Good morning. On UnHerd’s radar today:
- Elon Musk is no longer a trillionaire…
- … and he’s facing a criminal “bribery” probe in Wisconsin.
- Exclusive: Disney’s $3 billion shipping secret.
- Oil is mysteriously cheap!
- Trump eyes land invasion of Kharg Island.
- Dan Ives joins Trump-linked investment group.
- Countries of the world ranked by inflation.
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THE MARKETS
SpaceX loses $1 trillion in market cap as tech stocks lead sharp declines in Asia and Europe
Asian markets led a global selloff in the stock markets today as the central bank of South Korea raised its interest rates and warned there would be more rate hikes to come, to fight off persistent inflation. Asia is particularly exposed to increasing oil prices caused by the Iran war because it imports much of its fuel. The tech-heavy KOSPI was down 6.37% today, sinking deeper into correction territory—it has shed 21.84% over the last month. Nasdaq 100 futures are down 0.19% this morning prior to the open in New York.
SpaceX was down 0.6% at the close yesterday and although it gained 0.37% in overnight trading the stock has lost more than $1 trillion in value since its peak price of $225 per share. The stock dipped below its IPO launch price of $135, recovering to just $135.27. The downward drift of the stock means that Elon Musk is no longer technically a trillionaire. He’s worth “only” $856 billion today, according to Bloomberg’s billionaire index.
- S&P 500 futures were flat this morning. The index rose 0.38% yesterday.
- In Europe, the Stoxx 600 was down 0.26% in early trading and the U.K.’s FTSE 100 was down 0.37% before lunch.
- Asia: South Korea’s KOSPI was down 6.37%. Japan’s Nikkei 225 was down 2.79%. India’s Nifty 50 was up 0.15%. China’s CSI 300 was down 1.85%.
- Brent crude was $84 per barrel this morning, down from a high of $86 yesterday.
- Bitcoin was $64K.
MORE FROM FORTUNE
The MacKenzie Scott paradox: How a bull market lets billionaires give away tens of billions without getting poorer - Sydney Lake
As banks post blowout earnings, CEOs reckon with America’s inequality gap - Diane Brady
Klook cofounder Ethan Lin thinks the U.S. can help grow one of Asia’s largest travel platforms - Angelica Ang
‘We did not adapt and move quickly enough’: IBM CEO’s admission of weakness fails to prevent historic 25% stock crash - Tatiana Sataua
Why IBM just suffered its worst stock crash of all time—and what it says about the market’s two bubbles - Nick Lichtenberg
LAPD was one of Flock Safety’s biggest government customers. Now it’s renegotiating its partnership over ‘serious concerns around civil liberties’ - Sasha Rogelberg
Chipotle is trying to take over Mexico through its softest border town - Mia Osmonbekov
Pete Hegseth wants to test troops for ‘testosterone deficiency’ — literally - AP
ONE BIG THING
Hiding in plain sight: Disney’s $3 billion cruise ship business
Disney has historically refused to describe in detail the revenues earned by its growing cruise ship business. Its CFO, Hugh Johnston, has declined to do so on previous earnings calls. “We don’t break out cruise ships,” explained Hugh Johnston on its Q3 call last year.
But UnHerd’s Christian Sylt can reveal that a Disney filing in the U.K.—where its ships are based for tax reasons—reveals that cruise revenue passed the $3 billion mark last year for the first time, fuelled by the addition of a sixth ship to its fleet as part of a $12 billion expansion.
CRUDE REALITY
Why is oil so cheap?
The price of oil is $84 per barrel this morning, which is bad enough (before the war with Iran started it was just over $60). Following the outbreak of the hostilities, it peaked at $114. So one question is, why is the price of oil so low? After all, the Strait of Hormuz is now in its sixth month of total or partial closure. The supply of oil is more constrained than ever, but its price is nowhere near peak pessimism.
One reason for that is that, in fact, the world still has an unusually large amount of stored oil on hand, as this chart from Bridget Payne of Oxford Economics shows. “Despite record drawdowns, total global oil inventories remain above their recent historical average, continuing to reduce the risk of an acute crude shortage. However, much of this buffer is held as crude and offers limited protection against lower refinery output, weaker middle-distillate yields, and the loss of major diesel exporters” such as Russia.
