WSJ What’s News - In Davos, U.S. Optimism Meets European Gloom

Episode Date: January 23, 2025

A.M. Edition for Jan. 23. WSJ Deputy Editor in Chief Charles Forelle says bankers, government officials and CEOs at the World Economic Forum see President Trump’s deregulatory, energy and tariff policies drawing more investment to the U.S.–and hurting other regions. Plus, the Trump administration gives more federal agents deportation powers to help expedite mass deportations. And tens of thousands flee as new fires erupt in the Los Angeles area. Luke Vargas hosts.  Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Air Transat presents two friends traveling in Europe for the first time and feeling some pretty big emotions. This coffee is so good! How do they make it so rich and tasty? Those paintings we saw today weren't prints. They were the actual paintings. I have never seen tomatoes like this. How are they so red? With flight deals starting at just $589, it's time for you to see what Europe has to offer. Don't worry, you can handle it. Visit airtransat.com for details, conditions apply. Air Transat. Travel moves us.

The Trump administration takes steps to fast-track deportations. Plus Israel launches a deadly crackdown against West Bank militants. And Journal Deputy Editor-in-Chief Charles Farrell dials in from Davos, where leaders see the U.S.'s economic fortunes diverging from the rest of the world's. Among business leaders that we talk to, there's a lot of, Trump is going to figure out how to unlock growth in America. And there is a palpable sense that Europe has fallen behind and might continue to fall

behind further. It's Thursday, January 23rd. I'm Luke Vargas for The Wall Street Journal and here is the AM edition of What's News, the top headlines and business stories moving your world today. We exclusively report that the Trump administration is taking fresh steps to prepare for carrying out deportations of potentially millions of undocumented immigrants by handing new powers to federal agents. According to an internal memo seen by the journal and sent by the acting Secretary of Homeland Security, DHS is granting immigration enforcement authority to several agencies at the Justice Department, including the Drug Enforcement Administration,

the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the U.S. Marshals Service. And while FBI agents typically steer clear of deportations, the memo also emphasized that those agents have immigration arrest powers. Separately, the Pentagon is sending as many as 1,500 active-duty troops to monitor and increase security at the southern border. Defense officials say there have been requests from the Trump administration for up to 10,000 troops, but that they have yet to receive an order to send more. Those steps come as lawmakers last night gave final approval on a bill to impose harsher penalties on undocumented

immigrants by expanding the list of criminal charges resulting in potential deportation. In addition to GOP support, a dozen Senate Democrats and 46 House Democrats backed the Laken Reilly Act, which could soon become the first legislation to be signed by the president. New fires are breaking out in the Los Angeles area, forcing tens of thousands of people to evacuate. Firefighters work through the night north of Santa Clarita, where a fire that started yesterday has already scorched more than 10,000 acres and remains just 14 percent contained,

according to the fire department. In the early hours of this morning, another fire erupted in Bel Air, just miles from the perimeter of the Palisades Fire that destroyed thousands of homes earlier this month. Officials are warning that dangerous fire conditions will persist through tomorrow. Israel says it has launched a major counter-terrorism operation in the West Bank, raiding a crowded refugee camp in the city of Jenin with light armored vehicles and using drones to launch strikes on it. According to the Palestinian Health Ministry, 12 people have been killed by Israeli forces

in and around Jenin, while Israel says it's killed 12 militants since the operation began on Tuesday. Journal correspondent Dov Lieber is in Tel Aviv and told us that with ceasefires now in place in Gaza and Lebanon, Israel has been able to direct more resources toward fighting militancy in the West Bank. Now, there's another reason, which is a political one. The ceasefire in Gaza is not very popular among some people in the government. Those people have settlers in the West Bank.

And if they are not pursuing the policy they would like to see in Gaza, at the very least they want to show that they're pursuing another aggressive policy there in the West Bank. The third reason is because we actually have seen a spate of attacks coming from the West Bank. It shows that even if you can plug one hole, the conflict is always operating in the background. It has the potential for creating massive destruction in the West Bank. Israelis are incredibly vulnerable to Palestinians who are living in the West Bank since they have simply a lot more access to Israel than Palestinians in Gaza. In markets news today, China is ramping up efforts to prop up its stock markets by encouraging

state-owned insurers and mutual funds to buy Chinese equities. Officials expect nearly $14 billion to pour into the stock market in the first half of the year, though analysts say that Beijing's moves to revive investor confidence are still falling short. Benchmark indexes in mainland China ended the day slightly higher. And Nvidia supplier SK Hynex has posted stronger than expected quarterly earnings thanks to continued demand for high-end memory chips that help power AI.

