Good morning readers. If you thought Boeing’s situation couldn’t get any worse, you thought wrong. In a fiery turn of events, an Atlas Air Boeing 747-8 cargo plane performed another emergency landing, this time in Miami. Shortly after takeoff, an engine fire forced the aircraft to return safely to the runway with its five-member crew unharmed. The Federal Aviation Administration (FAA) and the National Transportation Safety Board (NTSB) are probing the incident, with a post-flight examination revealing a softball-sized hole above the engine. Unverified videos circulating on social media showcased flames engulfing the left wing during flight. While investigations are underway, Atlas Air and Boeing pledge their support, while GE Aerospace lends technical assistance.

Let’s jump into today’s storylines.

In today’s digest:

• U.S. power companies abandon offshore projects

• Headline Hustle: U.S. & Arab allies push for an end to Israel-Hamas war, Ron DeSantis drops out of presidential race, Japan goes to the moon

• The controversy surrounding employee reductions

• The Week Ahead: What to Expect

• Pulse Points: What’s Trending

ENERGY

When your green dream meets reality

Just like that one friend who enthusiastically joins a gym in January only to cancel their membership by February, several U.S. power companies are backing out of offshore wind projects faster than you can say “green energy.” What started as a sprint towards renewable energy, championed by President Biden's ambitious goal of 8.5 gigawatts of offshore wind power by 2030, is now looking more like a winded jog.

The reasons behind this pullback are multifaceted

The problems began with a surge in labor and commodity prices following the pandemic and the Russia-Ukraine conflict. The Federal Reserve's decision to raise interest rates only compounded the issue, making borrowing for billion-dollar offshore wind projects more expensive. Add to that a global backlog of wind farm plans, and you've got a serious shortage of ships to ferry those giant turbines and foundations out to sea. The result? Delays, cost overruns, and a lot of headaches.

The withdrawal from offshore wind projects started gaining momentum in May when Public Service Enterprise Group sold its stake in the Ocean Wind 1 project to Ørsted, a Danish wind-power company, which subsequently cancelled both the Ocean Wind 1 and Ocean Wind 2 projects. Eversource Energy, another utility giant, followed suit by selling its stake in an undeveloped lease off Massachusetts to Ørsted for a staggering $625 million. Eversource is now in advanced talks to sell similar stakes in three additional projects. This industry upheaval has cast a shadow over the completion of deals and is potentially resulting in write-downs of up to $1.6 billion for Eversource.

But it's important to note that the situation varies from state to state. Dominion Energy's wind farm project in Virginia has managed to stay on schedule and budget, thanks in part to a model that allows cost recovery from ratepayers. Nevertheless, even Dominion is actively seeking an investor for its $10 billion development, highlighting the cautious approach that investors are taking.

Looking ahead…as the sector matures and stabilizes, it may become more attractive for utilities and investors alike, but for now, it faces significant hurdles that must be overcome to meet the nation's renewable energy goals.

Headline Hustle

🤝 U.S. and Arab allies push for hostage-release talks aimed at ending Israel-Hamas war. The U.S., Egypt, and Qatar are facilitating talks between Israel and Hamas, aiming to initiate a phased process beginning with a hostage exchange. Despite Israeli Prime Minister Netanyahu's rejection of Hamas's demands for an end to the war and troop withdrawal, both parties show renewed willingness for dialogue. The proposed 90-day plan involves a cessation of hostilities, prisoner exchanges, and steps towards a permanent ceasefire, with broader goals of regional stabilization and the potential for a Palestinian state.

🇺🇸 Ron DeSantis drops out of presidential race, endorses Trump. Ron DeSantis, once a beacon of hope for Republicans seeking a post-Trump era, has exited the presidential race, endorsing Donald Trump. DeSantis's campaign, marred by strategic missteps and organizational woes, failed to rally the Republican base, which remains firmly in Trump's grip. Despite his strong record as Florida governor, DeSantis struggled to balance appealing to Trump's base and projecting his own political identity. His departure consolidates the primary race to a Trump-Haley contest, reflecting the enduring influence of Trump in the GOP and reshaping the party's trajectory towards the 2024 election.

