Good morning from the Financial Times.
Today is Monday, January 26th, and this is your FT News Briefing.
US President Donald Trump's immigration crackdown faces a growing backlash after federal agents killed a man in Minneapolis this weekend.
Plus, we could find out this week who's on deck to lead the Federal Reserve.
And the U.S. government is poised to announce its largest investment in the rare earths sector.
But Washington's continued foray into private industry has some business leaders wary.
The main concern is that Trump is picking winners and losers.
And it doesn't really work well with kind of a traditionally capitalist society as the US is known for.
I'm Victoria Craig, and here's the news you need to start your day.
President Trump is under pressure over his immigration policies, after the second person in two weeks was killed by federal agents in Minneapolis Minnesota, this weekend.
Protesters took to the streets in some of the country's biggest cities, and some senior members of Trump's Republican Party also expressed alarm over the killing of Alex Preddy, a 37-year-old intensive care nurse.
Video footage contradicted authorities' claims that he violently resisted attempts by Border Patrol agents to disarm him.
On Sunday, federal officials maintained that Peretti threatened agents with a gun.
Democrats meanwhile, are warning about a potential government shutdown as soon as next week in response to the killing.
Senate Democrats said they would block a key funding package if it included financing for the agency that oversees the Immigration Enforcement Agency.
In an unusually pointed intervention, former President Barack Obama said the shooting was quote a wake-up call to every American that the nation's core values are increasingly under assault.
U.S.
President Donald Trump says he's decided who he wants to lead the Federal Reserve when Jerome Powell's term ends in May.
We just don't know who that is yet.
Four men are jockeying for the top spot at the U.S.
Central Bank, and an announcement on a final decision could come this week.
Claire Jones, our U.S. economics editor, is here to tell us how the horse race is shaping up.
Hi, Claire.
Hi, Victoria.
All right.
So there's still a lot of shuffling going on.
But on Friday, betting markets had a new favorite in Rick Reeder, who is BlackRock's head of fixed income.
What can you tell us about him?
Rick Reader's odds over the past week on betting markets have really shot up.
He had an interview with Trump earlier this month.
It seemed to go very well.
Trump said he's very impressed.
There's also the sense in which Reader is someone who'd be well received on Wall Street.
And there's also issues as to whether or not Trump's pick will get through the Senate, which has had something of a backlash against the probe into Jerome Powell.
And the feeling may well be that Reader is someone who will play well not only with investors, but with senators too.
Let's look at a couple of other names here.
Kevin Warsh, a former Fed governor, is still among the top contenders, as is current governor Christopher Waller.
What are the feelings on these options, Claire?
One of the reasons Walsh has emerged as one of the favourites for this role is that he's extremely well connected.
He served, as you say, as a Fed governor in the past, during which he built up quite substantial relationships with very senior executives on Wall Street.
So Wall Street's pretty keen on Kevin Walsh getting the job.
There's really a sense that he's someone who people know well, both on Wall Street and within Washington.
And in that sense, he's considered a rather safe bet.
However, as far as Trump is concerned, there may be some issues as to whether or not he's willing to make the sorts of big cuts in interest rates that the president would like to see.
Waller has long been considered a very strong candidate.
He's the person that people within the Fed and within the US economics community would really like to see get the job.
But again the concern might be as to whether or not he'd be willing to back very sharp interest rate cuts.
Okay, and those who have been following this race will notice that we have not yet talked about Kevin Hassett, the other Kevin in this mix.
What's turned President Trump's opinion on him for this job?
So Trump said recently that he'd like to keep Hassett, who's the head of the White House's National Economic Council, where he is.
After that, the odds on Hassett have plunged.
The feeling has been that, because of the Senate backlash against the DOJ probe into power, Trump would have struggled to get a close ally such as Hassett confirmed.
So someone who's long been considered really the frontrunner for the race has more or less been ruled out.
So, no matter who the president picks to replace Jay Powell, is that person going to need to contend with the same kind of political pressure from the White House that the Fed has dealt with for the past year?
The Fed chair is a very influential figure.
But when it comes to the Federal Open Market Committee that sets interest rates, they're just one of 12 voters.
At the moment, the committee is pretty divided as to whether or not to prioritise a weakened labour market over signs that inflation isn't yet at the Fed's target.
So for the Fed chair to just come in and call for mega cuts isn't going to necessarily sit well with the rest of the Federal Open Market Committee.
