TheChek News Flow

Politics has created choppy waters for the sector

Subsea cables, the backbone of our communications and energy, are enormous: nose to tail, they’d wrap round the globe 37 times. But even that is nowhere near enough. The green transition — which for many places means relying on far-off sun and wind — has stuffed some cablemakers’ order books, and lifted their shares.

There are still knots to untangle. Cables are vulnerable to everything from sabotage to the shifting seabed. Investor sentiment is shifting too, after November’s elections installed Donald Trump, no friend of renewable energy, as US president.

Since then, shares in French cablemaker Nexans and Danish peer NKT have fallen. Italy’s Prysmian, the biggest, fell sharply last week, caught up in the energy sell-off triggered by a Chinese start-up’s strides in creating less power-intensive AI. More quietly, Prysmian ditched planned, and long-stalled, projects in the US.

Europe remains gung-ho on renewables like wind, which are powering demand. Cables bring offshore wind power on to land, or allow countries to pass on — or receive — surplus energy, such as the Nemo link connecting Belgium and the UK. The European Commission wants members to have interconnectors in place to enable transport of at least 15 per cent of their capacity by 2030.

More ambitious still, come 2030, start-up Xlinks aims to pump solar energy from sunny Morocco through 4,000km of subsea cable, ultimately meeting 8 per cent of the UK’s electricity needs and keeping lights on when the home winds drop. The required £20bn investment sounds like a pipe dream, but then so does the UK’s bid to have 50MW of offshore wind power by 2030, a more than threefold increase.

That points to the second big cable snag. Can Europe actually deliver its green ambitions, and over what timescale? The power industry is an unhelpful mish-mash of public and private sectors with different aims. The UK’s 2023 contract for differences auction, in effect setting prices, drew precisely zero bids from offshore wind farm developers: none could make the maths stack up.

Politics, too, creates choppy waters. Russia’s full-scale invasion of Ukraine, which exposed Europe’s reliance on Russian gas, prompted the need to diversify energy supplies — including from renewables. But much of the technical cable expertise, and some capital, is coming from China, a potentially hostile actor.

Still, cablemakers are not in a bad spot. They are big. They are vital to the long-term trajectory of the energy system. And they have a lot of work already in the pipeline. While investors may be reluctant to dive in, this is a sector that will be hard to ignore.

Mexican drug cartels are ordering their members to attack US Border Patrol agents with kamikaze drones and other explosives in a desperate bid to thwart the crackdown at the border, according to an internal memo obtained by The Post.

The alert, which cites social media posts and other sources, cautions federal agents “to remain cognizant of their surroundings at all times” in the face of the new threat.

“On February 1, 2025, the El Paso Sector Intelligence and Operations Center (EPT-IOC) received information advising that Mexican cartel leaders have authorized the deployment of drones equipped with explosives to be used against US Border Patrol agents and US military personal currently working along the border with Mexico,” the internal memo titled “Officer Safety Alert” said.

“It is recommended that all US Border Patrol agents and DoD personnel working along the border report any sighting of drones to their respective leadership staff and the EPT-IOC.”

Federal agents working the border are also advised to “carry proper equipment” at all times, including first aid kids, tourniquets and body armor. The memo also notes that rifles “should be readily available.”

News Nation, which first revealed the memo, also reported that posts on TikTok and other social media sites by the cartels have advised illegal migrants to “spit and urinate” in ICE agents’ food and defecate in their vehicles.

Other posts have encouraged assassins to target agents.

The new threat from narcotraffickers south of the border comes amid a major crackdown on illegal immigrants crossing into the US under President Trump.

Just days after taking office, Trump vowed to send 10,000 US troops to help secure the border, while his border czar Tom Homan has launched deportation raids across the country targeting migrant criminals.

Mexican cartel bosses, who recognize the stepped-up US presence at the border will cut deep into their drug and human trafficking operations, have turned things up a notch, the leaked memo showed.

