France and Germany weigh nuclear deterrence amid US reset

Good morning. Here's what happened overnight and what you need to know today.

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1.

Davos with guns: German Chancellor Friedrich Merz said Germany has initiated talks with France on nuclear deterrence at the Munich Security Conference, after urging the bloc to bolster defences and repair its relations with the US. French President Emmanuel Macron later confirmed the discussions, adding that he is having similar talks with other EU leaders as well. Macron used his address at the summit to hit back at comments by US Vice President JD Vance made at the same event last year, declaring "everyone should take their cue from us, instead of criticising us.” While Macron said he supports US President Trump’s drive to reach a Russia-Ukraine peace deal, he said it is a “huge strategic mistake” for some leaders to urge that Ukraine “accept defeat.” Taking a more direct tone, California’s Democratic governor Gavin Newsom told Europe earlier in the day to “stop with the BS diplomacy” and stand up to Trump. Marco Rubio is scheduled to speak at the summit on Saturday. Elsewhere in defence, Trump told reporters that he is dispatching a second aircraft carrier to the Middle East, which could be used for military strikes against Iran should negotiations with Tehran fail. (Bloomberg)(The Guardian)(Politico)(FT)(WSJ)

2.

Leydership lost: Less than an hour after being shorn of her title, the Member for Farrer stepped into Parliament’s sunny courtyard with a smile fixed to her face. Confirming her axing would bring a two-decade political career to an end, there were only hints at the frustrations that have bubbled under the surface. “It’s important the new leader is given clear air, something that is not always afforded to leaders,” Ley said, with the subtlest of smiles. Thirty-four of Angus Taylor’s colleagues turned to him, double the number that voted to retain the embattled Ley. The weight of resignations on Thursday made his momentum irresistible. “It is clear we are running out of time, I won’t mince words...If an election was held today, our party may not exist” Taylor told reporters on Friday afternoon. Even among Ley’s supporters, there is relief at the scale of Friday’s result. “It gives them the licence to prosecute their agenda,” Andrew Wallace, a Ley backer, told Capital Brief. (Capital Brief)

3.

Soft inflation: US stock indexes lost steam into the close on Friday, with the S&P 500 ending the day just 0.05% up, while the Dow Jones added around 49 points, or 0.1%. The tech-heavy Nasdaq fell 0.22% after the previous session’s AI-led selloff. All three benchmarks sank to a weekly loss. Data from the US Labor Department on Friday showed that inflation slowed more than expected in January, cooling to an annual pace of 2.4% as fuel prices eased. Core CPI came in at 2.5%, in line with forecasts. Ten-year Treasury yields slipped to their lowest intraday levels since early December on the data. Republicans claimed the lower inflation data evidenced the success of President Donald Trump’s economic policies, with Jason Smith, chair of the house ways and means committee stating: “Today’s report is just the latest evidence that the affordability crisis President Trump inherited is improving for working families." (CNBC)(WSJ)(FT)(Capital Brief)(Bloomberg)

4.

Doubly attractive: SpaceX is considering a dual-class share structure in its planned IPO later this year, according to sources cited by Bloomberg, the same strategy founder Elon Musk mulled for Tesla. The two-tier structure awards stock with extra voting power to certain shareholders, allowing them to carry more sway in decisions. Such a structure would permit Musk to maintain control of the company while holding a minority stake. The planned IPO could raise as much as USD50 billion ($70.74 billion) to fund the company’s ambitions to build AI data centres in space and a factory on the moon. The ambitions follow SpaceX’s recent purchase of Musk’s AI startup, xAI, which will see the companies combine AI, rockets, space-based internet, direct-to-mobile device communications, and "the world's foremost real-time information and free speech platform". Dual class shares have been adopted by US tech firms like Meta and Alphabet, as a means to enable founders to focus on longer-term vision. (Bloomberg)

5.

A-list appeal: The High Court will examine the appeal of two long-running class actions against the Commonwealth Bank, after the bank was found to have contravened its continuous disclosure obligations to the market in the lead up to its $700 million settlement with AUSTRAC in 2017. The Zonia and Baron class actions were granted special leave to appeal on Friday morning, as the High Court prepares to settle once and for all the class actions that have dogged the bank for the better part of a decade. The High Court has yet to publish its formal decision and CBA acknowledged the decision late Friday evening, stating only that it is defending the appeals. The class actions commenced in 2017 and 2018 respectively and related to allegations that CBA made misrepresentations to the market and did not disclose material information relating to its AML/CTF compliance over the three year period prior to AUSTRAC’s civil proceedings against the bank. (Capital Brief)

6.

Chinese chip-lash: The Pentagon briefly added Alibaba, BYD, Baidu and TP-Link Technologies to a list of companies it says aid the Chinese military, before withdrawing the list minutes later. An update on the Federal Register said that the list was removed after a withdrawal request from an unnamed government agency. Asked about the new list, the Pentagon told Bloomberg “we have nothing to announce at this time.” The updated list had also removed two of China’s memory chip makers, ChangXin Memory Technologies and Yangtze Memory Technologies. While being included in the list carries few immediate legal consequences, the move is likely to add fresh tension to US-China relations ahead of the countries’ summit in April. The unexplained move rattled the shares in affected companies, with Alibaba’s American depositary receipt shares falling by as much as 5% in extended trading on Friday, while Baidu’s receipts dropped 4.5% (DOD List)(Reuters)(Bloomberg)(FT)

7.

Epstein files: Sultan Ahmed Bin Sulayem, the leader of Dubai-based ports operator DP World, resigned after files released by the US Justice Department showed his close ties to the late sex offender Jeffrey Epstein. Messages between Bin Sulayem and Epstein showed the men exchanged friendly emails for years, including discussing women in crude terms and sexual experiences, while photos showed that Bin Sulayem visited Epstein’s island. Making no mention of Bin Sulayem, DP World announced in a statement on Friday that it had appointed Essa Kazim as chairman of its board of directors and Yuvraj Narayan as group chief executive officer. A disclosure to Nasdaq Dubai said Bin Sulayem had resigned “effective immediately.” Bin Sulayem has been chief executive of DP World since 2016 and chairman since 2007. The company runs more than 60 ports and terminals across the globe and is ultimately owned by the government of Dubai. (DP World)(FT)(WSJ)(CNBC)(Bloomberg)

8.

Under attack: The US Department of Justice is suing Harvard over access to data on race in the university’s admissions process. A suit filed in Boston federal court on Friday alleges that Harvard has failed for 10 months to produce the admissions data necessary to determine whether Harvard is violating civil rights laws in its admissions process. “Under President Trump’s leadership, this Department of Justice is demanding better from our nation’s educational institutions,” attorney general Pamela Bondi said in a statement. The DOJ launched compliance reviews in April last year as part of the Trump administration’s aggressive targeting of elite universities over alleged antisemitism as well as racial and ideological diversity. Harvard has repeatedly pushed back against the administration’s pressure, filing its own lawsuits against the government. The DOJ requested that the court declare Harvard to be in violation of the law and order the university to comply with the government’s document requests. (DOJ)(Court filing)(Bloomberg)(NYT)