Goldman, JP Morgan face pressure amid Trump DEI cuts

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

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1.

DEI erased: The Trump administration ordered the closure of federal diversity, equity and inclusion (DEI) offices, requiring employees in these roles to be placed on paid administrative leave by 5:00pm Wednesday (9:00am Thursday AEDT). Agencies must dismantle DEI programs, remove related online content and submit staff reduction plans by 31 January. The directive follows President Trump’s executive order to end DEI initiatives, which the administration describes as “radical and wasteful,” in favour of promoting a “merit-based society.” Meanwhile, right-leaning activist groups are pressuring corporations such as Goldman Sachs and JPMorgan Chase to scale back DEI efforts, including hiring targets and racial-discrimination audits, citing potential legal risks. Bank of America and Citigroup have also received shareholder proposals from these groups. Federal employees are concurrently facing reduced job protections, a hiring freeze and mandated office returns under related executive orders. Unions have filed lawsuits, arguing these measures undermine stability, merit-based service and due-process rights. (Capital Brief)(NYT)(WSJ)

2.

Elon unplugged: Donald Trump adviser and Tesla CEO Elon Musk publicly questioned the financial viability of Stargate, the USD500 billion ($796.99 billion) artificial intelligence infrastructure project proudly announced by the US president a day earlier. Announced by Trump at the White House alongside Oracle Chairman Larry Ellison, OpenAI CEO Sam Altman, and SoftBank CEO Masayoshi Son, the project plans to create a new American company to “immediately” start investing USD100 billion. That would ramp up to USD500 billion in equity and debt over four years and generate over 100,000 jobs, Trump said Tuesday (Wednesday AEDT). On X, Musk wrote the backers lack the funds to deliver on their commitments. “They don’t actually have the money,” he said, adding that “SoftBank has well under USD10b secured. I have that on good authority.” The companies have not disclosed their exact contributions. (Capital Brief)(Elon Musk post)(WSJ)

3.

Harry settles: Prince Harry and former UK Labour Deputy Leader Tom Watson have settled a lawsuit against Rupert Murdoch’s News Group Newspapers over unlawful information-gathering, including surveillance and phone hacking. The settlement, reached a day before a scheduled trial, marks a landmark moment as News Group acknowledged unlawful conduct at The Sun for the first time, issuing Prince Harry a “full and unequivocal apology.” As part of the agreement, News Group will pay substantial damages – reportedly in the eight-figure range – and legal fees estimated at £10 million ($19.65 million). Harry and Watson hailed the outcome as a "monumental victory," accusing News Group of obstruction and urging Parliament and police to investigate not only the unlawful activity now admitted but also allegations of perjury and cover-ups by senior executives. In a statement, News Group said it has implemented safeguards to prevent future misconduct and described the settlement as “drawing a line under the past.” (Capital Brief)(NGN’s apology)NGN statement)(BBC)(Reuters)

4.

LinkedIn leaks: Microsoft’s LinkedIn was sued in the US federal court in San Jose, California, for allegedly sharing Premium customers' private messages with third parties to train generative AI models. The proposed class action, filed on Tuesday night, local time, claims LinkedIn quietly introduced a privacy setting in August 2024 allowing users to enable or disable data sharing. On 18 September 2024, LinkedIn updated its privacy policy to allow data use for AI training, with a “Frequently Asked Questions” section saying opting out "does not affect training that has already taken place." The lawsuit, filed on behalf of Premium customers who sent or received InMail messages, alleges LinkedIn violated its privacy commitments and seeks damages for breach of contract, violations of California’s unfair competition law, and USD1,000 ($1,590) per person under the federal Stored Communications Act. (Reuters)

5.

Green halt: Donald Trump has put more than USD300 billion ($477.88 billion) in potential federal green infrastructure funding in the US at risk with a sweeping reversal of Biden-era policies, alarming the clean energy sector and raising concerns about long-term investment instability. Trump’s executive orders halting disbursements from the Inflation Reduction Act (IRA) and bipartisan infrastructure law, impact USD50 billion in approved Department of Energy loans and USD280 billion in pending requests, according to the FT. Key projects affected include a USD9 billion loan for DTE Energy and USD3.5 billion for PacifiCorp. While IRA tax credits remain intact, nearly 25GW of offshore wind projects (65% of the US projects in development) are unlikely to proceed according to researcher Rystad Energy. (FT)

6.

IPO repriced: Venture Global LNG, the second-largest US exporter of liquefied natural gas, has reduced its target valuation for its initial public offering to USD65.33 billion ($104.06 billion), down from an initial USD110 billion. The revised plan aims to raise USD1.89 billion by offering 70 million shares priced at USD23–USD27 per share, instead of the earlier target of USD2.3 billion from 50 million shares at USD40–USD46 each. The reduction follows investor concerns that the company’s future sales may not justify its earlier valuation. The IPO comes as global demand for LNG rises, partly due to the US shale boom and the European Union’s reduction of Russian gas imports. The IPO, underwritten by a banking syndicate led by Goldman Sachs, JPMorgan and BofA Securities, is expected to value the company higher than Cheniere Energy, the largest US LNG exporter. Venture Global operates five LNG projects along the Gulf Coast with a peak annual production capacity of 143.8mt. (Reuters)

7.

Data mine: MetaPlatforms joined Databricks’ USD10 billion ($14.92 billion) funding round, pushing the data analytics company’s valuation to USD62 billion amid soaring demand for AI technologies. The Series J round, which closed on Wednesday, coincided with Databricks securing a USD5.25 billion credit facility from major banks, including JPMorgan, Goldman Sachs, Morgan Stanley, Barclays and Citigroup. Based in San Francisco and founded in 2013, Databricks helps organisations build AI applications from complex data. The funding deepens its collaboration with Meta’s Llama team, which develops open-source large language models (LLMs). CEO Ali Ghodsi said thousands of customers, including Comcast, Rivian and Shell, use Llama on Databricks' platform. (Reuters)

8.

Netflix record: Netflix's shares surged almost 15% to a record high of USD999 ($1,591) on Wednesday after the streaming company shattered expectations gaining a record 18.9 million new subscribers in Q4 2024. That took its global subscriber base to 301.6 million, a figure Netflix has said it will no longer publish moving forward. The company’s expansion into live sports, including a record-breaking Tyson-Paul boxing event and NFL games, drove growth. Despite a 16% rise in sales, the subscriber surge, roughly double expectations, did not translate into a proportional revenue increase, exceeding estimates by only about USD100 million, according to Reuters. That was attributed to subscriber growth in lower ARPU regions and ad-supported tiers. Price hikes in key markets aim to address this. (Netflix)(Reuters)