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French group ‘absolutely certain’ to be world’s biggest ad company by revenue last year, says Arthur Sadoun

France’s Publicis overtook rival WPP to become the world’s biggest advertising company last year after a series of acquisitions helped it grow in the US and push ahead in digital marketing, according to its chief executive.

“We had a very strong Q4, which now makes us absolutely certain to be the largest advertising company in 2024,” Arthur Sadoun told the Financial Times in an interview. “Everyone knows we’re winning more than others in new business, but we’re also losing less.”

He also said the “acquisitions we’ve made for more than $12bn in the past decade have been growing by 40 per cent”.

The Paris-listed group grew 6.3 per cent on an organic basis in the fourth quarter, ahead of company-provided consensus estimates, in order to deliver net annual revenues of €14bn in 2024.

WPP is expected to deliver £11.4bn in sales when it reports results this month, according to Visible Alpha estimates. London-listed WPP has been hampered by weak revenue growth after a period of upheaval that followed the departure of its founder Sir Martin Sorrell.

Publicis’s operating income grew by more than a quarter year on year to €2.2bn.

However, its moment in the top spot may prove shortlived once Omnicom’s $13bn takeover of rival Interpublic, announced in December, closes, creating a group with more than $25bn in revenues.

Sadoun said the industry consolidation would provide opportunities for Publicis as the new group went through several years of restructuring and integration.

Publicis was struggling with low growth and falling shares when Sadoun took over as chief executive in 2017 as the industry’s traditional agency model was disrupted by online platforms such as Facebook and Google.

Deals such as the $3.9bn acquisition of Epsilon, a US digital agency that allows advertisers to target consumers using data, have helped transform the business. Its shares used to trade at a discount to WPP and Omnicom, but have gained on them since 2020 and now outpace them.

The group benefited from the rebound in US tech client spending this year and has been growing three times faster than its peers there in the past four years, according to Sadoun. “We’re the largest media buyer — we’re buying every one dollar out of three” in the US advertising space, he said.

Sadoun said it was too early to assess the impact of recent changes to content moderation policies on Facebook announced by Mark Zuckerberg, chief executive of parent company Meta.

A big change in the moderation and content policies at X, formerly Twitter, after the platform was bought by Elon Musk in 2022 resulted in a marked decline in advertising spending by clients, though that has now stabilised.

“We’ll be looking very closely at brand safety on Facebook in the future,” Sadoun said.

Meta CEO Mark Zuckerberg has pledged to make artificial general intelligence (AGI) — which is roughly defined as AI that can accomplish any task a human can — openly available one day. But in a new policy document, Meta suggests that there are certain scenarios in which it may not release a highly capable AI system it developed internally.

The document, which Meta is calling its Frontier AI Framework, identifies two types of AI systems the company considers too risky to release: “high risk” and “critical risk” systems.

As Meta defines them, both “high-risk” and “critical-risk” systems are capable of aiding in cybersecurity, chemical, and biological attacks, the difference being that “critical-risk” systems could result in a “catastrophic outcome [that] cannot be mitigated in [a] proposed deployment context.” High-risk systems, by contrast, might make an attack easier to carry out but not as reliably or dependably as a critical risk system.

Which sort of attacks are we talking about here? Meta gives a few examples, like the “automated end-to-end compromise of a best-practice-protected corporate-scale environment” and the “proliferation of high-impact biological weapons.” The list of possible catastrophes in Meta’s document is far from exhaustive, the company acknowledges, but includes those that Meta believes to be “the most urgent” and plausible to arise as a direct result of releasing a powerful AI system.

Somewhat surprising is that, according to the document, Meta classifies system risk not based on any one empirical test but informed by the input of internal and external researchers who are subject to review by “senior-level decision-makers.” Why? Meta says that it doesn’t believe the science of evaluation is “sufficiently robust as to provide definitive quantitative metrics” for deciding a system’s riskiness.