Its dominance of that market has pushed its share price almost 60 percent higher over the past 12 months, though the stock slipped around 3 percent today in Seoul. Coming up, Wilhead to Davos as political and corporate elites process the change in U.S. administrations. That update from Journal Deputy Editor-in-Chief Charles Farrell after the break. In a darkly comedic look at motherhood and society's expectations, Academy Award-nominated Amy Adams stars as a passionate artist who puts her career on hold to stay home with her young son.

But her maternal instincts take a wild and surreal turn as she discovers the best, yet fiercest, part of herself. Based on the acclaimed novel, Nightbitch is a thought-provoking and wickedly humorous film from Searchlight Pictures. Stream Nightbitch January 24 only on Disney Plus. U.S. inflation is set to rise over the coming year, along with U.S. economic growth. That is the main takeaway of The Wall Street Journal's latest survey of economists carried out earlier this month, which suggested that President Trump's tariffs could pass along higher costs to consumers, leading to projected inflation of 2.7 percent over the coming 12

months, compared with previous forecasts of 2.3 percent, even as the broader economy gathers momentum thanks to strong consumer spending. Well, that mixed bag forecast captures a bit of the mood at the World Economic Forum's annual meeting in Davos this week, where world leaders and corporate elites are trying to make sense of how to navigate the new U.S. administration. Wall Street Journal deputy editor-in-chief Charles Ferrell is in Davos this week. Charles, what is the mood like there? The Davos set is a pretty international one, and I'm curious what they make of the return of the America First agenda.

Well, the Davos set is definitely international, but it is also, and I've been coming here for a number of years, just congenitally optimistic. It might be the fresh mountain air that does it, but among business leaders that we talk to, among people on the ground here, there's a lot of Trump is going to figure out how to unlock growth in America, which will cascade around the world and make the world economy better. That's kind of this hyper, hyper, hyper optimistic take. And obviously, there are a lot of people who are worried about tariffs and trade and isolationism of the US economically, but there's generally a good bit of optimism.

Yeah, I was going to ask you to kind of break down who's in each of those cohorts, maybe starting with those who think that there are blue skies to come. I gather from our colleague Greg Ip that bankers and dealmakers are among them. Financial services and particularly banks are probably among the most optimistic here. There's a general consensus among bankers that the mood in the Trump administration will be much friendlier to banks on a bunch of things sort of small and big in rulemaking and in the way that the Trump administration will pursue or not pursue consumer protection rules and other things. And this helps with

their pressure campaign in Europe to loosen bank regulations in Europe, which will be harder. But there is a sense that the US may lead the way on this. Okay, let's talk then about the worrywarts over there in Davos. Who would you say is the most anxious and why? The Europeans are pretty anxious. There is a sense that Europe has a whole bunch of problems economically, politically fractious, difficult for Europe

to come together on a lot of the topics that animate the European Union, coupled with a sense that America is moving ahead much faster than Europe, even prior to Trump's election. And then you think, okay, if the US pulls away on some of the regulatory issues and isolates a little bit with tariffs and the US domestic economy that's so tech dominated and at the center of all the AI stuff continues to power ahead, Europe is going to be stuck and left behind. So I think there's a lot, a lot of worrying in European quarters. Soterios Johnson Right. And I imagine European leaders seeing multinationals wanting to relocate to the US, maybe take advantage of a lesser regulatory

burden. Matt McHenry And just generally investment dollars or euros flowing towards the U.S. Capital raising in equity markets in the U.S. is vastly bigger than Europe, and there is a palpable sense that Europe has fallen behind and might continue to fall behind further. All right. So we will hear directly from Donald Trump later today remotely at Davos. I'm sure that's a big item on the agenda there. But have you encountered any foreign delegations, corporate leaders who feel confident already based on what they're hearing from

Washington that they can kind of thread the needle with the new administration? I think again, this is a town, at least for this week, of reasonable optimism. People are trying to focus on, okay, where are the areas where we share common ground? Is it approaches to China? Is it approaches to some political issues depending on where you are on the political spectrum? It's a fairly pragmatic way to operate, but that's sort of what people are trying to do here. And finally, Charles, any other themes dominating the conversation this year we should know about?

A huge amount of attention is being focused on AI here, which everybody talks about everywhere. Clearly, a ton of money is going to be spent in the United States on AI. And so you are seeing a bunch of foreign companies in that industry trying to find a way in and try to find their way into a piece of that pie. So you see a lot of that. That was Wall Street Journal Deputy Editor-in-Chief Charles Farrell. Charles, thank you so much. Thank you, Luke. Nice to talk. Take care. Luke Fargus And that's it for What's News for this Thursday morning. Today's show was produced by Kate Bullivant with supervising producer Christina Rocca. And I'm Luke Fargus for The Wall Street Journal. We will be back tonight with a new show.

Until then, thanks for listening. Music