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Today’s agenda: Lockheed’s UK pitch; Fed cuts US outlook; China’s drone push; Leo Lewis on Trump’s “stick-holder capitalism”; and is AGI another Silicon Valley buzzword?
Good morning. We’ll start with the latest on the Middle East war and its global fallout.
The situation now: Donald Trump has made his most explicit comments yet about possible US military action against Iran, saying: “I may do it. I may not do it.” The president also said next week or “maybe less than a week” would be “very big”, hinting at a possible timeframe for his decision. The nuclear-powered USS Nimitz, the US Navy’s lead ship in its class of aircraft carriers, is moving to join other American military assets in the region. Trump said Tehran wanted to negotiate, but Iran has denied his account.
Global reaction: UK Prime Minister Sir Keir Starmer has put the UK cabinet on alert for potential US action, with his team weighing how to respond should Tehran threaten British assets in the Middle East. They discussed whether Trump might seek to strike Iran’s nuclear facilities from a joint US-UK air base at Diego Garcia in the Indian Ocean, which would draw Britain closer to the conflict. Meanwhile, Russian President Vladimir Putin said he has had discussions with the US, Iran and Israel but said the solution was up to the warring parties.
Impact on energy: Oil prices have steadied after last week’s surge, with crude exports from the Middle East largely unaffected. But prices to charter large oil tankers sailing through the Strait of Hormuz have more than doubled since Israel struck Iran. Roughly one-third of the world’s seaborne oil supply flows through the narrow waterway separating Iran from the Gulf States. Demand for alternative energy sources, such as palm or soyabean oil, has also increased in recent days.
Follow our live blog for the latest updates.
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Iranian casualties: Israel’s missile strikes have eliminated Iran’s top military leaders and nuclear specialists. Here are the key figures who have been killed.
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Secret war: Hacked phones, deep-cover agents and miniaturised weapons systems were part of the covert campaign that preceded Israel’s attack on Iran.
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‘Let them kill us’: Millions of Iranians are refusing to leave Tehran despite Israel’s deadly strikes and warnings to evacuate.
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Steve Bannon: Trump’s former adviser has warned that US involvement in another war in the Middle East would “tear the country apart”.
Here’s what else we’re keeping tabs on today:
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UK interest rates: The Bank of England is expected to keep borrowing costs unchanged, with UK inflation well above its official target.
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Chatham House: The think-tank holds its flagship conference in London, with former MI6 chief Sir John Sawers and the FT’s Martin Wolf expected to speak.
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TikTok ban: Trump is expected to extend today’s deadline for Chinese owner ByteDance to sell its stake or face a ban.
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US markets closed: The country marks the end of slavery after the civil war with the Juneteenth holiday.
Five more top stories
1. Exclusive: Lockheed Martin has approached the British government to offer help in building a new missile defence system for the country. The US defence group said it would be happy to partner with whomever “the UK wanted us to work with”. Read the full story.
2. Exclusive: Microsoft is prepared to walk away from talks with OpenAI over the future of its multibillion-dollar alliance, as the ChatGPT maker seeks to convert itself into a for-profit company. The two sides remain unable to agree on critical issues such as the size of the software group’s future stake in the start-up.
3. The Federal Reserve cut its outlook for the US economy yesterday, with policymakers split on whether they would be able to reduce interest rates at all this year as Trump’s tariffs bring risks of higher inflation. Hours before the decision, the US president called Fed chair Jay Powell “stupid” and asked whether he could “appoint myself” to the central bank.
4. Exclusive: Thames Water’s creditors are demanding exemption from key UK environmental laws, according to documents seen by the FT. The lenders, who are providing a £5bn backup rescue of Britain’s biggest water company, also want fines amounting to millions of pounds removed.
5. The US clean energy sector is facing a wave of bankruptcies as Congress weighs a spending bill that would gut clean energy tax credits that have kept the industry afloat. Since retaking Congress and the White House, Republicans have moved swiftly to dismantle Biden-era investment in renewable energy sources.
The Big Read
Artificial general intelligence has been tipped as the next big breakthrough out of Silicon Valley, with proponents from OpenAI to Google DeepMind predicting it can turbocharge the economy, cure diseases and “elevate humanity”. But is AGI a scientific goal — or just a marketing buzzword?
We’re also reading . . .
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Chinese drones: Beijing has pushed the country to produce millions of unmanned aircraft. Now, it wants the “low-altitude economy” to become a driver of growth.
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Julius Baer: Stefan Bollinger, a former Goldman Sachs banker, takes on the Swiss wealth manager’s troubled legacy as its new chief executive.
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‘Stick-holder capitalism’: Nippon Steel’s $15bn deal for US Steel is the first big cross-border deal under Trump’s new genre of capitalism, writes Leo Lewis.
Chart of the day
Universities in Asia had a strong showing in the latest QS world rankings, while the majority of UK institutions dropped down the list for a second straight year. Here’s how individual institutions performed.
Take a break from the news
Now is the time for a fun, no-nonsense, beach-ready watch. Louis Cheslaw reviews affordable and water-resistant timepieces for the summer.
