Good morning. The row between EU and US politicians over subsidies linked to Joe Biden’s Inflation Reduction Act is deepening as governors across America try to lure European clean energy businesses to their states.
Governors of Michigan, Georgia and Illinois, as well as West Virginia senator Joe Manchin, one of the IRA’s architects, were at the World Economic Forum in Davos last week extolling the virtues of the act, which will provide $370bn worth of subsidies for clean energy on everything from solar panels to electric cars.
“I have been astonished by the many activities from state governments, from business development agencies, state-owned business development agencies, which have been trying hard to lure us in,” said Gunter Erfurt, chief executive of Meyer Burger, a Switzerland-based solar modules manufacturer.
But European politicians have been less impressed. Germany and France have expressed unease with the IRA. Belgian prime minister Alexander De Croo complained recently about the “very aggressive way” the US had pitched the subsidies to EU businesses.
In a recent editorial the FT said the US and EU need to work together and “not engage in a wasteful battle to draw business and investment away from each other”. It went on to say avoiding distortionary subsidies, and having clear rules on the boundaries of what support is acceptable, is key.
Valdis Dombrovskis, Europe’s trade commissioner, said last week that the fight against climate change should be done by “building transatlantic value chains, not breaking them apart”.
Five more stories in the news
1. Former FBI agent charged with violating sanctions by working for Oleg Deripaska Charles McGonigal, who previously served as special agent in charge of counter-intelligence at the FBI’s New York office and investigated the Russian oligarch, has been arrested.
2. Ford plans to slash jobs in Europe The US carmaker wants to cut thousands of jobs in Europe and move more product development roles to the US, according to Germany’s largest union. IG Metall said Ford had internally announced plans to slash up to 3,200 jobs in Germany, with more cuts expected elsewhere in Europe.
3. Elon Musk says he believed he had funding to take Tesla private On his second day of testimony in a San Francisco federal court, Musk said he believed it was “a done deal” that Saudi Arabia’s Public Investment Fund would support a possible attempt to take Tesla private at $420 a share, a 20 per cent premium to the share price at the time. But Musk acknowledged there was no contract and that many details had not been worked out.
4. Lazard expands venture banking unit The boutique investment bank is set to advise a greater number of fast-growing start-ups in the US as part of a broader push to expand its private-capital offering. Lazard is assembling a team of six specialist bankers to be based in Los Angeles and Austin, according to a memo seen by the Financial Times.
5. China is ‘barrier’ to ending Zambian debt crisis, says Janet Yellen The US Treasury secretary called on China to agree to a rapid restructuring of loans to Zambia, saying Beijing was a “barrier” to ending the debt crisis in the southern African nation. Africa’s second-largest copper producer defaulted on $17bn of debt in 2020.
The day ahead
Markets latest US stocks are taking a pause after Monday’s rally and ahead of a busy day for earnings announcements. Contracts tracking Wall Street’s blue-chip S&P 500 and those following the tech-heavy Nasdaq 100 traded in a tight range ahead of the New York open. Read the latest market report.
Debt ceiling: US president Joe Biden will meet the congressional Democratic leadership to chart their united front on the country’s debt limit. The US last week hit the legal maximum amount the federal government is allowed to borrow, leading the Treasury to say it is now taking “extraordinary measures” to meet its debt obligations.
Earnings Microsoft reports earnings having announced plans to cut 10,000 jobs and pour billions of dollars into the company behind the ChatGPT artificial intelligence platform in recent days. US defence contractors Lockheed Martin and Raytheon also report earnings as demand for their products surges. 3M, Johnson & Johnson and General Electric also report.
Ticketmaster: The Senate judiciary committee will hold an antitrust hearing focusing on the meltdown during the sale of tickets for Taylor Swift’s upcoming Eras tour. Joe Berchtold, chief financial officer of Live Nation, the company that owns Ticketmaster, is due to testify.
To coincide with the publication of Martin Wolf’s new book, ‘The Crisis of Democratic Capitalism’, join him and other thought leaders online for a subscriber-exclusive event on January 31. Register for free here.
What else we’re reading
Wagner Inc: a Russian warlord and his lawyers As founder of the private mercenary operation known as the Wagner Group, which offers muscle to dictators and has waged war in the Middle East and Africa as an unofficial foreign policy tool of the Kremlin, Russian entrepreneur Yevgeny Prigozhin is one of the most sanctioned individuals on the planet. An FT investigation shows how he has used leading corporate lawyers around the world to try to keep western governments at bay.
The rise of Esther Crawford in Musk’s ‘hardcore’ Twitter The social media giant’s director of product management has become one of the few women at the company to join Elon Musk’s trusted lieutenants. Some insiders believe the 39-year-old has the charismatic energy needed to transform Twitter’s flailing business, while also having the ear of its impulsive owner. Others revile her as a sycophant and opportunist.
Trawler case tests Norwegian control over Arctic Archipelago In a case starting today, Norway’s supreme court will assess whether a Latvian trawler needs a Norwegian licence to fish for snow crab in an extended area around the Arctic Archipelago of Svalbard. The case will test Oslo’s interpretation of territorial waters and control of the region’s resources.
Why passive investing makes less sense in the current environment Passive portfolio management is attractive in a world where investment outcomes are heavily influenced by a common global factor — as in the decade of artificially floored interest rates and massive central bank injections of liquidity. But in a world where the macro outlook is murky dynamic asset allocation trumps low fees, writes Mohamed El-Erian.
What to do if you hate your job Whatever your reason for being unhappy at work, hating your job is not viable long term. Grace Lordan of the London School of Economics shares eight proactive strategies to identify the source of the problem — and to do something about it.
Take a break from the news
Eleven across is simply “nonsense, twaddle”, while the down clues are more cryptic. Try your hand at the FT’s latest crossword puzzle.
