TheChek News Flow

Congress and the Pentagon need to revitalize the U.S. defense industry base—and they need to act fast.

The conflict with Iran is an urgent reminder that the U.S. needs a defense industrial base that can wage a high-intensity war against American adversaries—especially China. The Trump administration has taken important steps to increase production of some munitions, reform an antiquated acquisition system, and establish incentives for private-sector innovation. It is critical now to accelerate these changes.

There have rightly been growing calls to increase stockpiles of long-range munitions for precision strikes, as well as munitions for Patriot, Thaad, and other air-defense systems. But the challenge is much bigger than Iran. The U.S. lacks enough munitions to support its war plans if a protracted conflict with China, Russia or North Korea arises.

Military planners should be particularly worried about China, which has vastly superior capabilities to Iran. The Chinese industrial base, which is on a wartime footing, has produced thousands of hypersonic, cruise and ballistic missiles capable of precision strikes, along with millions of drones. U.S. bases, aircraft, naval vessels and other infrastructure operating within the First Island Chain—which extends south from Japan through Taiwan, the northern Philippines and Borneo—are highly vulnerable to attack.

The Chinese threat makes it essential that the U.S. have enough long-range munitions and unmanned systems to strike ships, aircraft and land targets from a distance. The U.S. military also badly needs more air-defense systems and equipment to defend critical infrastructure. Empty bins won’t deter China.

The Trump administration has started to address some of these problems. The Pentagon has committed to rebuilding what it calls the “arsenal of freedom” and placing the defense industrial base on a wartime footing. Deputy Defense Secretary Steve Feinberg established a Munitions Acceleration Council in 2025 to increase production of 12 critical weapons, from Patriot interceptors to Long Range Anti-Ship Missiles. He has also spearheaded efforts to reform a woefully slow acquisition system, minimize stifling regulations, and take advantage of an innovative private sector.

But more needs to be done—and fast. The Pentagon should urgently focus on fully funding multiyear contracts for several critical munitions that Congress has already authorized, such as the Joint Air to Surface Standoff Munition, Standard Missile 6 and Patriot Advanced Capability 3. It should also fund research, development and production of cheaper alternatives. The Pentagon has sometimes reached strategic framework agreements—not contracts—with defense companies. But these aren’t binding obligations. The lack of firm commitments creates unnecessary risk for companies that have to report to their shareholders.

Multiyear contracts can help strengthen a fragile supply chain. Production is limited, and there are too few suppliers for solid rocket motors, castings, forgings and seekers for munitions. Longer-term commitments are essential for defense companies to fund their suppliers adequately and reliably.

Another priority should be maintaining aircraft and ship readiness. The U.S. has heavily used F-35 stealth fighters, B-2 bombers, C-17 transport aircraft, Arleigh Burke-class destroyers and other aircraft and ships against Iran. These are even more vital in other theaters, particularly the Indo-Pacific. The Pentagon and Congress need to work together to authorize and fund multiyear contracts to maintain aircraft and ship readiness.

In addition, Iran has conducted missile and drone strikes against U.S. bases and critical infrastructure—and other adversaries would do the same. U.S. bases and installations throughout the Indo-Pacific—such as in Japan, the Philippines and Guam—are in desperate need of hardened aircraft shelters, air defenses, reinforced munitions storage bunkers and fuel bladders. Congress should increase the Pentagon’s facilities sustainment, restoration and modernization funds to address these gaps.

A Pentagon supplemental request to Congress is the most immediate solution to secure funding, and the Defense Department is reportedly planning to ask for $200 billion. The administration shouldn’t pitch its request just as support for the Iran war, but rather as an investment to revitalize the lagging U.S. industrial base.

In the longer term, the administration should make good on President Trump’s pledge to increase the defense budget by $500 billion for fiscal 2027. The Pentagon should use the money to procure systems necessary to support Indo-Pacific Commander Adm. Samuel Paparo’s Hellscape concept, which uses a mix of drones, long-range missiles and other capabilities to target Chinese forces attacking Taiwan.

