FirstFT: Icahn’s bearish bet cost $9bn

At the top of the news today, prominent investor Carl Icahn has admitted he was wrong to make a huge bet that the market would crash after the ill-fated trade cost his group nearly $9bn over roughly six years.

According to a Financial Times analysis, Icahn lost about $1.8bn in 2017 on hedging positions that would have paid out if asset prices had tumbled before losing another $7bn between 2018 and the first quarter of this year.

“I’ve always told people there is nobody who can really pick the market on a short-term or an intermediate-term basis,” Icahn told the FT in an interview to discuss the analysis. “Maybe I made the mistake of not adhering to my own advice in recent years.”

Icahn Enterprises started aggressively betting on a market collapse after the 2008 financial crisis and became bolder in subsequent years, deploying a complex strategy that involved shorting broad market indices, individual companies, commercial mortgages and debt securities.

At times, Icahn’s notional exposure, the underlying value of the securities he was betting against, exceeded $15bn, regulatory filings show. “You never get the perfect hedge, but if I kept the parameters I always believed in . . . I would have been fine,” he said. “But I didn’t.”

Here’s what else I’m watching in the days ahead:

• Economic data: Germany releases April producer price inflation data today, while GfK has the latest consumer confidence survey for the UK.

• G7: The summit of leaders from the world’s major economies starts today in Hiroshima, Japan.

• Earnings: Nationwide Building Society reports full-year results today.

• FT US Weekend Festival: It’s not too late to register for Saturday’s US FT Weekend Festival online or in person. Sign up to hear from leading FT journalists in conversation with Hillary Rodham Clinton, Jamie Lee Curtis, Salman Rushdie and others.

Who will win the US-China tech war? Join leading FT journalists and a Nikkei Asia colleague for a subscriber-exclusive webinar on May 25 at 12.30pm BST and put your questions to the panel: James Kynge, Eleanor Olcott, Ed Luce and Cheng Ting-Fang, moderated by Geoff Dyer.

Five more top stories

1. The UK defence secretary has warned of the threat of wider global conflict by the end of the decade and called for a firm timetable for increasing UK military spending to 2.5 per cent of gross domestic product. Read more from the FT’s interview with Ben Wallace and why he believes “the world will be a more dangerous, unstable place”.

2. A top global media agency has told clients it no longer considers Twitter “high risk”. WPP’s GroupM had made the designation in November over fears about the social media platform under Elon Musk. The change comes days after advertising executive Linda Yaccarino was appointed as Twitter’s new chief, marking a push to woo back major advertisers who deserted the platform.

3. Hackers may have stolen the personal data of tens of thousands of Marks and Spencer and Diageo pension scheme members, the pension schemes said. The funds were among hundreds of private-sector retirement schemes which used Capita, the outsourcer that confirmed last month it was the victim of a hack.

4. Europe’s largest asset manager Amundi is moving out of US assets in favour of China, with chief investment officer Vincent Mortier saying US markets are “too optimistic” as recession looms. Read more from the FT’s interview with Mortier.

5. A Latvian bank owner faces a murder conspiracy trial for his alleged part in a plot to kill a lawyer who accused the lender of money laundering. The trial is set to refocus attention on Latvia’s banks, which previously faced multiple corruption and money laundering claims.

How well did you keep up with the news this week? Take our quiz.

The Big Read

A British private investigator is on the trail of shoplifters and counterfeiters for private clients that include Apple, Louis Vuitton, Mulberry and Fortnum & Mason — and he is taking criminals to court when the state will not. What does his work say about justice in England today?

We’re also reading . . . 

Chart of the day

From March 2020 onwards, trends in house and flat prices in the UK diverged dramatically as lockdowns and remote working put a premium on domestic space. But apartments in England and Wales had shown signs of becoming second-class housing long before the pandemic.

Take a break from the news

The FT’s six films to watch this week include Ari Aster’s Beau Is Afraid starring Joaquin Phoenix, the Nam June Paik profile Moon Is the Oldest TV and Kelly Fremon Craig’s adaptation of the Judy Blume novel Are You There God? It’s Me, Margaret.

Additional contributions by Emily Goldberg