The Big Buzz in Davos: AI, Ukraine, China and the Middle East

The meetings behind the meeting

Thousands of world leaders have once again descended on snowy Davos, Switzerland, for the annual meeting of the World Economic Forum. The theme of this year's event: 'restoring trust'.

But there are the public meetings, and then there are the Real behind closed doors is what those present talk about most. This includes discussions about tensions between the US and China, the war in Gaza, artificial intelligence and the future of Ukraine.

There is a kind of game that some CEOs play with another: How many public panels do you sit on, or how many times have you been to the Convention Center, the main hub for the forum's major presentations? If the answer is zero, you win.

Top US officials will appear on the main stage, including Secretary of State Antony Blinken and Jake Sullivan, the national security adviser. But there is plenty of speculation about who they see behind the scenes.

One question: Will there be anyone from the significant Chinese delegation, led by Li Qiang, the country's prime minister? Tensions between the US and China are high after Lai Ching-te, a fierce defender of Taiwanese sovereignty despised by Beijing, was elected president of the self-governing island on Saturday.

Li has already met with the CEOs of IBM, Intel, Walmart and others over lunch. (He also addressed the conference on Tuesday, revealing that China's economy grew by about 5.2 percent last year, a day before the official figures were released.)

Many eyes are also on Middle Eastern officials. Israeli President Isaac Herzog is expected to take the stage Thursday as his country's war with Hamas threatens to further escalate into a broader regional conflict. Some attendees wonder whether he will meet Qatari Prime Minister Mohammed bin Abdulrahman al-Thani, whose country has been a key mediator in negotiations over hostages and humanitarian aid in Gaza.

Also present is the delegation from Saudi Arabia, led by Foreign Minister Prince Faisal bin Farhan, as the kingdom exercises its growing economic and diplomatic power.

Another participant: Jared Kushner, Donald Trump's son-in-law who helped lead the Abraham Accords and now heads a private equity firm that backs the Saudi sovereign wealth fund, among other things.

Volodymyr Zelensky is a keynote speaker, giving a public speech this afternoon and participating in a Q&A that Andrew will moderate. And Ukraine's president met with top bankers including JPMorgan Chase's Jamie Dimon and Bank of America's Brian Moynihan, as well as Bridgewater's Ray Dalio.

Artificial intelligence is the talk of the town. DealBook has had more conversations about generative AI than any other topic at Davos. (There are more than two dozen events scheduled that directly reference AI in their titles.) So it's not surprising that among the most sought-after attendees are executives like Sam Altman, the CEO of OpenAI; Mustafa Suleyman, co-founder of Google DeepMind who now leads Inflection AI; Lila Ibrahim, the COO of DeepMind; Aidan Gomez, CEO of Cohere; and Florian Bressand of the French Mistral AI.

Penny Pritzker's dilemma: She is officially present there in her role as Special Representative of the Ministry of Foreign Affairs for Ukraine's economic recovery. In most years, her other role, as head of Harvard's board of trustees, would make her a hot ticket for the crowd of alumni in attendance.

But given the controversy over Claudine Gay's defenestration as Harvard president, amid accusations of plagiarism and concerns about anti-Semitism on campus, is she more likely to face sharp questioning from concerned donors?

HERE'S WHAT'S HAPPENING

Goldman Sachs beats fourth-quarter earnings estimates. Shares of the Wall Street giant rose nearly 2 percent in premarket trading after the bank reported it a jump in revenues. But annual profits dropped to lowest level in four yearshurt by losses due to the withdrawal from consumer banking and a slowdown in investment banking.

Houthi militants in Yemen are increasingly attacking ships in the Red Sea. The Iran-backed group hit a US-owned commercial ship with a missile on Monday, days after the US and British militaries launched attacks on Houthi targets in Yemen. Traffic via the vital shipping route has plummeted the past weeks. QatarEnergy, a major exporter of liquefied natural gas, is the latest company order his ships to avoid the region.

Apple redesigns its smartwatch to avoid an import ban. The company is removing a blood oxygen sensor of the Apple Watch at the heart of a patent dispute with Masimo, a technology company that accused Apple of violating its intellectual property rights. According to Masimo, the U.S. Customs and Border Protection Agency has approved the changes.

Boeing will add more inspection requirements to the 737 Max and a major supplier. The plane maker does increase controls and send a team to audit Spirit AeroSystems' work after hundreds of its 737 Max 9 jets were grounded when a panel made by that company blew into the sky over Oregon. The company also plans to do so open its factories to customers to inspect processes.

