is not performing then you trade him for someone else,” the person said. “There’s no personal relationship, it’s just business.”

Cohen surrounded himself with the top moneymakers but sitting close to him could be intimidating. He expected his employees to share his ferocious work ethic, quizzing them during Sunday meetings to prepare for market opening the following day.

“He is not an easy gentleman, he is not a wallflower,” said a second colleague from the SAC years. “He’s a very complicated individual but very smart, a very good trader and knows how to reinvent himself.”

Supporters of Cohen say his edge came from a seemingly instinctive ability to spot market patterns and, as the years rolled on, his experience.

“Whatever’s going on, he’s seen it all before . . . he has seen it and every iteration of it,” said the first person who worked with him.

From 1992 to 2013, SAC boasted annual returns of about 30 per cent, making it one of the world’s top performing hedge funds.

Investors clamoured for access, coughing up an annual management fee of roughly 3 per cent and up to an enormous 50 per cent performance fee, far higher than the industry standard “two and 20”.

Growing to manage more than $15bn at its peak, SAC’s returns seemed almost too good to be true. They were.

In 2013 a team of New York prosecutors led by US attorney Preet Bharara brought several charges against Cohen’s SAC Capital and affiliated firms. It alleged that insider trading at SAC was “substantial, pervasive and on a scale without known precedent in the hedge fund industry”.

They said numerous portfolio managers and research analysts obtained “material, non-public information” from “dozens” of listed companies and then traded on that inside information.

SAC incentivised portfolio managers or analysts that brought “high conviction” trading ideas to Cohen where they had an “edge” over the competition, the indictment said, with portfolio managers and analysts encouraged to pursue “industry contact networks” — but without effective controls to make sure they were not receiving inside information.

SAC Capital pleaded guilty in a $1.8bn settlement, the largest ever for insider trading. But prosecutors ultimately stopped short of charging Cohen — who did not admit personal fault — with criminal or civil insider trading charges, believing they did not have enough evidence.

For a time he appeared to retrench, managing his own money in Point72, which was set up as a family office.

By 2018 he had opened it up to external investors and after a difficult first year when the fund was flat, Point72 began, in Cohen’s customary baseball lingo, “hitting doubles” — gaining more than 10 per cent in every year except 2021.

Those who know him say that as the hedge fund industry has become more institutional and straight laced, Cohen has also mellowed with age.

But he still has his quirks. Ahead of one visit to the London office, the fridge was stocked with Dr Pepper, Skittles and Post-it notes warning “do not touch”, according to a person familiar with the situation, while the local team made sure the air conditioning was suitably cool for the boss.

Point72 employs 2,800 people, runs more than double the assets of SAC at its peak and marks one of the hedge fund industry’s greatest redemption stories.

In an unforgiving industry, Cohen is notable for his longevity, and regarded as a pioneer of the so-called multi-manager hedge fund approach, alongside Citadel’s Ken Griffin and Millennium Management’s Izzy Englander.

Like Pete Rose, the baseball player whose legacy was later soured by sports gambling, Cohen’s brush with the law means even the “best hitter ever” has a “little asterisk” next to his name, said one rival hedge fund manager who knows him.

But they added: “Stevie can still have another chapter.”

Cohen and Point72 declined to comment.

For Gagosian, his friend’s shift from player to coach may mean their holidays can resume.

“We stopped chartering boats together,” he said. “Maybe now we’ll do it again.”

The investment sector has welcomed the news that that cost disclosure requirements for investment trusts will be temporarily banned.

The announcement, by the Treasury and the Financial Conduct Authority yesterday (20 September), comes following years of investment companies calling for change.

These rules were inherited by the European Union (EU) and made it appear that investment trusts were more costly to put money into than they were.

This is because the disclosure rule requires trusts to publish the costs of financing, operating and maintaining real assets.

However, many of these costs are already published in regular company updates and reflected in the value of the share price for all investment companies.

This created a “double counting of costs”, which investment trusts have long been saying has put investors off.

Although £15bn of new money went into investment trusts in 2021 alone, it is estimated the double counting rule was seeing £7bn a year in income being lost.

The Treasury said it will lay out legislation to provide the FCA with the appropriate powers to deliver reform – the new Consumer Composite Investments (CCI) regime.

It said the new CCI regime will deliver more tailored and flexible rules to “address concerns across industry with current disclosure requirements, including for costs.”

The UK’s new retail disclosure regime is expected to be in place in the first half of 2025, subject to Parliamentary approval and following a consultation from the FCA.

The FCA intends to consult on proposed rules for the CCI regime this Autumn.

The Association of Investment Companies (AIC) chief executive Richard Stone described it as “great news”.

He said the AIC has lobbied tirelessly on the issue and praised the Labour government for “acting so swiftly”.

Stone added: “Investment companies are a great UK success story and have a vital role in bridging the gap between private assets and public markets.

“Ending misleading cost disclosures will enable us to continue delivering for investors and make a critical contribution to the economy as the government drives forward its ambitions for growth, investment and wealth creation.”

Abrdn head of closed-end funds Christian Pittard said: “We welcome this move by government and the FCA to address unfair and distortive rules that have crippled investment trusts.

“With the FCA confirming that it will not take supervisory or enforcement action if a fund chooses not to follow the cost disclosure requirements, all eyes will now be on data publishers at a time when what the industry and investors really need is consistency.”

Pittard also labelled the UK investment trust sector “one of the jewels in the crown of the financial services industry.

This announcement came following research from Abrdn that revealed London listed closed-end infrastructure investment companies are on track for their first ever three-year gap with no primary capital raised.

Abrdn blamed this on a higher interest rate environment and the cost disclosure rules, with 2023 and 2022 both being fallow years for primary fundraising.

AJ Bell interim investments managing director Ryan Hughes agreed that this news will be “warmly welcomed by both the investment trust industry and broader market participants”.

Hughes added: “Investment trusts play a hugely important role both in the financial services sector and the wider economy as a provider of capital and the unintended consequences of the current legislation created an unequal playing field that put investment trusts at a disadvantage and threatened, in some cases, their very existence.

“The removal of this unnecessary barrier will help the investment trusts sector regain its footing and allow them to compete equally against other investment structures, which will put them back on the radar for investors who have been reluctant to use them given the cost disclosure requirements.”

In the week before the Treasury and the FCA made this announcement,