Weekend Papers Summary
FINANCIAL TIMES
-Western nations are considering seizing Russian central bank assets to fund Ukraine amid political disputes in the US and Europe. G7 officials have intensified talks on spending $300B in immobilized Russian sovereign assets, a radical step in the west's financial warfare against Moscow. The push comes as two crucial financial aid packages for Ukraine worth over $100B faltered, with Republicans in Congress and Viktor Orban of EU member Hungary opposing funding Kiev. Seizing Russian assets could provide an alternative stream of funding for Kiev, especially given the expected postwar reconstruction costs.
-Chinese spies used a Belgian politician, Frank Creyelman, as an intelligence asset for over three years, demonstrating Beijing's influence operations to shape politics in its favor. Woo, an officer in China's Ministry of State Security, pushed Creyelman to influence discussions in Europe on issues like China's crackdown on democracy in Hong Kong and Uyghur persecution.
-Top Federal Reserve officials have resisted speculation about imminent interest rate cuts, stating that the US central bank needs to see more progress on inflation before considering lowering borrowing costs. New York Fed president John Williams and Atlanta's Raphael Bostic, both voting members on the Federal Open Market Committee next year, emphasized that the Fed is not currently discussing rate cuts but needs to be ready to tighten policy if progress on inflation stalls or reverses.
-Israel's military has admitted to accidentally killing three Israelis held hostage in the Gaza Strip during combat. The incident occurred when soldiers mistakenly identified the Israelis as a threat and opened fire on them. The hostages were all young men in their 20s. The Israeli Defense Forces expressed deep remorse and condolences to the families involved.
-Microsoft has changed its description of its role in OpenAI, a multibillion-dollar alliance, following UK competition officials' announcement of an investigation. The move aims to clarify the distinction between Microsoft and OpenAI, as antitrust authorities seek to scrutinize the partnership. The change comes after OpenAI's CEO Sam Altman was fired, only to be reinstated after pressure from employees and investors. Microsoft and OpenAI's other backers, including Thrive Capital and Sequoia Capital, do not own any conventional equity shares in the company.
-Rudy Giuliani, former New York City mayor, must pay $148M to two Georgia electoral workers he falsely accused of election fraud. The damages award comes after a civil trial in which Freeman and Moss accused Giuliani of defamation, intentional emotional distress, and conspiring with others. The penalty is three times the amount requested by Freeman and Moss, who had sought nearly $50M in damages. Giuliani said he would appeal against the order. Freeman and Moss claimed Giuliani falsely accused them of criminal acts.
-Ukraine's Volodymyr Zelenskyy was, a week ago, still hopeful that his two biggest allies, Washington and Brussels, will approve financial aid packages worth $115B. However, he ends up with little to show for his efforts. The US Congress failed to approve a $60B support package, and a summit of EU leaders ended without agreement on their own €50B four-year funding for Ukraine. This failure to secure Ukraine’s long-term financial stability comes at a sensitive moment in the conflict, as Ukraine's counteroffensive has failed to free significant swaths of land from Russian occupation and Kiev's firepower is running low.
-Belgium's central bank governor, Pierre Wunsch, has expressed optimism that the European Central Bank will begin cutting interest rates in March, citing strong eurozone wage growth and pressure on prices. Although Wunsch is not yet ready to rule out raising borrowing costs further if wages continue to rise, he believes the probability of a hike has decreased. He believes inflation is moving in the right direction, but still needs good news on wages.
-Brazil's lower house of Congress has backed a constitutional amendment to simplify a range of levies on goods and services, addressing concerns about the country's complex tax system. The legislation will replace five separate consumption taxes with a dual VAT system, charged by federal authorities and regionally, starting in 2026. The reform, which was designed during the Jair Bolsonaro administration, is expected to be phased in over eight years. The move is seen as a significant step for Brazil's economy.
-Elon Musk has privately assured bankers who lent him $13B to fund his leveraged buyout of Twitter that they would not lose any money. These verbal guarantees were made to reassure lenders as the value of the social media site fell after Musk completed the acquisition last year. However, the seven banks that lent money to the billionaire for his buyout are facing serious losses on the debt if and when they eventually sell it. Musk's behavior, including attempting to back out of the takeover in 2022 and alienating advertisers, has stymied banks' efforts to offload the debt since he engineered the takeover.