🇯🇵 Japan lands on the moon. Japan joins an elite group as the fifth country to land a spacecraft on the moon, marking a significant achievement in space exploration. However, their lunar probe, facing a solar panel malfunction, is now dependent on limited battery power. This setback restricts the data collection period to just a few hours. Despite this, the mission represents a leap forward in precision lunar technology, aiming for a 100-meter target landing zone, a feat not attempted by any nation before. While the mission's scientific and commercial impacts are modest, it underscores Japan's growing presence in the space race, building on a history that includes a 1990 moon mission.

WORKFORCE

Big names, big decisions: The debate between mass layoffs and gradual reductions

As the New Year's confetti settles, some big names aren’t celebrating. Instead, they’re handing out pink slips like they're going out of style. Citigroup, Google, Amazon, Spotify, Discord, HP, and even the NFL are all trimming their rosters. The question on everyone's mind: Is it better to rip off the band-aid with mass layoffs or to slowly peel it off over time?

Experts weigh in on the debate.

• Some argue that gradual layoffs, while avoiding immediate large-scale cuts, can create panic among employees, potentially leading to voluntary departures and achieving little beyond meeting investor demands to reduce costs.

• Others suggest that mass layoffs are generally more challenging to manage than staged layoffs. The need to carefully choose who stays and who goes, along with managing the workload of departing employees, becomes increasingly complex with large-scale cuts.

• There's also a viewpoint that many organizations, particularly in specific sectors, may be correcting over-hiring during the pandemic with these layoffs. The preference here is to reassign employees as a strategy to maintain workforce stability.

• Alternatively, some advocate for a hiring approach that aligns with demand rather than relying on layoffs. They argue that layoffs in stages can erode trust among employees, particularly high-performing ones, potentially jeopardizing the company's success.

Ultimately, the debate revolves around the "cut-once-and-deep" philosophy. This approach is considered by some to be less damaging to employee morale and trust compared to prolonged layoffs. However, it's worth noting that certain countries with stringent labor laws may necessitate longer notification periods for layoffs, leading companies to announce them years in advance.

In the long run: While there is no one-size-fits-all approach to reducing headcount, it underscores the importance of carefully considering the strategy, timing, and impact on employees when making such decisions.

WEEK AHEAD

What to expect

• Round two of the Republican primary season starts in New Hampshire this week: Donald Trump is the leading candidate in the New Hampshire Republican primary, with pressure on Nikki Haley to perform well after finishing third in Iowa.

• Central bank meetings this week: This includes the Bank of Japan, the European Central Bank, and the Bank of Canada, with no major rate changes expected.

• Key economic data: U.S. fourth-quarter GDP figures, G7 nations' PMI reports for manufacturing and services, China's loan prime rate fixings, and the ECB's quarterly lending survey.

• Earnings: Major tech companies Tesla, Intel, Netflix, IBM, and Seagate are releasing earnings, marking a busy period in the U.S. earnings season.

What else is happening:

• The Kansas City Chiefs beat the Buffalo Bills in the AFC Divisional Playoff round 27-24. The NFL Conference Championship matches take place this Sunday with Kansas City taking on Baltimore and Detroit taking on San Francisco.

• Green Day released their 14th studio album, ‘Saviors’, which is their first album since 2020.

SNIPPETS

Pulse Points

• La Française des Jeux is negotiating to buy Kindred Group for about $2.5 billion, potentially forming one of Europe's largest online gambling companies.

• Sports Illustrated faces uncertainty as its publisher, the Arena Group, plans significant layoffs, potentially affecting all unionized staff, after losing the license to publish the magazine.

• A New Mexico grand jury has indicted Alec Baldwin for involuntary manslaughter in the "Rust" movie shooting, reinstating a charge previously dropped by prosecutors.

• Microsoft revealed that the Russian state-sponsored hacking group Midnight Blizzard targeted and extracted information from its senior leadership and employees in cybersecurity and legal teams.

• Apple began preorders for its $3,499 Vision Pro headset on Thursday, ahead of its U.S. release on February 2.

• Harvard University provided detailed documents to House lawmakers about their review of the plagiarism allegations against former President Claudine Gay, who recently resigned amid controversy.

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