The Volodymyr Zelensky-Donald Trump Divide Looms at Davos

Zelensky and Trump loom over Davos

Two people are having an outsize impact at the World Economic Forum, and one of them isn’t even there.

One is Volodymyr Zelensky, Ukraine’s president, who put on a full-court press of business and global leaders at the forum in Davos, Switzerland. The other is Donald Trump, whose potential re-election is dominating the discussion among attendees.

Zelensky used an expletive to describe a Trump claim about containing Vladimir Putin. At a Q. and A. with journalists that Andrew moderated, Zelensky dismissed the idea that Trump could stop the Russian president from going after other parts of Europe. Putin, he added, “will not stop — but the question is what will the U.S. and Trump do after this point, because in this case it will mean that Europe lost the most useful and most strong army in Europe because we lost Ukraine.”

Zelensky initially sought to tamp down worries about Trump, and whether his potential re-election would lead to a drop in support for Ukraine. But he also appeared somewhat fearful about the prospect. “One man cannot change the whole nation,” Zelensky said in the Q. and A., adding that deciding on the next president is “a choice for the American nation and only the American nation.”

The Ukrainian leader acknowledged that a win for Trump, who has opposed U.S. aid to Ukraine, could affect his country’s military campaign or settlement talks. “Radical voices from the Republican Party” have created tension and pain for the Ukrainian people, he said.

Zelensky isn’t the only leader at Davos worried about Trump. Multiple attendees have told DealBook that the outcome of the election is a potential risk for business, particularly after the former president thumped his Republican rivals in the Iowa caucuses.

The Ukrainian leader has sought to shore up global business support. He spoke at a private gathering of executives organized by JPMorgan Chase, which is advising Ukraine on its reconstruction efforts.

In the audience at the Congress Center for the talk were Steve Schwarzman of Blackstone, Ray Dalio of Bridgewater, David Rubenstein of Carlyle and Michael Dell of Dell, DealBook hears.

Zelensky also spoke about how U.S.-China tensions are affecting Ukraine. Bringing Beijing on board with the country’s reconstruction is important, given China’s size and influence on Russia, he told the C.E.O.s. But Ukraine is seen as an American concern, not a global one.

• Seen and heard around town: The traffic on the main street was so bad that John Kerry, President Biden’s climate envoy, hoofed it to a meeting. And the annual wine tasting hosted by Anthony Scaramucci, the financier and former Trump official, well, ran out of wine.

HERE’S WHAT’S HAPPENING

Rate-cut concerns rattle the markets. European stocks and bonds are down this morning, after Christine Lagarde, the European Central Bank president, warned that interest rates may not fall until the summer, and inflation in Britain rose unexpectedly. U.S. futures are also down after Christopher Waller, a Fed governor, signaled yesterday that it was premature to consider a rate cut in the first quarter.

Disney formally rejected Nelson Peltz’s board nominees. The entertainment giant has submitted a slate of directors — including James Gorman of Morgan Stanley and Mary Barra of General Motors — and snubbed the activist investor, who has criticized Disney over strategy and succession planning. Separately, compensation for Bob Iger, Disney’s C.E.O., for fiscal 2023 topped $31 million.

BP appoints a new C.E.O. The energy giant today named as its new chief Murray Auchincloss. The former C.F.O. stepped in as interim chief four months ago after his predecessor, Bernard Looney resigned for failing to disclose relationships with employees. Auchincloss has indicated that he will follow Looney’s strategy to build up the company’s renewables business and cut back its oil and gas production by the end of the decade.

China’s conundrum

China delivered a double dose of bad news this morning, pushing down markets in Asia. Official data shows that the economy grew last year at its slowest pace in decades and that the country’s population declined again.

The readings are another sign of deeper problems in the world’s second-largest economy, as it grapples with a property crisis, weak consumer confidence, falling exports, deflationary pressures and big demographic challenges.

The economy grew 5.2 percent last year, up from 3 percent in 2022 when strict coronavirus restrictions were in place. That was better than the official target of about 5 percent but 2024 is expected to be tougher, with a Reuters poll of analysts forecasting growth that will probably slow to 4.6 percent.

The population decline points to bigger challenges. The country recorded more deaths than births for a second straight year. Beijing is worried because fewer people means fewer consumers, and it needs working-age people to fuel growth. Retail sales in December were lower than expectations, too, while industrial output barely surpassed them.

A post-Covid boost hasn’t materialized. “Chinese authorities and some international economists believed that China’s economic downturn in the past few years was caused by the “zero Covid” policy,” Yi Fuxian, a scientist at the University of Wisconsin–Madison and an expert on Chinese demographics, told DealBook. “But China’s economic recovery was much weaker than expected last year, as the core drivers of the downturn were aging and a declining work force.”

Structural reforms are needed to address these new realities. But for the short term, China will continue to rely on export-led growth at a time when many Western companies are already looking to move parts of their supply chains elsewhere.