The Iran war is the latest wake-up call to revitalize the defense industrial base. It is time to move faster.

Hong Kong firm, which also runs Joe Tsai’s family office, bucks tough fundraising environment

Hong Kong investment firm Blue Pool Capital raised $1 billion for Riverside, its first private-equity fund, amid a challenging fundraising environment.

Blue Pool Capital, led by Chief Executive Oliver Weisberg, also manages the family office and operating assets of Alibaba co-founder Joe Tsai.

The firm’s multistrategy fund’s private-equity strategy had an estimated gross internal rate of return of 55% for the decade ended Dec. 31, 2025.

Hong Kong investment firm Blue Pool Capital has raised $1 billion for its first private-equity fund, according to people familiar with the firm, a significant haul in a tough fundraising environment for the sector. Blue Pool also runs the family office and operating assets of Alibaba co-founder Joe Tsai.

Under Chief Executive Oliver Weisberg, Blue Pool has been a private-equity investor for a decade out of a multistrategy fund that counts as investors Tsai, Weisberg and a handful of former Alibaba executives. Its portfolio companies have included the luxury sneaker-maker Golden Goose, SpaceX, “Fortnite” videogame developer Epic Games and TikTok parent ByteDance, according to a fundraising document viewed by The Wall Street Journal.

One of its most profitable investments was in the management company of the private credit firm Blue Owl, which it exited several years ago. Blue Owl recently has come under pressure.

Historically, select investors could invest alongside Blue Pool’s flagship fund in specific private-equity deals. But Blue Pool started to get access to deals that were too big for its multistrategy fund to pursue, one of the people said, kicking off discussions around raising a stand-alone private-equity fund.

Blue Pool closed on a $1 billion capital raise for that fund, Riverside, earlier this week. Weisberg and his team are the largest investors in Riverside. The fund is expected to invest in fast-growing consumer businesses globally.

Weisberg and a separate team at Blue Pool run Tsai’s family office and the Tsai family’s operating assets, which include the Brooklyn Nets, the New York Liberty, Barclays Center and European vineyards. Forbes estimated Tsai’s net worth at $12.7 billion as of Friday.

The fundraising document said that for the decade ended Dec. 31, 2025, the multistrategy fund’s private-equity strategy had an estimated gross internal rate of return of 55% which, after fees, would place it among the top decile of funds launched in 2016, according to PitchBook data.

Fundraising in private equity has fallen off in recent years from a 2021 peak. A lack of distributions, or money returned to investors in private-equity funds, has been a key factor, as many investors use those distributions to fund new private-equity commitments. That dynamic also has contributed to investors becoming overly weighted in private equity, causing many to look to trim rather than add to their exposure. Higher interest rates have slowed distributions because they have made it harder for managers to get the prices they’d hoped for when they look to sell portfolio companies.

Weisberg moved to Hong Kong in the 1990s from the U.S. He worked in Goldman Sachs’s Asian special situations and principal investment divisions before moving to Citadel. He met Tsai while at Goldman, where he negotiated the Series A term sheet for Goldman’s investment in the then-fledgling Alibaba with Tsai and Jack Ma, and was Goldman’s director on Alibaba’s board.

He joined Blue Pool from Citadel in 2015 and restructured it, taking a cue from the early path of Michael Dell’s MSD Capital. MSD began as the billionaire computer pioneer’s family office; it eventually raised money from outside investors, with that part of the business becoming MSD Partners. (Today, MSD Partners is part of the investment and advisory firm BDT & MSD Partners.)

Macro specialist brings lawsuit against UAE-backed landlord over disturbance at London headquarters

Hedge fund Pharo has sued a United Arab Emirates-backed landlord over claims that building works caused “intolerable disturbance” at its London headquarters.

Macro specialist Pharo, which manages $8.3bn, has brought a lawsuit against the freehold owner of the building in Knightsbridge, complaining that “excessive noise and vibration” disrupted trading operations and client meetings.