If Meta determines a system is high-risk, the company says it will limit access to the system internally and won’t release it until it implements mitigations to “reduce risk to moderate levels.” If, on the other hand, a system is deemed critical-risk, Meta says it will implement unspecified security protections to prevent the system from being exfiltrated and stop development until the system can be made less dangerous.

Meta’s Frontier AI Framework, which the company says will evolve with the changing AI landscape, and which Meta earlier committed to publishing ahead of the France AI Action Summit this month, appears to be a response to criticism of the company’s “open” approach to system development. Meta has embraced a strategy of making its AI technology openly available — albeit not open source by the commonly understood definition — in contrast to companies like OpenAI that opt to gate their systems behind an API.

For Meta, the open release approach has proven to be a blessing and a curse. The company’s family of AI models, called Llama, has racked up hundreds of millions of downloads. But Llama has also reportedly been used by at least one U.S. adversary to develop a defense chatbot.

In publishing its Frontier AI Framework, Meta may also be aiming to contrast its open AI strategy with Chinese AI firm DeepSeek’s. DeepSeek also makes its systems openly available. But the company’s AI has few safeguards and can be easily steered to generate toxic and harmful outputs.

“[W]e believe that by considering both benefits and risks in making decisions about how to develop and deploy advanced AI,” Meta writes in the document, “it is possible to deliver that technology to society in a way that preserves the benefits of that technology to society while also maintaining an appropriate level of risk.”

The president said Musk won’t have the unfettered ability to dismantle the government, but for now their relationship is holding firm

WASHINGTON—President Trump on Monday said there were curbs in place to prevent Elon Musk from doing anything in the government without the White House’s blessing, responding to growing confusion about who was overseeing Musk’s push to dismantle multiple agencies.

Trump described Musk’s role as advisory. “Elon can’t do—and won’t do—anything without our approval and we’ll give him the approval where appropriate. Where not appropriate, we won’t,” Trump said.

Trump’s comments, made to reporters in the Oval Office, came just hours after a Musk-led team effectively shut down the U.S. Agency for International Development. Musk, over the weekend, called USAID “evil,” “a criminal organization” and said it is “time for it to die.” Secretary of State Marco Rubio was made acting head of the agency on Monday and said he would work with Congress regarding the agency’s future.

Musk leads X, SpaceX and Tesla and helped funnel more than $250 million into a political campaign effort aimed at getting Trump and Republicans elected last November. Trump initially said Musk would co-chair a new entity called the Department of Government Efficiency, but some people involved—including the other co-chair—have already departed, leaving Musk with broad powers. DOGE, as it is known, is now a repurposed part of the White House, though its exact remit and staff remain murky and undefined.

For example, Musk initially sought volunteers to work with him on DOGE who he said wouldn’t be paid, but now because the entity is part of the government, it is unclear whether the staff is paid or whether they are allowed to have other jobs outside the government that might pose a conflict.

Musk has been designated as a “special government employee,” a temporary status, which enables him to work at the White House for 130 days without filing financial disclosure forms required for regular White House employees. Both political parties have used this mechanism to bring in top advisers who have complicated finances.

Trump, speaking of Musk and potential conflicts on Monday, said, “If there’s a conflict, then we won’t let him get near it.” Trump didn’t specify who would block Musk when necessary or whether he has been barred from any parts of the government so far.

Congressional Democrats have expressed growing fury about Musk’s role and the way he is moving to either shut down agencies or slash government employment.

“We don’t have a fourth branch of government called Elon Musk and that’s going to become real clear,” said Rep. Jamie Raskin (D., Md.) during a protest outside USAID on Monday. “This illegal, unconstitutional interference with congressional power is threatening lives all over the world.”

On Tuesday several progressive groups plan a protest they are calling the “Nobody Elected Elon rally” outside the Treasury Department. The groups, which include Move On Civic Action, the Working Families Party and Indivisible, are demanding that Democratic lawmakers “use every tool available to stop Elon Musk’s hostile takeover.”

As Musk and his team face growing scrutiny, some members of the Trump administration are rallying to his defense. Edward R. Martin Jr., the interim U.S. Attorney in Washington, D.C., sent Musk a letter on Monday vowing to help protect DOGE and its staff.

