Good morning. American industrial giant Honeywell, under pressure from the activist investor Elliott, has announced plans to separate its aerospace division, spin off its advanced materials arm and divest itself of smaller business lines. The stock fell 6 per cent on the news. Did Elliott remember to double check its sum-of-parts model? Email us about your worst Excel errors: robert.armstrong@ft.com and aiden.reiter@ft.com. 

Michael Pettis on rebalancing trade

Michael Pettis has been having a moment. His theories of trade imbalances and capital flows have garnered support among Democrats and Republicans, and have served as the intellectual justification for President Donald Trump’s tariff policies. Economic commentators Paul Krugman, Noah Smith and Tyler Cowen have recently published pieces strongly criticising his work. We decided to pose their critiques to him and let him respond in his own words.

Krugman and Smith argue that tariffs tend to strengthen the dollar, making imports cheaper and neutralising the tariffs’ effect on the balance of trade. What is your response?