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

It might have been slightly lost in all the noise over the last seven days, but in any major world historical event it’s always important to ask yourself — what does this mean for financial regulation?

The Trump victory will presumably be seen as a massive victory for bank lobbyists, as they put together their wish lists. Those wish lists include the repeal of a number of predatory lending rules and credit card fee regulations and easier mergers.

But the biggest item on the list is surely the one that they were buying Super Bowl ads about earlier this year — the Basel Endgame rules.

For most of 2024, the banks’ political strategy was to try and delay the implementation process, hopefully trigger another round of consultation, but in any event to push Endgame to the other side of the elections. This was done in the hope that a Trump victory would bring in a new set of players, allowing the Endgame to be substantially weakened, or cancelled altogether.

And now they’ve got their wish. 

The personnel issues are made a little bit more complicated by the fact that the lead regulator in charge of drafting Endgame is the Fed, and the president doesn’t actually have the authority to fire the vice-chair for Supervision. If Michael Barr decides to dig in like Jay Powell, then his fingernails can’t actually be removed from the paintwork until July 2026 when his term ends. (He remains a Fed governor until 2032).

There’s some precedent for him to resign immediately, as Dan Tarullo did in 2016, but, well, quite a lot of precedents have been broken recently. If Barr really wanted to stay around to make Endgame happen, he could.

Or could he? Although the Fed has the main responsibility, Endgame also has to be agreed to by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. The chairs of both of those bodies are at-will presidential appointments. 

Furthermore, the OCC currently has an Acting Comptroller, awaiting confirmation, while the FDIC is chaired by Martin Gruenberg, who has already agreed to resign over a bullying scandal as soon as a replacement is confirmed.

So the bottom line on Endgame is that if personnel is policy, it isn’t happening any time soon, unless it can be presented in a form that’s acceptable to the US banking industry.

Paradoxically, that might make the work of the banking industry lobbyists harder rather than easier. It means that rather than brick-wall obstruction forever, they now have to decide what they actually want from Endgame, and what features they consider to be genuine show stoppers. 

Because whatever they say, big Wall Street banks don’t actually want to send a message to the world that the US industry isn’t capable of complying with international standards. 

The industry has gained mightily over the years from a perception that while smaller American banks are a snake’s nest of unrealised losses and lax supervision (and the definition of “smaller” includes some really quite big banks), the bulge bracket and the globally systemic firms have fortress balance sheets that define the gold standard of stability and transparency. 

It’s just not a good look to be aggressively lobbying for exceptions and exemptions and challenging your stress test requirements —— particularly in a world in which bond yields might be heading back towards levels where people start asking impertinent questions about mark to market valuations again.

So it might be convenient for many people if a very much weakened Endgame could be put out the door quickly with industry support, allowing everyone to get on with their lives. 

And in terms of watering down the Endgame, the industry might be pushing at an open door. Powell was notably reluctant to support the first draft in public, and Barr declared the entire experience “a lesson in humility”. Interestingly, European supervisors seem to have been informally told back in September that a re-proposal was ready to go. 

Having bought an Endgame T-shirt at the start of the summer from the Alphaville merch shop, I can confirm that it has held its pattern very well. The real thing might end up being washed out a lot more quickly.

Indri, the single malt Indian whisky that came out of nowhere to sweep multiple ‘world’s best’ awards at various fora, is now taking a shot at going global. Its makers have announced a Rs 1,000 crore expansion plan including new distillery and malt facilities, as well as perhaps a first for an Indian alco-bev company, an international distillery in Scotland.

Talk about taking the fight to the leader’s doorsteps — Walker’s better walk faster!

Piccadily Agro Industries, the makers of Indri, on Wednesday, announced its moonshot venture at taking an Indian whisky to the global stage. The plans include expanding its existing distillery and malt facilities in Haryana, establishing a new distillery in Mahasamund in Chhattisgarh, as well as a distillery in Portavadie on a 58-acre land in Scotland.

“This expansion is not just about scaling up our operations; it is about reshaping the future of premium Indian alco-bev spirits on a global stage. Our expansion across India and Scotland demonstrates our ambition to redefine the global spirits industry while solidifying India’s position as a producer of high-quality, premium alcohol,” said Siddhartha Sharma, promoter, Piccadily Agro Industries.

Piccadily, listed on the Bombay Stock Exchange, had raised Rs 262 crore from investors last month, while an additional Rs 50 crore is being infused by the promoter family. The balance funding shall be tied up through a combination of internal accruals and debt, the company said in a statement on Wednesday afternoon.

The expansions are expected to be completed over the next two years, with phase 1 of the total expansion at Indri plant of malt and ethanol reaching completion in early 2025.

