>>> Barron’s Weekend Summary

Cover Story:
-Defense stocks like Northrop Grumman, Lockheed Martin, and General Dynamics are facing disruption in the military-industrial complex. The changing way wars are fought, such as the Russia-Ukraine conflict and the Middle East, has led to the weaponization of cheap drones and unmanned aerial vehicles. The Trump administration has also brought change, with Elon Musk advocating for AI-enhanced technology from upstarts like Palantir Technologies and Anduril Industries. Shares of Lockheed, Northrop, General Dynamics, and L3Harris Technologies have slumped 10% on average since the election, shedding $25B in market value. However, traditional defense contractors have a history of delivering new weapons when needed, and there will still be a need for more-traditional jets, boats, tanks, and missile systems that Northrop and Lockheed can provide.

Interview:
-Teva Pharmaceutical Industries CEO Richard Francis has said that if President Donald Trump imposes drug tariffs on cheap generic medicines, the company will have to raise their prices. He said that the cost would pass on to the purchaser. Drug makers are waiting to learn their fate this week, as Trump has repeatedly warned of a "major tariff on pharmaceuticals." Top executives of pharma giants have offered mixed messages about the tariffs' implications. Teva said that the broader tariffs already in place are factored into its guidance. The big question is what the sector-specific drug tariffs Trump has threatened will mean, if implemented. Big pharma companies have been rushing to cram as much product as possible through their supply chain into the US before any sector tariffs go into effect, and drug imports skyrocketed in March.

Tech Trader:
-Alphabet stock has dropped 5.9% this week after Apple's senior vice president of services, Eddy Cue, said Google Search volumes on Safari browsers declined in April for the first time in court testimony. Cue cited the rise of artificial-intelligence chatbots, including Perplexity, Anthropic, and ChatGPT, for the slowdown. Skeptics argue that Google's dominance of search, which accounts for over half of Alphabet's revenue, is being eroded by AI, and there is little the company can do about it. Alphabet immediately took issue with the testimony and conclusions drawn from it, stating that the number of search queries was still growing and users were accessing it for new things and in new ways. However, there is little doubt that Google Search is being disrupted, and it's a question of extent and timing. Barron's argued that the company would be able to survive both disruption to its search business and government lawsuits, which have been harsher than expected.

The Trader:
-Microsoft's better-than-expected earnings on May 1 boosted Salesforce stock by 8%, benefiting software companies, particularly those betting on artificial intelligence. The earnings report showed no signs of customers soured on AI or tightening budgets due to a tariff-driven economic slowdown. Salesforce, which reports earnings on June 6, could benefit from increased cloud services investments. Analysts expect Salesforce's sales to grow to $9.95 billion, or 6.7% year-over-year growth, due to its ability to cross-sell customer-relationship management applications at higher subscription prices. Salesforce's projected growth is achievable due to the weakened dollar and the company's 9% sales growth in 2024, suggesting that current estimates should be achievable if the dollar stays near its current level.
-The US may be heading for a recession; then again, it may not, and if it doesn't materialize, economically sensitive stocks, known as cyclicals, will be the place for investors to be. Recession fears are justified, as tariffs may slow consumer and business demand and bring the economy to a halt. However, there hasn't been any hard evidence of this, and the first-quarter GDP growth showed that consumer spending and business investment grew. The Institute for Supply Management services purchasing managers' index rose to 51.6%, which was expected to fall to 50.2%. If the trend continues, it would bode well for stocks in cyclical sectors, which take the hardest hits in recession and perform best when the economy grows. Some of these stocks are still trading well below peaks and have lots of ground to recover if the US sidesteps a recession.

Features:
-Barron's believes that defense contractors will adapt to changing times and technologies, with companies like Northrop Grumman, L3Harris Technologies, Booz Allen Hamilton, and AeroVironment showing positive performance. However, there are other stocks for investors to consider, including European players. Palantir Technologies, an AI leader, is valued at almost $275B, more than Lockheed Martin, Northrop Grumman, and General Dynamics combined. AeroVironment, a smart weapons maker, is also gaining popularity due to its merger with BlueHalo. Kratos Defense & Security Solutions and Karman Holdings are two small-cap companies working to fuse AI and unmanned vehicles and weaponry. Karman is uniquely positioned in the defense supply chain, serving hypersonic propulsion, space launch, and missile defense segments. Its stock trades for about 96 times estimated 2025 earnings, but is expected to grow by 33% a year on average for the next three years.
-The Trump administration's tariffs have led to earnings warnings, highlighting the potential damage to publicly held American companies. However, small businesses are in survival mode, often lacking the resources and cushion of larger companies to navigate a rapidly changing global trading system. Tableware maker Haand, co-founded by Chris Pence, started the year with plans to show its pottery at a trade show and begin exporting to Canada. However, distribution concerns about tariffs on Canada have slowed Haand's export plans, forcing it to reduce growth expectations. The company sources premium porcelain from Spain and the UK for tableware, which is at risk of becoming more expensive and harder to obtain due to the tariffs. As a result, orders that would arrive in one to two weeks now take up to eight weeks. Small businesses are living opportunity to opportunity, with many facing higher tariffs than megacap companies like Apple and Ford Motor.

Europe:
-Alphabet is being sued for €2.97B ($3.34B) in damages by Italian company Moltiply Group, alleging that the company abused its position as the dominant search engine to favor Google Shopping between 2010 and 2017. Moltiply owns the Italian price-comparison website Trovaprezzi.it. Google was hit with a €2.42B penalty by the European Union in 2017 for promoting its own comparison-shopping service in search results and demoting competitors'. A number of private claims against Google have been resumed or launched following the EU's final decision. Google spokespersons said that the changes made in 2017 following the European Commission's decision are working as intended and the number of comparison shopping sites in Europe using Google's shopping features has multiplied from just 7 to more than 1,550.