So Trump...
Even if he picks the candidate who is now willing to cut interest rates, that candidate, once they're in the job, may find that more difficult to achieve.
Well, it could be a very exciting week ahead for you.
Claire Jones, our U.S. economics editor.
Thanks so much for your time.
Thanks, Victoria.
UK Prime Minister Sir Keir Starmer is heading to China this week.
It's the first visit by a British leader in eight years and comes as London looks to reset relations with Beijing amid deteriorating ties with Washington.
The trip follows one earlier this month by Canada's Mark Carney, who said Ottawa would forge a new partnership with China to adapt, to quote new global realities.
It's a remark that has infuriated the White House and unleashed a fresh tariff threat.
For Beijing.
Starmer's visit is a chance to draw in another close US ally as it works to exploit widening transatlantic fractures.
Talks are expected to focus on illegal migration, organized crime and financial cooperation, while China will push for greater access to UK markets, despite security warnings from Washington.
Over the past year, President Trump has directed the United States to invest in companies that ultimately help serve his policy agenda.
Late.
Last year, the government took a 10 percent stake in struggling chipmaker Intel to push back against competition from China.
Before that, the president finagled a so-called golden share for the government after greenlighting Japan's Nippon Steel takeover of US.
Steel.
But rare earth elements which are vital to production of everything from cell phones to fighter jets, have become a particular area of focus.
James Fontanella-Khan is the FT's U.S. finance editor, and he joins me now to talk more about this.
Hi, James.
Hi, Victoria.
So the Trump administration is planning today to announce a new investment in a US rare earths company.
What can you tell us about that?
Well, this is going to be the U.S. government's largest investment in a rare earth company.
We're talking about a $1.6 billion capital injection in this company called USA Rare Earth.
In return, the government will receive roughly a 10% equity stake.
In addition to that, there'll be some additional investors coming along.
And this isn't the Trump administration's first foray into rare earths.
It's done at least six other deals in the last year.
Why is it so focused on this particular industry?
Mainly because of national security and the fight against China, which is dominant in this sector.
China controls anything between 70 to 80 percent of the global rare earths mining.
And that means that, like you know, the defense industry, the AI industry, the semiconductors industry, the electric vehicles industry and so forth, which are very dependent on these minerals, is kind of at risk of the Chinese government blocking access and supply to these resources.
So the U.S. government has decided that we need to refocus our attention on this.
It's part of, if you want, Trump's broader industrial policy.
And is this strategy of such direct corporate dealmaking common for the US government historically?
The short answer is no, but it's a bit more complicated than that.
The U.S. has always supported its strategic industries.
There's a bit of a myth that the U.S. is kind of not involved in promoting private companies.
Every strategic kind of industry in the US, And part of the success of the US is because the US government has invested a lot in the development of a number of industries, including Silicon Valley.
What is less common and what we're seeing now, is the government actually buying stakes becoming an owner of privately listed companies.
As you mentioned, Intel earlier on, USA Rare Earths is also listed.
And that is kind of unusual.
This is much more common in Europe, where the government often has, or used to have, a monopoly, then started to privatize and still kind of controls a minority stake.
However, I've been talking to a lot of people and the big difference again here is that there isn't really a framework in the US.
And so there are some concerns about the government getting more involved in owning U.S. companies.
And to that point Trump has used his influence as president to get CEOs sort of on board with his ideas.
You've been talking to a number of people in corporate America.
How do they feel about having a quote unquote dealmaker in chief?
Privately.
There's definitely a lot of unease and concern amongst business leaders CEOs, dealmakers.
The main concern is that Trump is picking winners and losers and it doesn't really work well with kind of a traditionally capitalist society as the US is known for.
What happens if the government picks losers? an investment in a company that is a rival to you.
Let's take the example of Intel.
Intel was really not doing very well.
Since the government invested 10%, the stock has been rallying until very recently.
I think it's up nearly 100%.
If you're a rival to Intel, that's kind of a little concerning.
On the flip side though, there is a recognition that the US is facing more national security challenges, predominantly coming from China.
And so there's an open-mindedness.
What people feel is needed is a better framework.
Fascinating stuff.
James Fontanella-Khan, the FT's U.S.
Finance Editor.
Thanks for breaking this down for us.
Thank you, Victoria.
You can read more on all of the stories in today's podcast for free when you click the links in our show notes.
This has been your daily FT News Briefing.
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