Good morning. Andrew here, in Davos, Switzerland. It is Day 4 of the World Economic Forum — and it’s been a wild 24 hours. For the past couple of days, C.E.O.s and politicians were wringing their hands about whether President Trump would use military force to take over Greenland. All of those discussions are now moot, with Trump announcing a “framework” for an agreement over the future of Greenland and the Arctic. But the fissures between Washington and the rest of the world feel real and unresolved. Over and over again in conversations, major American C.E.O.s expressed deep worry that their relationships with international companies and countries were breaking down. Several pointed to the speech on Tuesday by Prime Minister Mark Carney of Canada, in which he described a “rupture” to the global order. (Was this newsletter forwarded to you? Sign up here.)
On edgePresident Trump’s speech yesterday at the World Economic Forum in Davos, Switzerland, and what happened next, delivered a serious case of whiplash to many business and political leaders in attendance. But even as investors sighed in relief after Trump walked back his threats of military force and then tariffs to acquire Greenland — some attendees texted one another “Taco!” after, The Times reports — his dark warnings against perceived enemies hung heavily on executives’ minds. That includes many who applauded his speech and sought to see him in person later. C.E.O.s made sure to wait for Trump to arrive at a gathering he summoned them to, Lauren Hirsch reports from Davos, with some canceling other meetings out of fear of offending the president by leaving early. Jane Fraser, Citigroup’s C.E.O., missed part of her own bank’s cocktail reception to wait for Trump, according to two people with knowledge of the event, who weren’t authorized to speak publicly about it. Many attendees remained on edge. Executives walking into client meetings had to gauge the temperature to figure out what was safe to say on Greenland, energy or any other political topic. At various lunches, business leaders traded notes on the best way to announce corporate news without offending the Trump administration. Many feared saying anything on the record that the administration could construe as negative, leading to some tongue-twister answers. Consider the response that Scott Strazik, the C.E.O. of GE Vernova, gave to a question at a Semafor event about what he was looking for in Trump’s speech: I’m always just trying to listen and try to very authentically recognize patterns and through pattern recognition, figure out how we can find opportunities that serve the administration with where their priorities are. And the only way to do that is to listen carefully and consistently and find that pattern recognition as best you can. Examples of worst-case scenarios abounded. Not on the guest list at the Trump business reception was Brian Moynihan, the C.E.O. of Bank of America, The Financial Times reported. The president memorably dissed Moynihan at Davos last year over claims of his firm debanking political conservatives. Two sources told Hirsch that Moynihan spent part of the evening at a client dinner featuring Commerce Secretary Howard Lutnick. When Lutnick read aloud Trump’s social media post withdrawing his tariff threat over Greenland, the sources said, executives in attendance applauded.
Berkshire Hathaway prepares to sell its Kraft Heinz shares. Berkshire, in one of its first major moves since Greg Abel succeeded Warren Buffett as C.E.O., registered its 27.5 percent stake in the food giant, a step toward potentially selling the holding. The move highlights a rare bad bet by Buffett: Shares in Kraft Heinz have dropped 70 percent since he championed the 2015 merger that created the company, which now plans to split up. F.C.C. regulators plan to tighten regulation of late-night TV. The agency warned that it planned to enforce long-dormant rules that require network talk shows featuring political candidates as guests to offer candidates with opposing views equal airtime. The move comes after longstanding conservative complaints that late-night shows are more likely to host Democrats than Republicans. Media analysts say the change would make it easier to file complaints against shows that President Trump regularly criticizes, including “Jimmy Kimmel Live!” and “The View.” OpenAI is said to pitch Middle East investors on a $50 billion fund-raising round. Sam Altman, the artificial intelligence company’s C.E.O., met with major investors in the region to line up funding at a valuation of up to $830 billion, according to Bloomberg, as it prepares to spend big on chips, data centers and talent. Separately, Apple plans to remake Siri into an A.I. chatbot that will be installed in iPhone, iPad and Mac operating systems and will replace the existing interface, Bloomberg reports. Apple is also developing an A.I.