And finally, here’s our Washington bureau chief David Smith on today’s trade breakthrough:
Donald Trump and European Union officials appeared to step back from a trade war on Wednesday as they struck a deal to work toward “zero” tariffs, barriers and subsidies.
“We had a big day, very big,” the US president said in the White House rose garden, standing alongside Jean-Claude Juncker, the European Commission president, adding that there was a “new phase” in US-EU relations.
Trump and Juncker appear amiable at meeting aimed to avert trade war
“We agree today, first of all, to work together toward zero tariffs, zero, non-tariff barriers, and zero subsidies on non-auto industrial goods,” Trump told reporters.
The statement came after Trump had threatened tariffs on car imports and reports that the EU is planning retaliatory measures.
Trump said the US and EU will set up an executive working group to work on trade and assess existing tariffs “to the betterment of both”. He added: “We’re starting the negotiation right now but we know very much where it’s going.”
Juncker said it his “intention to make a deal” that would work towards zero tariffs on industrial goods.
Trump added: “This was a very big day for free and fair trade, a very big day indeed.”
I’ll be back in the morning to see how the European stock markets react. You might expect a rally.... however, the news that Facebook’s shares have tanked in afterhours trading (it missed Wall Street forecasts and lowered its outlook) could weigh on investors.
BOOM! Facebook shares drop more than 20% in after-hours trading on revenue growth forecast. https://t.co/yPrfwGkFVk @technology pic.twitter.com/LW5NsWd5le
— Mike Dorning (@MikeDorning) July 25, 2018
Goodnight! GW
Europe’s commitment to import a lot more liquified natural gas from America is quite interesting.
During his visit to Europe this month, Donald Trump blasted Germany for signing up to a new natural gas pipeline link with Russia called Nord Stream 2.
Trump claimed the deal made Europe dangerously reliant on Russia for its energy needs - a concern echoed by some experts.
So does today’s deal fix that problem? Not according to former US ambassador Anthony Gardner, who doubts whether much more LNG will actually cross the Atlantic...
Idea of significantly more LNG shipments to EU absurd. It is not price competitive with piped gas. In TTIP we had already agreed to eliminate 97pc of tariffs including all industrial tariffs — nothing new there though Trump of course will take credit. https://t.co/a2Z49cA239
— Anthony Gardner (@tonylgardner) July 25, 2018
I came, I talked, I got a deal, says Juncker on Twitter:
I came for a deal, we made a deal. The EU continues to stand up for free and fair trade. My joint statement with @realDonaldTrump: https://t.co/JISJJ1CWR2 pic.twitter.com/GMpS0ZL5Ul
— Jean-Claude Juncker (@JunckerEU) July 25, 2018
Here’s a video clip of presidents Juncker and Trump announcing they have agreed to work together on trade:
The United States and the European Union have a $1 TRILLION bilateral trade relationship – the largest economic relationship in the world. We want to further strengthen this trade relationship to the benefit of all American and European citizens... pic.twitter.com/4zlmEEtCpG
— Donald J. Trump (@realDonaldTrump) July 25, 2018
European trade commissioner Cecilia Malmstrom says Washington and Brussels have “turned a page” in their relationship.
Important meeting at the White House today with @JunckerEU and @realDonaldTrump. Turning a page, agreed to facilitate trade between us, looking at zero tariffs on industrial goods, energy and regulatory cooperation. Also intensify work on reform of WTO.
— Cecilia Malmström (@MalmstromEU) July 25, 2018
Beijing may be looking at tonight’s deal nervously, says Reuters Noah Barkin:
This will be deeply unsettling for China. The first sign that the EU & US might resolve their trade spat and significantly lower bilateral barriers. Early days but that could ultimately mean a tag-team approach towards Beijing. If Trump sticks to this. Big if https://t.co/sJo1cBum0h
— Noah Barkin (@noahbarkin) July 25, 2018
China, of course, is being threatened with tariffs on ALL its US sales, unless it makes concessions on trade.
US-EU deal: instant reaction
European Commission vice-president Jyrki Katainen has hailed the apparent breakthrough:
I’m delighted that Presidents Juncker & Trump agreed that that the EU & US will work together: 1) towards a trade agreement with zero #tariffs, zero non tariff barriers, & zero subsidies in non auto industrial goods, 2) to reform the #WTO to address unfair trade practices, 1/2
— Jyrki Katainen (@jyrkikatainen) July 25, 2018
Professor Steve Peers points out that the two sides have primarily agreed to negotiate on trade, rather than reach a concrete agreement (yet).
Joint EU/US trade statement - at first sight looks to me like an agreement mainly to have further talks, with an implied standstill on any escalation of trade disputes: https://t.co/TSUVPkb0Nw
— Steve Peers (@StevePeers) July 25, 2018
The BBC’s Andrew Neil isn’t impressed by Trump’s approach
Trump says EU/US will work towards end of tariff, non-tariff barriers plus no subsidies. That’s what you call a trade deal, which he recently walked away from.