“I recognize that some of the staff at DOGE has been targeted publicly,” he wrote. “At this time, I ask that you utilize me and my staff to assist in protecting the DOGE work and the DOGE workers. Any threats, confrontations or other actions in any way that impact their work may break numerous laws.”

Musk and his White House team appear to be moving with Silicon Valley velocity to shake up the U.S. government. They have already accessed payment system information inside the Treasury Department and staffing records at the Office of Personnel Management, among other things. On its social-media account, DOGE claimed to have played a role in changing the way water is pumped in California. It also says it has canceled numerous contracts and leases on underused buildings, saving taxpayers millions of dollars.

A coalition of labor unions sued the Treasury Department on Monday, alleging that handing over information to DOGE was illegal and violated federal privacy protections for millions of Americans.

The abrupt decision by the White House to try to close and reorganize the USAID prompted waves of protest and is serving as a test case for how quickly Trump can reduce the size and scope of the federal bureaucracy and which guardrails he must respect.

The Education Department is another imminent target, according to people familiar with the discussions. Officials at smaller agencies, like the Development Finance Corporation, a federal agency that helps finance projects in developing nations, are also hearing that their duties could be reduced or redistributed, according to people who work there.

These changes are coming as Musk and his team comb through the federal budget and bureaucracy to identify areas where spending can be slashed. Musk’s team is developing artificial intelligence tools they want to install into government technologies in order to root out what they deem as wasteful government spending, according to people familiar with the matter. And they are aiming to acquire office space in every agency, according to people familiar with how the operation is working.

At the Education Department, for instance, DOGE officials want executive orders that would start to gut the agency with the ultimate goal of severely curbing it, according to a person familiar with the Musk-led department’s plans. Trump during last year’s campaign vowed to eliminate the Education Department entirely.

One question is the legal hurdles that Trump and Musk might confront. Many federal workers are unionized and have protections against being dismissed abruptly. Congressional approval is required to create a federal agency, making it very hard to eliminate one by edict.

At the Development Finance Corporation, employees were told that if they can’t begin working in the office five days a week by mid-April, they need to resign by this Thursday, according to a current employee who requested anonymity out of fear of retribution.

The rapid speed of the changes has sparked confusion among employees across the government. Some at the Development Finance Corporation believe their jobs could morph into the sovereign-wealth fund Trump took actions on Monday to create.

Trump nominated investor Ben Black—the son of Apollo Global Management co-founder Leon Black—to lead the agency on Friday. One employee said that with the number of officials expected to resign this week, the agency could be decimated by the time Black arrives.

Musk has emerged in Trump’s inner circle as far more effective than his close aides initially anticipated. Musk has targeted agencies the Republican Party has scrutinized for decades, said a senior administration official, who added that Musk gives them some cover from the fallout from the major disruptions they are planning.

A person close to Musk compared the Tesla CEO to Dick Cheney’s time as vice president during the George W. Bush administration. Cheney was considered the most powerful person to hold the post because of his access to the president and his deep knowledge of how the federal government operated.

Musk’s approach in his DOGE role mirrors, to an extent, the way he took over Twitter in 2022. At the time, Musk urged those at Twitter who couldn’t commit to working at a high intensity to resign voluntarily. Musk later changed the company’s name to X. After slashing staff, which many speculated would decimate the company, X continued operating and appeared to have stabilized, proving to be a popular platform for many during the 2024 election. More recently, the company’s financials have been improving, people familiar with the company have said.

Inside the Education Department, civilian employees have watched the developments at USAID with trepidation, fearful that their agency could be next, said a department employee who was placed on administrative leave Friday.

There were some signs that the White House’s bold edicts to reshape the federal government were already facing turbulence.

The Office of Personnel Management sent an email Sunday clarifying terms of its previous offer for some two million government employees to resign and continue to get a paycheck through September. The email acknowledged that the government hasn’t appropriated the funds for the offer, since the current funding bill for the government expires mid-March.

