How Europe Is Investigating the Epstein Files

0:00Matthew Dalton:That's pure automotive joy. I'm Peter, the owner of Muscle Car Junior. It started as a hobby, then I started posting about it. Before I knew it, I built a business restoring muscle cars on Facebook Marketplace and the community of car lovers on Instagram. Today, new customers send me WhatsApp messages from all over. Not bad for a hobby. Learn how Meta helps over 35 million American businesses like Peter's grow at meta.com slash community.

0:33Matthew Dalton:Jitters in private credit markets prompt comparisons to the run-up to the financial crisis. Plus, we'll look at how Europe is leading investigations related to Jeffrey Epstein.

0:43Luke Vargas:European officials and prosecutors tend to be more independent than their counterparts in the U.S. And so they may have more latitude to bring investigations against high-profile people who have ties to the government.

0:57Matthew Dalton:And President Trump orders the release of government files on UFOs after Obama says that aliens exist. It's Friday, February 20th. I'm Luke Vargas for The Wall Street Journal. And here is the AM edition of What's News, the top headlines and business stories moving your world today.

1:19Matthew Dalton:Private credit markets are flashing warning signs after the industry's poster child Blue Owl Capital blocked everyday investors from withdrawing their money from one of its funds. The move got the attention of Democratic Senator Elizabeth Warren, who's calling for more oversight. Meanwhile, nervous investors sent shares in other private credit firms lower, reviving comparisons to the stress we saw in credit markets in 2007, just before the global financial crisis. Journal Finance editor Alex Frango says we don't yet know whether this is a canary in the coal mine, but that investors are increasingly worried.

1:53Matthew Dalton:Blue Owl is an asset manager. They go out and raise money from investors and invest in making loans to junk-rated companies that pay really high interest. And the idea is if you're an investor, you're going to get a really high return. And that was a really hot thing for a while. But then in the last few months, it's really not very hot, partly because a lot of the loans were going to software companies. And now people are worried about AI affecting the prospects for those companies. So a lot of the investors are asking for their money back. And what Blue Owl did was instead of letting you cash out your shares in these funds, we're going to pay you back your principal, but it's going to take time.

2:30Matthew Dalton:Alex added that the turmoil in credit markets isn't impacting wider stock markets, which remain at record highs. We are exclusively reporting that the White House wants to ban investors with more than 100 single-family homes from purchasing additional homes. That's according to a memo sent to House and Senate committee leaders, with the Trump administration hoping to add the ban as an amendment to either of the landmark housing packages moving through Congress. The proposal affects more investors than initially thought, with hundreds of investment firms set to lose their ability to buy single-family homes.

3:05Matthew Dalton:And speaking of housing, we've got a special bonus episode coming later today. In the latest What's News in Earnings, we'll look at what some of the country's biggest homebuilders tell us about the health of the U.S. housing market. Look out for that in your podcast feed at midday. S &P 500 companies are back to appointing fewer women and minority board directors. According to a journal analysis of corporate board data, diversity is now back to levels seen 10 years ago when institutional investors started pressuring companies to add diversity, equity, and inclusion policies. Since then, the political winds have changed, and nearly three-quarters of last year's newly appointed directors at S &P 500 companies were men, and roughly four in five new appointments were white, according to data from People Return.

3:51Matthew Dalton:Just a quarter of S &P 500 firms last year had a diversity policy, down from about half the year prior. And a batch of economic data is set to be released today, including an advanced look at fourth-quarter U.S. GDP and the Federal Reserve's preferred inflation gauge. And here with a look at what investors will be watching for in those releases, I'm joined by friend of the podcast, Journal Deputy Finance Editor Quinton Webb. Quinton, let's start on inflation. We saw in the Fed minutes earlier this week, officials are setting a pretty high bar for more rate cuts this year, and yet markets are still expecting cuts.

4:23Matthew Dalton:Which brings us to this release of the PCE price index for December, a delayed release because of the shutdown. What should we be watching for? We're looking for a rate of about 3 % on a core basis, i.e. stripping out volatile food and energy costs for December. And, you know, that is another reminder that while the Fed has succeeded in bringing inflation down from the very high level seen in and coming out of the pandemic, this last mile of getting back down towards the 2 % level, which they target over time, is proving pretty difficult. Right. So inflation remaining above target. But what about growth, Quinton?

4:58Matthew Dalton:Our most recent poll of economists show they expect the U.S. to have returned to growth above 2 % for the last year and for 2026 as well. We do see this very strong growth in the economy. Now, if you look at the Atlanta Fed GDP Now model, which kind of takes recent data points and use them to extrapolate growth, that model is spitting out a kind of very strong rate of growth for the fourth quarter, not quite as strong as the 4.4 % we saw in the third quarter. But, you know, it's been a very kind of turbulent few quarters for growth because of tariffs and tariff front running in the spring last year.

5:33Matthew Dalton:We saw this kind of contraction and then this big bounce back in U.S. growth. We've got this huge boost from AI investment. So all of these data centers going up and so on, leading to extraordinary amounts of capex spending, construction. And that's helping, you know, underpin this very robust growth at the moment. Quinton, Alex was on earlier saying that in spite of these private credit warning signs, stocks just keep moving higher in the U.S. And now we see growth kind of in the same boat, the U.S. just remaining sort of the economic envy of the world in many ways. Correct. You know, the economy is running hot at the moment.

