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Billionaire CEO of Tesla says there’s a good shot of cutting at least $1 trillion from federal expenditures

Elon Musk reiterated that his Department of Government Efficiency will try to cut $2 trillion from federal spending, but he said they may not reach that goal.

“I think if we try for $2 trillion, we’ve got a good shot at getting one,” Musk said Wednesday in a conversation with Mark Penn, chairman and chief executive of ad company Stagwell, that was livestreamed on Musk’s social-media platform X.

Musk said the $2 trillion goal is “like the best-case outcome.” He also said that the group should set an ambitious target to help them get results.

President-elect Donald Trump tapped Musk and Vivek Ramaswamy to co-lead the Department of Government Efficiency, or DOGE, an effort to cut federal spending and regulations. The entrepreneurs have proposed ideas such as reducing the federal workforce, requiring federal employees to return to the office five days a week, and removing government agencies outright.

Musk previously suggested he could cut at least $2 trillion in federal spending.

Musk and Penn spoke for more than 30 minutes, with their remarks covering a range of topics including advancements in artificial intelligence, colonizing Mars, and humanoid robots.

Musk voiced confidence in his efforts to reduce federal spending. “It’s a very target-rich environment for saving money,” he said.

“It’s very, very hard for people to care about spending someone else’s money,” Musk said about government spending. He added: “Actually, I know people in the government who do care about, just as a matter of principle, spending money effectively, and they try to do so, and they can’t. The system prevents them from doing so.”

Musk oversees six companies, including electric-vehicle maker Tesla and space-exploration company SpaceX. Last year, Musk also dove into presidential politics, contributing roughly a quarter of a billion dollars to Trump’s election efforts and helping lead the initiative that became the Department of Government Efficiency.

Companies vie to create small plants for deployment to sites from data centres to oil platforms

Nuclear energy companies are trying to shrink reactors to the size of shipping containers in a bid to compete with electric batteries as a source of zero-carbon energy.

Led by Westinghouse, the race to develop “microreactors” is based on the notion they can replace diesel and gas generators used by everything from data centres to remote off-grid communities to offshore oil and gas platforms.

“Initially, the idea was there are parts of the economy that are very difficult to decarbonise, especially remote communities that depend on transportable diesel, which is very expensive,” said Jon Ball, head of Westinghouse’s eVinci microreactor programme. “But the level of interest has really expanded and we believe this is going to be a significant growth area.” 

The nuclear industry is enjoying a renaissance as governments and big tech companies search for clean sources of power to meet their climate commitments. Dozens of projects are already under way to develop small modular reactors, which have capacities of up to about 300 megawatts. 

Microreactors have a much smaller output of up to 20MW, enough to power roughly 20,000 homes, and are likely to operate like large batteries, with no control room or workers on site. The reactors would be transported to a site, plugged in and left to run for several years before being taken back to their manufacturer for refuelling. 

Westinghouse in December won approval from US nuclear regulators for a control system that will eventually allow the 8MW eVinci to be operated remotely. The reactor, which has minimal moving parts, uses pipes filled with liquid sodium to draw heat from its nuclear fuel and transfer it to the surrounding air, which can then run a turbine to produce electricity or be pumped into heating systems. 

“Our goal is to be able to operate autonomously from a central location where we can just simply monitor a fleet of reactors that are deployed around the world,” said Ball.

The reactor uses small quantities of ceramic-coated Triso fuel, which is designed to withstand extreme temperatures without melting down.

The eVinci is the first microreactor to complete engineering studies for a test programme — expected to start in 2027 — at the Idaho National Laboratory in the US, and Westinghouse recently signed a deal with Core Power, a UK start-up looking to develop nuclear power plants at sea. 

“It is on track for an operating licence at the US Nuclear Regulatory Commission . . . We think 2029 is the time it comes, which is as early as anything will come on to the market,” said Mikal Bøe, chief executive of Core Power. He added that he hoped the two companies could start building an order book in 2027 and 2028. 

Ball said two of the target markets for eVinci reactors were data centres and the oil and gas industry, both on and offshore. He said the ability to run several microreactors side by side would make data centres more resilient than with a single source of energy. 

Microreactors are also likely to be used by the mining industry, particularly to excavate cobalt, manganese and other critical minerals that are often located in remote locations, said Ian Farnan, a Cambridge professor of earth and nuclear materials.

He said the problem was “you have to cut 1,000 tonnes of rock for one tonne of product”.

“This will change how you run a mine. Currently, we use diesel. Aside from its cost and carbon intensity, the logistics of getting diesel to remote sites make a lot of these mines unviable. If you could install a reactor that lasts 10 to 20 years, you’ve got a power source sorted.”

