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Hey, this is Jessica Mendoza, host of the Journal Podcast, our show about money, business and power. If you're looking for more deeply reported stories like we share every day, consider becoming a subscriber to the Wall Street Journal. Visit subscribe.WSJ.com TheJournal all lowercase to subscribe now.
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Elon Musk reshapes his tech empire as SpaceX acquires XAI. Plus the Epstein scandal sends shockwaves across the Atlantic and the prepares to vote as soon as today to end a partial government shutdown. We have a one vote margin now, so what could go wrong? That's fine. It's Tuesday, February 3rd. 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 begin with a major tie up as SpaceX is buying Xai, a deal that brings together Elon Musk's well established rocket business and his AI startup to form a one and a quarter trillion dollar company. The MER merger was confirmed in a memo yesterday by Musk saying the deal will form the most ambitious vertically integrated innovation engine on and off earth. But as Journal tech reporter Berber Ginn explains, the move was unexpected as industry observers had anticipated that Xai would merge with Tesla instead.
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We've reported that SpaceX is looking to go public as soon as the middle of this year and this merger definitely throws a little bit of a curveball in those ambitions, but because SpaceX on its own is a profitable business and Xai on the other hand doesn't generate a lot of revenue, but it burns through billions of dollars every year on computing costs. So by merging the two companies together he's essentially taking a very money losing, cash intensive business and pairing it with SpaceX.
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Berber added that he'll be looking to see how investors like this combination and whether they buy into Musk's long term vision for the new company.
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In a blog post, Elon essentially said that the merger is in service of this kind of almost sci fi esque vision of building AI data centers in space. So Elon talked about having SpaceX building a constellation of data centers in space that can power AI training in the future. And a lot of tech CEOs including Google, Sundar Pichai and Sam Altman at OpenAI have talked about space as the new frontier and be able to harness the power of the sun and have more leeway to build data centers in places where there are fewer regulations.
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SpaceX previously invested $2 billion into XAI and last week Tesla committed to invest the same amount in the company. Republican House Speaker Mike Johnson says he has the votes to end a partial government shutdown as soon as today. That follows a push by President Trump to pressure a handful of House Republicans to drop their opposition to the bill unless it included voter ID legislation. Johnson has a thin majority in the House and will need near unanimous support from Republicans if he hopes to pass the measure. Across the aisle, Democratic Minority Leader Hakeem Jeffrey said that while some in his party may back an eventual spending package, they're united in opposing an earlier procedural vote. Democrats are committed to this fight and again, we've made clear line in the sand, red line. We've articulated the things that will be necessary for there to be a full year appropriations bill connected to ICE funding. One of those demands that federal officers wear body cams, is being partially addressed by the administration. Homeland Security Secretary Kristi Noem says that officers in Minneapolis will receive body cameras effective immediately, an effort that would expand to DHS law enforcement nationally as funding becomes available. Speaking in the Oval Office, President Trump told reporters that the move was all gnomes.
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Well, it wasn't my decision. I would have, you know, I leave it to her. They generally tend to be good for law enforcement because people can't lie about what's happening. So it's generally speaking, I think 80% good for law enforcement.
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As a part of shutdown talks, Democrats also want to bar federal agents from wearing masks and mandate that they carry proper identification. Some 350,000 Haitian immigrants to the US will no longer lose their work permits or become targets for deportation today after a federal judge blocked the Trump administration from revoking their temporary protected status. DHS had moved to end the protections last year, arguing it was in the national interest. However, the judge said that the government offered no evidence Haitians under the designation posed a threat to the US and that the decision was motivated, at least in part, by racial animus. The administration has sought to end protected status designations for a range of countries, including Honduras, Somalia and Venezuela, with a number of those efforts tied up in the courts. And former President Bill Clinton and former Secretary of State Hillary Clinton have offered to give depositions to a House committee investigating sex offender Jeffrey Epstein. The two had been facing a contempt vote after earlier declining to appear for depositions. The Clintons have said they had no personal knowledge of Epstein's criminal activities, though Bill Clinton has acknowledged flying on Epstein's private jet. Lawyers for the two have argued the subpoenas against them are designed to embarrass the Clintons while Democrats say the chair of the House committee and Republicans are failing to investigate President Trump's connections with Epstein. Meanwhile, the fallout from the latest release of Epstein documents, which included photos of former Prince Andrew kneeling over an unidentified woman, is now reaching across the Atlantic. As Journal correspondent Max Colchester explains.