Emerging Markets:
-No update

Commodities:
-Oil prices have been sliding, and investors are bearish. Despite a rally to $61 a barrel by Friday, West Texas Intermediate crude remains far off the January high of $78. Oil has supply-and-demand problems, with OPEC and its allies ramping up supply faster than expected. Daily production is set to rise by nearly a million barrels by June from March. OPEC wants to regain market share from countries like the US, and seems willing to endure lower prices to make it happen. Demand isn't rising fast enough to sop up extra supply. Global oil demand in April was flat with year-ago levels, says JP Morgan. Most other sectors only face demand pressure, mostly from tariffs. If they go away, those sectors could be in the clear, but energy would still face a glut. Bullish energy investors are hoping US producers pull back drilling operations, leading to a fall in US output and lifting prices. At $50 a barrel, most companies can still make money on operating wells, but they will almost certainly spend less on policies like stock buybacks, and few will be able to drill new wells profitably. Analysts' earnings expectations have come down, but they may still have room to fall.

Streetwise:
-Jack Hough suggests the markets have entered a phase of “tariff purgatory.” Last month, President Donald Trump announced global tariffs, leading to panic among markets. He introduced a tariff teaser rate of 10% for 90 days, except for China, which gets 145% for now. Markets felt better about this, but markets were uncertain whether he was referring to May 2026, when Jerome Powell's time is up, or a more complicated situation. The US and the UK have announced a trade deal, with the 10% tariff mostly sticking. Wall Street is also concerned about the 145% tariffs coming down. Three explanations for this situation include the president's right to claim the US is "getting rich on tariffs," Corporate America's gravitational pull, and the development of buythedipitis, a condition brought on by four decades of rising global trade. This has boosted profits and held down US prices, allowing interest rates to move lower, making stocks an even better deal. Symptoms of buythedipitis include excessive reliance on policymakers to act as a put, pulling various financial levers to get gains going again. Retail investors, unlike institutional investors, remain invested in the market and have been buying the dip, with first-quarter growth being weak due to tariff front-running

FT : Elephants to elbows: US sours antitrust ties with Europe

Elephants to elbows: US sours antitrust ties with Europe
After years of co-operation to check Big Tech, transatlantic competition enforcers have turned to trading barbs

US and European antitrust enforcers used to work so closely that Jonathan Kanter’s office in Washington was adorned with an elephant knitted by his then EU counterpart Margrethe Vestager.

That camaraderie has all but evaporated as Donald Trump’s new team has taken charge. Far from cuddly toys, the main transatlantic exchanges between regulators in recent months seem to be barbed criticisms.  

Andrew Ferguson, chair of the US Federal Trade Commission, this week chose a conference established to foster collaboration between regulators to chide “Brussels bureaucrats” for seeking to stifle enterprise and clip the wings of American business.

“In almost every category by which one would assess competitiveness, Europe lags in some way behind the US,” he said on Wednesday at the International Competition Network conference in Edinburgh. “There is no doubt that Europe’s heavy regulatory hand is at least partially to blame.”

The comments mark a turning point in a transatlantic partnership that had steadily grown closer in the digital age, reaching a peak under Joe Biden’s presidency with Kanter at the Department of Justice and Lina Khan at the FTC.

The open question is whether the drastic change of tone will have concrete effects, hampering efforts to check the corporate power of vast, complex technology groups that stretch across multiple jurisdictions. 

While close cross-border co-operation once spooked dealmakers, a potential breakdown in relations and the policy uncertainty that would bring may be equally alarming, say lawyers in Europe and the US. 

“If anyone thinks that US/EU tensions will provide certainty, [they are] simply kidding themselves,” said a senior US mergers and acquisitions lawyer, noting a fragmented system can cause even more problems.

Washington’s messaging comes as the UK Competition and Markets Authority has been directed to take greater account of UK interests, raising further questions on whether co-operative trustbusting efforts may be dented.

“We have moved from a moment of global co-ordination to a time where it seems like the agencies will have to be more nationalist in their outlook,” said antitrust lawyer Liza Lovdahl Gormsen.

“This is not necessarily a good development . . .[it] could lead to protectionist outcomes that harm consumers and the global economy.”

The Edinburgh speech was not the first time Ferguson railed against Europe but it was perhaps the first to a room packed with European regulators.

In a heated exchange after his speech, Ferguson told Andreas Mundt, the veteran president of Germany’s Bundeskartellamt competition authority, that European regulators should not “assume everything is going to be bad”. Instead he urged them to take a more positive outlook, waiting for evidence of harm rather than proactively intervening.

Mundt later told the Financial Times: “We should not give too much weight to policy rhetoric . . . in practice there is more common ground than divergence.” An individual close to Ferguson disputed the characterisation of the exchange with Mundt.

EU competition chief Teresa Ribera told reporters in Edinburgh that she thought Ferguson had misunderstood the EU’s main digital regulation, adding that “in any case what I appreciate is mutual respect”.

A senior Trump administration official said Ferguson “has a very intimate and deep understanding of [the EU’s Digital Markets Act], which is why he has spoken so forcefully against these onerous regulations in Europe”.

EU officials are indeed trying to remain optimistic, pointing to Trump’s antitrust officials embracing the tough enforcement stance against Big Tech that was unleashed during the Biden administration. 

The DoJ is continuing litigation against Google, which US courts found to be a monopolist in online search and advertising. The FTC has taken Meta to court over allegedly building a monopoly by acquiring Instagram and WhatsApp — accusations the company rejects. Lawsuits against Apple and Amazon are also ongoing. 

