Good morning. Andrew here. Virtually every morning we have more news about how the situation in the Strait of Hormuz has become more complicated, not less (which is also the case today). And yet, the stock market frequently continues to grind higher. We go behind the scenes. We’re also looking at the standoff between the Pentagon and Anthropic — and how that increasingly seems like a transparent politically motivated fight. The latest evidence: a meeting between Anthropic and the Trump administration, and the N.S.A. reportedly using Anthropic tools despite the artificial intelligence company being designated a “supply chain risk.” (Was this newsletter forwarded to you? Sign up here.)
Shots firedOil prices are climbing and global stock markets are wobbling this morning as U.S.-Iran talks appear to have hit a major snag. President Trump said the U.S. team would arrive in Pakistan today for another round of negotiations, but an Iranian official said there were “no plans” for negotiations. Tensions are high again over the Strait of Hormuz, with Iran vowing to retaliate after the U.S. attacked and seized an Iranian cargo ship over the weekend. The strait, a vital waterway for global oil and natural gas exports, remains largely shut this morning, monitoring groups say, as a tenuous cease-fire agreement is set to expire this week. The latest turbulence suggests that investors may have been too optimistic last week in betting on a rapid end to the war. The latest:
Watch U.S. gas prices. The average national price at the pump was $4.04 this morning, according to AAA, down slightly from last week. Energy Secretary Chris Wright acknowledged in a CNN interview yesterday that while the average price of U.S. gasoline had probably peaked, it may not fall to below the prewar $3 level until next year. That could weigh on Trump and the Republican Party ahead of the midterm elections. The economic fallout continues to widen. The United Arab Emirates, a major oil exporter whose economy has been hit hard by the war, has held talks about a financial lifeline from Washington, The Wall Street Journal reported, citing unnamed sources. Last week, according to The Journal, The Emirati central bank chief discussed the possibility of setting up a currency swap line with Treasury Secretary Scott Bessent and officials at Treasury and the Fed. That would be a sign that the country fears the financial damage from a prolonged war. (The request also implicitly raised the possibility that the Emirates may use the Chinese renminbi if it ran out of U.S. dollars.) The fighting has forced luxury brands like Zegna Group to move inventory out of the Middle East, and more broadly reconsider the Persian Gulf region’s importance to their fortunes. Yet the war hasn’t crashed earnings season. Several large banks reported solid results last week, bolstering the stock market rally. Many benefited from volatile stock markets, which is good for trading desks, though several business leaders said the U.S. economy was holding up. (“Resilient” was a word that came up more than once.) “Right now we’re in a war with a lot of uncertainty,” Bruce Van Saun, the C.E.O. of Citizens Financial, told analysts. But, he added, “profitability is still increasing.”
Blue Origin’s latest mission experiences a mishap. Jeff Bezos’ space company launched its New Glenn rocket yesterday, with its booster safely returning to Earth, an ability considered crucial for next-generation spacecraft. But the mission deployed a satellite from a customer, AST SpaceMobile, into an incorrect orbit; it’s a black mark for Blue Origin, which is seeking to rival Elon Musk’s SpaceX in the commercial space market. Polymarket is said to be in talks to raise money at a roughly $15 billion valuation. The popular prediction market is seeking to raise about $400 million, according to The Information, adding to what it has raised from the Intercontinental Exchange. That valuation would reportedly put it behind its rival Kalshi, however, which is said to have locked in a $22 billion valuation in a new round. A Fed chair confirmation hearing and key earnings reports are set for this week. Kevin Warsh, President Trump’s pick to lead the Fed, is expected to testify before the Senate Banking Committee tomorrow; his confirmation faces uncertain odds given the ire of Senator Thom Tillis, the North Carolina Republican who opposes a federal criminal investigation into the central bank. Also keep an eye on quarterly reports from United Airlines tomorrow; Tesla and Southwest Airlines on Wednesday; Blackstone and American Airlines on Thursday; and Procter & Gamble on Friday. Is tariff relief finally here?Refunds may finally be in sight for many U.S. importers walloped by President Trump’s tariffs. The Trump administration is set to begin the process of reimbursing claims from importers and their brokers today for the more than $166 billion collected in tariffs (plus interest) that the Supreme Court struck down in February. This step potentially removes major uncertainty hanging over companies. FedEx and Costco were among the more