The hedge fund, which bets on assets such as bonds and currencies, pays more than £500,000 a year in rent for the site opposite department store Harrods, according to papers filed at Central London County Court.

Both parties declined to comment.

The two sides had reached an agreement in principle to settle the case but had not signed it, a person familiar with the case said on Friday.

Pharo, headed by former Merrill Lynch trader Guillaume Fonkenell, has brought the action against Knightsbridge Commercial Estates, the British Virgin Islands-incorporated owner of the freehold.

Companies House records list the “private department of the President of the UAE” as a beneficial owner of Knightsbridge Commercial Estates.

In court papers, lawyers representing Pharo said the works had “substantially and materially” disrupted communication between portfolio managers, traders and outside firms, as well as investor meetings.

“Employees are required to speak by telephone and via virtual platforms with accuracy and clarity, in particular to avoid potential costly errors in executing trades,” the claimant said.

“Excessive” dust had triggered fire alarms, while problems with air conditioning and ventilation had caused “extreme” fluctuations in temperature, Pharo said in the legal complaint. One morning last July, the temperature in a large meeting room had reached 28C by 8am, Pharo claimed.

Knightsbridge Commercial Estates said in court papers that it had sought to ensure that the works did “as little nuisance, damage or inconvenience” as reasonably practicable.

“It has not been reasonably practicable to prevent all noisy works taking place during business hours, but the defendant has sought to minimise them as far as reasonably practicable”, the defendant said.

Some of the works, such as replacing lifts and air conditioning, were required to fulfil its obligations as the landlord, lawyers representing the defendant added.

The works at Pharo’s offices took place throughout last year and the bulk of them had been completed by last summer, according to a person familiar with the matter.

Even so, Pharo, which has 70 London-based employees, had signed a lease to move its staff to a 22,000-square foot office on Victoria Street, close to Green Park and Buckingham Palace, the person added.

The macro fund added in the court documents that “significant noisy work and highly disruptive disruptive operations have repeatedly taken place”.

Lawyers for Pharo, which bets on economic indicators including inflation and interest rates and has a particular focus on emerging markets, added in court papers that it had video recordings as evidence.

There had been “numerous occasions where excessive noise levels, caused by drilling, banging, and jackhammering have been experienced and disrupted the claimants’ business”, the claimant added.

Pharo’s macro fund was up 17.5 per cent last year, while its Africa fund was up 28.2 per cent, according to a person familiar with the figures.

Currently, SpaceX is a dominant force in launching rockets into space—out of 59 total rocket launches into orbit so far in 2026, 35 have been SpaceX’s Falcon 9. A significant portion of SpaceX’s launches put its own Starlink satellites into orbit, but the company also launches satellites on behalf of governments and other companies like Amazon.

Other significant but much smaller competitors in the launch business include Jeff Bezos’ Blue Origin and Rocket Lab in the U.S., as well as Chinese and European rivals. The total value of the worldwide launch business was between $10 billion and $20 billion in 2025, according to analysts.

And while SpaceX’s Falcon 9 rocket is currently a reliable workhorse for SpaceX, Musk forecasts the company’s cadence of launches increasing greatly in the coming years, primarily to power its own initiatives like data centers in space. All those plans depend on its next-generation launch vehicle, the Starship.

Yes. The company needs to get its Starship launch vehicle into service as soon as possible to ensure that virtually all of the plans SpaceX is pitching are technically and economically viable.

For instance, the new generation of Starlink Mobile satellites that SpaceX unveiled this month rely on Starship to launch. Musk has indicated that SpaceX’s orbital data centers would build on a newer version of the company’s regular Starlink satellites, which are also designed to deploy from Starship. Any long-term plans for space colonies on Mars or the moon also rely on Starship’s success.

In addition, large government contracts hinge on Starship. In an audit released earlier this month, NASA said SpaceX’s Starship lunar lander has suffered delays, still faces significant hurdles and may not be on track to fulfill a target of landing astronauts on the moon in 2028. And Blue Origin is designing a rival lunar lander for NASA.