After hitting Apple and Meta in April with fines totalling €700mn for breaching antitrust rules, Ribera told the FT that US authorities “are taking very similar decisions on very similar cases”.

Gail Slater, the Dublin-born head of the DoJ’s antitrust division, has previously said that “antitrust enforcement is a scalpel and regulation is often a sledgehammer” — a phrase repeated by Ferguson in Edinburgh.

But she was notably more conciliatory than Ferguson in her own appearance in Scotland. In a “fireside” chat with CMA chief executive Sarah Cardell, she sought to emphasise the “powerful network” that the ICN provided, of which the DoJ is “honoured to be a part”. “Please come visit with us,” she said to the assembled regulators.

Some experts argue that any US-EU friction may focus on rulemaking, rather than merger control or antitrust enforcement. Washington is pushing for deregulation while Brussels is trying to “rely more on forcing large tech firms to comply with a set of upfront rules to boost competition,” said Zach Meyers of the Centre on Regulation in Europe, a think-tank.

Still, lawyers in the US and Europe are keeping a close eye on potential forks in antitrust policy.

“If consensus breaks down between Brussels and DC there is serious trouble,” one former European competition official said. “But I don’t think that will happen.”

Sustainability may be one flashpoint with Washington. A former climate minister, Ribera has said she wants mergers that would ultimately help “providing sustainable goods and equipment”.

This is a break from the Trump administration, which is suing US states to block “burdensome and ideologically motivated” climate laws.

Questions over transatlantic co-operation come as multiple authorities are examining their approach to antitrust, and the limits of merger control.

UK Prime Minister Sir Keir Starmer, for instance, has pledged to ease the burden of regulation hampering investment in the country.

Following the unceremonious replacement of its chair in January, the CMA pledged to move faster on mergers and review fewer global deals where the UK is not a central player.

Cardell last month flew to the US to meet Ferguson and Slater. The meetings went well and Ferguson was impressed by Cardell as compared with some of her European counterparts, according to two people familiar with the matter. 

Still, while the US may be taking a softer line towards the UK — Ferguson in Edinburgh notably focused on the EU’s DMA and failed to mention London’s newly-introduced digital markets legislation — tensions may stem from new CMA powers. 

The regulator can now designate companies with an outsized position in certain digital markets as having “strategic market status”, and impose certain conduct requirements. The CMA is investigating Google and Apple with a view to potentially handing them such a designation.

While the hard policy implications of the transatlantic divergence has yet to unfold, the rhetoric seems to already be having an impact. 

One senior European official in Edinburgh said they were surprised by Ferguson’s negative tone, particularly at an event designed to foster collaboration between global agencies.

“He comes to Europe and criticises Europe and then leaves,” the official said. “I would never do that.”

