© Financial Times

This is an audio transcript of the FT News Briefing podcast episode: Corporate America after the Capitol insurrection

Marc Filippino
Good morning from the Financial Times. Today is Thursday, January 6th, and this is your FT News Briefing.

[MUSIC PLAYING] 

The Federal Reserve released minutes from its latest meeting and tech stocks nosedived. One of Germany’s biggest utilities has turned to the government to get through a cash crunch. And on this day last year, a mob of Trump supporters stormed the US capitol. Corporate America quickly condemned the attack. So what have companies done since then?

Andrew Edgecliffe-Johnson
They’ve decided that they’d rather come out and support democracy anyway, even if that means taking some heat because they feel it’s gonna put them on the right side of the issue.

Marc Filippino
I’m Marc Filippino and here’s the news you need to start your day.

[MUSIC PLAYING] 

The Fed may need to raise interest rates sooner or at a faster pace than officials initially expected. That’s according to minutes from December’s Fed meeting. They were released yesterday and also show officials are fully on board with a faster scaleback of the central bank’s asset purchase programme. That would give the Fed greater flexibility to raise interest rates this year. After the minutes came out, there was a powerful sell-off in tech stocks. The Nasdaq plunged more than three per cent. The S&P 500 ended the day down nearly two per cent. But as investors sold off tech, they’ve been moving into banks, industrial groups and energy producers — companies whose fortunes are linked to an economic recovery.

[MUSIC PLAYING] 

European power companies are struggling amid the ongoing energy crisis due in part to a slowdown in gas supplies from Russia. Yesterday, one of Germany’s biggest utilities, Uniper, said it was forced to seek €10bn of extra financing, in part from a German state bank. Here’s FT commodities correspondent Neil Hume.

Neil Hume
Well, we’re seeing one of Europe’s biggest power producers effectively having to receive sort of a cash bailout almost by the German state. In the fact that, you know, KfW, which is a state-owned bank, has been instructed by the German government to extend €2bn of credit to Uniper so it can pay margin calls on gas and power sales that it’s made. And at the same time, Uniper’s also had to lean on its parent company, which is another state-backed company, and it’s providing €8bn in credit loans. So basically what this is telling us is that governments are having to get involved to backstop big utility companies because of this sort of unprecedented surge in volatility that we’re seeing in gas prices this winter.

Marc Filippino
Now, Neil, as I understand it, it’s not just big utilities. Several smaller power companies in the UK have gone bust because of the energy crisis. Does this start to put pressure on governments?

Neil Hume
Well, it does, I think, really sort of underline the fragility of energy markets across Europe and the system that the EU and governments across the region have put in place whereby, you know, they are very dependent on gas flows from Russia and also sort of cargos coming in of liquefied LNG from the US and Qatar. So it sort of exposes, I think, the folly of not having long-term sort of domestic sources of gas and power in place.

Marc Filippino
Is there anything that Europe can do to get more gas out of Russia?

Neil Hume
Well, there is one thing it could do. I’m not sure it will do it, but there is another pipeline that Russia or Gazprom has filled with gas that could be pumped to Europe. It’s called Nord Stream 2. Unfortunately, this pipeline bypasses Ukraine. That is, in the view of many European politicians, very deliberate because it then paves the way for sort of Russia to basically take de facto control of Ukraine. So yes, there is a way. It or Germany, is the EU going to approve Nord Stream 2? At the moment, with sort of Russian troops massing on the border of Ukraine, it seems unlikely. So what other choices does Europe have at the moment? Well, it can pay up more for gas from the US, also Qatar in the Middle East. That is happening. But I mean, that’s not really a long-term solution.

Marc Filippino
Neil Hume is the FT’s commodities correspondent.

[MUSIC PLAYING] 

Marc Filippino
Food prices in Hong Kong are expected to jump as a result of the territory’s strict Covid policies. Officials have suspended flights in and out of Hong Kong and that’s squeezed cargo space. Freight companies and importers are warning of steeper prices. One supermarket chain said logistics cost for many imported products have tripled. Some of the foods especially affected are yoghurt, soft cheeses and certain fresh fruit.

[MUSIC PLAYING] 

[Audio clip: people chanting USA! USA!]

