What’s with Wall Street’s weird selloffs?

0:03Good morning from the Financial Times. Today is Monday, February 16th, and this is your FT News briefing. International bank mergers are heating up across the EU, and carmakers are taking a $65 billion hit from a reversal in electric vehicle ambitions. Plus, we dig into what's going on with all the weird sell-offs on Wall Street. I get the impression that a lot of people just want to avoid parts of the market that could randomly implode on a way more strange white paper issued by a former karaoke company. I'm Victoria Craig, and here's the news you need to start your day.

0:49Banking mergers between European Union countries hit their highest level since the 2008 financial crisis. Rising profits and share prices in the sector have revived sluggish dealmaking, which reached 17 billion euros last year. That's a 400 percent increase from 2024, according to DealLogic data. Policymakers have long called for more consolidation across the EU banking industry, but executives said regulatory hurdles and political resistance made dealmaking difficult. That, they argued, caused the European sector to lose ground to U.S. rivals. EU banking consolidation is part of a wider trend worldwide.

1:28Global M &A in the sector more than doubled last year, according to research by McKinsey.

1:39U.S. President Donald Trump says no one has benefited more from his drive to cut regulation than the U.S. auto industry. Here he is at the White House just last week announcing an effective end to federal emission standards for cars and trucks. This action will eliminate over$1.3 trillion of regulatory costs and help bring car prices tumbling down dramatically. But the auto industry says these kinds of policy reversals have actually cost them billions of dollars, and they're warning there's more pain ahead. The FT's Kana Inagaki has been digging into the latest numbers. She joins me now. Hi, Kana.

2:16Hi. So just walk us through what this change in regulation is forcing companies to do because it seems like a complete 180 in car production. What is the impact on the industry? Basically, a lot of these car makers from Stellantis, General Motors to Ford, they've been forced to sort of overhaul their, you know, EV products, and then they also have to cancel a lot of their investment plans. So for example, you know, a lot of these car makers, because they were going to boost EV sales, they were investing heavily in building battery plants. And so a lot of these projects have been put on hold or canceled.

2:53And that has led to a huge write down for many of these companies. So Stellantis took a$26 billion charge. Ford was a$19.5 billion charge. And then GM was a$7.6 billion charge. So it's a huge change in strategy for these car makers. And to that point, it's not just about little changes, we're talking about a total reversal in what companies produce. So basically, the car makers that have been hit the hardest have been the ones that have really pivoted the most to electric vehicles. So, you know, for example, like Stellantis scrapped some of their petrol models, and now they've made a decision to revive their petrol ram pickup trucks or reviving the popular Hemi V8 engine in the U.S.

3:41And then even in Europe as well, you know, Stellantis also recently decided to revive diesel engines for several of their European models, even though, I mean, diesel, to be fair, the market is shrinking quite rapidly there. How do these carmakers plan and budget for disparities now in the standards in regulations globally? Yeah, so, you know, Stellantis' chief executive, Antonio Filoso, has phrased this quite often as like bringing freedom of choice to consumers. But in reality, what that means is that basically car makers are going to have to provide a wide variety of options. So whether it's petrol, diesel, hybrid, or electric, you need to invest heavily to bring all of these various choices to consumers.

4:28Some car makers have already been doing this. So like, for example, Toyota, BMW have said, you know, they've always want to offer multi-energy options. But for some car makers who have decided to focus on one particular, you know, whether it's EV or something, that means they need to revive models that they decided to let go, like, for example, petrol models. So what does all of this mean then for the global EV market? Yeah, so we're talking a lot about the change in the U.S., but if you look elsewhere in the world, there are a lot of areas, That's most notably, obviously, China, where the electric transition is accelerating extremely rapidly.

5:04So while we're seeing sales of EVs falling sharply in the U.S. because of these changes, we're still seeing record EV sales in Europe, in the U.K. as well. So what that means is that companies still do need to invest because longer term, most of these companies, whether it's GM or Ford, agree that long term future is electric. So it doesn't mean they can abandon it. And also, I mean, the big question is, while the U.S. is, you know, reviving petrol and other models, diesel or whatever, Chinese rivals like BYD will be continuing to accelerate the transition to EVs. So it's not going to be easy for these car makers because every country has a different pace of transition and they need to keep up with each market.