— Andrew Neil (@afneil) July 25, 2018
Trump two-step continues:
— Andrew Neil (@afneil) July 25, 2018
Nato summit: bluster then retreat
May’s Brexit strategy: bluster, retreat
Helsinki: bluster, retreat
EU trade wars: bluster, retreat
Do you think there’s a trend here?
Investor Christian Gagnon thinks Juncker has played his cards well:
The Europeans are playing it smart. They signed trade deals with China, Japan and now are avoiding a trade war with the US. https://t.co/IJ0YJPsJao
— Christian Gagnon (@InEgoVeritas) July 25, 2018
Has car tariffs threat receded?
Jean-Claude Juncker told reporters that he had a “good and constructive meeting” with Donald Trump.
He added that the two sides had agreed not to impose any new tariffs while talks were taking place.
That might mean that the threat of punitive tariffs being imposed on EU car sales into America may have receded....
Donald Trump also sounds optimistic following his talks with Juncker today.
He tells reporters in Washington that the two side have agreed to work together to lower trade barriers
Trump declares:
“This was a very big day for free and fair trade, a very big day indeed.”
“This was a very big day for free and fair trade, very big day indeed,” Trump says after making a joint statement on reaching a trade deal with the EU’s Juncker #tictocnews pic.twitter.com/i5TCCChtpH
— TicToc by Bloomberg (@tictoc) July 25, 2018
Trump points out that the negotiations are only just starting, but both sides know where they want to get to.
That includes working towards “zero tariffs, zero
non-tariff barriers, and zero subsidies on non-auto industrial goods,” says the US president.
He adds:
“We will also work to reduce barriers and increase trade in services, chemicals, pharmaceuticals, medical products, as well as soybeans; soybeans is a big deal,
Europe would also become “a massive buyer” of liquefied natural gas from the United States, Trump adds proudly.
The EC says it has launched a “new phase” in its relationship with the US today.
It is:
....a phase of close friendship, of strong trade relations in which both of us will win, of working better together for global security and prosperity, and of fighting jointly against terrorism.
The EC adds that it hopes to “resolve the steel and aluminum tariff issues” -- the levies imposed by Donald Trump on European metal imports earlier this year.
US and EU reach agreement on trade
It’s official: The European Union and the United States have reached an agreement that may calm fears of a trade war between the two sides.
The breakthrough was reached during Jean-Claude Juncker’s talks with Donald Trump at the White House. The two side have agreed to work together to lower trade barriers, and towards eliminating some tariffs.
It will see Europe import more energy, and soy beans, from America.
In a statement, the EU says it agreed four key points with the US today:
First of all, to work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods. We will also work to reduce barriers and increase trade in services, chemicals, pharmaceuticals, medical products, as well as soybeans.
This will open markets for farmers and workers, increase investment, and lead to greater prosperity in both the United States and the European Union. It will also make trade fairer and more reciprocal.
Secondly, we agreed today to strengthen our strategic cooperation with respect to energy. The European Union wants to import more liquefied natural gas (LNG) from the United States to diversify its energy supply.
Thirdly, we agreed today to launch a close dialogue on standards in order to ease trade, reduce bureaucratic obstacles, and slash costs.
Fourthly, we agreed today to join forces to protect American and European companies better from unfair global trade practices. We will therefore work closely together with like-minded partners to reform the WTO and to address unfair trading practices, including intellectual property theft, forced technology transfer, industrial subsidies, distortions created by state owned enterprises, and overcapacity.
More to follow!
Updated
US shares have jumped in late trading, following the report that Europe has made some trade concessions.
The Dow surged by 150 points, on hopes that a trade war can be averted.
Stocks jumped to daily highs after President Trump reportedly obtained concessions from the E.U. to avoid a trade war. pic.twitter.com/vhvALSbUvT
— CNBC (@CNBC) July 25, 2018
NEWSFLASH: The Dow Jones newswire is reporting that Jean-Claude Juncker has proposed some concessions to Donald Trump at their talks today.
It says the Europeans have “agreed to lower industrial tariffs” and also to “iimport more U.S. soybeans”.
We don’t have more details, or confirmation yet....
Sky News have a video clip of Donald Trump and Jean-Claude Juncker’s remarks at the White House earlier:
The president of the European Commission Jean-Claude Juncker has told @realDonaldTrump the US and EU are “allies, not enemies” as he arrived at the White House for trade talks
— Sky News (@SkyNews) July 25, 2018
For more from the US visit: https://t.co/bq81R3emMf pic.twitter.com/CIzpHriypN
Shares rise on trade talk hopes
Donald Trump and Jean-Claude Juncker have now vanished off for their trade talks.
The two leaders appeared quite friendly as they sat side by side in the Oval Office. At one stage, Trump even reached over to give Juncker a friendly tap on the thigh.
The optimistic noises from the two men have also helped to push shares higher on Wall Street, dragging the Dow Jones industrial average away from its earlier losses.