Nasdaq-listed Nano Nuclear Energy has hired Farnan to help design a low-pressure-coolant microreactor that it hopes to bring to market by 2031.

Other companies that have established leading positions in the new microreactor industry include New York-listed BWX Technologies, which already builds nuclear reactors for US navy submarines and aircraft carriers, and X-energy, which raised $500mn in September from investors including Amazon and Ken Griffin, founder of the Citadel hedge fund. 

Both companies were selected for Project Pele, a US defence department commission for a portable nuclear reactor that could be deployed to any site on an aeroplane and run for several years before being moved on. 

But J Clay Sell, chief executive of X-energy, said the market for microreactors was “still emerging”. 

“We’ve probably invested as much as anyone in the sector,” he said. “But when you go down in size, the economics become much more challenged. You have to get to a greater level of scale for microreactors to become economic.”

Bøe said microreactors would be price-competitive once production lines were scaled up. “If you have an order book of 60 to 120 reactors, you see an economy of numbers,” he added, saying the aim was to produce electricity for somewhere between $100 and $150 per megawatt hour.

“That’s not grid-scale competitive, but it is very competitive for ports, terminals, petrochemical facilities, island locations, remote locations,” he said. “The cost of bringing diesel and gas into these places is prohibitively high.”

But there are questions over how to build, transport and run microreactors safely, said Ronan Tanguy, programme lead for safety and licensing at the World Nuclear Association. 

Regulators still have to draw up rules around whether microreactors can be operated remotely and how to make them safe from cyber attacks. Rules are also needed around transporting them, especially across national borders, and whether they should be fuelled in a factory or on site. Given their smaller size, they may also pose an easier target for nuclear fuel theft.

Westinghouse said the eVinci would pass the same aircraft impact assessment test that applies to larger reactors but Tanguy noted that many existing rules for reactors were either “disproportionate or not applicable for microreactors”. It would be very difficult to deliberately hit such a small target with an aircraft, he noted.

“The International Atomic Energy Agency is likely to issue high-level safety standards and those are usually taken into national regulation,” he said. “It is not going to be quick. If people want it to get done, yes it can be, but there’s lots of work involved.

FT : Playing the M&A Trump card & Activistist coming for Europe

Steel groups cry foul and bet on Trump

Nippon Steel has spent more than a year playing nice.

The Japanese group’s executives have courted Washington power-players and dined alongside Pennsylvania steelworkers in far-flung towns, all with one goal: to garner support for the company’s $15bn deal to buy US Steel.

But it’s now become a legal battle. They have sued President Joe Biden for allegedly blocking the transaction in exchange for union support in the swing state of Pennsylvania during last year’s election.

They’re betting Donald Trump and his incoming administration will approve their deal, even though he has repeatedly said he would block it.

What triggered the abrupt shift? Biden officially blocked the deal last Friday, citing national security concerns, after months of indicating he wanted the company to remain American-owned.

But Nippon and US Steel aren’t walking away from their merger.

Although Trump has vowed to block the deal, he’s notoriously mercurial, and has changed his mind on high-profile commercial issues before, such as banning TikTok.

Now, by suing Biden, the companies hope to be granted a do-over of the national security review by the Committee on Foreign Investment in the US, which couldn’t come to a decision by the December 23 deadline.

The two steelmakers are positioning themselves to benefit if Trump changes his mind.

“You could see a scenario where president Trump doesn’t want to defend the corrupt practices of his predecessor,” said a person familiar with the litigation. “In that scenario, this deal shouldn’t even end up on the president’s desk.”

But the companies face a time crunch. In his order blocking the deal last week, Biden stipulated they had 30 days to abandon the deal. The companies are hoping that either Cfius or the court will grant them more time to fight for the deal’s survival.

Europe, brace for the activists

Brace for impact: as European economies navigate political instability, slowing growth and unpredictable geopolitics, activist investors are gearing up to be even bolder and louder in 2025.

Some 86 per cent of corporates expect activism to tick up in 2025, according to a new study by top law firm Skadden Arps, with just under half expecting that increase to be “significant” — double the expectation from last year.

This follows years of consistent increases in the number of campaigns in Europe and a trend towards going public earlier, ratcheting up the pressure on boards.

Activists see Italian companies as most ripe for the picking, followed by the UK, Germany and France, according to Skadden.

While technology, media and telecoms were seen as offering the most opportunities in 2024, industrials are expected to be the big target in activists’ sights in 2025 — a major change from last year, when the sector was ranked fifth.

That prediction comes as Europe’s carmaking supply chains, for instance, are expected to continue to suffer this year.

“If you have different activists telling you . . . we’re going to target mainly industries and chemicals, it helps those companies to get prepared,” Armand Grumberg, the head of Skadden’s European M&A practice, told DD.

