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Good morning and welcome back. Today we’re covering:
The Maga pushback against military intervention
Fed cuts to US growth forecasts
China’s drone push
And Silicon Valley’s new buzzword
Steve Bannon has joined the growing chorus of Maga voices urging President Donald Trump not to join Israel in bombing Iran, warning it would “tear the country apart”.
What did Bannon say? Speaking in Washington yesterday the president’s former chief strategist said: “My mantra right now: The Israelis have to finish what they started. They started this. They should finish it.” The risk of a so-called forever war in the Middle East is worrying some Trump supporters. For them, it has echoes of the wars in Afghanistan and Iraq at the beginning of the century, which cost the lives of thousands of American military personnel and more than 1mn direct deaths in total, according to some estimates. “We can’t do this again. We’ll tear the country apart. We can’t have another Iraq.”
What do Trump supporters think of the prospect of the US attacking Iran? Bannon’s intervention laid bare a fierce public battle playing out among Trump’s most ardent supporters who backed his “America first” message in last year’s election campaign. Former Fox News host Tucker Carlson, former Florida congressman Matt Gaetz and Georgia representative Marjorie Taylor Greene have been among the most vocal Trump acolytes calling on him to exercise restraint. An opinion poll published earlier this week by the Economist/YouGov showed only 19 per cent of Trump supporters backed the idea of a US strike on Iran.
Meanwhile, Trump kept the world guessing yesterday as to whether he would authorise a strike on Iran by the US military. “I may do it. I may not do it,” he said on the White House lawn. More news and analysis on the war below.
Latest news: Our live blog has the latest developments from reporters in the region and around the world.
Market reaction: Prices to charter large oil tankers sailing through the Strait of Hormuz have more than doubled since Israel attacked Iran last week.
Israel’s secret war: Hacked phones, deep-cover agents and miniaturised weapons systems were part of the covert campaign that preceded Israel’s attack on Iran.
Iran’s exiled royal: “This is the first time in all these years that we see the playing field being more even for an opportunity for change,” Reza Pahlavi tells the FT.
Military manoeuvres: Bunker-busting bombs and aircraft carriers are among the US military assets being prepared for possible conflict with Iran.
Here’s what else we’re keeping tabs on today:
Economic data: Mexico’s national statistics agency publishes its preliminary economic growth figures for May.
Interest rates: The Bank of England is expected to keep borrowing costs unchanged at 4.25 per cent. Earlier the Swiss National Bank cut its benchmark rate to zero.
TikTok ban: Trump is expected to extend today’s deadline for Chinese owner ByteDance to sell its stake or face a ban.
Juneteenth holiday: US markets will be closed as the country marks the end of slavery after the civil war.
Five more top stories
1. 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.
Treasury market: Foreign investors’ stockpile of US government debt fell only modestly in April despite turmoil from Trump’s trade war.
Central banks: Without political consensus, hawkish central banks and budgetary rules will not bring economic stability, writes Raghuram Rajan.
2. 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. Read this exclusive story.
3. The EU is pushing for a UK-style trade deal with the US that leaves some tariffs in place after next month’s deadline, further delaying retaliation against Washington. Diplomats and officials briefed on the matter say that early talk in Brussels of retaliatory levies if US President Donald Trump did not lift all measures against EU countries has diminished.
4. 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.
5. The family that owns the Los Angeles Lakers is closing in on a deal to sell its majority stake in the National Basketball Association team to Guggenheim Partners chief executive Mark Walter at a valuation of about $10bn, which would be the largest-ever sale of a sports team.
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 . . .
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.
Julius Baer: Stefan Bollinger, a former Goldman Sachs banker, takes on the Swiss wealth manager’s troubled legacy as its new chief executive.
‘Stick-holder capitalism’: Nippon Steel’s $15bn deal for US Steel is the first big cross-border agreement 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. The rankings reflect a higher education arms race.
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