But SpaceX’s schedule for Starship has been slipping for years—back in 2019, the company said that the craft would enter commercial service by 2021.

SpaceX has demonstrated that it can reuse Starship’s booster, known as the Super Heavy, which has successfully launched and landed in multiple tests over the past couple of years. But the company has yet to demonstrate reusability for the rocket’s upper stage, the section of the craft designed to carry cargo such as satellites and astronauts.

SpaceX has been working its way up to testing a landing of the upper stage, which Musk has said the company will only do when it’s very confident the rocket won’t break up. But SpaceX hasn’t conducted a new Starship test flight since October, and in November a new version of the rocket known as the version 3 failed in testing on a Texas launchpad, contributing to further delays.

This past January, Musk said the first test launch of version 3 would occur in early March, which has come and gone. On the sidelines of a conference in early March, SpaceX President and Chief Operating Officer Gwynne Shotwell said the next flight would occur in the next “four to six weeks.”

Very important. Starlink, which beams internet from space to terminals owned by individual consumers and to planes and cargo ships, has grown to more than 10 million users since it launched in 2020. It was SpaceX’s biggest source of revenue last year. But Starlink’s hopes of continuing to expand face some obstacles.

One challenge is the fact that most people in the U.S. and Europe tend to live in or near major cities, where getting access to traditional internet isn’t an issue.

To make its service more appealing to a broader group of customers, as opposed to people in remote cabins or traveling in RVs, SpaceX has slashed prices in North America and Europe and ramped up sales efforts aimed at homeowners in suburban and exurban areas. That’s put it in more direct competition with traditional wired internet firms like Comcast, and the pricing pressure is likely to continue.

Meanwhile, India and significant parts of Africa offer a big potential market of people without access to internet infrastructure. But SpaceX has yet to secure approval to launch in those places even after years of negotiating with local regulators. Even if it does, it would likely have to charge significantly less for service than it can in wealthier parts of the world.

What’s more, big Starlink competitors, including Amazon’s Leo and two Chinese-owned constellations, are set to come online soon. And European governments are funding their own Starlink rivals to reduce their reliance on U.S. tech. But for the foreseeable future, SpaceX is likely to have a cost advantage because it can use its own rockets to launch satellites.

Starlink Mobile uses a separate kind of satellite to power text messaging, calling and limited data for mobile phones in remote areas. The next generation of satellites for Starlink Mobile will offer more advanced services in such areas, including video calls and streaming, according to SpaceX. Those satellites will use spectrum SpaceX is buying from EchoStar for $19.6 billion in cash and stock in deals set to close next year.

SpaceX offers Starlink Mobile through deals with telecom firms like T-Mobile. However, a major debate is playing out in the telecom industry over whether regular cellphone users are willing to pay for Starlink’s backup service, since the vast majority live and travel in areas served by traditional towers. While some telecoms that have partnered with Starlink, such as T-Mobile, offer the service only to customers on more premium plans or those that pay a monthly fee, others, like Ukraine’s Kyivstar, offer the service for free.

If telecoms find their customers don’t care enough about Starlink backup service to pay extra for it, it’s unlikely to become a big revenue driver for SpaceX.

Another question is whether Apple will ever do a deal with Starlink. Apple currently offers emergency texting services on iPhones through a partnership with Globalstar, a rival satellite firm, and balked at previous offers from SpaceX because Musk asked for too much money, The Information has reported. Starlink Mobile currently works on newer iPhones but is paid for by cell service providers rather than Apple.

At a telecom conference this month, industry executives expressed skepticism about demand for Starlink Mobile and questioned whether SpaceX is overpaying for the spectrum it’s buying from EchoStar. Some drew parallels to Iridium and Globalstar, both of which launched expensive satellite-powered cellphone services to great fanfare a quarter century ago, reached gigantic valuations during the dot-com bubble and then went bankrupt when demand failed to materialize. Iridium and Globalstar survived but are now valued at a mere $2.7 billion and $7.5 billion, respectively.