Launched in 2022, Indri single malt whisky won the ‘Whisky of the Year’ title at the USA Spirit Rating Awards this year, following up on its Diwali Collector’s Edition winning the top prize at the ‘Whiskies of the World’ awards last year. The Indri Reserve 11-year-old wine cask also made it to the Top 15 at the International Whisky Competition this year.

Canada’s indigenous communities are seeking deals with China that could give Beijing access to the country’s natural resources, despite warnings from Canadian security services over doing business with Xi Jinping’s government. 

This week the Canada China Business Council indigenous trade mission is in Beijing to discuss potential energy and other business deals in a trip that could put Canada’s national “reconciliation” with its First Nation communities at odds with its national security priorities. 

Karen Ogen, the trade mission’s co-chair and chief executive of the First Nations Liquefied Natural Gas Alliance, said her goal on the trip, which starts on Wednesday, was to sell LNG for the benefit of the Wet’suwet’en communities in Canada’s western province of British Columbia.

“We’ve been oppressed and repressed by our own government,” she said. “I know the history with China is not good but we have an understanding of what we need and what they need.”

Prime Minister Justin Trudeau came to power in 2015 pledging to promote “economic reconciliation” with indigenous, or first nation, communities, which for decades saw their ancestral lands and resources exploited by European settlers and their culture belittled and attacked.

He committed to spend billions on business, economic and social programmes in an effort to reduce inequalities between indigenous and non-indigenous Canadians. The government also signed a number of land-sharing treaties with first nations communities giving them rights over the natural resources in their territories — subject to federal foreign investment rules.

Despite the pledges, many first nations communities remain socially and economically deprived. Earlier this year, a UN special rapporteur said Canada’s failure to provide First Nations reserves with clean drinking water and sanitation constituted a human rights violation. 

China has spotted an opportunity in the sometimes fraught relations between Canada’s national and provincial governments and indigenous groups. 

In 2021, shortly after Canada imposed sanctions on Beijing over the treatment of its Uyghur population, Chinese officials began to object to the “systemic violations of Indigenous people’s rights by the US, Canada and Australia” at the UN’s Human Rights Council. 

“The PRC tries to undermine trust between Indigenous communities and Canada’s government by advancing a narrative that the PRC understands and empathises with the struggles of Indigenous communities stemming from colonialism and racism,” said a spokesperson for Canada’s security intelligence service.

A 2023 CSIS report accused China’s government of employing “grey zone, deceptive and clandestine means” to influence Canadian policymaking, including Indigenous communities.

“China knows how sensitive Indigenous reconciliation is to the Trudeau government,” said Phil Gurski, a former CSIS intelligence analyst. 

Relations between Canada and China have deteriorated significantly in recent years. An official inquiry reported in May that China had directly meddled in Canada’s 2019 and 2021 elections and was “the most active foreign state actor engaged in interference” in the country. Ottawa’s 2022 Indo-Pacific strategy also described China as “increasingly disruptive”.

As a result, Canada’s policy towards Beijing is becoming more in line with that of the US, with Ottawa imposing tariffs on Chinese goods and forcing Chinese-owned social media company TikTok to close its Canadian office.

This realignment is expected to become even more important with the election of Donald Trump south of the border. “Canada would be expected to enforce harsher trade governance with China,” said Marc Ercolao, an economist with TD Bank.

But CSIS remains concerned over Beijing’s possible access to resource-rich areas or geopolitically important waterways and regions such as the Arctic through First Nations groups.

“It not only undermines the government but is a way to potentially embarrass them on Canada’s past,” said Gurski.

But Matt Vickers, from Sechelt Nations land in Canada’s western province of British Columbia, who first visited China in the 1990s and is part of the CCBC delegation heading to Beijing this week, rejected the concerns of the security services. 

“China now understands that for any major project to receive approval in Canada, you need First Nation consent, and not only consent but the First Nations require a majority equity play in those projects,” he said.

The CCBC is a bipartisan organisation consisting of Canada’s biggest companies, including Power Corp, which is the main sponsor of the Indigenous event.

This week’s trip marks the third time a group of Indigenous officials has travelled with the council to China in an effort to identify export markets, sources of capital and potential tourism projects. 

“These missions have been developed in the spirit of reconciliation and collaboration, to help delegates better understand how China’s economy and economic development influences its desire for imports and investment opportunities,” said Sarah Kutulakos, executive director of the CCBC.

The Chinese embassy in Ottawa declined to comment on CSIS’s security concerns over deals with First Nations communities but said: “We are pleased to see Canadians from all walks of life, including Indigenous Canadians, proactively engage in pragmatic co-operation with China.”