6:07Matthew Dalton:And we're going to see the kind of effects of big tax cuts coming in in the next few months as well. So that is likely to kind of add further fuel to this. That was Wall Street Journal Deputy Finance Editor Quinton Webb. Quinton, as always, a pleasure. Thank you so much. Thanks very much. Coming up, the rest of the day's news, including a look at Europe's widening investigations into the Epstein files and why U.S. authorities aren't following suit after the break.

6:48Matthew Dalton:with lifelong friends, new potential business partners, and a powerful globe-spanning network of fellow changemakers. Learn more at hbs.me slash breakthrough. That's hbs.me slash breakthrough. The recent release of millions of files relating to convicted sex offender Jeffrey Epstein is highlighting a transatlantic rift, with European authorities finding plenty to investigate, while U.S. officials maintain that there's nothing warranting further prosecution. The Journal's Matthew Dalton is in Paris. Matt, you and a pair of colleagues in the United States have been exploring these differing approaches that we've seen emerging in relation to these documents, something that was cast into quite sharp relief yesterday with the arrest of former Prince Andrew in the U.K., though we should note he's not the only example of the fact that Epstein remains a very live story, shall we say, on this side of the pond.

7:45Luke Vargas:Yeah, prosecutors in a number of European countries are going to be looking through these documents, millions of them, to see if there are crimes involving either their citizens or people on their national territories. One of the challenges, of course, is that in some cases, the statute of limitations may have expired. In other cases, evidence may have been lost. Two of the main characters in this story, Jeffrey Epstein himself and the model scout, Jean-Luc Brunel, are both dead. And so that's going to be another obstacle to investigate the crimes that his associates may or may not have committed.

8:22Matthew Dalton:There are definitely obstacles, but you were speaking there sort of in the future tense, and we've actually seen, in addition to Andrew, other activity recently across Europe that's worth mentioning, specifically beyond the UK. Right.

8:33Luke Vargas:So the Norwegian authorities have charged former Prime Minister Thobjorn Jagland with corruption related to favors, gifts that Jeffrey Epstein may have provided to him while he was the head of the Council of Europe. And in France, prosecutors have opened a new sort of investigative effort. France is a place where Epstein spent a lot of time. He owned a vast apartment next to the Arc de Triomphe. He was friends with a lot of people in the French elite. And the former culture minister, Jacques Lang, is under investigation for funds that he may have accepted from Epstein starting in 2012. So that's the first shoe to drop, I would say.

9:21Luke Vargas:And we'll see whether the French investigation leads to charges being filed against other people. There are several people who have been associated with Epstein or are friends with Epstein who have been accused of sexual assault and rape in recent days. And it's unclear whether those incidents had anything to do with Epstein himself. But that's another thing that's on our radar.

9:42Matthew Dalton:We should note here that Matt Lang's lawyer didn't respond to a request for comment, though he said in the past that neither Lang nor his family received money from Epstein. Meanwhile, over in the UK, former Prince Andrew has consistently denied wrongdoing, as has Jogland, the former prime minister of Norway. Matt, these cases are very much about misconduct. But as you write, there are other countries that are looking into something else, potential trafficking.

10:04Luke Vargas:Right. Epstein is known to have looked at a number of Eastern European countries for recruits for his what he's called his massages. So the government's authorities in Lithuania and Latvia are looking into whether their citizens were trafficked by Epstein and by his associates to places in Western Europe, maybe to the U.S. And they're going to be looking at the new files that were published to make that determination. We have very little information about what exactly they're looking at, but France, too, is going to be looking at sexual trafficking that may have happened on its territory based on the new information in these files.

10:44Matthew Dalton:Matt, just zooming out here, you and your colleagues spoke to legal experts as well as the DOJ to try to understand what accounts for the kind of difference in approach we're seeing between the U.S. and in Europe. What did you learn?

10:55Luke Vargas:Well, in the case of Prince Andrew, for example, he was arrested for misconduct in public office, and the Justice Department said that there's no similar crime under U.S. law. You know, one of the experts that we spoke to said that European officials and prosecutors tend to be more independent than their counterparts in the U.S. who are under the oversight of the Justice Department. And so they may have more latitude to bring investigations against high profile people who have ties to the government. You know, we'll see what the prosecutions in other European countries, in particular France, lead to.

11:31Matthew Dalton:We'll be watching closely. I've been speaking to Wall Street Journal reporter Matthew Dalton in Paris. Thanks a lot.

11:39Matthew Dalton:And President Trump is ordering the DOD and other divisions of the federal government to release files related to alien life and unidentified flying objects. Trump's order, posted on Truth Social Overnight, comes after former President Obama set off an online firestorm with these comments over the weekend in a podcast interview with Brian Tyler Cohen. Are aliens real? They're real, but I haven't seen them, and they're not being kept in, what is it? Area 51. There's no underground facility unless there's this enormous conspiracy and they hid it from the president of the United States. A Pentagon spokesman said the department looks forward to fulfilling Trump's directive.

12:23Matthew Dalton:The DOD in 2024 said it found no evidence that UFO sightings were extraterrestrial spacecraft. And the journal reported last year that the U.S. military fabricated evidence of alien technology and let rumors fester in order to cover up secret weapons programs. And that's it for What's News for this Friday morning. Today's show was produced by Daniel Bach and Hattie Moyer. Our supervising producer is Sandra Killhoff, and I'm Luke Vargas for The Wall Street Journal. We will be back tonight with a new show. Otherwise, have a great weekend, and thanks for listening.

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