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Chapter 1: What is the main topic discussed in this episode?
Good morning from the Financial Times. Today is Monday, April 20th, and this is your FT News Briefing. Donald Trump wants to restart talks with Iran, and Brussels is using the energy crunch to push renewables. Plus, we look at a controversial new craze on Wall Street. It's tax loss harvesting, but this time it's turbocharged. I'm Sonia Hudson, and here's the news you need to start your day. U.S.
President Donald Trump says he's sending senior officials to Pakistan to negotiate with Iran again. He told Fox News his son-in-law, Jared Kushner, and special envoy Steve Witkoff would arrive in Islamabad today. The previous round of talks were led by Vice President J.D.
Chapter 2: What is the Brussels plan to ease the energy crisis?
Vance. But Iranian state-affiliated media said Tehran won't send anyone to the talks. not until the U.S. lifts its naval blockade of Iranian ports. The two sides still have many sticking points, including Tehran's stockpiles of highly enriched uranium and how the Strait of Hormuz will be governed.
The European Commission is pushing remote work and public transportation subsidies to cut fossil fuel use. Brussels is trying to make the energy price shock from the U.S.-Iran war a little less painful. The recommendations also include measures to help move toward clean power. The commission is going to present member states with its plan later this week.
And here to tell us more is the FT's Ian Johnston, who broke this story. Hey, Ian. Hi there. So what are the highlights of these set of recommendations?
So some of the highlights are behavioral recommendations to try and convince EU citizens and businesses to use less energy.
That includes remote working, so encouraging businesses where they can to have at least one day of remote working per week, measures to support the use of heat pumps, electric vehicles, and also encouraging member states to use subsidy schemes for things like public transport. But they are also going to bring in laws to encourage more electrification.
So they're going to tweak electricity market rules in the EU to lower the price of the transportation of electricity. That's related to grid charges. And they're also going to try and make sure that electricity is taxed lower than fossil fuels. They tried this in 2025 and have been doing so for some years, and the talks broke down.
But there's hope that this more targeted measure will get member state approval because of the energy crisis.
Yeah, that added pressure of the energy shock, I'm sure, has some people feeling optimistic. But has Brussels ever done anything like this before, you know, after other energy shocks?
Yeah.
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Chapter 3: How is Donald Trump involving the U.S. in negotiations with Iran?
those small behavioral changes can actually have quite a significant impact on overall energy use. And we saw a lot of demand reduction in 2022. We see here that Brussels is turning to the same playbook.
Yeah, that's interesting. I was curious about whether people would actually heed these recommendations or just be Brussels kind of shouting into the void. Do you anticipate any pushback against these recommendations that we're going to see this week?
Brussels is very keen and officials I've spoken to are very keen to stress that these are recommendations. They're by no means binding. But there's always a question mark over whether the EU is trying to encourage people to do things that they'd rather not do. I think they're leaving it in the hands of member states to decide whether or not they want to use these measures.
And so we will see if member states decide to take them up on those recommendations.
I'm also curious about some of the measures to help the block transition away from fossil fuels. Do you think those measures to move to cleaner fuel will have staying power if, you know, this is just a temporary shock and those are measures that take a long time to implement?
I think they could lead to changes in how Europe gets its energy. We saw in 2022 that not only did Europe move away from Russian gas, it did significantly build out renewable energy infrastructure. It is still getting a lot of gas from the US and was getting some from the Middle East as well.
If you look at energy prices in the likes of Spain, where they've got loads of solar and wind power, in France, where they've got lots of nuclear power, They are better prepared for this crisis than some of the other countries in the bloc that are still using lots of gas, for example, Italy.
So whether these demand reduction measures work is probably an open question and it could be a temporary demand reduction. But I think on the long term, there is going to be more momentum for those cleaner energy forms.
Ian Johnston is an EU correspondent for the FT. Thanks, Ian.
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Chapter 4: What recommendations is the European Commission making for energy use?
Thanks for being on the show. So explain tax loss harvesting to me. What exactly are these hedge funds doing?
Sure. So tax loss harvesting as a practice has actually been around for decades, by some measures maybe even a century. And it basically involves selling securities at a loss, so the ones that have lost money, to offset gains elsewhere in your portfolio.
So it basically is a way to ensure that if you've had some losing investments at the end of the year, you can write that off on your tax bill and pay a little less in taxes. What these hedge funds are doing is they're using leverage and short selling, which are new dimensions to this practice of tax loss harvesting, to basically turbocharge the strategy.
And they're able to generate way more consistent tax losses and at a bigger scale with leverage.
OK, so on top of this being a somewhat complex strategy, it has been very lucrative.
Why is that the case? Yeah. So there are two hedge funds in particular that have really led the charge on this. One is called AQR, which by some measures is the biggest hedge fund in the world. And the other one is called Quantino. It's really taken off in the last couple of years, seemingly from what I found in my reporting from word of mouth.
And so because these strategies and funds are really targeted towards organizations, ultra high net worth and high net worth investors. These are social groups where people kind of exchange investment ideas and products that they're investing in. And I think that it's also worked. You know, there have been really kind of consistent and strong returns the last few years.
And so it's attracted a lot of capital.
Why is this taking off now in particular?
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Chapter 5: How does Brussels plan to encourage remote work and public transport?
Is there something that's going on in the wider market that's making this more attractive, or it's just kind of a new strategy and people are catching on to it?
I mean, one thing that's happened in the U.S. over the last decade is that the really crazy bull market with stocks has just generated this... whole new class of multimillionaires that didn't exist before. And a lot of these people might have a lot of their wealth tied out into one stock if they worked for a company where they were paid in equity.
And so they're basically looking to diversify this whole thing. So that's one big contributor. I think there's a constant obsession among wealthy Americans of trying to lower their tax bills any way they can. And these funds are really tapping into that desire.
Chapter 6: What are the behavioral recommendations for reducing energy consumption?
But I imagine the strategy is also a bit controversial. It is. There's a few reasons. One is that there are some people on Wall Street who believe that this could come under regulatory scrutiny. And I should say everything these funds are doing, to my knowledge, is totally legal. And so it's not a concern necessarily under this administration.
But there's some sense that if Democrats come back to the White House, this could be a potential target. There's kind of like a more fundamental criticism, too, which is that, you know, this is just a really effective way of lowering really rich Americans' tax bills. You know, and so some people are critical of ways that rich investors and Americans are able to find ways to lower their tax bills.
And this is obviously one of the biggest tools they've been turning to recently.
What about risks just as a wealth management investment strategy?
Yeah. So it's important to remember that hedge funds for a long time were not ever targeted towards richer, regular investors. Hedge funds were always investment tools or vehicles used by endowments and pension funds, basically institutional investors who didn't need to worry about taxes because they weren't taxed. Pension funds and endowments also don't need to worry as much about liquidity.
So they go in eyes wide open to what these investment strategies are, which is that they know that they use leverage. They know the risk involved. Some of the wealth advisors I spoke to raised the concern that some rich Americans are not totally cognizant of what they're investing in. And even though, you know, there are plenty of disclosures about that.
This not being guaranteed returns, you know, there always being a risk of loss. They might not fully appreciate, you know, what leverage and short selling could mean for their investments or capital.
Amelia Pollard is the FT's U.S. investment correspondent. Thanks, Amelia. Thanks so much for having me. You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT News briefing. Check back tomorrow for the latest business news.
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