Donald Trump requires US to ‘take over’ Gaza and a couple of.2mn to be resettled | Invesloan.com

Good morning and welcome back. We start today with Donald Trump’s radical proposal to redevelop the Gaza Strip. We’ll bring you all the reaction. And here’s what else we’re covering:

• EU’s “bazooka” to Trump’s tariff threat

• Alphabet shares drop

• PwC and BCG see “pent-up demand” for M&A services

• Canada’s long-running existential crisis

Donald Trump said the US would “take over” the Gaza Strip and that its 2.2mn inhabitants should be permanently resettled in countries such as Egypt and Jordan.

“The US will take over the Gaza Strip,” the US president said yesterday after meeting Israeli Prime Minister Benjamin Netanyahu at the White House. “We’ll own it and be responsible for dismantling all of the dangerous unexploded bombs and other weapons on the site.”

The president, who built his fortune in real estate, offered a vision of Gaza as “the Riviera of the Middle East”, a peaceful and prosperous Mediterranean resort with “representatives from all over the world” living there.

For decades the bedrock of US policy towards the Palestinian-Israeli conflict has been a two-state solution. Trump’s proposal would destroy Palestinians’ claim to an independent state and clear the 40km strip of land for redevelopment, enforced by the American military if necessary.

Saudi Arabia, a key US ally in the Middle East, was quick to reject Trump’s proposal and said its support for an independent Palestinian state was “firm and unwavering” and a condition for re-establishing diplomatic relations with Israel.

Hamas, the militant group that runs Gaza, said the proposal was a “recipe for creating chaos and tension in the region”. Jordan and Egypt have yet to respond but last month rejected Trump’s plan to “clean out” the enclave.

But Israel’s far-right leaders lauded Trump’s plan. Itamar Ben-Gvir, the former national security minister, wrote on X: “The only solution to Gaza is to encourage the emigration of Gazans.” Finance minister Bezalel Smotrich also welcomed the proposal.

Trump’s intervention comes as negotiators prepare to discuss the second phase of the Gaza hostage release deal that is supposed to include a declaration that the war is over. Read more on how the Arab world reacted to Trump’s plan.

• Global Insight: For weeks Arab leaders have been braced for Donald Trump’s reaction to the Middle East’s biggest crisis in decades. But none expected the surreal, extraordinary proposal he unleashed on a stunned world.

Here’s what else we’re keeping tabs on today:

• Results: Qualcomm, Arm, Uber, Walt Disney, News Corp, Ford, Eli Lilly, Michael Kors parent Capri Holdings and T Rowe Price report earnings.

• Economic data: The Institute for Supply Management releases non-manufacturing PMI data for January while Brazil’s statistics agency publishes industrial output data for December and we also get gross fixed investment for November in Mexico and Canada’s trade balance for December.

• Congress: The Senate Banking Committee holds a hearing on whether large banks “debank” certain clients on political grounds.

Five more top stories

1. Exclusive: The European Union could hit Silicon Valley with retaliatory measures if Donald Trump follows through on his tariff threat against the bloc. The EU’s plan to use its “anti-coercion instrument” in a potential dispute with Washington would allow it to target US service industries such as Big Tech, said officials with knowledge of the plans. Andy Bounds has more on Brussels’ “bazooka”.

2. Alphabet shares dropped sharply after Google’s parent reported slowing growth in its vast cloud unit and outlined plans to spend $75bn this year on building capacity for artificial intelligence products, up from $53bn in 2024 and a third more than Wall Street had estimated. The share price decline wiped $200bn off the group’s market capitalisation in after-hours trading and put it on course for one of its worst trading days of the past decade.

• Microsoft: Mustafa Suleyman, the tech group’s AI head, has poached former colleagues at Google DeepMind who built its popular podcast-generating feature.

3. PwC and Boston Consulting Group expect “pent-up demand” for mergers and acquisitions to boost their advisory revenues this year as an expected surge in dealmaking spurs hopes that the industry can break free from its post-pandemic funk. Here’s more from the two consultancies’ chiefs.

4. The proposed $58bn merger between Honda and Nissan that would create the world’s fourth-largest carmaker is close to collapse. Honda is under pressure from shareholders to take full control of weaker rival Nissan and abandon the plan for a jointly-owned holding company. Here’s what we know about Honda’s “take it or leave it” offer.

5. Jeff Bezos’s $10bn philanthropic fund has stopped backing the Science Based Targets initiative, the leading voluntary climate standard setter that affects how companies including Apple and H&M can achieve a credible “net zero” label. The move is seen as the billionaire’s latest effort to curry favour with Trump.

Today’s big read

For weeks, Friedrich Merz appeared to be cruising towards his life-long dream of leading Germany by focusing on a pro-business pitch to revive its economy. But a recent flirtation with the far right to gain support on migration policy has hurt his campaign, antagonised potential coalition partners and complicated his plans to enact bold reforms if elected.

We’re also reading . . . 

• The ‘51st state’: A quarter of young Canadians are open to exploring union with the US, writes Joel Suss, as Trump’s declaration resurfaces Canada’s long-running existential crisis.

• Democrats: To claim America’s minority party is too punch drunk to get its act together would be charitable, says Edward Luce. Its response to Trump 2.0 is from a bygone era.

• Netflix: The streaming group is betting on live events and an old-school addition to its line-up — the chat show — to boost its nascent ads business.

Chart of the day

In Trump’s view, running a trade surplus with another country is a “rip-off”, which is of course the reverse of the truth, writes Martin Wolf. Under Trump, the US has become a dangerous partner for other countries to trust.

For more coverage of global trade, sign up for Alan Beattie’s weekly Trade Secrets newsletter here if you’re a premium subscriber, or upgrade your subscription.

Take a break from the news . . . 

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