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In the uk, the Epstein scandal has morphed from something which focused on potential bad behaviour by individuals, which was chronicled in the tabloids, into what could now morph into a police investigation. On Friday, documents were made public which appear to show that a former senior member of the British government, Lord Peter Mandelson, was forwarding internal information from Downing street to Epstein directly, which raises the question of whether Epstein was able to trade on that non public information. The British police have said they are looking at the emails in question and will determine whether to launch a fully fledged investigation. And there's a key ramification from this, which is now British Prime Minister Keir Starmer is saying that Peter Mandelson and Andrew Mountbatten Windsor should give evidence to the House Oversight Committee and the Prime Minister has suggested that Lord Mandelston should quit Britain's House of Lords. So we're talking about real world ramifications now from this scandal.
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Mandelson, who quit the ruling Labour Party this week, says he has no recollection or record of having received money from Epstein, as newly released emails appeared to show, and he didn't immediately respond to an email requesting further Andrew, who didn't reply to an email requesting comment, has denied allegations he abused an American teen introduced to him by Epstein. Coming up, we'll weigh the long term impact of America's aggressive foreign policy strategy as U.S. allies search for alternative trading partners. That chat with the Journal's David Luno after the break. Hey, this is Alex from what's News. Thanks so much for being a listener of the show. If you're looking for more insights and tools to understand the latest headlines, consider becoming a subscriber to the Wall street journal. Visit subscribe.WSJ.com whatsnews to subscribe now. Can the world separate its views of President Trump from its treatment of Americans and American brands? It's one of several questions that Journal UK Bureau chief David Luno has set out to answer as the White House's America first strategy risks becoming an America Alone approach to foreign David, you write that America's allies are becoming increasingly disenchanted with the US this is based not only on interviews that you conducted, but also on public opinion polling. Could you just walk us through what you're seeing in those surveys.
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Well, the surveys make for grim reading here in Britain, which has pretty much always been America's strongest overseas ally, our partner in crime in many ways. The number of Brits who view the US unfavorably has doubled in the last two years to 64%. In Germany, 71% now view the US as an adversary. And across Europe, only 16% view the US as an ally. Those are by far the lowest numbers we've ever had. And yeah, it's not only Europe. I mean, nearly two thirds of Canadians and Mexicans now hold unfavorable views of the US and they view the US As a bigger threat than China, which is also something very new. We're seeing that in Brazil and a lot of other third countries. Favorable views of the US Are also falling in Asia, among our longest standing allies there. So places like Korea and Japan, there are only very few exceptions to this. So across much of the world, it's a pretty dark view of the US Right now.
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David, we're talking here about America's brand reputation, but I'm curious about American brands. Are we seeing a potential business impact here too?
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The US has proved really resilient in the past to the occasional bouts of sort of boycotts of American products. I mean, after the Iraq war we saw that as well. That's generally held up. Well, the US has enormous reservoirs of soft power. We have the best universities in the world. We make the movies and the music that everyone wants to listen to. People like American technology. We're the world's most innovative economy. So there's a lot of pluses. But right now, as the US Sort of disengages with globalization, other countries are over time. It's not just creating an app to allow Canadians to find Canadian made products. It's that Canada is now making free trade agreements with India, with the Europeans trading more with China. They're all going to diversify their trade a little bit away from the United States as a hedge. They're also going to be pursuing their own defense buildups independently or at least more locally sourced than they would have in the past. So the Europeans are going to rearm. Are they going to buy F35s? Maybe for now. But they're not always going to just buy American to rearm. So American defense sales will also probably suffer on the margin. So will it be as easy for American films to do as well abroad? If the American image isn't so good, will people want to use their Apple phones or Microsoft or AI? That's made in America right now, they don't have much choice. But as a diversification slowly takes hold, they will have increasing choices. And if they don't like the United States, they will make choices that don't align with our economic interests.
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David Luno is the Wall Street Journal's UK Bureau chief. David, thank you so much.
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It's a pleasure.
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And that's it for what's news for this Tuesday morning. Today's show was produced by Hattie Moyer and Daniel Bach. Our supervising producer was Sandra Kilhoff. And I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening.