Good morning. Texas has banned Barclays from participating in the state’s municipal bond market due to concerns about its environmental, social and governance policies.

State Attorney General Ken Paxton said on Friday the ban was prompted by Barclays failure to respond to requests for information regarding its net zero carbon emissions policies. A spokesperson for Barclays declined to comment.

• What's Texas' beef? Barclays was previously identified as a potential “fossil fuel boycotter” under Texas law. The bank subsequently opted not to respond to questions about its ESG commitments, Paxton’s office said.
   
• Pledge from Paxton's office: The Attorney General’s Public Finance Division ruled that “we will not approve any public security issued on or after today’s date in which Barclays purchases or underwrites the public security or is otherwise a party to a covered contract relating to the public security.”
   
• Other banks under review: An initial letter from the attorney general’s office, sent in November, identified Barclays, Bank of America, J.P. Morgan, Morgan Stanley, Wells Fargo and other large banks as subjects of review. None of the other banks under review have said they would be unable to respond to the state’s inquiries, the division said.

Cyber management details emerge under SEC rules.

Regulatory filings from defense company Lockheed Martin and other large corporations under strict new federal disclosure rules are setting early expectations for how much companies must disclose about their cybersecurity programs.

First to file. Starting in mid-December, the Securities and Exchange Commission expanded requirements for discussing cyber risk and oversight in the reports, known as 10-K filings.

Looking for insight. Businesses due to file later this year are looking for guidance on satisfying the SEC without divulging sensitive information useful to hackers or leading to potential liabilities.

Biden pauses approvals for LNG exports.

The Biden administration effectively froze the approval process for new plants to export U.S. liquefied natural gas, bowing to demands from environmental groups and angering oil-and-gas companies.

President Biden said Friday the administration will pause export application reviews as it takes stock of the country’s newfound status as the world’s largest LNG exporter.

• Chinese company WuXi AppTec said alleged findings by a U.S. draft bill against it were neither legitimate nor accurate and that its business wouldn’t pose security risks for any country.
   
• Apple's "walled garden" has driven record revenues, but the way the company is trying to preserve it has become an invitation for regulators to pounce, partners to defect and competitors to circle.
   
• In December, Tesla initiated a recall of about two million vehicles—nearly all the cars it has sold so far in the U.S.—to update the Autopilot software and install new safeguards to prevent driver misuse. But the software update has left many dissatisfied and pointing fingers.
   
• Bolts needed to secure part of an Alaska Airlines jet that blew off in midair appear to have been missing when the plane left Boeing’s factory.
   
• The Biden administration, eager to highlight a signature economic initiative as elections approach, is expected to award billions of dollars in subsidies to Intel, Taiwan Semiconductor Manufacturing Co. and other top semiconductor companies in coming weeks to help build new factories.
   
• Billions of dollars evaporated in the collapse of Sam Bankman-Fried’s FTX cryptocurrency empire. But one man sits on a massive pile of that cash: a burly jujitsu champion from Kazakhstan.
   
• Former New York Gov. Andrew Cuomo harassed at least 13 women, according to a settlement announced Friday by the U.S. Department of Justice.
   
• A federal jury ordered Donald Trump to pay more than $83 million in damages for defaming writer E. Jean Carroll.

DOJ, FTC remind companies to retain text messages in antitrust investigations.

Companies must retain messages sent over ephemeral messaging applications and collaboration tools during antitrust investigations and litigation, the Justice Department and the Federal Trade Commission said Friday.

The two agencies, in updated guidance published Friday, said documents created through these technologies, particularly those that provide an option to auto-delete messages such as with Google Chat, have long been covered by the agencies’ document requests. But companies haven’t always properly preserved and produced these types of documents in investigations, the agencies said.

The updates come after the Justice Department signaled in recent years that businesses can face penalties for failing to preserve such messages. The Justice Department last year asked a federal judge to sanction Google for its past practice of setting employee chats to auto-delete, despite the company having told the court it would preserve records required for an antitrust lawsuit. Read more here.

—Mengqi Sun

Three U.S. troops killed in drone attack in Jordan.

Three U.S. service members were killed and at least 34 were injured in an Iran-backed militia’s drone strike on a base in northeast Jordan, U.S. officials said, marking the first American troops killed in hostile action since the start of the Hamas-Israeli conflict in Gaza.

The strike, which was carried out by a one-way attack drone, signals an escalation in the fighting in the region. The president and secretary of defense said the U.S. would retaliate.

• Houthi Attacks Disrupt Shipping, Draw U.S. Into Direct Conflict
• Houthis Attack U.S. Warship as China Urges Iran to Rein In Rebels
• Arab Mediators Propose New Hostage-Release Plan to End Israel-Hamas War
• At Least 12 U.N. Agency Employees Tied to Oct. 7 Attacks, Intelligence Reports Say

Plummeting inflation raises new risk for Fed: Rising real interest rates.

Federal Reserve officials start the year with a problem they would ordinarily love to have: Inflation has fallen much faster than expected.

It does, nonetheless, pose a conundrum. The reason: If inflation has sustainably returned to the Fed’s 2% target, then real rates—nominal rates adjusted for inflation—have risen and might be restricting economic activity too much. This means the Fed needs to cut interest rates. The question is, when and by how much?

• Cooler Inflation Keeps Door Open for Rate Cuts This Year
• New Year Brings New Voters to Fed’s Rate-Setting Committee

• Donald Trump’s free-form stump speeches bounce around the globe, ticking off problems and grievances with foreign governments. Until recently, world leaders had tuned him out. Now they are parsing Trump’s words and making plans for the possibility he will return to the White House.
   
• Property developer China Evergrande Group has been ordered to liquidate by a Hong Kong court, bringing an end to the yearslong saga of a company whose default rippled through the world’s second-largest economy.
   
• For many people in China these days, getting a job isn’t the problem. Finding a good one that pays enough is.
   
• U.S. Treasury yields, which set a floor on the cost of debt such as mortgages and corporate bonds, have retreated from their multiyear highs. Businesses and individuals are finding it easier to borrow, and many are forging ahead.
   
• In the country’s busiest oil field, frackers are devouring nearly as much electricity as four Seattles every day—and they are clamoring for more.

• As much as 80% of Hamas’s vast warren of tunnels under Gaza remains intact after weeks of Israeli efforts to destroy them, U.S. and Israeli officials said.
   
• Boeing Chief Executive David Calhoun—enlisted to fix Boeing following a pair of fatal 737 MAX crashes in 2018 and 2019—is taking heat after the accident on the Jan. 5 Alaska Airlines flight left a gaping hole in the plane at 16,000 feet.
   
• "There is no Plan B," Argentinia President Javier Milei tells The Wall Street Journal as his moves to privatize state companies and slash government jobs spark inflation and protests.
   
• This bonus season is shaping up to be another underwhelming one for bankers on Wall Street as lackluster deal activity pushes down the closely watched annual payouts.
   
• A court in Moscow ruled to extend by two months the detention of Wall Street Journal reporter Evan Gershkovich, who is deemed by the U.S. to be wrongfully held in Russia.

Follow us on X at @WSJRisk. Follow Risk & Compliance editor David Smagalla @DSmagalla_DJ and reporters Mengqi Sun @_MengqiSun, Dylan Tokar @dgtokar and Richard Vanderford @VanderfordRich.

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