Deteriorating relations between Ottawa and Beijing meant this year’s CCBC meeting would likely be “sombre”, said former Canadian ambassador to China Guy Saint-Jacques. 

First Nations leaders should have “very limited expectations” from the trip. “I don’t expect big business coming out of it,” he said.

But Ogen, of the First Nations LNG Alliance, said she would put the controversy surrounding the trip to Beijing aside. “I . . . look at the global energy sector, China’s need for our gas, and how I can make the best deal for my people,” she said. 

Will it cut interest rates or not? That will be a key question when the Reserve Bank of India’s monetary policy committee meets next in December. Last time around, the MPC left the repo rate unchanged at 6.50 per cent, but chose to change its stance to neutral. That had sent signals that the central bank was perhaps positioning itself to start a rate cut cycle, even if shallow, in December. But, a resurgence in inflation may have thrown a spanner in the works.

The US Federal Reserve on November 7 cut its key interest rate by 25 basis points. This was on top of the outsized 50 bps rate cut in September. The Bank of England and the European Central Bank too have cut interest rates in recent months. The rate cuts in the West come at a time when supporting growth has gained priority amid escalating geopolitical tensions and cooling inflation.

In India too, slowdown signs have emerged, be it sluggish urban demand for fast-moving consumer goods or passenger vehicles. But, inflation remains a big worry. India’s CPI (consumer price index) inflation surged to a 14-month high of 6.2 per cent in October. Food prices spiking 10.87 per cent last month continues to fuel inflationary pressures. As the MPC meets next, will it continue to focus on inflation and keep interest rates unchanged or will its attention turn to the slowdown signs and in turn prompt a rate cut?

ALSO READ: RBI ‘neutral’ stance: Here’s what economists say about possible interest rate cuts in December

“While the RBI’s change in stance from withdrawal of accommodation to neutral at its last MPC raised expectations of rate cuts in December 2024, inflation data of the past two months indicates that the RBI would hold rates. This is consistent with our view that rate cuts will begin only at the beginning of 2025,” pointed out Sujan Hajra, chief economist and executive director at Anand Rathi Shares.

Pranjul Bhandari, chief economist, India and Indonesia at HSBC, also believes RBI will leave interest rates unchanged in December.

“As the RBI makes its assessment of India’s growth-inflation dynamics for the upcoming December policy meeting, we find that a lower proportion of activity indicators are growing at a fast clip compared to a quarter ago, particularly in financial services and consumption-related sectors. Meanwhile, even as food prices remain elevated thus far, they could start falling in early 2025, at least going by food production and sowing estimates,” said Bhandari.

She feels the RBI could deliver the first rate cut in February 2025, by which time, it would have gained some confidence that the food price spike will drop.

Economists say food inflation remains a major threat to headline CPI inflation and managing that will be crucial given its impact on household consumption budgets. Besides, monetary policy alone may not be enough to get food prices under control and may need more supply-side measures from the government.

As the fresh food harvest starts reaching the market, some of the pressure on food prices is likely to ease. Prospects for winter crop sowing are also positive after good monsoon rains this year. However, current trends suggest that CPI inflation may exceed RBI’s earlier projections in the October-March period this financial year and that may delay the start of a rate cut cycle, according to Rajani Sinha, chief economist at CAREEdge Ratings.

“We anticipate that headline inflation will fall below 5 per cent by the fourth quarter of 2024-2025, driven by a moderation in food inflation. This would create an opportunity for the MPC to consider a 25 bps reduction in policy rates in February meeting,” said Sinha, who now sees CPI averaging 4.8 per cent for the full year ending March 2025. The RBI has earlier forecast CPI inflation to average 4.5 per cent this financial year.

CRISIL’s chief economist Dharmakirti Joshi too expects the MPC to maintain a status quo in the December meeting.

“In our base case, we expect food inflation to ease this fiscal as kharif sowing has been healthy. Vegetable prices can correct sharply when fresh stocks enter the market. Accordingly, we expect the MPC to cut rates towards the end of this fiscal,” he noted.

We have heard much about the £22bn “black hole” in the UK government’s finances left by the previous Conservative administration. In “Britain braced for policy flashpoints with US over trade, tech and defence” (Report, November 9), you cite research by the Centre for Inclusive Trade Policy at Sussex university that forecasts Donald Trump’s threat to impose tariffs on all imports into the US could cause a “£22bn annual hit to UK exports”.

A further example, your October 4 edition carried the story “Carbon capture gains £22bn pledge”.

In Douglas Adams’ The Hitchhiker’s Guide to the Galaxy, the number 42 is the answer to the “Ultimate Question of Life, the Universe, and Everything”. Which made me think. Maybe 22 is the new 42?

Paul Temperton
Chalfont St Giles, Buckinghamshire, UK