>>> Weekend Papers Summary

FINANCIAL TIMES
-Pakistan and India are moving closer to full-scale war after Pakistan launched short-range missiles over the border and India targeted air bases in its neighbor's territory. Pakistan has launched Operation Bunyan Marsus, named after a Koranic phrase meaning "Iron Wall," as a response to missile and drone attacks by India since Wednesday. The latest clash between the nuclear-armed neighbours was triggered by the mass shooting of 25 Indians and a Nepali citizen in Pahalgam, a tourist hub in Indian-administered Kashmir, on April 22. India blamed the attack on militants backed by Pakistan, while Pakistan denied involvement. India responded by carrying out air strikes on what it said were terrorist camps in the Pakistan-administered part of Kashmir, which both countries claim.
-The Chengdu Aircraft Company's stock surged after the first combat between modern Chinese warplanes and advanced western hardware deployed by India. The share price of Chengdu's Chengdu Aircraft Company jumped over 40% in just two days as evidence of a Pakistani pilot possibly shooting down India's French-made Rafale jet was gathered. The conflict is also a testing ground for equipment crucial to a rivalry between China and the US-led western alliance. About 81% of Pakistan's military equipment comes from China, including more than half its 400-strong fighter and ground attack aircraft, according to estimates by the Stockholm Peace Research Institute and the International Institute for Strategic Studies.
-France, Germany, Poland, and the UK have visited Kyiv to show solidarity with President Volodymyr Zelenskyy, following Russia's recent hostility to China and Brazil. The leaders called for a 30-day ceasefire to invigorate US-led negotiations aimed at ending the war. They urged Russia to stop obstructing efforts to secure an enduring peace and emphasized the need for a reliable and lasting ceasefire for at least 30 days. The leaders also supported US President Donald Trump's calls for a peace deal and urged Russia to stop obstructing efforts to secure an enduring peace. The leaders are prepared to support talks between Ukraine and Russia and explore how a ceasefire could be implemented to prepare for a full peace deal. The visit comes after a recent attack on Kyiv, which killed a mother and son.
-US President Donald Trump has expressed openness to cutting tariffs on China ahead of high-stakes talks between the two largest economies. Trump suggested the US could almost halve its tariffs on Chinese goods, which currently stand at 145%, while calling on Beijing to open up its markets to American products. Both sides are seeking ways to unwind their huge levies on each other in a tit-for-tat confrontation that threatens the global economy. US commerce secretary Howard Lutnick said the current tariff levels would lead to a "decoupling" between the two economies, but said Trump would keep significant tariffs on trade with China.
-Isabel Schnabel, a member of the European Central Bank executive board, has warned that protectionism and increased defense spending in Europe, particularly Germany, could lead to a lasting increase in tariffs, reinforcing inflation pressures from higher fiscal spending. The EU faces a 20% levy on all exports to the US, and the trade war could contain inflation by hitting demand. Schnabel's remarks challenge the dovish consensus among economists and investors, who predict another quarter-point cut at the ECB's June meeting. Traders are betting on two or three cuts by the end of the year. The ECB has lowered borrowing costs in seven steps since June, bringing its benchmark rate down from 4% to 2.25%.
-Pension funds and institutional money managers are beginning to reduce their exposure to dollar investments, according to Wall Street banks. Concerns over erratic policymaking, Trump's attacks on the Federal Reserve chair, and the trade war's fallout are driving this shift. US stocks have recovered from losses since Trump's tariff announcements, but remain negative this year and behind global peers. The dollar is down over 7% this year, with some investors pointing to capital flight to other assets like German government debt. Europe's relatively cheap equity markets and catalysts for European economic growth make it the most logical destination.
-Ukraine has arrested two individuals suspected of being part of a Hungarian spy ring gathering intelligence for a possible military incursion. The Ukrainian state security service (SBU) uncovered a network run by Hungary's military intelligence to gather sensitive information on its defenses and population in its western Zakarpattia region. The alleged network collected information on regional military defenses and assessed local sentiment, including potential reactions to a Hungarian military incursion. The Hungarian government dismissed the Ukrainian allegations and expelled two Ukrainian diplomats it called spies.
-The UK and Swiss governments are planning to encourage train companies to launch direct services between London and Switzerland to meet the growing demand for long-distance rail travel in Europe. The governments announced a memorandum of understanding to establish commercial services linking the two countries through the Channel Tunnel rail link. The direct service would cut the journey time from London to Geneva to five hours, compared to the current 7.5 hours by train with a transfer in Paris. However, logistical challenges include building border infrastructure at Swiss stations and purchasing trains compatible with the Channel Tunnel's safety rules.
-Sweden lost its second national security adviser, Tobias Thyberg, hours into his job due to sensitive pictures on a dating app. Thyberg, who became the nation's second national security adviser, resigned after local newspaper Dagens Nyheter asked questions about the image. Experts believe the images could have left Thyberg open to being blackmailed. Thyberg's resignation is further embarrassment for Sweden and Prime Minister Ulf Kristersson, who created the post to boost the country's strategic profile after years of underspending on the military. Thyberg's departure comes months after his predecessor, Henrik Landerholm, was forced to step down after leaving confidential documents in an unlocked hotel safe.
-Donald Trump's aides have threatened the UN and other international humanitarian groups with funding cuts and sanctions if they don't support a new US-led aid plan for war-torn Gaza. The warning was issued by US special envoy Steve Witkoff in a private briefing to UN Security Council ambassadors. The most significant threats were directed towards the World Food Program (WFP) and UN agency for Palestinian refugees, UNRWA. The WFP was told that the US would sever funding, which currently makes up 40% of its budget, endangering programs in trouble spots like Sudan and Bangladesh.
-Santander rejected a £11B bid from NatWest for its UK retail bank earlier this year, stating the offer was too low. The state-backed British lender, advised by Morgan Stanley and UBS, is no longer active. Santander raised €7B from the sale of a large stake in its Polish unit, making any sale of its UK unit less likely. NatWest's approach comes as the British lender gears up to expand more aggressively in its domestic market once the UK government sells the last of its £46bn crisis-era stake. Santander's UK subsidiary, which includes retail and commercial banking, had total equity of £10.4B at the end of last year.
NEW YORK TIMES
-Top economic officials from the US and China are set to meet in Geneva for high-stakes negotiations on Saturday, which could determine the fate of the global economy. The negotiations, which are scheduled to continue on Sunday, are the first since President Trump increased tariffs on Chinese imports to 145% and China retaliated with its own levies of 125% on US goods. The tit-for-tat effectively cut off trade between the world's largest economies and raised the possibility of a global economic downturn. While the stakes are high, expectations for a breakthrough resulting in a meaningful reduction in tariffs are low. Analysts expect discussions to focus on determining each side's wants and how negotiations could move forward.
-Toyota has forecast that tariffs will erase $1.3B in profits in just two months, highlighting the rapid changes in fortunes for many companies dealing with President Trump's tariffs. The automaker's operating profit is expected to decline by about one-fifth for the fiscal year ending in March, citing headwinds from a stronger yen and predicting a $1.3B hit from President Trump's tariffs in April and May alone. The company estimated the effect of the auto tariffs, which started in April, only for those two months. Toyota's chief executive, Koji Sato, said that the impact of the auto tariffs is "very difficult to forecast" beyond that, as the current environment surrounding the auto industry, including trade relations, is in extreme flux.
-The Israeli offensive in the West Bank has led to the destruction of densely populated neighborhoods in Jenin and Tulkarm, with homes being demolished to make crowded areas more accessible to Israeli forces and prevent militant re-emergence. Israel has maintained its longest-running presence in the heart of West Bank cities since January, targeting Hamas and Islamic Jihad. However, clashes have become rare in recent weeks, indicating that Israel and Palestinian authorities have arrested or killed many militants. The two most affected cities, Jenin and Tulkarm, have long been controlled by the Palestinian Authority, a semiautonomous body that cooperates with Israel on security. The Palestinians hope that the Israeli offensive will evolve into a future state government.
-Researchers have discovered more details about Pope Leo XIV's Creole roots in New Orleans' Afro-Caribbean culture. In 1900, a census taker visited the home of Pope Leo XIV's grandparents, Joseph and Louise Martinez, in the French Quarter. Joseph N. Martinez was recorded as a Black man, born in Haiti, and his wife, two daughters, and an aunt were marked "B" in a column denoting "color or race." Ten years later, the census came knocking again, and the family had grown. Mr. Martinez's place of birth was listed as Santo Domingo, capital of the Dominican Republic, and the family's race was recorded as "W," for white. This simple switch from "B" to "W" suggests a complex and very American story. New Orleans operated under a racial system that distinguished among white people, Black people, and mixed-race Creole people like the Martinezes. By the early 20th century, Jim Crow was the order of the day, dealing in black and white, with myriad restrictions imposed upon any person of color.
-American cardinals of the Roman Catholic Church have noted that the Pope's choice of the papal name Leo, which could signal a particular interest in workers' rights. The historic papal conclave concluded this week, with no arm-twisting or overt politicking. The cardinals inside the Sistine Chapel "went wild" when the man they had elected privately told them that he would take the name Leo. They said that that name could be an indication of the pope's plans. Cardinal Blase J. Cupich, the archbishop of Chicago, referred to Pope Leo XIII, referring to Pope Leo XIII. Pope Leo wrote a landmark papal document called Rerum Novarum in 1891, addressing the needs and dignity of the working class, which helped spark a social justice movement amid the Industrial Revolution.
-President Trump welcomed Cardinal Robert Francis Prevost as the new pope, but his allies criticized him for his similarities to Pope Francis. Laura Loomer, a far-right activist who holds significant sway with Trump, described Pope Leo XIV as "anti-Trump, anti-MAGA, pro-open Borders, and a total Marxist" in a social media post. The MAGA movement began to cast him as an enemy shortly after Prevost emerged as the new pope and took the name Leo XIV. Loomer criticized the pope's style as similar to that of his predecessor, Pope Francis, who she described as "anti-Trump, anti-MAGA, pro-open Borders, and a total Marxist."
-A New York Times analysis of federal spending data revealed that at least 44 government contracts canceled by Elon Musk's cost-cutting initiative have been revived by federal agencies, wiping out over $220M of the group's purported savings. However, Musk's group continues to list 43 of those contracts as "terminations" on its website, which it calls the "Wall of Receipts." The White House claims this is a paperwork lag that will be remedied. The reversals illustrate the struggles of Elon Musk's team to produce accurate data about its results and the drawbacks of its fast, secretive approach. The White House says this is a paperwork lag that will be remedied.
-French President Emmanuel Macron has reportedly endorsed Ukrainian President Zelensky as a courageous leader who embodies Ukrainian resistance. Zelensky often calls Macron by his first name during speeches and sees Macron as someone who will advocate for Kyiv's interests and help him navigate difficult relationships with foreign leaders like President Trump. The two leaders now communicate directly on secure lines, WhatsApp, and Signal, with agendas and occasional calls out of concern or friendship, such as after a Russian missile strike in Zelensky's hometown.
-Four European leaders, including France, Germany, Britain, and Poland, have made their first joint visit to Kyiv to demonstrate their support for Ukraine and to reinforce calls for Russia to agree to a 30-day cease-fire. The leaders arrived in Kyiv to hold talks with Ukrainian President Volodymyr Zelensky, marking the first time these leaders have traveled together to Ukrainian soil. This visit is the first for German chancellor Friedrich Merz and the first time the leaders of four European nations have traveled together to Ukrainian soil. The visit comes one day after President Vladimir V. Putin of Russia welcomed the presidents of China and Brazil to Moscow to mark the 80th anniversary of the defeat of Nazi Germany with a military parade. Prior to the visit, the four European nations voiced support for President Trump's call for a 30-day cease-fire in the conflict between Ukraine and Russia.
-Newark Liberty International Airport experienced a brief radar outage on Friday morning, adding to concerns about safety at the nation's busiest airport. The outage affected communications and radar displays at a Philadelphia facility, affecting flights for hours. The Federal Aviation Administration reported the outage, which occurred just before 4 a.m. and lasted about 90 seconds. A similar 90-second outage occurred last week, causing widespread flight delays and cancellations. The recent outage has exacerbated safety concerns at the airport, as controllers struggle to communicate with pilots and prevent plane collisions.