-powered pin, according to The Information. “China is right there waiting for them”There’s relief on both sides of the Atlantic today after President’s Trump apparent retreat from another potential trade war (and military action) over Greenland. But the biggest winner from Trump’s high-stakes brinkmanship may be China, Niko Gallogly reports. While Trump used his speech at the World Economic Forum in Davos, Switzerland, to try to browbeat allies into giving him what he wants, Beijing trade officials there have struck a more business-friendly tone. “China definitely wants to assume the mantle of being the adult in the room, while the United States continues capriciously showing hostility,” Eswar Prasad, an international trade expert at Cornell University, told The Times. He Lifeng, China’s vice premier and a key negotiator on trade deals, criticized protectionism and pitched Beijing, which had a record trade surplus despite Trump’s trade war, as a commercial “partner, not a rival, for other countries.” France seems game. “China is welcome,” President Emmanuel Macron of France said in Davos, and called for more Chinese foreign direct investment in Europe. That’s even as the authorities in Brussels continue to accuse some Chinese companies of engaging in exports dumping. And then there’s Canada. Last week, Mark Carney, the Canadian prime minister, announced that the country would lower tariffs on some Chinese electric vehicles in exchange for China reducing tariffs on Canadian canola products. For good measure, he said Ottawa’s relationship with Beijing had become more “predictable.” Then Carney received attention — and applause — in warning in Davos this week of a “rupture” to the global order. (Trump shot back yesterday: “Canada lives because of the United States. Remember that, Mark, the next time you make your statements.”) That leaves a door open for China. For disgruntled trade partners, “China is right there waiting for them,” Kyle Chan, a fellow at the China Center at the Brookings Institution, told DealBook. China is positioning itself to meet global demand in key areas like clean energy, electric vehicles, artificial intelligence and some manufacturing equipment, he added. But don’t expect a wholesale transformation anytime soon. For starters, Beijing has stayed close to Moscow since Russia’s full-scale invasion of Ukraine, a bitter pill for the E.U. to swallow. “The Europeans would stand alongside China but for Ukraine,” Adam Tooze, an economic historian at Columbia University, told The Times. “We realized they were fundamentally changing how people were hired. People were getting rejected in the middle of the night and nobody knew why.”— Jenny Yang, a lawyer representing plaintiffs in a lawsuit against Eightfold AI, which produces a popular artificial intelligence tool to help employers screen job applicants. The suit argues that such software can block candidates from advancing to a human reviewer and gives no feedback on its decisions or recourse for its mistakes. The lawsuit wants some A.I. tools to be subject to the same Fair Credit Reporting Act requirements as credit agencies. Fighting about the FedThe continuing battle over the independence of the Fed took new twists, from Washington to the World Economic Forum in Davos, Switzerland. The latest: The Supreme Court heard oral arguments yesterday in the case over President Trump’s effort to remove Lisa Cook from the Fed, and it didn’t go well for the Justice Department. Trump is trying to fire Cook, a Fed governor, over accusations of mortgage fraud. (Cook has denied wrongdoing, and has not been charged with a crime.) Judging by the skepticism a few of the conservative justices expressed, the court appeared likely to rule against Trump:
The Supreme Court faces a complicated choice. Justices mused yesterday about rejecting Cook’s attempted firing and sending the case back to the lower courts to ultimately resolve the matter. Or they could take the more complicated route of trying to reach a broad ruling that would seek to set limits to presidential powers when it comes to Fed members. Either option would potentially buy Fed officials more cover from possible White House interference, legal experts say. That would be an important victory for Fed independence — for now. Jay Powell, whose term as Fed chair ends in May, attended Cook’s trial yesterday to show support. Trump has openly chided Powell — and the Justice Department has started a criminal investigation into him ostensibly over his congressional testimony from June — to lower interest rates, even as some policymakers fear that could risk re-accelerating inflation. The new front-runner to replace Powell, according to the prediction market Kalshi, is Kevin Warsh, a former Fed governor who was on Trump’s shortlist for Treasury secretary. At Davos yesterday, Trump teased the idea that he had chosen Powell’s replacement. “I’ll be announcing a new Fed chairman in the not-too-distant future,” he said. “Somebody that’s very respected,” he added. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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