Good morning and welcome back to FirstFT. Today we’re covering:
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The rise in US corporate bankruptcies
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The opening of Argentina’s protectionist economy
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Why Indian investors are rushing into defence stocks
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The downfall of Canada’s Justin Trudeau
US corporate bankruptcies have hit their highest level since the aftermath of the global financial crisis as elevated interest rates and weakened consumer demand punish struggling groups.
At least 686 US companies filed for bankruptcy in 2024, up about 8 per cent from 2023 and higher than any year since the 828 filings in 2010, according to data from S&P Global Market Intelligence.
Out-of-court manoeuvres seeking to stave off bankruptcy also increased last year, outnumbering bankruptcies by about two to one, according to Fitch Ratings. As a result, priority lenders to issuers with at least $100mn of aggregate debt experienced the lowest recovery rates since at least 2016.
There were only 777 bankruptcy filings in 2021 and 2022 combined, when the cost of money was much lower because of the Fed’s rate-cutting programme. That figure jumped to 636 in 2023 and continued to climb last year even as rates started to come down in late 2024.
At least 30 of last year’s bankruptcies had up to $1bn in liabilities at the time of filing, according to the S&P data.
The collapse of party supply retailer Party City was typical of 2024 corporate failures. Here’s more on the growing trend of corporate bankruptcies.
For more top stories from the world of corporate finance and private equity, sign up for the Due Diligence newsletter here if you’re a premium subscriber or upgrade your subscription here.
Here’s what else we’re keeping tabs on today:
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CES: The consumer electronics show continues a day after Nvidia chief executive Jensen Huang promised new products and partnerships in the “physical AI” space in his keynote speech.
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US monetary policy: Federal Reserve Bank of Richmond president Tom Barkin will deliver remarks before the Greater Raleigh Chamber of Commerce.
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Joe Biden: The outgoing president will make his final trip to the west coast in his capacity as US president and is expected to announce the creation of new national monuments that would protect tribal lands a day after announcing a ban on offshore oil and gas drilling along most of the US coastline.
Five more top stories
1. Donald Trump has reiterated his ambition to buy Greenland, putting pressure on the Danish government as the US president-elect’s son prepares to visit the Arctic island later today. Trump promised to “make Greenland great again” after news broke that his son Donald Jr plans to make a “private visit” to the world’s largest island. Greenland’s prime minister responded by saying “we are not for sale and never will be for sale”.
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Trump supporter appointed to Meta board: The $1.6tn social media platform has appointed the chief executive of Ultimate Fighting Championship and prominent Donald Trump supporter Dana White to its board of directors.
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Congress certifies Trump’s electoral win: The shadow of events four years ago hung over the event, write James Politi and Alex Rogers in a snowy Washington.
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Trump Q&A: A special edition of FirstFT Americas ahead of the inauguration will answer reader questions. Please send questions to [email protected], giving your name and location and our experts will seek to answer them.
2. Tech group Tencent and the world’s dominant battery maker CATL are among a swath of Chinese companies that have been designated by the Pentagon as having alleged military links, in the latest effort by Washington to counteract the rise of China as a military superpower. Here’s what the move means for some of China’s biggest companies.
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Trade tensions: The US dollar fell yesterday after reports that president-elect Donald Trump’s administration is considering watering down a campaign pledge to apply sweeping tariffs on imported goods.
3. Michael Barr, chair of bank supervision at the Federal Reserve, is stepping down but will stay on as a governor, the central bank said yesterday. Barr, a supporter of tighter bank regulation, has faced intense pressure from financial industry groups opposed to the new rules he proposed. Here’s more on what his decision will mean for Wall Street.
4. A senior Nato official has warned western rating agencies, banks and pension funds are being “stupid” in shunning defence investments. Admiral Rob Bauer, outgoing chair of the alliance’s military committee, told the Financial Times that policies that bar investing in armaments based on environmental, social and governance concerns were obsolete.
5. A growing number of passengers are bypassing congested hub airports and flying directly, as airlines take advantage of new fuel-efficient jets to redraw their networks. Read more on how advances in aircraft technology have put the “hub and spoke” model under pressure.
Today’s big read
Justin Trudeau’s commitment to social causes, gender equality, indigenous rights and fighting climate change brought him global fame. But Canadians’ view of Trudeau — like that of his father, who himself served more than a decade in two stints as the country’s prime minister — was always deeply mixed, writes Ilya Gridneff in this review of the Liberal party leader’s career.
We’re also reading . . .
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Argentina: Javier Milei has begun to open up Argentina’s protectionist economy, slashing tariffs on dozens of products, from acne cream to funeral urns.
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UK politics: Can Kemi Badenoch, the new leader of the Conservative party, unite the right in the UK? She remains an enigma to voters.
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Dungeons & Dragons: Tweaks to the cult game’s rulebook are an object lesson in how not to promote change, writes Stephen Bush.
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Financial literacy: Only one in four young adults received financial education at school, according to a study that warns students are turning to “unreliable” resources.
Chart of the day
Retail investors in India are pouring money into defence stocks after Prime Minister Narendra Modi’s push for domestic arms manufacturing drove the sector index up nearly 56 per cent in a year. Experts forecast defence production in India, which has been the world’s largest arms importer for more than two decades, will grow by as much as 20 per cent a year until the end of the decade.
Take a break from the news
Mole hunts, missing billionaires and DIY spies — Adam LeBor reviews the best nail-biting new thrillers, including David McCloskey’s latest novel that cements his place in the top division of spy writers.
Read the full article here