Good question. XAI developed the Grok AI models and operates the Grok AI chatbot, which is competing with chatbots from OpenAI, Anthropic, Google and Meta Platforms.

XAI has been burning significant cash—around $9.5 billion in the first nine months of last year on $210 million in revenue—and recently bought a building to turn into a third gigantic data center that it will need to stock up with chips and power.

Its prospects of turning Grok into a major business are uncertain, however. Right now, most of its AI-related revenue comes from consumer subscriptions. Enterprise customers include the U.S. government and companies that have existing relationships with Musk, like Morgan Stanley and Palantir Technologies, and many of the businesses using Grok have been doing small tests that bring single-digit millions of revenue or less, The Information has reported.

Meanwhile, xAI has accumulated debt, through its own debt raise last summer and by taking on about $12.5 billion in debt from X dating to when Musk acquired the site in 2022. Bloomberg reported earlier this month that Morgan Stanley, which handled debt raises for both xAI and X, has told lenders the debt is set to be paid back in full, though the story didn’t specify where the capital would come from. That would lighten the combined company’s debt load, but it could come with some early repayment penalties for newer debt.

But xAI has also been funding its data center build-out with more creative arrangements. That includes using special purpose vehicles to be funded with up to $20 billion from outside investors, which will buy Nvidia chips that xAI will then rent over several years. So far, this arrangement has resulted in two SPVs with funding totaling less than $10 billion. An LLC linked to xAI also formed a joint venture with an energy firm to buy natural gas turbines for powering the data centers, with the venture taking out a $550 million term loan at an interest rate of more than 10%.

SpaceX has been pulling out all the stops to gin up demand for its shares.

The company is considering dividing up roles among a wide variety of investment banks, including having Morgan Stanley and Goldman Sachs sell shares to institutional investors, Bank of America and Citi focus on individual investors, and international banks like Barclays, Deutsche Bank and Royal Bank of Canada offer shares to investors in their own regions, The Information has reported.

Another big question is whether major money managers that offer trillions of dollars’ worth of popular passive funds tied to indexes like the Nasdaq 100 and S&P 500 will have to buy SpaceX shares soon after the IPO. The Nasdaq and S&P Dow Jones Indices are both reportedly considering amending their rules to fast-track large firms after they go public. That would almost certainly help SpaceX, as well as other potential mega-IPOs from companies like OpenAI and Anthropic.

But it could also spark pushback from investors wary of changing longstanding index rules. More broadly, continued escalation in the U.S.-Iran war could cause economic turmoil and lead IPO candidates across the board to rethink their plans.

Musk often shifts trusted lieutenants between his companies to work on his highest-priority projects—for example, several of xAI’s key early staff joined from SpaceX and Tesla when the companies were separate, and employees from several of Musk’s companies worked on his Department of Government Efficiency last year.

More recently, Musk placed Tesla’s top AI executive, Ashok Elluswamy, in charge of an xAI effort known as Macrohard, which has been trying to develop “virtual employees” that can replace white-collar workers. Elluswamy is leading what Musk has described as a combined team that’s working on both xAI’s Macrohard and a virtual AI named after Tesla’s Optimus humanoid robot.

While such moves aren’t that unusual for Musk’s companies, SpaceX becoming a public company would almost certainly lead to increased scrutiny of such entanglements, as well as of how Musk himself is dividing his time between SpaceX and Tesla. Tesla also invested $2 billion in xAI shortly before SpaceX acquired it, so Tesla now has an equity stake in the combined company.

Another question is whether investors will evaluate SpaceX and Tesla on their own terms, or whether they will view both companies as a single entity under Musk’s control. Musk has even hinted that he could one day merge all of his companies, saying in November that they’re all “trending toward convergence.”