Dow turns positive amid Europe trade deal hopes, rise in tech stocks https://t.co/KmNdvLJM7r pic.twitter.com/NAHfgFSAAT
— CNBC Now (@CNBCnow) July 25, 2018
Juncker: We should lower tariffs, not raise them
President Juncker thanks Donald Trump for inviting him to the White House for talks on trade.
America and Europe are close partners and allies, not enemies, he says, so we have to work together. [reminder, Trump recently claimed the EU was a ‘foe’ when it comes to trade].
Juncker says that he believes talks should focus on decreasing tariffs, not increasing them.
Trump says he agrees! The US would be very pleased if there were no tariffs, barriers or subsidies.
We want reciprocal trade at a minimum, he insists, and “we’re making tremendous strides” towards it.
We hope to achieve something good, and when we do you’ll be the first to know, Trump concludes.
The assembled press pack then shout questions. Some are on trade, but at least one was about the secret recording of Trump discussing buying the rights to former Playboy model Karen McDougal’s story about her alleged affair with the president. None of the questions are answered.
Updated
Donald Trump began by complimenting Jean-Claude Juncker on the way he represents EU citizens.
We are looking for a fair trade deal, and hopefully we can sort something out, Trump tells reporters at the White House.
The president then claims that America has been losing “hundreds of billions of dollars” to the EU over recent years [because it runs a trade deficit with Europe].
We just want a level playing field for American companies and farmers, Trump continues. Something that’s good for everybody, that’s what we are going to discuss.
Newsflash: European Commission president Jean-Claude Juncker has declared that America and Europe are “friends, not enemies’, as he sits down with Donald Trump for talks on trade.
Juncker to Trump: „We‘re friends, not enemies.“ pic.twitter.com/vUdnZWVv0d
— Stefan Leifert (@StefanLeifert) July 25, 2018
In response, Trump has told reporters at the White House that Juncker is “very smart” and “tough”, as they prepare to lock horns about tariffs.
Trump about Juncker: He is a very smart and a very tough guy. pic.twitter.com/KtqPrYjYTb
— Alexandra von Nahmen (@AlexandravonNah) July 25, 2018
There’s a media scrum at the White House as reporters prepare to hear from presidents Juncker and Trump.
Auf dem Weg ins Oval Office werden alle Journalisten zu Disziplin, Ruhe und Ordnung aufgefordert. #Trump #Juncker pic.twitter.com/d3iDhqMUHW
— Stefan Leifert (@StefanLeifert) July 25, 2018
We’re expecting the two men will hold a “pool spray”* in the Oval Office (* - a chance for journalists to ask questions, not a refreshing blast from a hose)
Donald Trump limbered up for his talks with Jean-Claude Juncker over trade today, by declaring he would show “No weakness”.
Every time I see a weak politician asking to stop Trade talks or the use of Tariffs to counter unfair Tariffs, I wonder, what can they be thinking? Are we just going to continue and let our farmers and country get ripped off? Lost $817 Billion on Trade last year. No weakness!
— Donald J. Trump (@realDonaldTrump) July 25, 2018
When you have people snipping at your heels during a negotiation, it will only take longer to make a deal, and the deal will never be as good as it could have been with unity. Negotiations are going really well, be cool. The end result will be worth it!
— Donald J. Trump (@realDonaldTrump) July 25, 2018
As explained in the introduction, the EU hope to talk Trump away from imposing tariffs on European car imports, but there’s not much hope of a big breakthrough today.
Now this is interesting...
Donald Trump’s top economic advisor, Larry Kudlow, has told Fox News he held constructive talks with EU officials over trade yesterday.
That could be an encouraging sign for the Trump-Juncker talks, which are due to start soon in Washington.
#Trump advisor Larry #Kudlow told Fox he met with EU senior staff, "including #Juncker’s right hand man, for a long time yesterday," adding "they have a positive attitude; so do we. Expectations are so low, people may be very surprised by the outcome." 1 on 1 to start in 1 hour.
— Florian Eder (@florianeder) July 25, 2018
In London, the FTSE 100 index of top shares has fallen 50 points, or 0.66% today, to close at 7658.
Chinese president Xi has fired a warning to the White House not to launch a global trade war.
Speaking at the annual summit of BRICS (emerging market) economies in Johannesburg, Xi warned that countries who pursue “economic hegemony” will end up hurting themselves
Xi declared that leaders must choose between cooperation and confrontation, adding.
“Unilateralism and protectionism are mounting, dealing a severe blow to multilateralism and the multilateral trading regime”.
Trump, meanwhile has accused China of being ‘vicious’, by imposing retaliatory tariffs in response to his push for freer trade.
China is targeting our farmers, who they know I love & respect, as a way of getting me to continue allowing them to take advantage of the U.S. They are being vicious in what will be their failed attempt. We were being nice - until now! China made $517 Billion on us last year.
— Donald J. Trump (@realDonaldTrump) July 25, 2018
Motor racing chief Jean Todt, who ran the Ferrari Formula 1 team for several years, says Sergio Marchionne was a “visionary leader”.