NEW YORK POST
-President Donald Trump's trade war is causing alarm among global paper suppliers, potentially leading to a shortage of toilet paper in US supermarkets. Suzano SA, the world's largest exporter of pulp, reported a 20% drop in US-bound exports in April compared to the same time last year. The Brazilian company, which produces bleached hardwood pulp used by many American manufacturers, has had to pass increased costs on to US buyers. Suzano warned that continued trade barriers could worsen supply chain tensions and push prices higher. The company warns that it wouldn't take much to trigger renewed instability in the paper supply chain, especially if US buyers begin stockpiling in anticipation of further trade disruptions. The pulp industry is already feeling the effects, with shares of Suzano tumbled as much as 4.3% during trading Friday in São Paulo, hitting their lowest intraday level since June. Executives at Suzano say the tariff uncertainty is throwing off contract negotiations and pricing, and the entire industry is entering a phase of instability. Several other global suppliers have flagged the potential for new bottlenecks in essential goods if the tariff fight escalates.
-President Donald Trump's trade war is causing alarm among global paper suppliers, potentially leading to a shortage of toilet paper in US supermarkets. Suzano SA, the world's largest exporter of pulp, reported a 20% drop in US-bound exports in April compared to the same time last year. The Brazilian company, which produces bleached hardwood pulp used by many American manufacturers, has had to pass increased costs on to US buyers. Suzano warned that continued trade barriers could worsen supply chain tensions and push prices higher. The company warns that it wouldn't take much to trigger renewed instability in the paper supply chain, especially if US buyers begin stockpiling in anticipation of further trade disruptions. The pulp industry is already feeling the effects, with shares of Suzano tumbled as much as 4.3% during trading Friday in São Paulo, hitting their lowest intraday level since June. Executives at Suzano say the tariff uncertainty is throwing off contract negotiations and pricing, and the entire industry is entering a phase of instability. Several other global suppliers have flagged the potential for new bottlenecks in essential goods if the tariff fight escalates.

WSJ : The Giants of Silicon Valley Are Having a Midlife Crisis Over AI

The Giants of Silicon Valley Are Having a Midlife Crisis Over AI
Apple, Facebook, Google and Tesla are all facing the ‘innovator’s dilemma’ at the same time

Middle age hits hard—even for the Kings of Silicon Valley.

One minute you’re upending established industries as the young disrupter. The next, you’re staring into the abyss, eating glass—as Elon Musk likes to say—watching the disruption at your door.

Most, if not all, of the Magnificent Seven are in that position—weirdly trying at the same time to figure out the threat of artificial intelligence to their kingdoms.

That dynamic has been on display the past few weeks: Alphabet’s GOOGL -0.99%decrease; red down pointing triangle stock dropped more than 7% Wednesday after a senior Apple AAPL 0.53%increase; green up pointing triangle executive disclosed that Google search-traffic on its devices using Safari fell for the first time in 20 years. (Google later clarified it continues to see overall search growth, even from Apple devices.)

For his part, Apple Chief Executive Tim Cook is trying to buy time for his company, pushing investors during his latest earnings call to be patient with the iPhone maker’s delays around AI features.

Then there is Facebook META -0.92%decrease; red down pointing triangle co-founder Mark Zuckerberg’s attempt to paint a bright future for his ad-dollar juggernaut as something of an AI-buddy for the lonely.

Even Musk seems to be sweating things as he returns from his DOGE sojourn to Tesla, seeking to counter a slide in the electric carmaker’s stock price with promises of deploying driverless cars. “We’re not on edge of death—not even close,” Musk told analysts recently.

His protests sounded like that “Monty Python and the Holy Grail” character about to be thrown on a pile of corpses: “I’m not dead! … I feel happy!”

To be fair, none of these giants are dead—yet. And they have lots of reasons to feel happy—they are wildly profitable pillars of corporate America and together represent around $7 trillion of market value.

Yet the crossroads they all stand at, collectively, and how they react, individually, look like ready-made case studies for a 21st century update of the classic business school book “The Innovator’s Dilemma.”

Author Clayton Christensen tried to explain how new products or services displace existing players by creating new markets. It was a book that made the term “disruption” wildly popular in boardrooms—even if used in a way the late Christensen didn’t always intend.

The gist of his theory was that successful companies doing everything seemingly right can fail when smaller companies—not constrained by what has been—rise up, often with new technologies or processes. Think Netflix targeting through-the-mail subscribers versus Blockbuster’s in-store model.

Many turned to this book to explain the dot-com boom that helped usher in the current crop of Silicon Valley heroes. There are rough parallels today.

Just as the internet was a new technology that could do lots of things, AI holds many promises. But in these early innings, it isn’t clear how AI will be deployed—or by whom or when.

Pets.com, for example, wasn’t the winner many thought. That’s the rub. Even Christensen had a hard time predicting disrupters, like Apple’s iPhone.

When the gadget came out in 2007, the Harvard professor didn’t see it as a threat to phones. In fact, the device ushered in a new era of mobile computing and the App Economy.

That app marketplace, however, might look a lot different if companies are reaching customers in different ways. AI agents, for example, could upend the App Store way of the world.

So far, Apple’s answer to AI has appeared to be heavy on the hype. “We just need more time to complete the work so they meet our high-quality bar,” Cook told investors during Apple’s recent earnings call about the delay.

At least Google has an AI assistant, Gemini, though it’s unclear if that chatbot will be enough to save its real business—advertising, which accounted for most of its revenue last year. That’s a lot of ads sold off users clicking on links in a world where people increasingly ask a chatbot their questions, like: What is “The Innovator’s Dilemma” about?

Still, it might be surprising that no dominant platform seems to have a winning formula just yet.

That gives hope to the likes of Sarah Guo, a young venture capitalist in Silicon Valley. She is trying to make her mark by investing in the next hot AI startup that might dethrone the big dogs.

“There are many claims you can make strategically about why a company shouldn’t exist: because Microsoft should build it or Apple should build or Google should build it,” she told me during the recent episode of the “Bold Names” podcast. But, often for these established companies, she said, it can be hard “being creative with a risky new product.”

Just ask Google. The early days of Gemini were marred by apologies and promises to do better after its chat responses were seen as biased and—according to CEO Sundar Pichai—unacceptable. The rollout occurred amid concerns that startup OpenAI was ahead in the space, even though Google had been working on AI for a long while.

“No AI is perfect, especially at this emerging stage of the industry’s development, but we know the bar is high for us and we will keep at it for however long it takes,” Pichai wrote at the time.

Sometimes big breakthrough innovations, which we want to call disruptive, in fact help sustain existing businesses.

Microsoft—with a market value that has again surpassed Apple—is looking pretty savvy having embraced AI for its workplace products. Nvidia, too, has been a big beneficiary of AI companies gobbling up its high-price chips needed for developing their models.

Yet the emergence of China’s DeepSeek and other new AI models that supposedly use far less pricey computing power raise new questions. It remains unclear where the value of the new technology will land.

It’s all such a dilemma. At least, nobody is dead—yet.

FT : Rachel Reeves prepares to launch Isa review

Rachel Reeves prepares to launch Isa review
Treasury to begin consultation as UK chancellor looks to encourage savers to invest in domestic stocks

Rachel Reeves is preparing to launch a review of the Isa market within weeks in a push to encourage savers to channel more money from tax-free cash into British stocks, according to people familiar with the plans.