Marc Filippino
Today marks one year since a mob of Donald Trump supporters stormed the US Capitol. At least five people died in the attack. Many big name American companies condemned the assault. Some promised to suspend donations to groups supporting certain Republican candidates. But soon corporate America went quiet. The FT’s US business editor Andrew Edgecliffe-Johnson has been following corporate America’s response since the insurrection. He joins me now. Hi, Edge.

Andrew Edgecliffe-Johnson
Hi, Marc. Good to be with you.

Marc Filippino
So Edge, remind us why companies felt like they had to make public statements in the first place.

Andrew Edgecliffe-Johnson
Yeah, if you think about it, this is pretty unusual to see a bunch of major companies and bunch of business groups speak out on something so political. That really changed around the time of the last election, when even before the election business groups came out with statements saying they supported a peaceful transition of power. And straight after the election, once the results were confirmed by all of the major news networks, they came out and said, “Yeah, there’s no question about this. Joe Biden is the next president.” They then had to come out again around January the 6th, when they were pretty horrified to see the level of violence at the Capitol building and were genuinely concerned about the risk of democratic backsliding because frankly, they realise that democracy is vital to economic stability, which is what they care about most.

Marc Filippino
So Edge, a bunch of companies said they would suspend donations to groups that support Republican candidates, especially the ones that backed Donald Trump’s fraudulent claim that he won the election. Did companies actually follow through on this?

Andrew Edgecliffe-Johnson
Yeah, we see a sort of mix of pledges after January the 6th last year. Some companies said it was suspending all political donations for a period three months, six months, whatever. Others said we are stopping donations to any congressman who voted against certifying Joe Biden’s election victory. And the vast majority of companies have stuck to those pledges. But we have seen growing scrutiny in recent days of the minority of companies that have actually found ways to funnel money either directly to those candidates or through Republican, Senate or House committees which fund the re-election of those candidates. So there have been some big companies, including defence contractors like Boeing and General Dynamics, which have given fairly small sums of money to these candidates and to fund voting legislation at the state level, which they see as being potentially prejudicial, particularly to minorities, that make it harder for more people to vote.

Marc Filippino
So what do companies have to gain or lose by speaking out?

Andrew Edgecliffe-Johnson
I think there is always a concern, still a concern in the business community, that if they stick their neck out on a subject which they know polarises the population, they’re gonna get shot from one side or the other. And we have seen a huge amount of hate among activists on the left and the right for companies that have either said too much or too little. On the subject of voting rights, we saw it in Georgia with big local companies like Delta Air Lines and Coca-Cola. It then moved to Texas, where we had companies like Dell drawn into this, and American Airline. And I think a lot of CEOs feel they can’t win. They are gonna get attacked by one side or the other if they speak up on a political subject. But we are also seeing more CEOs, I think this year than last, realise that they want to be on the right side of this, that they have decided democracy is important, that they do think that it is imperilled if there is backsliding, as a Brookings Institution paper put it this week, and that that represents a systemic risk to economic stability and therefore to their investors.

Marc Filippino
Andrew Edgecliffe-Johnson is the FT’s US business editor. Thanks, Edge.

Andrew Edgecliffe-Johnson
Thank you, Marc.

[MUSIC PLAYING] 

Marc Filippino
Before we go, just a heads-up that I’ll be hosting a Twitter Spaces discussion today about the January 6th insurrection and civil unrest in the US. I’ll be chatting with a bunch of FT journalists, including our US managing editor Peter Spiegel and national editor Ed Luce, as well as Washington bureau chief James Politi and US political correspondent Lauren Fedor. We want you to be there, too. So sign on to Twitter at 12:30pm US east coast time, that’s 5:30pm London. You can find the handle @FinancialTimes. I’ll share the link on my own Twitter account, and we’ll also have a link in today’s show notes. See you then!

[MUSIC PLAYING]

You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

This transcript has been automatically generated. If by any chance there is an error please send the details for a correction to: typo@ft.com. We will do our best to make the amendment as soon as possible.

Copyright The Financial Times Limited 2024. All rights reserved.
Reuse this content (opens in new window) CommentsJump to comments section

Follow the topics in this article

Comments