Three including Super Micro co-founder are accused of skirting export-control laws and deceiving inspectors with dummy devices

Employees of a U.S. server maker helped smuggle machines with high-end Nvidia NVDA -1.43%decrease; red down pointing triangle chips to China and used dummy devices to deceive an American inspector, according to a U.S. indictment unsealed Thursday.

The server maker, Super Micro Computer SMCI -27.38%decrease; red down pointing triangle, said it placed co-founder and Senior Vice President Yih-Shyan “Wally” Liaw on leave after learning of his alleged role in the scheme involving billions of dollars of servers. Super Micro said it placed a second employee on leave and fired a contractor.

In premarket trading Friday, shares of Super Micro were down 20%.

The case involves one of the most sensitive issues in U.S.-China relations. In recent years, Washington has blocked China from importing Nvidia’s most advanced artificial-intelligence chips. The goal is to preserve America’s technology lead over Chinese companies developing AI models.

Some Chinese companies have found workarounds to get Nvidia chips by routing shipments through third countries, The Wall Street Journal and others have reported. The new indictment offers one of the most detailed pictures of how this is allegedly done.

The three defendants helped smuggle servers into China “through a tangled web of lies, obfuscation, and concealment—all to drive sales and generate revenues in violation of U.S. law,” said U.S. Attorney Jay Clayton for the Southern District of New York.

Super Micro, which wasn’t named as a defendant, said the alleged conduct of the accused contravened its policies and compliance controls. The company said it would continue to cooperate with the investigation and maintain compliance. Nvidia said strict compliance was a top priority.

The servers were assembled in the U.S. and shipped to Super Micro’s facilities in Taiwan before being delivered to customers, according to the indictment.

Two Super Micro employees—Liaw and Ruei-Tsang “Steven” Chang—allegedly directed a company based in Southeast Asia to place orders with Super Micro for the servers. After receiving the servers, the Southeast Asian company repackaged the servers and shipped them to China, the indictment said.

It said the two men and a contractor to Super Micro tried to deceive inspectors who visited the Southeast Asian company to confirm the servers hadn’t been diverted to China. The inspectors included people from Super Micro’s own compliance team and a U.S. Department of Commerce official who visited in December 2025, it said.

The group used hair dryers to remove and affix labels so that dummy servers—nonfunctional replicas of Super Micro devices—looked like real products, the indictment said, attaching a photo from a surveillance camera showing a woman with a hair dryer in her hand.

The Southeast Asian company bought around $2.5 billion in servers between 2024 and 2025, a substantial part of which were transshipped to China, according to the indictment. Between late April and mid-May last year, more than $510 million worth of Super Micro servers were sent to China via the Southeast Asian company, it said.

By late 2024, the accused had already arranged orders and transshipments of Blackwell chips, Nvidia’s most-advanced model at the time, according to the indictment. The Journal reported in March 2025 that buyers in China had started receiving Blackwell servers from local resellers.

Authorities in the U.S., Singapore and elsewhere have stepped up enforcement since early last year and underground trading of Nvidia servers has become more difficult, especially for big orders, distributors and buyers have said.

“Unlawful diversion of controlled U.S. computers to China is a losing proposition across the board,” an Nvidia representative said. The company “does not provide any service or support for such systems, and the enforcement mechanisms are rigorous and effective,” the representative said.

The Pentagon is also weighing sending more destroyers to escort tankers

The Pentagon is moving additional Marines and warships to the Middle East, as Iran steps up its attacks on the Strait of Hormuz and the U.S. prepares to escort tankers through the waterway.

Defense Secretary Pete Hegseth has approved a request from U.S. Central Command, responsible for American forces in the Middle East, for an element of an amphibious-ready group and attached Marine expeditionary unit to head to the region, according to U.S. officials.

Two ships from the Japan-based USS Tripoli Amphibious Ready Group and the 31st Marine Expeditionary Unit are now headed for the Middle East, one of the officials said. Marines are already in the Middle East supporting the Iran operation, and several more flights of Marines have moved into the theater in recent days, according to flight tracking data and U.S. officials.