The Treasury will begin a consultation to gain views across the City of London on how to reform the UK’s Isa regime, industry figures said, as the chancellor seeks to bolster what she calls “a culture in the UK of retail investing”.

The move could pave the way for one of the biggest shake-ups of the Isa market since its creation in 1999, following calls from some large City firms to cap the amount that can be held tax-free in cash.

The UK has four main Isa products, including the cash Isa, which is by far the most popular product, housing £300bn of savings at present. Isas allow individuals to save and invest up to £20,000 a year free of income and capital gains tax.

The Treasury paper is expected to be launched within weeks and potentially at Reeves’ Mansion House speech to City executives in July, when the government is aiming to publish its Financial Services Growth and Competitiveness Strategy.

“Mansion House is all about getting more money into the UK,” one of the people familiar with the plans said, adding that any reforms flowing from the consultation could feature in Reeves’ Autumn Budget.

The Treasury said “no decisions have been taken” but that the government was “looking at options for reforms to Isas that get the balance right between cash and equities”.

Reeves said this month that she wanted “to create more of a culture in the UK of retail investing, like what you see in the United States”, in order to help savers achieve better returns and “support the ambition to grow the economy”.

The Financial Times reported in January that City firms were urging Reeves to scale back tax breaks for cash Isas. Savers poured £4.2bn into cash Isas in March, up by almost one-third compared with the previous year, according to investment site Hargreaves Lansdown.

Companies including insurance group Phoenix and the London Stock Exchange Group told the chancellor in January that money in cash Isas could generate better returns for savers if it was invested in stocks and shares, while supporting London’s shrinking equities market.

Fidelity International is among the firms to have called for a single Isa product, within which individuals could move between cash and stocks and shares, and suggested limiting the cash portion to £4,000.

Despite speculation, Reeves did not set out changes in the Spring Statement in March, although the government at the time said it was “looking at options for reforms” to “get the balance right between cash and equities to earn better returns for savers, boost the culture of retail investment, and support the growth mission”.

One industry figure said a consultation should lead to “something more concrete in the Budget” in the Autumn. “We do know the Treasury is keen to listen, so they might find a paper helps to formalise those conversations and lighten the load of meetings they’ve been asked to,” they added.

Tom Selby, director of public policy at investment site AJ Bell, said the government was “absolutely right to be looking at whether the current Isa system does enough to foster a healthy investing culture in the UK”.

But Carol Knight, chief executive of The Investing and Saving Alliance, a not-for-profit organisation, said “cutting the tax benefits of [the] cash Isa will not encourage people to invest more”, and urged ministers to offer better support to Britons on how best to make use of their savings.

CrunchBase : The Week’s Biggest Funding Rounds: Anysphere, Wonder Raise Massive

The Week’s Biggest Funding Rounds: Anysphere, Wonder Raise Massive Rounds

It was a good week for startups looking to raise big, as two companies raised rounds of well more than a half-billion dollars. While it’s not surprising AI led the way, other normally quiet sectors like accounting and sports also saw some investor love.

1. Anysphere, $900M, artificial intelligence: Anysphere, which sells the popular Cursor application, has reportedly raised a $900 million round at a $9 billion valuation. The round — first reported by the Financial Times — was led by Thrive Capital and included investment from Andreessen Horowitz and Accel. It was just last December when Anysphere raised a $105 million Series B led by Thrive Capital that valued it $2.6 billion. That was four months after raising a $60 million Series A. Artificial intelligence-powered coding has become a hit with investors as the use case seems to have taken off inside large enterprises as a way to save developers’ time. It seems to have also spurred M&A interest. Last month, it was reported OpenAI is in talks to acquire AI-assisted coding tool Windsurf — previously called Codeium — for $3 billion. The deal would be the generative AI giant’s biggest acquisition to date, per Crunchbase. OpenAI reportedly tried to buy code-writing startup Anysphere before turning its attention to Windsurf. Founded in 2022, Anysphere has raised $1.1 billion, per Crunchbase.

2. Wonder, $600M, food delivery: Marc Lore’s food delivery startup is back again. Wonder made this column in June 2022, November 2023, and March and November 2024. Now the company has raised $600 million from investors including NEA that values the company at more than $7 billion, per Bloomberg. The company, which has bought others such as Grubhub, is building what it calls a “super app for mealtime.” Founded in 2018, Wonder has raised $2.5 billion, per Crunchbase.

3. Rippling, $450M, human resources: San Francisco-based HR management company Rippling made waves late in the week by announcing it had raised $450 million in new financing and agreed to repurchase up to $200 million of shares from current and former employees. The new financing values the company at $16.8 billion. No lead investor was announced, but money came from the likes of GIC and Growth Equity at Goldman Sachs Alternatives. Rippling is used to big raises, last April it raised a $200 million Series F at a $13.5 billion valuation and in March 2023 it raised a $500 million Series E funding that valued the company at $11.25 billion. Founded in 2016, the company has raised $2.4 billion.

4. Atlas Data Storage, $155M, database: DNA data storage — actually encoding digital information into genetic material — doesn’t get talked about a lot, but it saw a big seed round this week. Twist Bioscience spun off its DNA data storage technology application as an independent company, now called Atlas Data Storage. The company, based in South San Francisco, also raised a big $155 million seed financing from the likes of Arch Venture Partners and Bezos Expeditions. The company said it will focus on commercializing data storage products that “leverage the unique properties of synthetic DNA,” such as extremely high data density and durability.

5. NewLimit, $130M, biotech: South San Francisco-based NewLimit, which is developing ways to genetically program their cells to make people stay younger, locked up a $130 million Series B led by Kleiner Perkins. The company claims it has made progress toward developing treatments to restore youthful characteristics and has discovered three prototype medicines to reprogram liver cells that process fat and alcohol. Founded in 2022, the company has raised $170 million, per Crunchbase.

