Michael Flynn has resigned as Donald Trump’s national security adviser following reports that he discussed sanctions with Russian officials before the inauguration of the new President, and then misled Vice President Pence about the conversations. You can read his resignation letter here. Retired Lt. Gen. Keith Kellogg will take over in an acting capacity. The Associated Press says he is one of three candidates in the frame to get the job on a permanent basis, the other two being former general and CIA director David Petraeus, and Robert Harward, a former deputy commander of the U.S. Central Command and an erstwhile regional CEO for Lockheed Martin in the United Arab Emirates.

Meanwhile, Steven Mnuchin was confirmed and sworn in as Treasury Secretary.

The Wall Street Journal has an interesting article suggesting the new administration is softening its stance toward Chinese currency manipulation—a welcome development since for the last year and a half the Chinese have spent hundreds of billions of dollars to prop their currency up, rather than push it down as Trump had charged. At the same time, the administration is considering creating a panel to look into the transfer of technology—a more serious concern among U.S. businesses, which complain about rampant intellectual property theft in China.

All signs that the new administration may be starting to settle into something closer to normalcy.

Apologies yesterday for mislabeling the Committee (not Council) for Economic Development.

More news below.

Top News

• Another Market Sigh of Relief

Financial markets again responded strongly to signs of President Donald Trump softening his position on trade. After an incident-free meeting with Japan’s Shinzo Abe last weekend, Trump and Canadian Prime Minister Justin Trudeau put on a show of harmony after their first meeting, with the President playing down any suggestion of trade frictions with his northern neighbor. Trump said current arrangements with Canada would only be “tweaked.” The liberal-leaning Trudeau likewise resisted the temptation to “lecture” Trump on issues central to his own election platform last year, such as feminism and openness to refugees. The dollar touched its highest level since inauguration day, while the S&P 500 hit a new all-time high intraday. Globe and Mail

• Mobile Price War Escalates

The joys of competition are returning to the mobile communications market. A day after Verizon unveiled its first unlimited data plan, T-Mobile said it would improve its own plan known at T-Mobile One, saying it would no longer charge extra for higher-quality video streaming. It had previously charged $3/day or $15/month. Verizon responded by offering a range of free phones to customers who switched to its network. Both companies have also made other tweaks to their programs since the new year, while Sprint has also improved its offering around the edges. That begs the question of whether AT&T will respond. Its unlimited plan has the highest basic price of all at $100/month, and is only available to people who also subscribe to its DirecTV service. Fortune

• Toshiba Hints at Improprieties at Westinghouse

Toshiba postponed the publication of its third-quarter earnings at the last minute, after a whistleblower warned that there may have been improprieties at the U.S. nuclear business, Westinghouse. The company confirmed its expects a $6.3 billion writedown on its investment in Westinghouse, a move that effectively wipes out its equity and makes recapitalization an urgent necessity. The writedown stems from cost overruns for which Westinghouse assumed liability when it bought its construction partner Stone & Webster. The company’s shares, which have already lost over half their value since news of the likely writedown emerged, fell another 8%. Fortune

• Ford, VW Step up Technology Partnerships

The race to develop autonomous vehicles generated two more landmark deals Monday between established automakers and technology companies. Shares in Mobileye, a maker of sensor systems that help avoid collisions, rose 8% after Volkswagen said it would integrate Mobileye camera-based mapping and localization technology into its cars starting next year. Meanwhile, Ford said it had bought a majority stake in artificial intelligence startup Argo AI and plans to invest $1 billion in the company, part of its efforts to get a driverless car on the roads by 2021. Elsewhere, Ford CEO Mark Fields said the thing that scared him most about autonomous cars was that a company could bring one to market “before it’s ready” and cause “an event” that would discredit the technology.  Fortune

Around the Water Cooler

• Apple, Tesla Hit New Highs

Shares in Apple hit their first new all-time high in two years on a surge in optimism about the prospects for the 2017 iPhone and the company’s fast-growing services business. The move, which took Apple’s market value back above $700 billion and back into top spot ahead of Alphabet, followed two upgrades from Goldman Sachs and UBS. Another stock to hit a two-year record high was Tesla Motors, following news that it will start producing test Model 3 sedans by the end of the month, a key milestone in getting its first mass-market vehicle on the roads. The stock is now at a level that could test Elon Musk’s previous belief that the company doesn't need any fresh capital. Fortune

• Chesapeake Settles With McClendon Estate

Shale gas driller Chesapeake Energy settled a legal dispute with the estate of its former CEO Aubrey McClendon, whom it had accused of stealing company secrets when he was forced out by shareholders in 2013. Chesapeake will drop its $445 million claim against the estate and pay $3.25 million in legal fees. McClendon, who had set up a rival wildcatting firm (American Energy Partners) after leaving Chesapeake, died in a car crash in June last year, one day after being indicted on a charge of conspiring to rig the price of oil and gas leases. Police said that the shale gas pioneer’s death was accidental.  WSJ, subscription required

• "Death to All Jews" Isn't Actually Funny, Says Disney

Walt Disney cut ties with YouTube star PewDiePie, a 27 year-old Swede whose real name is Felix Kjellberg, for a series of videos he posted that features anti-Semitic or Nazi content. The most flagrant included Kjellberg laughing at two men holding a sign saying "Death to All Jews." Kjellberg said the content was meant humorously, but it was way out of  Disney's comfort zone (and also drew the sincere applause of neo-Nazi websites such as DailyStormer). Google, the owner of YouTube, has also canceled the new season of Scare PewDiePie, his show on the platform. Kjellberg had had a joint venture with Disney’s Maker Studios unit, producing videos, mobile apps and merchandise, according to The Wall Street Journal. The WSJ estimated he made over $14.5 million last year from his various businesses.  Fortune

• Nice Work if You Can Get it

Kjellberg could take some lessons on not killing golden-egg-laying geese from Leon Black, the co-founder and CEO of private equity firm Apollo Global Management. Black pocketed $142.5 million in dividends, salary and investment gains last year, according to a regulatory filing. That’s more than five times what the likes of JPMorgan Chase’s Jamie Dimon and Goldman Sachs’s Lloyd Blankfein have taken home in recent years.   WSJ, subscription required

Summaries by Geoffrey Smith Geoffrey.smith@fortune.com;

@geoffreytsmith