The move comes as Iran’s attacks on the strait have paralyzed traffic through the strategic waterway since the start of the war, disrupting the global economy, driving up gas prices and posing a major military and political challenge for President Trump. The U.S. announced it will release 172 million barrels of oil from the Strategic Petroleum Reserve, a rare emergency measure aimed at bringing down crude prices.

A Pentagon spokesperson declined to comment. One of the officials said the additional assets would initially be involved in strike operations on Iran. The USS Tripoli is equipped with F-35B jump-jet fighters.

An amphibious-ready group is a fast-response unit used to conduct sea-based amphibious assaults, humanitarian aid missions and special operations. The group’s embarked Marine expeditionary unit includes more than 2,000 Marines.

In addition to the Marine unit, the Pentagon is also weighing Centcom’s request for two additional destroyers to help escort commercial ships through the strait, one of the officials said.

Sending the USS Tripoli from Japan to the Middle East further decreases the American forces deployed to the Pacific. Trump has also redirected the aircraft carrier USS Abraham Lincoln from the South China Sea for the Iran operation.

Even with additional warships, U.S. forces won’t begin escorting vessels until the threat from Iran is reduced, the officials said. That could take up to a month or more, even as U.S. military strikes continue to target Tehran’s arsenal of missiles and drones.

The Islamic Revolutionary Guard Corps, a branch of Iran’s armed forces, struck three cargo ships attempting to transit the waterway on Wednesday, as Iran’s new hard-line Supreme Leader Mojtaba Khamenei vowed Thursday to continue blocking the strait.

Energy Secretary Chris Wright said that while the U.S. isn’t ready to escort oil tankers through the strait quite yet, he hopes it will happen in the next month.

“All of our military assets right now are focused on destroying Iran’s offensive capabilities and the manufacturing industry that supplies their offensive capabilities,” he told Fox News. “We don’t want this to be a brushoff for a year or two. We want to permanently destroy their ability to build missiles, to build drones, to have a nuclear program.”

Hegseth said Friday that the Pentagon wants to reopen the strait “sequentially, in a way that makes the most sense for what we want to achieve and ensure that we’re sending the right signals to the world when we do so.”

Europe’s business investment ‘needs stability and predictability,’ the EU says

The European Union plans to make changes to its landmark carbon-pricing program as the bloc’s industrial sector braces for a spike in energy prices caused by the war in the Middle East.

The EU’s emissions-trading system will be tweaked in the face of soaring prices for oil and gas, said Ursula von der Leyen, president of the EU executive, the European Commission.

“We need to modernize it and make it more flexible,” Von der Leyen told reporters late Thursday. The ETS will be adjusted to account for industry concerns, with roomier benchmarks for free allocations and greater firepower for the system’s market-stability reserve, she said. The changes should come within days, she added. Under the ETS, companies must buy a permit for each metric ton of carbon they emit.

Europe’s physical supply of energy is still guaranteed, despite the turmoil in the Middle East, Von der Leyen said.

“However, Europe is not immune to global price-spikes,” she said. Brent crude oil futures climbed above $111 a barrel Friday after the U.S. and Israel’s war with Iran continued to escalate, with a major gas hub in Qatar hit hard by Iranian attacks earlier in the week.

Amid soaring energy prices, Europe’s business investment “needs stability and predictability,” Von der Leyen said. Brussels will also work to alleviate the blow from the energy-price jump by making state aid more flexible, and by proposing that national governments tax electricity less steeply. In the longer term, cash support for decarbonization to the tune of 30 billion euros ($34.77 billion) will also be made available for European industry, she said.

“We will provide much needed financial support for our industry,” she said.

The ETS—which was launched in 2005—has already helped by reducing Europe’s dependency on fossil-fuel imports and spurring investment in the energy transition toward renewable energy and nuclear, Von der Leyen said. But ETS prices have dropped sharply this month, analysts at Rabobank wrote in a research note Friday.

