Trump pressures NATO members to up defence spending

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

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1.

Negative on NATO: Donald Trump has cast further doubt on the future of NATO should he win the US Presidency, stating that he would encourage Russia to do “whatever the hell they want” if members fail to meet defence spending targets. During a rally ahead of the South Carolina GOP primaries later this month, Trump said that NATO was “busted” until he pressured European members to increase their defence spending when he was last in office. Trump’s comments have been met with widespread criticism, with representative Adam Schiff posting on X: “It would be enough to make Reagan ill.” (Financial Times)

2.

Pakistan election: Final results from Pakistan’s election have put Imran Khan’s PTI party in the lead. Independent candidates won 101 of the country’s National Assembly seats, with 93 of those going to PTI-backed candidates, ahead of ex-Prime Minister Nawaz Sharif’s 75 seats. Many had expected Mr Sharif’s party to win, given his military backing and the fact that his main rival, Imran Khan, has been jailed on several charges including corruption and illegal marriage. The election campaign was marred by violence and terror attacks, and since the results were announced, demonstrations have broken out across the country after claims of election rigging. Both parties have said they wish to form the next government. (BBC)

3.

Bottomed-out: US banking profits fell 45% during the fourth-quarter last year, making it the largest year-on-year drop in quarterly profits since Covid-19 hit in Q2 2020. Falling to USD38 billion ($58.3 billion), banks' profits were hit by one-off charges tied to 2023’s regional banking crisis, provisions for bad loans, and restructuring costs, among other expenses. While the country’s largest bank, JP Morgan, also saw its profit fall in Q4, it took home 22% of the industry’s total profits which is its highest share in over 10 years. (Financial Times)

4.

Unstoppable OpenAI: OpenAI is on the way to hitting USD2 billion in revenue as growth continues to surge. According to unnamed sources cited by the Financial Times, the generative-AI giant’s yearly run-rate hit the USD2 billion milestone in December last year, with sources adding that OpenAI believes it will more than double this amount in 2025. In October 2023 the firm’s annualised revenue reached $1.3 billion. The surge in revenue is closely tied to increasing demand for OpenAI’s technology in the workplace. (Financial Times)

5.

Bezos sheds stock: In its first major stock sale since 2023, Jeff Bezos has sold $2 billion worth of Amazon shares. The founder sold around 12 million shares according to a company filing on Friday, one week after he announced plans to offload 50 million shares by the end of January 2025. Following the share sale, Bezos remains Amazon's largest shareholder, owning over 976 million shares, representing 9.4% of the company's stock. (Reuters)

6.

AI ambitions: Tower Semiconductor plans to build an USD8 billion chipmaking facility in India. The Israeli chipmaker has submitted a proposal to the Indian government to manufacture 65 nanometre and 40 nanometre chips under the country’s USD10 billion semiconductor production-linked incentive scheme. The Indian government is currently assessing the application, which if approved, could award a 50% capital expenditure subsidy to Tower. (Indian Express)(Reuters)

7.

Magnificent 6?: Tesla’s presence on the ‘Magnificent 7’ list is coming into question as stock in the electric vehicle maker continues to flail while the rest of the market rallies. Tesla’s stock price has fallen 22% this year, compared to a 46% surge by AI player Nvidia and Meta’s 32% increase. Bloomberg reports that a key factor in this dynamic is that 6 of the Magnificent 7 are capitalising on significant market enthusiasm in AI, and Tesla isn’t such an obvious AI bet by comparison. On top of this is the weight of falling demand for EVs, with carmakers across the board slashing their production estimates for 2024. (Bloomberg)

8.

‘Renaissance man’: Advertising icon and philanthropist Harold Mitchell died on Saturday, aged 81, while recuperating from knee surgery. The media tycoon founded Mitchell & Partners in 1976, which grew to become Australia’s largest media-buying agency. In 2010, he sold the company and was made a companion of the Order of Australia for his leadership and philanthropy in the arts, health, education and humanitarian support for Timor-Leste and Indigenous communities. Bill Shorten took to social media to pay tribute to Mitchell, writing: “An avuncular, Renaissance man who was energetically interested in everything and everyone. There can only ever be one Harold Mitchell.” (The Australian)(ABC)