Todt, now president of the FIA (Fédération Internationale de l’Automobile), writes:
“It is with great sadness that I learned that Sergio Marchionne tragically and unexpectedly passed away. Sergio achieved a colossal amount for the automotive industry and motor sport worldwide. He dedicated himself fully to turn around the FIAT-Chrysler group and put all his energy to bring Scuderia Ferrari back to the top.
He was an endearing, upstanding and brave man, an unconventional and visionary leader. He was an eminent member of the FIA F1 Strategy Group and of the FIA High-Level Panel for Road Safety. His death is a considerable loss.
On behalf of the entire FIA community, all my thoughts go out to his family, his friends and his Ferrari and Fiat-Chrysler group teams”.
Sergio achieved a colossal amount for the automotive industry and motor sport worldwide. He was an endearing, upstanding and brave man, an unconventional and visionary leader.
— Jean Todt (@JeanTodt) July 25, 2018
My tribute to Sergio Marchionne: https://t.co/33twI5k2EY
GM slashes forecasts in trade war warning
Another carmarker, General Motors, has spooked the markets by slashing its profit forecasts.
GM blamed rising commodity costs -- following Donald Trump’s decision to impose 25% tariffs on steel imports, and 10% on aluminium. That has pushed up GM’s raw materials bill, hitting profitability.
Chuck Stevens, GM’s executive vice president and CFO says:
Our operating performance was impacted by significant headwinds from commodity costs and currency devaluations in South America.
For the rest of the year we will focus on flawlessly executing our full-size truck launches and continue managing the business with discipline in a more challenging environment.”
GM now expects to make between $5.80 to $6.20 per share this year, down from $6.30 to $6.60 previously.
This makes GM one of the biggest companies to warn that Trump’s trade disputes are hurting business. The warning comes just a few hours before the president sits down with EC president Jean-Claude Juncker for talks to (possibly) stave off a trade war.
Wall Street has taken the news badly; shares in GM are down almost 7% today.
Italy’s Cgil union has given a guarded tribute to Sergio Marchionne, reports Associated Press:
The Cgil union, Italy’s most powerful, praised Marchionne for having “saved a dying company.” But it faulted him for having failed to negotiate with “an important sector of Italian workers,” which it said created conflict and divisions that are still being felt.
Cgil’s Fiom metalworkers union clashed with Marchionne over changes he brought to Italian plants to increase productivity.
Ford’s executive chairman, Bill Ford, says the auto industry will miss Sergio Marchionne badly:
“Sergio Marchionne was one of the most respected leaders in the industry whose creativity and bold determination helped to restore Chrysler to financial health and grow Fiat Chrysler into a profitable global automaker.
His extraordinary leadership, candor and passion for the industry will be missed by everyone who knew him. Our thoughts and prayers go out to his family at this difficult time.”
The plunge in Fiat Chrysler’s share price can’t be directly attributed to Sergio Marchionne’s death.
His long stint as CEO actually ended last weekend, when the company announced his resignation following complications after shoulder surgery. Plus, Marchionne was already expected to step down next year.
But..by lowering its profit and revenue forecasts today, FCA has reminded the markets that the auto sector is a tough place for new CEO Mike Manley to navigate.
Shares in Fiat Chrysler have tumbled almost 10% at the start of trading in New York, after the firm cut its profit and revenue forecasts for this year.
Fiat Chrysler continues pre-market drop at the open, falling more than 9.5% in early trading https://t.co/HWddcRvs5K pic.twitter.com/tPreKmtxsE
— CNBC Now (@CNBCnow) July 25, 2018
Here’s our news story on Sergio Marchionne’s death:
Over in Turin, Fiat Chrysler has lowered its flags to half-mast today, as a sign of respect to Sergio Marchionne.
Workers at Fiat’s plant in Pomigliano, Italy, where the popular Panda car is produced, stopped production for 10 minutes, Associated Press reports.
Updated
Ana Nicholls, Director of Industry Operations at the Economist Intelligence Unit, says the business world has lost one of its “greatest turnaround managers”.
“The death of Sergio Marchionne marks the passing of one of the greatest turnaround managers of the past century. His legacy is impressive: in saving both Fiat and Chrysler through clever deal-making and sheer hard work he not only ensured the survival two of the most venerable names in the auto industry, but also saved the jobs of tens of thousands of people.
Mike Manley has a lot on his place, as he tries to step into Sergio Marchionne’s shoes, she adds:
The difficulty is understanding what comes next for FCA. Mr Marchionne famously said there was no script for after his departure and the new CEO, Mike Manley, is having to start improvising more quickly than expected. The departure of the group’s EMEA head, Alfredo Altavilla, on Monday will make his job that bit harder, as will the escalating global trade war. As a Chrysler insider and the head of Jeep, Mr Manley is unlikely to want to follow through on previous rumours that FCA would spin off Jeep, or even sell the whole company.