An airline deal hits turbulence

The Biden administration scored a major victory yesterday after a federal judge struck down JetBlue’s proposed $3.8 billion acquisition of Spirit Airlines, a low-cost rival, ruling that the merger would harm competition.

The decision blocks the airline sector’s biggest attempted tie-up in the U.S. in over a decade, and throws into question the industry’s efforts to consolidate. President Biden hailed the ruling as “a victory for consumers everywhere who want lower prices and more choices.”

The Biden administration says airline mergers have made travel more costly. Last year, the Justice Department won a lawsuit that forced JetBlue and American Airlines to end a regional code-sharing alliance.

The Justice Department argued that a JetBlue-Spirit combination would remove a low-cost competitor from the market, messing with the economics of airfares. The judge, William Young, agreed, saying that combining forces would “likely incentivize JetBlue further to abandon its roots as a maverick, low-cost carrier.”

Shares in Spirit plunged after the decision. Stock in the budget airline, which received bailout funding during the coronavirus pandemic’s early days and is known for its yellow planes and no-frills service, sank 47 percent yesterday. The companies have not yet said whether they will appeal.

What next? Alaska Airlines’s $1.9 billion deal to acquire Hawaiian Airlines could also face tough scrutiny.

Big fish to fry at the Supreme Court

The Supreme Court justices will hear a case today that started with commercial herring fishermen challenging a rule about paying the regulators who oversaw them. The legal fight is hugely consequential, and could ultimately limit the powers of federal agencies.

The case challenges the power of administrative law. Courts today must defer to the hundreds of agencies that interpret a mountain of federal rules in regulating industry. Critics say this doctrine — known as Chevron deference — handcuffs judges, robbing them of the power to review and reverse agency actions.

Lawyers for the fishermen are expected to argue that the principle should be overruled, or at least simplified. The arguments won’t fall on deaf ears. Justice Neil Gorsuch has written that the Chevron deference doctrine “deserves a tombstone.”

The death of the principle could hobble regulators because their decisions could be overturned in court. Such a prospect is key to conservatives seeking a weaker administrative state. Court records show that the fishermen’s lawyers have links to Americans for Prosperity, a group funded by the petrochemicals billionaire Charles Koch, The Times’s Hiroko Tabuchi reports. Koch, the chairman of Koch Industries, is a longtime supporter of anti-regulatory causes.

This case is part of a larger conservative campaign. A 2022 Supreme Court decision that constrained the Environmental Protection Agency’s authority on emissions regulation bolstered right-leaning activists. That case has helped opened the door to further legal challenges to regulators’ powers, including one this term involving the S.E.C.

What to watch for in 2024

The Atlantic Council, an international affairs research organization, gave DealBook a first look at its annual list of the top risks, opportunities and under-the-radar phenomena to watch this year.

Geopolitical conflict is a big focus. There is a “medium to high” probability that the Israel-Hamas war widens, according to the analysis, and that is underscored by intensifying U.S.-led strikes on Iran-backed Houthi rebels who are attacking commercial ships in the Red Sea corridor.

Other hot spots include Ukraine and Taiwan. The West could pull back funding for Ukraine, the report’s authors write, making a Russian victory more likely. Meanwhile, China could choke off Taiwanese ports with a naval blockade rather than risking an invasion of the self-governed island nation.

“Smartifacts” may be an opportunity. Cars, appliances and personal electronics will increasingly be equipped with artificial intelligence to better interact with the physical world, the analysts write. They predict that “2024 will be the year when A.I. goes mainstream, and not just on our screens,” potentially yielding an “entirely new class of devices.”

Could white paint be an under-the-radar opportunity? The Atlantic Council also compiles an annual list of underappreciated risks and opportunities that it calls “snow leopards,” named for the well-camouflaged mountain cats.

This year, the list includes super reflective white paint that can help reduce emissions and reliance on energy by reflecting 98 percent of the sun’s rays. “It’s one of those things that seems pretty simple, but it could have an outsize impact,” said Imran Bayoumi, an associate director at the organization.

THE SPEED READ

Deals

• Uber is shutting Drizly, the alcohol-delivery business it bought in 2021 for $1.1 billion. (WSJ)

• Investors are raising billions to buy discounted stakes in venture capital-backed tech start-ups. (FT)

• Synopsys, a supplier to the chips sector, has agreed to buy Ansys, a software firm, for $35 billion. (NYT)

Policy

• The Supreme Court denied a request to hear an antitrust case between Epic Games and Apple, leaving a lower-court ruling that was seen as a win for Apple in place. (Axios)

• Congressional leaders agreed a $78 billion deal to expand the child tax credit and other popular expired business tax breaks. (NYT)

Best of the rest

• Harvard is trying to smooth relations with Silicon Valley after turmoil over antisemitism on campus. (WSJ)

• “Airbus Is Pulling Ahead as Boeing’s Troubles Mount” (NYT)

• Hockey die-hards are building snazzy new rinks in their backyards. (WSJ)

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