If Congress doesn’t cobble together a spending bill before the deadline, the government could shut down, freezing payments to federal employees. The memo said any employee who accepts the so-called deferred resignation offer would be entitled to backpay in the event of a shutdown.

On Monday, federal workers received more details about the offer in a form labeled “Deferred Resignation Agreement.” Employees who resign are expected to continue to work through Feb. 28 to “ensure a smooth transition,” according to a copy of the agreement reviewed by The Wall Street Journal. The form also stipulates that employees who resign waive their rights to take action “through any judicial, administrative or other process” related to the resignation offer.

Expectations are low among federal workers that a large number of employees will accept the deferred resignation offer from the federal government.

“I don’t think we’re going to have a lot of people who take it…because it appears to be a scam,” said Sheria Smith, president of the American Federation of Government Employees Local 252, which represents about 2,400 employees at the Education Department.

Jared Kushner’s global empire in the era of Trump

During Donald Trump’s first presidency his son-in-law Jared Kushner was involved in the renegotiation of the North American Free Trade Agreement, the response to the coronavirus pandemic, a blockade in the Middle East, and the normalisation of relations between Israel and Gulf countries.

It propelled Kushner’s profile from a property developer best known for his years-long effort to salvage a $1.8bn investment in a Manhattan office tower and into a global power broker with deep access to the key players in the Middle East and the highest rungs of finance.

On his way out of the White House, Kushner translated his Rolodex into a multibillion-dollar business, a private equity firm called Affinity Partners that mostly invests cash for the state-backed investment vehicles of Saudi Arabia, the United Arab Emirates and Qatar.

In a Big Read, the FT examined the ambitions Kushner has for this nascent but lucrative private investment empire and the potential conflicts of interest that could arise in Trump’s second term.

Affinity has gained attention from those on Wall Street to Washington since it was launched in January 2021.

Democrats have viewed the vehicle suspiciously and called for investigations into the fund. The fledgling firm’s initial $2bn fundraising mostly from Saudi Crown Prince Mohammed bin Salman, whom Kushner befriended, took many by surprise.

Now, Kushner is poised to seize the moment.

He will not take a formal role in the Trump White House this time around, freeing him to focus on his family and investments. Those investments range from high-profile property deals in the Balkans, to companies benefiting from artificial intelligence to bets on new trade dynamics in a deglobalising world.

Some deals, such as an ongoing negotiation for a waste management company in Mexico, may be derailed by Trump’s trade policies.

In an interview, Kushner laid out his vision for Affinity and his response to lawmakers who have characterised his outfit as a pay-to-play operation for foreign governments to gain influence with Trump.

In its first few years, Affinity invested sparingly, deploying less than half of its capital, moderate activity that Kushner says was a result of fears over corporate valuations.

The firm, which employs about 30 people and has seen staff churn, avoids buying companies outright, preferring minority equity stakes. Kushner views it as a more nimble investment operation that minimises administrative burdens. It is also lucrative for Kushner, the majority owner of Affinity.

So far, Affinity’s results are inconclusive. While some deals have gained in value, others like a stake in an Amazon aggregator backed by Adam Neumann have a cloudy outlook.

Kushner is now planning billions in new investments and recently struck two prominent deals, building stakes in Israeli insurer Phoenix Financial and billionaire Brad Jacobs’ acquisition vehicle QXO.

Notably, Kushner views the Phoenix deal as helping to build regional ties among potential adversaries. In it, he is ploughing cash from Saudi, Qatari and the UAE directly into Israel’s markets. A UAE fund had tried to invest in Phoenix in 2023, but was blocked by Israeli regulators.

Kushner says to his critics: “A lot of these people will say everything is a conflict. I am not going to let that stop me.”

He adds: “These guys won’t acknowledge [that] I have an incredible track record of success in the Middle East . . . I have those great relationships because of the success that I achieved, which was something that I was criticised for trying to do at every step along the way.”