Instead, he will probably continue to put Jeep at the centre of the group’s global strategy, and cement the overall group’s shift away from small cars towards sports utility vehicles. But if tariff barriers continue to rise, he will have to find a way to re-engineer the group’s product line-up so that fewer vehicles and parts need to cross borders, without undermining the savings the group was getting from greater global integration. That may mean fewer big deals and a lot more small-scale restructuring, but either way he will find Mr Marchionne a hard act to follow.”
Sergio Marchionne in pictures
The New York stock exchange have tweeted a nice picture of Sergio Marchionne on the day he floated Ferrari, a key milestone during his time at FCA.
We mourn the passing of auto industry legend Sergio Marchionne. He helped multiple companies (Fiat Chrysler, Ferrari, CNH Industrial) tap the public markets, creating thousands of jobs across the globe. Here he is pictured in 2015, the day he took Ferrari public. #RIPSergio pic.twitter.com/r5KA2QcsH0
— NYSE (@NYSE) July 25, 2018
Here are a few more photos from the archive:
• This block was amended on 26 July 2018 because an earlier version misnamed Sergio Marchionne as Silvio.
Updated
Fiat chief: Marchionne's death is heartbreaking
Fiat Chrysler Automobile’s new CEO, Mike Manley, has paid tribute to his predecessor, as he presents the car maker’s new financial results to analysts.
Manley says FCA learned this morning that Sergio Marchionne had passed away.
Clearly this is a very sad and difficult time. Our thoughts and prayers go out to his family, friends and colleagues.
Manley explains that he worked with Marchionne for many years, so his death is heartbreaking on a personal level.
There is no doubt that Sergio was a very special, unique man, and no doubt he will be sorely missed.
Manley thanks the analysts for their warm messages and comments since Marchionne’s surgery last week, and then held a minute’s silence.
He then confirms that FCA has cut its guidance for this year, following a tougher time in China:
Updated
Another top automobile boss, Mary Barra of General Motors, says Marchionne created a “remarkable legacy”.
We at General Motors offer our condolences to Sergio Marchionne’s family and friends. Sergio created a remarkable legacy in the automotive industry. Our thoughts are also with our industry colleagues at Fiat Chrysler as they deal with this sudden loss.
— Mary Barra (@mtbarra) July 25, 2018
Updated
Fiat Chrysler’s results show the challenging facing Sergio Marchionne’s successor, Mike Manley.
FCA, whose brands include Jeep, Ram, Alfa Romeo, Dodge and Maserati, is aiming to double its profits over the next four years - and also make a bigger splash in the electric car sector. Today’s downgraded forecasts mean that will be a little bit harder.
Manley, who took over last weekend after Marchionne’s surgery, will present the results to analysts shortly.
Fiat Chrysler shares slide as it cuts forecasts
Newsflash: Fiat Chrysler shares have just tumbled, after the carmaker released its latest financial results to the markets.
The company has reported that earnings shrank by 35% in the second quarter of 2018 (which turned out to be Sergio Marchionne’s final period in charge). Net profits fell to €754m, down from €1.155bn a year earlier.
The company says that sales in China fell, partly due to increased competition from domestic brands.
Fiat-Chrysler has also cut its forecasts for 2018. It now expects net revenues of between €115bn and €118bn, down from €125bn previously.
It has also slashed its profit forecasts, predicting adjusted EBIT of between €7.5bn and €8.0bn, down from €8.7bn.
This has alarmed investors; Fiat Chrysler shares have slumped by 10%:
(The company was scheduled to release its results today, so this isn’t related to Sergio Marchionne’s sad death).
ActivTrades analyst Carlo Alberto De Casa says Marchionne turned an “almost bankrupt Fiat” into an international powerhouse.
His heritage could be described in just a few numbers: in 2004 when Marchionne took over, Fiat’s revenue was close to €47bn, today it exceeds €140bn. The company profit almost trebled in the same period.
Loved or hated Marchionne is the man who made FCA as we know it today: more successful and a little less Italian.
It is still difficult to imagine FCA and Ferrari without the man and his unique style. He wore a sweater rather than the traditional suite and a tie as his everyday business attire and with is unconventional leadership style he managed to turnaround one of Italy’s biggest – and often most troubled - industrial realities.
Updated
The FT’s Henry Foy points out just how much value Sergio Marchionne created at Fiat Chrysler:
Marchionne was hired to fix Fiat in 2004 when the Italian carmaker was worth $7.5bn. Today he died, with Fiat, Chrysler and Ferrari worth roughly 10 times that. He was the smartest man I ever interviewed, and the car industry will never replace him
— Henry Foy (@HenryJFoy) July 25, 2018
Back in January, Morgan Stanley analyst Adam Jonas made the same point to Marchionne on a conference call:
“We hadn’t seen anything like you.
You took $2 billion, roughly, and you’ve turned it into around $72 billion, and more important than that, there are many hundreds of thousands of families across many nations that are better off because of you and your team and you beat the sceptics every step of the way.
So, I just had to say god bless you, Sergio.
