Elon Musk’s war on management consultants

Good morning and welcome back to FirstFT Americas. If this email was forwarded to you sign up to receive it every day here. If you are not a subscriber you can find out more about the newsletter here. Today we’re covering:

• US government cuts spending on consultants

• White House hands carmakers tariff reprieve

• Trump’s warning for Hamas

• Microsoft-CoreWeave ties cool

• How to find a sailing holiday on a modest budget

The Trump administration is widening its assault against government spending on consultants, after an Elon Musk-led cost-cutting drive triggered the cancellation of dozens of contracts and threatened hundreds more.

Ten of the largest US consultants have been told that they have until tomorrow to justify billions of dollars of ongoing projects for the federal government, and officials told the Financial Times they planned to expand the number of targeted firms in the coming weeks.

An FT analysis of federal data shows that more than 30 contracts held by the 10 consultants have been completely or partially cancelled. The largest is an umbrella contract covering IT services for the Internal Revenue Service, led by Deloitte, valued at up to $1.9bn over seven years.

The 10 consultants initially targeted by the administration include Deloitte, Accenture, Booz Allen Hamilton, Guidehouse and IBM. The FT’s analysis covers contracts held by these companies which, according to federal returns, have been the subject of “terminated for convenience” notices.

The contracts are held by a wide range of federal entities, including Immigration and Customs Enforcement, the Department of Defense, the Social Security Administration and the US Patent and Trademark Office.

Revenue from the US public sector accounts for about 6 per cent of the US management consulting market and totalled $6bn last year. 

Musk’s so-called Department of Government Efficiency (Doge) has been orchestrating cost-cutting measures across government that include mass firings of federal workers, the freezing of aid projects and the elimination of agency functions in a manner that critics say is haphazard and blind to the consequences. Read more of this exclusive story on Musk’s attack on the consulting industry.

Here’s what else we’re keeping tabs on today:

• Markets: A global sovereign bond market sell-off that started yesterday has deepened today. Japan’s 10-year borrowing costs rose to a 16-year high this morning. Here’s the latest.

• European summit: EU leaders meet in Brussels for an emergency summit to discuss defence spending and Ukraine after it emerged yesterday the US had stopped intelligence sharing with Kyiv.

• Central banks: The European Central Bank is expected to cut interest rates at its monthly policy meeting. Federal Reserve Board governor Christopher Waller speaks on the economic outlook at an event in New York.

• Results: Retailers Kroger, Gap and Costco Wholesale report earnings. Our Week Ahead newsletter has the full list.

• Congress: The Senate Banking Committee will vote on whether to advance President Donald Trump’s nominees to lead the Consumer Financial Protection Bureau and Federal Housing Finance Agency, among other positions.

• The Moon: Houston-based Intuitive Machines’ Athena lander will attempt a touchdown on the lunar surface. The touchdown will be streamed live here.

To mark International Women’s Day on Saturday, consumer editor Claer Barrett later today will host a webinar on tackling debt. Register for free

Five more top stories

1. Trump has handed carmakers a one-month reprieve on tariffs on imports from Mexico and Canada, the White House said, in the latest last-minute policy shift to roil corporate America. The carve-out comes after markets reacted turbulently to tariffs imposed by the Trump administration which took effect on Tuesday.

2. Emmanuel Macron has said he will hold talks with allies over how France’s nuclear weapons could protect Europe, as the continent steps up efforts to guard against an emboldened Russia. The French president was responding to a call by Germany’s chancellor-in-waiting Friedrich Merz for some form of “nuclear sharing” among European allies. Leila Abboud in Paris watched last night’s live TV broadcast by the president.

3. Trump has warned Hamas that “it is OVER for you” unless it hands over the remaining hostages it holds in Gaza, hours after Washington said it had held direct talks with the militant group for the first time. The US president added that he was “sending Israel everything it needs to finish the job”, warning Gazans they would be “dead” if the hostages are not released.

4. Microsoft has walked away from some of its commitments to cloud computing provider CoreWeave in a significant blow to a company seeking to launch a blockbuster $35bn initial public offering next month. New Jersey based CoreWeave provides Microsoft with computing capacity from its AI data centres under a partnership worth billions of dollars. Here are the reasons behind Microsoft’s shift.

• Seven & i: The Japanese retail giant is planning to list its 7-Eleven store business in North America and launch a massive share buyback, David Keohane in Tokyo reports.

• Discord: The chat platform is in early talks with banks about a US public listing, people close to the company have told the FT.

5. Billionaire Izzy Englander is exploring opening up the ownership of his $76bn hedge fund Millennium Management to its top executives for the first time, in the latest step to prepare it for life beyond its founder. It is still working out how to structure a distribution of equity to its key people but this is what is currently being discussed.

• More financial services news: HSBC has renamed its “eastern markets” and “western markets” business sections, after the branding prompted renewed speculation that the bank might formally split along east-west lines. 

Today’s big read

Brook­field Cor­por­a­tion, one of the world’s most com­plex financial con­glom­er­ates, is attract­ing scru­tiny for circular flows of cash involving its global property portfolio. Read the FT investigation in full.

We’re also reading . . . 

• ‘America First’ bets misfire: Investors betting that the new president’s agenda would boost US equities and the dollar have been confounded.

• Europe: Governments on the continent must cut welfare spending if they are to meet the challenge of higher defence spending, argues Janan Ganesh.

• Climate change: The expected cooling of the Earth’s temperature this year has not happened, say scientists at Europe’s Copernicus observation agency.

• Turkey: The country’s top diplomat says Ankara would join a post-Nato European security pact, in a rare interview.

• US aid freeze: The rest of the world should take the lead on aid and show that it can spend it better, write Nobel laureates Abhijit Banerjee and Esther Duflo.

Chart of the day

For the first time in more than 30 years, Europe’s defence sector is hot property. After decades in which military budgets were squeezed, Donald Trump’s hardline approach towards Ukraine and calls on allies to shoulder more of their security burden have forced the region’s leaders into action. But can European defence groups step up?

Take a break from the news . . . 

A guided sailing holiday can offer those with little experience — and a modest budget — a taste of the yachting lifestyle, as Neville Hawcock found on a flotilla tour of Greece’s Ionian Islands.