Trump marches on

Donald Trump scored a record victory in the Republican caucuses in Iowa last night, crushing his opponents and demonstrating his dominance over the party as he seeks a rematch against President Biden.

Frigid temperature puts the chill on the rise. But with most of the votes counted, Trump still managed to win all but one county, and that was expected searches almost every demographic voter group: men, women, youth, college graduates, evangelicals, political moderates, and conservatives.

Biden called Trump “the clear leader” for the Republicans, and used his predecessor's victory as a fundraising pitch. (The president's re-election campaign says its war chest amounts to approximately $117 million after bringing in more than $97 million last quarter.) And world leaders are already warning of Trump's possible return to power. “It is clearly a threat,” said Christine Lagarde, president of the European Central Bank last week.

Iowa was about as good as Trump expected. Florida Gov. Ron DeSantis finished a distant second despite heavy investments in the state. His campaign is now running low on cash, but he tried to spin the outcome to give him some momentum.

Nikki Haley, who ran and won in the national polls major donorscame third, with about 95 percent of the votes counted at the time of writing.

The duo spent heavily on advertising, part of a record total of more than $123 million by all candidates, and still lost to Trump by huge margins.

The race has been slimmed down. Vivek Ramaswamy, the wealthy entrepreneur who ran a largely self-financed campaign, finished a distant fourth, dropped out of the race and endorsed Trump. Ramaswamy had clashed frequently with Haley and DeSantis during his campaign, and he was an outspoken defender of the former president, pledging to support him despite numerous legal challenges.

Next up on January 23 is New Hampshire, where Haley has focused much of her efforts and is doing better in the polls. The state is home to more moderate Republicans and independent voters than Iowa, and has a larger anti-Trump voting bloc. The former president anyway has a double-digit lead in the polls there.

Europe's big gamble on batteries

Northvolt, one of Europe's largest green startups, raises $3.4 billion in debt from the European Union and a consortium of banks including JPMorgan Chase to expand battery production locally and boost the continent's fledgling electric vehicle sector to support.

The financing and subsidy scheme is a bet by Europe to keep battery production closer to home and limit the advance of Chinese and American players that are starting to dominate the market. The Wall Street Journal reports this.

The financing is one of the largest transactions for a clean energy company in recent years. It highlights an effort by investors and policymakers to spend billions of dollars making batteries that can power electric cars and store energy when the wind doesn't blow and the sun doesn't shine, to accelerate the shift away from fossil fuels.

China controls parts of the battery supply chain, from metal processing to cell assembly, a concern for Western countries that are throwing billions of dollars in tax credits, loans and subsidies at companies to kick-start their own supply chains. The US Climate Act of 2022 has prompted other countries to boost their own subsidies to attract clean energy investments.

“It's an existential threat to the food industry and certainly an existential threat to the processed food industry.”

— Marion Nestlean emeritus professor of nutrition, nutritional studies and public health at New York University, on how popular weight-loss drugs like Ozempic could change snack food marketing in America.

The coming week

After markets closed on Monday for Martin Luther King's birthday, a slew of earnings figures, economic data and speeches from central bankers will be released this week. Here you can read what you should pay attention to.

Wednesday: China will officially release fourth-quarter GDP and population data, raising questions about the health of the world's second-largest economy and the extent of the demographic crisis.

The United States will release retail sales data for December, and the Fed will release its latest “beige book” report, detailing economic activity in 12 regions.

As for earnings, Charles Schwab, Alcoa and Citizens Financial report results.

Thursday: Central bankers are in the spotlight, with Christine Lagarde, the president of the European Central Bank, and Raphael Bostic, the head of the Atlanta Fed, set to speak at separate events. Expect many questions about persistently high inflation and the timing of the first round of interest rate cuts.

TSMC, the Taiwanese chip giant, announces fourth quarter figures.

Friday: State Street, Comerica and Burberry report the results, and the University of Michigan releases its latest consumer sentiment report.

READING THE SPEED

Offers

Artificial intelligence

• Elon Musk threatened that he would spin off a company from Tesla focused on AI and robotics if the automaker's board doesn't give him greater voting control and a major performance award. (Bloomberg)

• Thomson Reuters does in conversations with generative AI companies to license their news and data in deals that could be modeled after OpenAI's agreement with Axel Springer. (Bloomberg)

The best of the rest

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