Updated
Chrysler workers should be grateful that Marchionne took the risk of helping the stricken auto company out of bankruptcy protection in 2009, says Autotrader.com analyst Michelle Krebs:
It’s highly unlikely that Chrysler would exist today had he not taken that gamble. The company was in such bad shape, being stripped of any kind of resources by the previous owners.”
Anand Mahindra, chairman of Mahindra Group (the Indian conglomerate), has tweeted his admiration for Sergio Marchionne:
I convey my condolences to the family of Sergio Marchionne and to the entire FCA extended family..
— anand mahindra (@anandmahindra) July 25, 2018
I met Sergio only once but it was clear in an instant that he was a giant among men. @fcagroup
There’s a lot of affection for Sergio Marchionne on social media, including from fans of Ferrari (which he chaired until last weekend).
RIP Mr Marchionne. You revived an ailing Ferrari
— PrancingDevil (@prancingdevil46) July 25, 2018
Extremely saddened by the news. He saved both FIAT & Chrysler.
— Guru Goodly (@GuruGoodly) July 25, 2018
Hope Ferrari wins the title and dedicates it to him.#Marchionne #Fiat #Ferrari #Chrysler #F1 pic.twitter.com/H5ggbsi5EC
So sad to hear the news about Sergio Marchionne. He was without doubt one of the most inspirational greats F1 has seen and achieved things in the motor industry that no one thought possible.
— Stephen Theobald (@StephenTheobald) July 25, 2018
Shocked and saddened by the death of @fiat CEO #Marchionne. An Italian lawyer who has worked with him regularly told me he worked “miracles” in saving two very different but equally poor companies at once. #business #law #cars #FIAT #Italy
— John I Sanders, Esq. (@js_avvamericano) July 25, 2018
Rest In Peace, Sergio Marchione.
— Roy A. Butta (@Buddahkan) July 25, 2018
Sergio was an innovator who revolutionised the automotive industry. He will be missed. pic.twitter.com/mCl5KaCv53
Updated
Associated Press have dubbed Sergio Marchionne a “charismatic and demanding leader”.
The manager, known for his folksy, colourful turns of phrase and for his dark cashmere sweaters no matter the occasion, was the darling of the automotive analyst community.
Even when expressing doubts at his audacious targets, they expressed admiration for his adept deal-making. That included getting GM to pay $2 billion to sever ties with Fiat, key to relaunching the long-struggling Italian carmaker, and the deal with the U.S. government to take Chrysler without a penny down in exchange for Fiat’s small-car technology.
Marchionne joined Fiat after being tapped by the Agnelli family to save the company. Fiat had for generations been a family-run enterprise, and having someone at the helm from outside Italy’s clubby management circles even a dynamo like Marchionne was an enormous change.
Other key corporate moves included the spinoff of the heavy industrial vehicle and truck maker CNH and of the Ferrari supercar maker. Both deals unlocked considerable shareholder value for Agnelli family heirs led by John Elkann. Elkann came into his own under Marchionne’s stewardship, taking over as chairman in 2010 having been tapped more than a decade earlier by his grandfather, the late Gianni Agnelli, to run the family business.
Fiat Chrysler’s chairman, John Elkann, has told staff to build on Sergio Marchionne’s legacy, saying:
“The best way to honour his memory is to build on the legacy he left us, continuing to develop the human values of responsibility and openness of which he was the most ardent champion.”
Updated
FT: A bold, poker-playing workaholic
Marchionne was one of the boldest business leaders of his generation, says the Financial Times.
Here’s a flavour of the FT’s obituary, just published:
The 66-year-old, who died from complications following surgery, was a consummate dealmaker, known for his nonstop work habit and razor sharp mind.
A poker player, his entourage told of sleepless transatlantic flights where their chain-smoking boss always wanted to play — and win — another hand of cards.
The same passion defined his improbable rescue of Fiat via an audacious merger with Chrysler that saved both companies and created the world’s seventh largest car group.
He persuaded General Motors to pay $2bn to escape its alliance with a near bankrupt Fiat in 2005 before swooping on a distressed Chrysler in 2009 and executing a full takeover of the group in 2014.
The FT also points out that Marchionne enraged Italy’s unions by slashing costs, and jobs, as he pushed to return Fiat to profitability:
He was demonised by Beppe Grillo, founder of the anti-establishment Five Star Movement for his closure of plants and job cuts. At one political rally in Milan, Grillo led the crowd in a chant: “F**k you, Marchionne”.
In private, Marchionne was acutely aware of the ravages that globalisation had on those left behind.
Sergio Marchionne deserves great credit for his work rescuing Fiat since becoming its CEO 14 years ago, says Bloomberg:
Marchionne was handed an automaker that lost more than €6bn ($7bn) in 2003. By 2005, he had returned the company to a profit by wringing some $2 billion from an alliance with General Motors Co., laying off thousands of workers, introducing new models, and slashing the time it took to get a new car to market to just 18 months, from four years.
In 2009, U.S. President Barack Obama’s administration announced that Fiat would take control of Chrysler LLC, rescuing the American company from bankruptcy.