-European bonds rallied on Friday, pushing yields to nine-month lows due to investors' focus on a slowing economy and the European Central Bank's insistence on not considering interest rate cuts. The yields on 10-year German Bunds dropped by 0.11 percentage points to 2.02%, the lowest level since March. The moves came despite ECB president Christine Lagarde's insistence that it was too soon to discuss rate cuts and the US Federal Reserve's dovish message earlier in the week.
-Tokyo Electron, Asia's largest semiconductor equipment maker, has managed to counteract the impact of Chinese export controls by expanding its sales of less advanced products to the country's chip industry. The company has been focusing on regulation-compliant products for China while deepening technology development with cutting-edge clients in other key markets. Tokyo Electron generated 43% of its revenues from China in the third quarter, compared to 24% a year earlier. The company is a crucial player in the semiconductor supply chain, providing chipmaking equipment for Taiwan Semiconductor Manufacturing Company, Samsung Electronics in South Korea, and Intel in the US.
-Turkish Airlines has ordered over 200 Airbus aircraft as part of a multi-billion deal to boost Istanbul's international hub status and Turkey's tourism industry. The deal, which has been under discussion for weeks, is a significant milestone in the aviation industry's evolution. The deal, which has been under discussion for weeks, is expected to boost demand for the industry's largest jets, which have seen a surge following the Covid-19 pandemic. The investment is expected to contribute to Turkey's aviation hub status and positively impact the tourism sector.
NEW YORK TIMES
-Israeli troops accidentally kill 3 hostages during combat in Gaza. Israeli forces mistakenly identified three Israeli hostages as a threat during a battle in northern Gaza, the military said. Alon Lulu Shamriz, Yotam Haim, and Samer Fouad Al-Talalka, taken hostage during the October 7 attack on Israel by Palestinian militant group Hamas, died after being fired on by Israeli troops in Gaza.
-In Israel, President Biden’s national security adviser denied talks of a rift over the Gaza war.
-A jury Orders Giuliani to Pay $148M to election workers he defamed. The former Georgia election workers said Rudy Giuliani destroyed their reputations and caused extreme emotional distress by spreading baseless lies.
-Drugs like ketamine and psilocybin are largely considered safe, but some people should be particularly cautious, experts say.
-Several Republican senators have objected to advancing 43 Biden diplomatic nominees. The State Department says that the monthslong blockade has damaged national security.
-A viral dance and ‘happiness campaign’ frustrates Iran’s clerics. It all started when a 70-year-old fish market stall owner nicknamed “Booghy” was grooving in public, in violation of Iranian law.
-Material from Russia investigation went missing as trump left office. A binder given to Donald Trump contained details that intelligence agencies believe could reveal secret sources and methods.
-Lead levels in children’s applesauce may be traced to cinnamon additive. The FDA is investigating the sources of cinnamon and other ingredients produced outside the US as the possible cause of lead poisoning in dozens of children.
-Alex Jones and Sandy Hook families enter final stretch in bankruptcy fight. Jones and the families who won more than $1B in damages against him last year have submitted competing settlement plans.
-New York suspends engineer who inspected Bronx building that collapsed. Officials said the inspector had “misdiagnosed” as a “decorative” element a column that was holding up the seven-story building.
-A Memphis school says it can’t bar a club sponsored by the Satanic Temple, which has been stirring fury with First Amendment challenges and public displays.
NY POST
-Hunter Biden refused to appear for a deposition in a criminal investigation, claiming his father was not financially involved in his foreign business dealings. House Oversight Committee chairman James Comer said that Hunter, 53, gave a speech outside the Capitol, claiming his father was not financially involved. The committee had over a dozen members of both parties present, dozens of staffers, and hundreds of specific questions. Comer said that Hunter's actions gave Congress the middle finger.
-General Motors is laying off 1,300 workers at two Michigan auto factories in early January. The Orion Assembly plant will lose 945 workers due to the end of Chevrolet Bolt EV production and the conversion to electric truck production starting in late 2025. Another 350 workers will be laid off at Lansing Grand River plant due to the end of Chevrolet Camaro production. Hourly employees will be offered positions at other factories. GM shares closed down 1.4% on Friday.