C (3:53)

Harm.

B (3:54)

This is in essence a federal invasion of the Twin Cities and Minnesota and it must stop. Speaking on Fox News, acting ICE Director Todd Lyons defended his agency, saying it was carrying out its lawful law enforcement mission and justified its deployment to the state. You know we only are increasing our.

A (4:12)

Numbers because ICE agents are getting attacked due to the lax policies that Minnesota has.

B (4:18)

The Minnesota suit follows similar efforts to rein in ICE in other states, including Illinois, California, New New Jersey and Tennessee. It's earnings season again, at least for banks. Investors will be scouring JPMorgan Chase's Q4 results this morning for clues about American consumer health, with December's inflation report filling in more details at 8:30am Eastern. Economists polled by the Journal expect consumer prices rose 2.7% from a year earlier. Pharmaceutical company Abbvie has struck a deal with the Trump administration in exchange for tariff and pricing exemptions. AbbVie plans to lower Medicaid prices, invest $100 billion in its U.S. operations and expand the range of medicines it offers directly to patients through the government portal. Trump Rx Work on a major wind farm off the coast of Rhode island and Connecticut can now resume despite objections from the Trump administration. The ruling from a federal judge marks a temporary win for the offshore wind industry as President Trump seeks to block any windmills from being built. The the case is the first of three challenging the administration this week following Trump's order in December to freeze five big projects on the east coast over national security concerns. And the AI boom is pushing America's largest power grid to the brink 67 million people in a 13 state region stretching from New Jersey to Kentucky share their power supply with a slew of AI data centers in Northern Virginia. During periods of high demand, the grid's capacity is in danger of exceeding supply, which could force grid operator PGM to call for rolling blackouts during extreme weather. Well, if grids are struggling now, how will they cope with a projected $3 trillion in global data center spending over the next five years? Moody's ratings John Medina joins us to discuss the challenges and opportunities of the data center buildout after the break.

C (6:23)

Hey, this is Alex from what's News. Thanks so much for being a listener of the show. If you're looking for more ins and tools to understand the latest headlines, consider becoming a subscriber to the Wall street journal. Visit subscribe.WSJ.com whatsnews to subscribe now.

B (6:45)

Some of the AI boom's big winners so far besides members of the Mag 7 have been the developers and operators of data centers. But could regulations, power demand issues and water use fears crash the party ratings agency Moody's just published 2026 Global Data Center Outlook, an SVP for global project and infrastructure finance. John Medina is here to enlighten us. John, it doesn't sound like this big infrastructure scale up is ending anytime soon. Far from it. With this report highlighting that there are actually a bunch of data centers soon to be coming online that could potentially fuel more growth. Talk us through this.

C (7:22)

We are adjusting our forecast to look at the International Energy Agency forecast. We actually think our internal forecast aligns more with theirs for what's realistic growth and they're actually seeing about increase in global capacity in the next year, which is coming off a 20% growth the year before and most of that is in the U.S. to be honest, we're the largest market at about half of it. We're seeing an acceleration as new data centers are opening and coming online and others are starting construction at the same time. They're getting larger and larger and almost all of those are in the United States right now. There are other large developments you've heard elsewhere, particularly in China and in Asia, with Europe kind of a little bit slower but still having large developments coming in and Latin America kind of coming up at the sort of rear there because it's a smaller market but looking to grow and expand given they have good renewable resources and cheap cost of labor and to build. But pretty much every market that we're seeing is double digit growth across the board.

B (8:23)

John, with all of this build out underway, is there a risk of overcapacity here?

C (8:27)

I think that's the Million or now? Trillion dollar question, frankly, in this space, because there is a lot being built and it is being built essentially in a race. We're racing build new computing capacity to build new products that don't exist yet. Right. So there is an element of that capacity built for something coming. But what I can say is all of this is pre leased, meaning long term leases from high investment grade rated big tech companies. So even if they may not use it in the first few years, they're still on the hook to pay for it. So I think we're going through what could be considered a rational bubble, meaning we need all this growth and it's hard to predict what exactly the demand will be because a new model comes out tomorrow, creates a new product boom, everybody uses it, right? There's a lot of new services that you're actually seeing a greater focus like in China, more on the inference, more on the use of the AI models. Whereas here, often in North America, we're looking at building, getting to that generative AI, building the best models possible and sort of use cases are going kind of at the same time. So the question of overcapacity, no one's really going to know for several more years because everything that's opening is really being used because right now we have a backlog of need for computing.

B (9:40)

It sounds like based on your report. Another potential risk here is local pushback resistance in various communities to new and existing projects, which would then in turn trigger regulation. And this could stem from anything from the amount of power these facilities are drawing to something else that Moody's Ratings has been highlighting lately, water usage.

C (9:58)

Yes, water is always local, right. But the push to support and bring some of these projects into some locations is often at the state or sovereign level. Right. A higher level of government. And then when it comes down to actually building the project and coming to local resources, the locals may be against it or may not be for it. Now you're seeing outreach to the communities. You're seeing, hey, we're going to build this here, we're going to provide jobs, we're going to work with you on a new water treatment plan to help the community as well as ourselves. So you're seeing more partnerships in that regard. Same thing on the power side, because nobody wants to do all of the development costs and then not be able to finish your project.

B (10:36)

You mentioned big tech companies should be able to find a use for these data centers and most of them also have quite robust balance sheets. Is the credit risk then here primarily among the developers or financiers of these projects, especially with more of them being backed by debt.

C (10:51)

I think all of the projects I don't want to say are highly leveraged because it's infrastructure. Infrastructure is a highly leveraged asset class in general because they last a long time. These are 50 year assets, generally speaking, as long as you upgrade and keep them up and running, there's definitely a risk in terms of who's going to pay for that. If I have to put more leverage into my asset and I can't recover it from higher rents, then that's a problem, right? Or if I can't upgrade my facility because my tenant needs the newest cooling equipment, then maybe I don't have my tenant anymore. Right? Maybe they don't renew their lease or maybe they go somewhere else. So it's a balance in this space more than other spaces because the technology changes a little bit quicker, right? So like we say, our old malls, our new malls, our old hotels or new hotels, they're not that different. Data centers are notably different. When they change the types of internal compute, they could be quite different and quite expensive in terms of the internal configurations.

B (11:47)

John Medina is senior vice president of Moody's Ratings Global Project in Infrastructure Finance Group. John, thank you so much for being with us on what's News.

C (11:56)

Thanks, Luke. Appreciate it.

B (11:58)

And that's it for what's News for this Tuesday morning. Today's show was produced by Hattie Moyer and Daniel Bock. 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.