“I don’t care what a tough guy he was to work for, he saved our company,” said Cass Burch, a Chrysler and Jeep dealer in Georgia. “He deserves a bronze statue.”
Sergio Marchionne, the man who build Fiat Chrysler, has died
Newsflash: Sergio Marchionne, one of the titans of the global car industry, has died.
This very sad news comes just four days after Marchionne, aged 66, suddenly resigned from Fiat Chrysler, the company he had run for 14 years, last weekend.
He reportedly suffered an embolism while undergoing shoulder surgery.
FCA Chairman John Elkann said in a statement:
“Unfortunately, what we feared has come to pass. Sergio Marchionne, man and friend, is gone.
During a highly successful career, Marchionne turned Fiat around - including a merger with America’s Chrysler following the financial crisis. He was known as a passionate workaholic who turned two struggling carmakers into the world’s seventh largest automaker, through relentless negotiating and cost-cutting.
As Bernstein analyst Max Warburton put it earlier this year.
“Sergio Marchionne’s time as CEO of Fiat is already the stuff of legend.”
Evercore analyst George Galliers agreed that Marchionne was a real talent, saying:
“Marchionne is good at execution, strategy and gamesmanship.”
Sergio Marchionne has died, according to La Repubblica. Very sad. He was only 66.
— Sarah Rappaport (@SarahRapp) July 25, 2018
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Britain’s stock market has slipped into the red this morning, as investors await the Trump-Juncker meeting in Washington DC.
The blue-chip FTSE 100 has dropped by over 40 points, or 0.55%, wiping out much of yesterday’s rally.
Mining stocks are among the top fallers, reflecting worries that global growth (and demand for commodities) will suffer from a trade war.
Trade concerns are still prevalent in the markets, says Mike van Dulken of Accendo Markets, adding:
In focus today will be the Trump/Juncker US-EU meeting in Washington, an attempt to resolve the recent trade confrontation. Trump is looking for concessions on EU exports to the US (especially cars). Juncker wants a full suspension of US tariffs before any deal can be agreed.
Trade commissioner Cecilia Malmstrom has tweeted that she had “good discussions” with various US politicians.
She met with Republican house senator Paul Ryan, and Democratic leader Nancy Pelosi, yesterday to press Europe’s case, ahead of today’s crunch meeting with the president.
Good discussions in DC yesterday with @SpeakerRyan, @NancyPelosi, @OrrinHatch, @RonWyden, @JohnCornyn, @RepKevinBrady & @davereichert. Meeting @USTradeRep and @SenBobCorker today, before accompanying President @JunckerEU to the meeting with President @realDonaldTrump. pic.twitter.com/TPUq5Z8bFW
— Cecilia Malmström (@MalmstromEU) July 25, 2018
Former officials expect today’s White House meeting between Trump and Juncker to be tense, says Politico.
“The negotiating view of Donald Trump is unconditional surrender of the other side,” said Ivo Daalder, who served as the U.S. ambassador to NATO during the Obama administration.
“If you’re a betting person, it’s not going to be a great meeting.”
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Paul Donovan of investment bank UBS has a game to play at home: try completing the phrase “Tariffs are the greatest...
He explains:
Yesterday US President Trump tweeted “Tariffs are the greatest”. The president may have been muddled, forgetting to finish the sentence.
If implemented, tariffs are the greatest tax increase US consumers face this year. Tariffs are the greatest risk to US employment growth. Tariffs are the greatest threat to US and global economic growth.
Trade war fears are already hurting German companies, according to a new survey just released.
The IFO think tank reports that optimism among bosses fell this month, pulling down its ‘expectations index’ to 98.2 this month, from 98.6 in June. That suggests Donald Trump’s trade policies are damaging Europe’s largest economy.
Ifo chief Clemens Fuest said.
“Companies were slightly more satisfied with their current business situation, but scaled back their business expectations slightly.
The German economy continues to expand, but at a slower pace.”
Expectations of car exports have fallen ‘significantly’, IFO adds.
This pulled IFO’s business climate index down to 101.7, from 101.8. However its current economic assessment rose to 105.3, from June’s 105.1.
🇩🇪#IFO: somewhat disappointing compared to the strong (manu) #PMI number in Germany yesterday. But overall, its still a solid report.
— Piet P.H. Christiansen (@pietphc) July 25, 2018
The exp. fell yet again, now 8 month in a row. The exp. are worrying when reflecting on the soft landing in euro area in general and trade war. pic.twitter.com/DoHeWf1heN
German broadcaster ZDF reckons there are three ways the Trump-Juncker talks can play out.
Scenario 1: The EU proposes renegotiating all tariffs with the EU, alongside reform of the World Trade Organisation. In return, president Trump would drop his threat to tax EU cars. That would lead to lengthy negotiations, and isn’t the radical solution Trump would favour.
Scenario 2: Juncker proposes a new plurilateral deal just on car sales, which would lower or even abolish all auto tariffs. However it would probably have to include other countries, such as Korea and Japan - complicating the chances of a quick deal.
Scenario 3: No deal is reached, so Trump presses on with tariffs on EU car sales, and the EU retaliates. That would take the global economy closer to a full-blown trade war.
We shouldn’t expect a big breakthrough on trade today, says Simon French of City firm Panmure Gordon.
He writes:
Today represents an important test case for the breadth and sustainability of trade frictions as European Commissioner Jean-Claude Juncker meets with US president Trump.
We do not expect a positive read-out and retain our base case that trade frictions will continue to expand all the way to the US mid-term elections in November.
EU: We're preparing new tariffs on $20bn of US goods
Newsflash: Europe is preparing to impose tariffs on $20bn of US imports, EU trade commissioner Cecilia Malmstrom has revealed.
These tariffs would be brought in if Donald Trump follows through on his threat to hit European car imports with new tariffs, says Malmstrom, as she raises the heat ahead of today’s meeting.
Malmstrom told Swedish daily Dagens Nyheteron (via Reuters).
“We hope that it doesn’t come to that and that we can a solution. If not, the EU Commission is preparing a rather long list of many of American goods.
It would be around $20 billion.”
It’s not a very diplomatic approach to today’s White House meeting. But perhaps it’s a good way of getting Trump’s attention...
Maybe Malmstrom has been reading Trump’s Art Of The Deal, which recommended taking a tough attitude in negotiations:
The worst thing you can possibly do in a deal is seem desperate to make it. That makes the other guy smell blood, and then you’re dead.”
Has the Commissioner been studying @realDonaldTrump #theartofthedeal? Begin a negotiation by announcing a massive threat.....
— Geoff Cutmore (@GeoffCutmore) July 25, 2018
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Shawn Donnan, the FT’s world trade editor, isn’t convinced by Trump’s suggestion of abolishing all US-EU tariffs.
He points out that some American farmers might be unhappy about a surge of imports from overseas, especially as China is now imposing new tariffs on US goods.
Trump sets the bar high for a trans-Atlantic trade deal... But would US business go for end to all trade barriers? Sugar? Dairy? https://t.co/qOgaiwxOn6
— Shawn Donnan (@sdonnan) July 25, 2018
Dutch MEP Marietje Schaake agrees that the idea is a stretch...
Is he setting the bar high or setting the European delegation up for something he knows is not on the table? Especially as long as steel and aluminum tariffs based on national security & threats on cars, are? https://t.co/c2SswG850u
— Marietje Schaake (@MarietjeSchaake) July 25, 2018
The agenda: Juncker and Trump to talk trade
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
They may need to lay out sponges and towels at the White House today, as Donald Trump hosts European Commission president Jean-Claude Juncker for trade talks.
It could be a bruising meeting. Juncker and trade commissioner Cecilia Malmström hope to dial down the rising tensions in the global economy, and ward off the threat of a full-blown trade war.
The talks will centre on the car industry, with Trump threatening to impose tariffs on $50bn of EU car imports. That would hurt the German auto industry hard, and prompt retaliatory action from Brussels.
Juncker could propose some concessions; there is talk that a “plurilateral car deal” could lower tariffs could address Trump’s concerns. However, that would be politically tricky, for both sides -- America currently has a 25% levy on European trucks coming into the country, to protect jobs in its rust belt.
Juncker has said his goal is to “explain and find out how to prevent a trade war”.
But the signs aren’t great. Earlier this week, Trump tweeted that tariffs are “great”, and claimed America is being treated as a “piggy bank” by countries who run a trade surplus with it.
Overnight, the president has called for both sides to completely abolish tariffs, subsidies and other trade barriers.
That would certainly shake globe trade up - but is hardly something that Juncker can sign off during a quick chat in the Oval Office.
The European Union is coming to Washington tomorrow to negotiate a deal on Trade. I have an idea for them. Both the U.S. and the E.U. drop all Tariffs, Barriers and Subsidies! That would finally be called Free Market and Fair Trade! Hope they do it, we are ready - but they won’t!
— Donald J. Trump (@realDonaldTrump) July 25, 2018
The stakes are high, though. Trump has already angered Europe by imposing tariffs on steel and aluminium, which led to Europe putting 25% tariffs on bourbon whiskey, peanut butter, motorcycles and blue jeans.
A rocky meeting could shake the financial markets, warns Lukman Otunuga, Research Analyst at FXTM:
With escalating trade tensions between the European Union and the United States still a key theme that continues to weigh on global sentiment, the outcome of today’s meeting could leave a lasting impact on the markets.
If the talks prove unsuccessful and trade tensions end up escalating further, risk sentiment is likely to be negatively impacted. Market players should be prepared to expect the unexpected from the talks, especially when considering how highly unpredictable the Trump administration can be.
The agenda:
- 9am BST: German IFO expectations survey
- 11am BST: CBI survey of UK retail sales in June
- 6.30pm BST (1.30pm EDT): President Trump and president Juncker meet at the White House
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