“Expectations of changes to the supply of allowances in 2026 are creating a more bearish outlook,” they said.

European business has already begun to sound the alarm about the impact of an energy crunch. Economic sentiment in Germany, the bloc’s industrial powerhouse, plummeted this month, according to think-tank ZEW, which pointed to rising fears of a fresh spike in inflation. German chemicals association VCI warned last week that the war in the Middle East was showing early signs of hitting the industry’s supply chain. Chemicals giant BASF, which supplies a host of industrial sectors across Europe, said this week it would hike some prices by nearly a third as raw-materials costs climb. Wacker Chemie, another German supplier, said Friday that it would raise prices for silicone products from the start of next month, blaming the war’s “distortions” on energy and raw-materials.

The crunch is the most serious threat to European industry since the continent shut off supplies of Russian gas early in 2022, when President Vladimir Putin launched an all-out invasion of neighboring Ukraine, triggering a jump in energy prices that hobbled a European factory sector already struggling with hotter competition from abroad and moribund investment at home.

Still, Von der Leyen said the EU would continue with its plan to fully phase out imports of Russian gas. Imports of liquefied natural gas from Russia’s fields are due to have stopped by the end of the year.

Big U.S. companies replaced CEOs last year at the highest rate since at least 2010 and this meant some Sapient projects were delayed, CEO Nigel Vaz said

The head of Sapient, Publicis Groupe’s PUB -1.09%decrease; red down pointing triangle consulting arm, said clients are increasingly interested in artificial-intelligence projects, signaling more businesses are moving away from a wait-and-see approach and warming up to the technology.

Like other technology consulting firms, Sapient has been hit by delays in client spending over the past couple of years, with companies wary of embarking on major investment programs. But its chief executive, Nigel Vaz, hopes AI will become a tailwind for the business in the long run.

“We saw this also in the early days of the internet, when you were seeing lots of disruption coming to the organization,” Vaz said in an interview. “There’s a little bit of transformation that has to happen internally in order to then move forward.”

As the corporate world gears up for AI, a significant number of companies refreshed their executive ranks and those changes need to be absorbed within the organizations before transformations begin, Vaz said.

Big U.S. companies replaced CEOs last year at the highest rate since at least 2010, when the economy was emerging from the financial crisis, according to an analysis by executive-recruiting firm Spencer Stuart across 1,500 of the largest publicly traded companies.

For Sapient, this meant some projects were delayed because the executives who had to sign off on spending programs were either out of a job, in a different role or had just been appointed.

Publicis, Sapient’s owner, in February forecast the unit’s organic net revenue would increase slightly in 2026 after being flat last year. Over the past two years, Sapient’s top-line performance has lagged that of Publicis’ media and creative segments.

Analysts widely credit Publicis’ $3.7 billion acquisition of Sapient, closed in 2015, and its $4.4 billion purchase of data business Epsilon in 2019 with helping the French advertising company revive its fortunes. In a call with analysts in February, Publicis CEO Arthur Sadoun called Sapient a strategic asset for the group in the context of AI.

Sapient works with clients ranging from hotel group Marriott to carmaker Nissan to mayonnaise brand Hellmann’s and has been leaning into their plans to use AI to overhaul operations. Sapient’s Vaz said the business is leveraging AI to help clients cut costs or drive growth.

In aggregate, clients are moving from an experimental phase to implementation of AI projects, but the moment at which each of them gets out of wait-and-see mode depends on whether the internal changes that allow for it have happened, Vaz said.

Sapient is now in conversations with clients “about how they’re actively going to transform,” he said.

The business has launched three AI-focused platforms to help clients accelerate software development, build AI agents—systems that can take actions on behalf of humans—and orchestrate workflows, and automate maintenance of IT platforms, Vaz said. All three are picking up, he added.

Sapient has historically focused on solving complex technical problems for other companies, rather than on taking on outsourced work to lower clients’ costs, Vaz said.