She warns that the Strait could be closed for much of the rest of the year.
IRAN
Trump considers boots-on-the-ground escalation of war against Iran
President Trump is considering an escalation of the war against Iran, and has been briefed on options such an invasion of Kharg Island (long a Trump obsession) or bombing “Pickaxe Mountain,” a nuclear site with an underground tunnel complex, according to the Wall Street Journal. The Kharg operation would put U.S. boots on the ground in Iranian territory.
Over the last 24 hours, Iran attacked U.S. sites in Jordan, Kuwait and Bahrain. The U.S. continued a wave of attacks on Iranian coastal sites to “further degrade Iran’s ability to threaten innocent mariners” in the Strait of Hormuz,” Centcom said. The U.S. also disabled an oil tanker in the Gulf.
What Iran says: “As long as the United States does not accept the Iranian legal system, this strait will remain closed,” according to the semi-official Iranian Students’ News Agency.
- Must-read from the WSJ: All the companies and wealthy individuals who have given Trump’s proxy groups $782 million since he was elected.
TRUMPWORLD
Dan Ives’ new merchant bank has longstanding ties to Trump Media & Technology Group
When tech bull analyst Dan Ives announced he was leaving Wedbush to start what he described as a “modern merchant bank for the age of AI,” many were puzzled by the news. Ives is possibly the most famous tech stock analyst in the U.S. and he is a regular on CNN. It was also not entirely clear why the world of AI needs a merchant bank, given that AI companies have not had difficulty finding investment capital.
The FT has shone some light on the situation. The bank will be named “Yorkville Ives.” The Yorkville name refers to Yorkville Securities or Yorkville Advisors, the New Jersey-based group that has bankrolled Trump Media & Technology Group, the company that owns Truth Social and a host of video streaming services. TMTG’s stock is down 27.72% year-to-date.
UnHerd’s archive has a ton of stories on Yorkville and its dealings with the Trump empire. Here are three of them:
- More than half of Trump Media’s cash on hand came from selling $450 million worth of shares to a small New Jersey financial firm - Paolo Confino
- Trump Media lockup deadline leaves Trump with a choice: trigger a fire sale or hold a meme stock - Paolo Confino
- Trump Media’s latest crypto venture borrows a page from the MicroStrategy playbook: hoard a specific cryptocurrency and dress it up as a business - Alan Suderman
CHART OF THE DAY
Countries ranked by average inflation since COVID
If you think inflation is bad in the U.S. or Europe, remember, it could be worse. Argentina and Turkey have both had the worst inflation since the pandemic. The best performers, however, are Switzerland and China, both of which have had inflation near 1% throughout.
“Switzerland remains in a league of its own,” says Deutsche Bank’s Jim Reid in an email. “It's the only country globally to have seen CPI average below 2% since the end of Bretton Woods (>1971), and since Covid inflation has averaged just 1%.”
NUMBER OF THE DAY
1,000
The number of terawatt hours of electricity AI data centers will need by 2030—double the amount they consume today, according to Alpine Macro’s Kelly Xu. The biggest source of that extra energy will be renewable, Xu estimates: “Renewables are expected to account for roughly 40% of additional electricity generation for data centers between 2025 and 2030 and more than one-third of the data center power mix by 2030.”
THE FRONT PAGES TODAY
Dimon Warns of Broad Mythos Access, Calling It a Real Issue - Bloomberg
Goldman's Former Top Lawyer Calls Epstein a 'Masterful Liar' - NYT
TSMC to invest additional $100 billion in Arizona after second-quarter profit soars 77% - CNBC
Trump imposes 25% tariffs on Brazilian goods - Axios
The AI Backlash Has Tech Executives Fearing for Their Lives - WSJ
ONE MORE THING
Wisconsin election panel asks prosecutors to probe Elon Musk over “bribery” allegations
Remember when Elon Musk handed out money to people in Wisconsin if they promised to vote for his favored state Supreme Court candidates? That was probably illegal, a bipartisan panel has found.
Musk likely broke Wisconsin law when he promised to hand out $1 million checks to voters in the 2025 election, according to the Wisconsin Elections Commission. The panel last week referred two complaints to the Brown County district attorney’s office, according to the AP. Musk potentially faces criminal charges for election bribery. Prosecutors have 40 days to report back to the commission.
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