5:47A really interesting landscape. Kana Inagaki, the FT's industry editor. Thanks so much for your time. Great. Thank you.

5:59The gold rush in global markets is prompting some vault operators to leave larger values of physical bars and coins uninsured. Insurance brokers told the FT that's happening because vault holdings are reaching the limits of available cover. One broker said coverage for a single storage location has risen from an average of$3 billion a few years ago, now to as much as$5 billion. To better protect themselves, some gold vaults are moving their reserves between sites, while specialist gold transport services are buying more insurance. Gold prices have rallied to record highs this year due to geopolitical tensions and U.S.

6:39dollar weakness.

6:45We've all been told the rise of artificial intelligence will make our lives easier, And that might be true in some ways. But for financial markets, the threat of AI on pretty much every industry under the sun has caused chaos recently. Seemingly indiscriminate sell-offs have wiped billions of dollars off stocks in sectors from wealth management to insurance brokers and property services. So what's causing all the consternation, and is there any relief in sight? George Steer is our U.S. markets correspondent, and he's been following Wall Street's wild swings. Hi, George. Hello. All right. So there's been a lot of head scratching recently about these sudden sell-offs in various industries, particularly in tech.

7:26Just give us a taste of what's happening out there in the market. So the sell-off began two weeks ago when Amthropic, the AI startup, released some new tools to help boost the productivity of workers in the legal and publishing professions. Investors didn't like this. The sell-off intensified and started to sweep up some of the private equity giants that have piled into software over the last 10, 15 years. Even trucking companies were hit after a logistics company released an AI tool that would supposedly boost freight volumes. We've seen publishing companies sell off FinServe, insurance brokers, any company that kind of aggregates public information has been hit.

8:14So some of these moves, they do make sense, but others are just bizarre. You mentioned the trucking company, and I think that's such an interesting example of how investors have just had this knee-jerk reaction. Walk us through that. So a company called Algorithm Holdings, which is based in Florida, they're a tiny company that are valued at something like $6 million. They trade on the NASDAQ. They released a white paper basically arguing that a company that they own in India, a logistics company, had developed an AI tool that meant its trucking customers could scale up their volumes by something like 400 % without needing to hire any extra people.

8:54It's always hard in markets to attribute a price swing to something specific, but it looks like this white paper ended up triggering a massive sell-off across global transport stocks like airlines, freight forwarders, the Dow Jones Transport Index. I think it suffered its worst day since last April's Liberation Day tariffs. It was a crazy reaction to an incremental study self-published by a company that just a few years ago was selling karaoke equipment to Walmart. So if the market reaction was based on this one white paper that this company nobody knew about a few days ago put out, how did investors find it.

9:32Yeah, there's a kind of irony to the fact that the AI narrative is so dominant in the market right now. It's all investors want to talk about, even if it's what they currently want to avoid. And at the same time, buying and selling in the market of stocks is dominated massively by ultra fast proprietary trading firms that use complex models to basically comb through the internet for potentially market moving signals. So this AI paper was probably picked up by one such strategy. Others spot it. Momentum feeds momentum. And the sell-off kind of feeds on itself. AI driving AI. Incredible. I want to talk about what investors are doing because you've written about this anything but tech trade.

10:18Are they trying to protect themselves really against all of this volatility by just moving into something different. So I think investors had been maybe looking for an excuse to trim their exposure to some of this tech trade. And a lot of the kind of, yeah, the supermarkets, the materials companies, chemicals groups, anything cyclical, which is to say tied to the strength of the economy. A lot of those companies that had been kind of underloved for a long time have benefited from that rotation. So if we look at the week ahead, does it seem like some investors may take this opportunity, particularly in the tech sector, to buy the dip?

10:57I would never rule out the dip buying phenomena. Investors have proved time and time again that just when you think their appetite is waning, that proves not to be the case. But who knows what could happen on Monday or Tuesday? I get the impression that a lot of people just want to avoid parts of the market that could randomly implode on a way more strange white paper issued by a former karaoke company. Plenty to keep you busy then, I guess, in the next week. Always. George Stier is our U.S. markets correspondent. Thanks so much for your time. Thank you. As always, you can read more on all of the stories in today's podcast for free when you click the links in our show notes.

11:35This has been your daily FT News Briefing. Check back tomorrow for the latest business news. Thank you.