6. Unrivaled Sports, $120M, sports: New York-based Unrivaled Sports, a youth sports brand, received a $120 million strategic investment led by DSG Ventures. The new investment will help Unrivaled Sports expand its brands across youth sports properties and programming. Founded in 2024, this is the company’s first outside investment, per Crunchbase.

7. (tied) HubSync, $100M, accounting: HubSync, a Franklin, Tennessee-based tax and accounting platform, raised a $100 million growth round from investment firm Thoma Bravo. Founded in 2019, the company has raised $101 million, per Crunchbase.

7. (tied) Statsig, $100M, analytics: Statsig, developer of a data-driven product development platform, raised a $100 million Series C at a $1.1 billion valuation led by Iconiq Growth. Founded in 2021, the Bellevue, Washington-based company has raised $153 million, per Crunchbase.

9. (tied) Sirius Therapeutics, $50M, biotech: San Diego-based Sirius Therapeutics, a biotech developing siRNA therapeutics for cardiometabolic disorders, raised a $50 million Series B2 financing led by an unnamed “renowned corporate venture capital firm.” Founded in 2021, Sirius says it has raised nearly $150 million to date.

9. (tied) Wonderskin, $50M, beauty: Beauty brand Wonderskin secured a $50 million Series A led by Insight Partners. Founded in 2020, this is the New York-based company’s first round raised, per Crunchbase.

Big global deals
The biggest raise this week outside the U.S. was a big seed round from Asia.
  • India-based PB Healthcare Services, a healthcare platform that provides both services and insurance, raised a $218 million seed round

FT : St James’s Place’s rapid recovery shows the value of aspiration

St James’s Place’s rapid recovery shows the value of aspiration
The wealth manager’s future growth will rely on luring more of the ‘mass affluent’

St James’s Place is the sort of company that defies the idea of efficient markets. Why are people so keen to pay a premium to invest their money when they can often achieve similar results from a few low-cost tracker funds? The answer: sometimes, wealth management is more about making customers feel wealthy than actually maximising wealth.

SJP has been the FTSE 100’s best-performing stock over the past 12 months. It is the second-best in the entire FTSE 350, driven by chief executive Mark FitzPatrick’s efforts to cut costs and rebuild a reputation damaged by criticism over opaque fees and complaints about poor service.

Stock prices are forward-looking; it makes sense for investors to give advance credit for a long-term plan if they have faith in the team delivering it. More surprising is that customers, too, are already flocking back. They put in £1.7bn more than they took out in the first quarter of this year. That is more than double net inflows in the same period last year, despite the fact that the new, more user-friendly fee structure has not even come into force yet.


The quick recovery suggests customers were put off more by the reputational stink surrounding SJP than the charges themselves. Well-off clients are happy to pay a bit, as long as they are not made to feel like chumps whose money funds corporate jollies at Gleneagles.

This should be a warning to the phalanx of banks and asset managers looking to break into wealth management. Lenders such as Lloyds and Barclays think a captive audience of existing customers is a useful tool for expansion, but SJP shows how valuable a good brand can be. Bankers may not be the pariahs they were after the 2008 financial crisis, but nor are they significant carriers of cultural cachet.

The recent rally has brought SJP’s market capitalisation to about 14 times expected earnings over the next 12 months — above the broader FTSE 100, but well below its 10-year average of almost 20 times. The recovery still has space to run, assuming it can avoid any more reputational own goals. 

Beyond that, future growth will rely on luring more of the “mass affluent” — folk a rung or two below the very rich, with between £75,000 and a few million in investable assets. Retail banks tend to assume their digital-first platforms have an advantage at this level, where it is harder to make the economics of a dedicated financial adviser work. But SJP already manages on average about £180,000 per client, so it is not alien territory. 

That SJP advisers pick up the phone for fortunes so small may surprise readers. But it just goes to show how good the company is at projecting exclusivity. Would it still be simpler and potentially cheaper for a newly affluent client to open an extra account with their existing bank? Sure. But where is the snob value in that? 

FT : EA, MLS and the gamified future of live sport

EA, MLS and the gamified future of live sport

Last year, Electronic Arts laid out grand ambitions to turn EA FC — its long-running football franchise and by some measure the most successful in video game history — into a one-stop shop for fans. The idea was to create an online platform where fans could play the game, buy merchandise and match tickets, and watch live games.

Today, that vision takes a step closer to reality. As part of a deal announced this week with Major League Soccer, this afternoon’s match between LA Galaxy and New York Red Bulls will be broadcast live worldwide through the EA FC Mobile app. A handful of other MLS games will be shown the same way in future. The global element was made possible thanks to the media rights deal MLS has with Apple.

There are some interesting details. Those who watch the matches will be rewarded with in-game currency, which can be used to buy players and other items, and offered a one-month free pass to watch the MLS on Apple+. In a statement, MLS said it was “reaching new and digitally native audiences around the world and continuing to broaden the way we’re building relationships with fans”.

This is part of a trend across sport of experimenting with the way live events are broadcast. During the Qatar World Cup in 2022, Fifa allowed a popular gamer to stream live matches on his Twitch account. Amazon has recently been dabbling with pay-per-view for individual football matches.

For now, rights holders are in trial and error mode and much of this remains low-risk. Offering tens of millions of football fans a free taster of something that is otherwise not in high demand (in this case MLS matches) looks to be a no brainer. Gamifying the experience will also help gauge changing consumer behaviour in a way not possible before.

With the old broadcast model coming under strain, even for prime content, we can expect to see more and more of this in the coming months. But where it’s all heading remains anyone’s guess.