He added that while European companies previously lagged behind UK counterparts on planning to defend against activists “preparedness is now much, much higher than it used to be”.

Mid-sized companies with market value of €1bn to €2bn were also increasingly targeted in 2024. “When we speak to our mid-sized company clients, they say: ‘we’re not so much on the radar’. Well, guess what? You’re going to be,” he said.

That’s not to say all is smooth sailing for activists.

Bluebell Capital Partners — which made waves targeting oil company BP, pharmaceutical company GSK and yoghurt maker Danone — closed its activist hedge fund in December after struggling to raise funds.

And Paul Singer’s feared activist hedge fund Elliott Management has lost a string of top staff in its London office since autumn 2023, including star fund manager Nabeel Bhanji, who is decamping to Citadel.

But for European companies with vulnerabilities such as governance issues or non-core businesses creating drag: watch out.

Issuers pounce on surging investor demand for debt before Donald Trump returns to the White House

Corporate borrowers kicked off 2025 with a record $83bn in dollar bond sales, capitalising on buoyant investor demand to raise debt ahead of any market volatility sparked by Donald Trump’s return to power.

Borrowing in the US dollar investment-grade and high-yield bond markets reached $83.4bn by January 8, the highest year-to-date figure since 1990, according to data from LSEG.

High-grade borrowers have led the rush, including international banks such as BNP Paribas and Société Générale, car giants such as Toyota, and heavy machinery maker Caterpillar. US banks are expected to join the fray later in January after their earnings season.

“The market is strong, so there is no need for them to delay. They’re trying to come as early as possible,” said Marc Baigneres, global co-head of investment-grade finance at JPMorgan.

The rush of new debt sales comes as spreads — the difference between the yield on corporate debt versus safer government bonds — are near multi-decade lows, spurring companies to raise funds cheaply while they can.

“There are a lot of risks to spreads — inflation picking up, the economy slowing down, the Fed potentially pausing rate cuts and even moving on to rate hikes,” said Maureen O’Connor, global head of Wells Fargo’s high-grade debt syndicate.

The average US investment-grade spread sat at just 0.83 percentage points on Wednesday, not far above its narrowest point since the late 1990s, according to ICE BOFA.

January is typically busy for debt issuance, especially by banks. But the latest deal burst comes as companies lock in cheaper debt before Trump’s inauguration — with economists warning that the incoming US president’s telegraphed policies, including trade tariffs, could be inflationary.

On Wednesday, minutes from the last Federal Reserve meeting showed that officials were also concerned about inflation and wanted to be “careful” with the pace of future rate cuts.

Big borrowers are also under pressure to refinance quickly, with $850bn of high-grade dollar debt set to mature this year and another $1tn in 2026, according to Wells Fargo calculations.

“It’s a very attractive market environment” for borrowers, said Dan Mead, head of Bank of America’s investment-grade syndicate. “You continue to see healthy investor cash balances and receptivity to the new issues coming to market, and pricing at very attractive spreads that leads to issuers looking to go sooner rather than waiting.”

Edward Al-Hussainy, senior interest rate and currency analyst at Columbia Threadneedle, said pension funds and insurance companies were “exceptionally predisposed” at the moment to buy debt.

Banks are typically first to take advantage of narrow spreads and are among the most active issuers so far. But market participants said non-financial borrowers could join the rush before the 10-year Treasury yield — a benchmark for global borrowing costs — rises any further. It now sits at about 4.7 per cent after climbing sharply in recent weeks.

“We have a couple of fairly critical risk events in January,” said O’Connor, pointing to US jobs data due on Friday, which will offer investors clues about the future path of interest rates, and Trump’s January 20 inauguration.

“We’ve heard quite a bit of rhetoric from the incoming administration on what the market could see quickly on the back of that,” O’Connor said. “I think there is a concern that that could catalyse another leg higher in Treasury yields.” Some “coupon-focused borrowers” — meaning companies focused primarily on the total yield they pay to investors — “are trying to get in front of that”, she added.

This week’s volumes, which have been condensed to just three days by shortened trading hours on Thursday, and Friday’s payrolls, follow on from a borrowing bonanza in 2024 — when global issuance of corporate bonds and leveraged loans hit a record $8tn.

While the current conditions remained favourable for sellers of debt, some buyers said they were now willing to sit on the sidelines until more alluring conditions emerge.

“The vast majority of deals are coming at levels that leave very little value on the table,” said Andrzej Skiba, head of BlueBay US fixed income at RBC GAM. “[It has] looked rather unappealing and we prefer to keep powder dry for a potential increase in volatility following the inauguration, as the market finds out this new policy mix and the Fed’s response to that.”