than 3,000 businesses that had sued the administration to try to get a refund. Some companies filed suits before that Supreme Court decision, which involved the administration’s use of a 1977 law known as IEEPA. It could also bring a windfall to hedge funds that bet that the tariffs would be overturned. But the administration isn’t backing down. Last week, Treasury Secretary Scott Bessent told businesses to brace for a new wave of levies. “We had a setback at the Supreme Court in terms of the tariff policy,” Bessent said at an event hosted by The Wall Street Journal. But, he added, new measures, potentially imposed under Section 301 of the Trade Act of 1974, could mean “tariffs could be back in place at the previous level by beginning of July.” Investors will be watching closely. The yields on Treasury bonds and notes spiked shortly after the Supreme Court decision as traders began to worry that the IEEPA tariffs, which had been pitched as a way to help pay down the national debt, would be choked off. (That said, Trump’s federal budget proposal calls for a huge increase in military spending and cuts elsewhere, though not enough to appease deficit hawks.) But others in the stock market cheered the court ruling, saying it removed an additional tax on corporate profits. Still, businesses fear a complicated refund process. “We’re thinking we might get it back, we might not get it back,” Melkon Khosrovian, a founder of Greenbar Distillery in Los Angeles, told The Times. Greenbar is one of several companies to have registered for refunds on a new online portal operated by the government. Gabriel Rodriguez, the president of A Customs Brokerage, in Doral, Fla., told DealBook’s Bernhard Warner this month that confusion around tariffs had weighed heavily on business sentiment. That hasn’t gone away, even now. “Everybody’s got a conspiracy theory as to where this will all go wrong,” he added. “They’re just hopeful that it doesn’t.” “A lot of Whoppers are getting sold, and I’m walking around with a smile on my face.”— Tom Curtis, the president of Burger King, who put aside his reservations about starring in an ad for the fast-food chain. C-suite leaders are more frequently being called on to be the public face of their companies — the veteran political strategist Mark Penn called it akin to political advertising — but the risks are big. (Just ask Chris Kempczinski, the C.E.O. of McDonald’s.)
Anthropic seeks a truce with the Trump administrationWhen Defense Secretary Pete Hegseth declared Anthropic a “supply chain risk” recently, forcing government contractors to stop using the artificial intelligence company’s tools for military work, some observers called it “attempted corporate murder.” But the strength of Anthropic’s offerings, including the Claude Mythos Preview model, appears to be enough to keep the company in the good graces of other parts of the Trump administration. Anthropic’s C.E.O., Dario Amodei, met on Friday with senior administration officials, including Susie Wiles, the White House chief of staff, and Treasury Secretary Scott Bessent. According to an Axios account of the meeting, based on unnamed sources, the intent was to determine how to let government agencies — except for the Pentagon, which is battling Anthropic in court — test out Mythos. (The National Security Agency, a key intelligence agency, is reportedly among those with access.) Axios added that while Wiles acknowledged that the Pentagon-Anthropic legal fight would continue to play out, she believed that the government needed a relationship with the company. Separately, Bessent has publicly and privately acknowledged concern about the potential threats that next-generation A.I. models pose for financial stability, and convened Wall Street leaders this month to discuss what Mythos might mean for big banks. It’s a sign that the Pentagon threat isn’t slowing Anthropic. The company has seen a jump in adoption by businesses on the strength of tools like Claude Code and the agent-focused Claude Cowork. Another sign: The company has reportedly received offers for investment at an $800 billion valuation, according to The Information, which cited unnamed sources. That would rival the valuation of Anthropic’s main competitor, OpenAI. The other tech talker of the weekend was Palantir’s 22-point manifesto on social media. Adapted from “The Technological Republic,” a book by its co-founder and C.E.O., Alex Karp, the post outlined how the company views its mission. Among its points:
Opinions on the post were predictably split. In one camp was Shaun Maguire, a Sequoia Capital partner who has publicly praised Karp: “Palantir represents the ideological center with a rarely articulated moral clarity,” he wrote. In the other camp was Eliot Higgins, the founder of the investigative journalism site Bellingcat, who wrote: “These 22 points aren’t philosophy floating in space, they’re the public ideology of a company whose revenue depends on the politics it’s advocating.” We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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