Senate Republicans on Monday proposed deeper Medicaid cuts, including new work requirements for parents of teens, as a way to offset the costs of making President Donald Trump’s tax breaks more permanent in draft legislation unveiled for his “big, beautiful bill.”

The proposals from Republicans keep in place the current $10,000 deduction of state and local taxes, called SALT, drawing quick blowback from GOP lawmakers from New York and other high-tax states, who fought for a $40,000 cap in the House-passed bill. Senators insisted negotiations continue.

The Senate draft also enhances Trump’s proposed new tax break for seniors, with a bigger $6,000 deduction for low- to moderate-income senior households earning no more than $75,000 a year for singles, $150,000 for couples.

All told, the text unveiled by the Senate Finance Committee Republicans provides the most comprehensive look yet at changes the GOP senators want to make to the 1,000-page package approved by House Republicans last month. GOP leaders are pushing to fast-track the bill for a vote by Trump’s Fourth of July deadline.

Sen. Mike Crapo, R-Idaho, the chairman, said the proposal would prevent a tax hike and achieve “significant savings” by slashing green energy funds “and targeting waste, fraud and abuse.”

It comes as Americans broadly support levels of funding for popular safety net programs, according to the poll from The Associated Press-NORC Center for Public Affairs Research. Many Americans see Medicaid and food assistance programs as underfunded.

What’s in the big bill, so far

Trump’s big bill is the centerpiece of his domestic policy agenda, a hodgepodge of GOP priorities all rolled into what he calls the “beautiful bill” that Republicans are trying to swiftly pass over unified opposition from Democrats — a tall order for the slow-moving Senate.

Fundamental to the package is the extension of some $4.5 trillion in tax breaks approved during his first term, in 2017, that are expiring this year if Congress fails to act. There are also new ones, including no taxes on tips, as well as more than $1 trillion in program cuts.

After the House passed its version, the nonpartisan Congressional Budget Office estimated the bill would add $2.4 trillion to the nation’s deficits over the decade, and leave 10.9 fewer people without health insurance, due largely to the proposed new work requirements and other changes.

The biggest tax breaks, some $12,000 a year, would go to the wealthiest households, CBO said, while the poorest would see a tax hike of roughly $1,600. Middle-income households would see tax breaks of $500 to $1,000 a year, CBO said.

Both the House and Senate packages are eyeing a massive $350 billion buildup of Homeland Security and Pentagon funds, including some $175 billion for Trump’s mass deportation efforts, such as the hiring of 10,000 more officers for Immigration and Customs Enforcement, or ICE.

This comes as protests over deporting migrants have erupted nationwide — including the stunning handcuffing of Sen. Alex Padilla last week in Los Angeles — and as deficit hawks such as Kentucky Sen. Rand Paul are questioning the vast spending on Homeland Security.

Senate Democratic Leader Chuck Schumer warned that the Senate GOP’s draft “cuts to Medicaid are deeper and more devastating than even the Republican House’s disaster of a bill.”

Tradeoffs in bill risk GOP support

As the package now moves to the Senate, the changes to Medicaid, SALT and green energy programs are part of a series of tradeoffs GOP leaders are making as they try to push the package to passage with their slim majorities, with almost no votes to spare.

But criticism of the Senate’s version came quickly after House Speaker Mike Johnson warned senators off making substantial changes.

“We have been crystal clear that the SALT deal we negotiated in good faith with the Speaker and the White House must remain in the final bill,” the co-chairs of the House SALT caucus, Reps. Young Kim, R-Calif., and Andrew Garbarino, R-N.Y., said in a joint statement Monday.

Republican Rep. Nicole Malliotakis of New York posted on X that the $10,000 cap in the Senate bill was not only insulting, but a “slap in the face to the Republican districts that delivered our majority and trifecta” with the White House.

Medicaid and green energy cuts

Some of the largest cost savings in the package come from the GOP plan to impose new work requirements on able-bodied single adults, ages 18 to 64 and without dependents, who receive Medicaid, the health care program used by 80 million Americans.

While the House first proposed the new Medicaid work requirement, it exempted parents with dependents. The Senate’s version broadens the requirement to include parents of children older than 14, as part of their effort to combat waste in the program and push personal responsibility.

Already, the Republicans had proposed expanding work requirements in the Supplemental Nutritional Assistance Program, known as SNAP, to include older Americans up to age 64 and parents of school-age children older than 10. The House had imposed the requirement on parents of children older than 7.

People would need to work 80 hours a month or be engaged in a community service program to qualify.

One Republican, Missouri Sen. Josh Hawley, has joined a few others pushing to save Medicaid from steep cuts — including to the so-called provider tax that almost all states levy on hospitals as a way to help fund their programs.

The Senate plan proposes phasing down that provider tax, which is now up to 6%. Starting in 2027, the Senate looks to gradually lower that threshold until it reaches 3.5% in 2031, with exceptions for nursing homes and intermediate care facilities.

Hawley slammed the Senate bill’s changes on the provider tax. “This needs a lot of work. It’s really concerning and I’m really surprised by it,” he said. “Rural hospitals are going to be in bad shape.”

The Senate also keeps in place the House’s proposed new $35-per-service co-pay imposed on some Medicaid patients who earn more than the poverty line, which is about $32,000 a year for a family of four, with exceptions for some primary, prenatal, pediatric and emergency room care.

And Senate Republicans are seeking a slower phase-out of some Biden-era green energy tax breaks to allow continued develop of wind, solar and other projects that the most conservative Republicans in Congress want to end more quickly. Tax breaks for electric vehicles would be immediately eliminated.

Conservative Republicans say the cuts overall don’t go far enough, and they oppose the bill’s provision to raise the national debt limit by $5 trillion to allow more borrowing to pay the bills.

“We’ve got a ways to go on this one,” said Sen. Ron Johnson, R-Wis.

This story was originally featured on Fortune.com

© J. Scott Applewhite—AP

• In today’s CEO Daily: Diane Brady talks to Cushman & Wakefield’s Michelle MacKay.
• The big story: Trump may or may not be trying to get a ceasefire in Iran.
• The markets: Resting easy.
• Analyst notes from Convera on the weakening dollar,  Macquarie on Iran and the oil market, and Oxford Economics on business sentiment
• Plus: All the news and watercooler chat from Fortune.

Good morning. Cushman & Wakefield’s Michelle MacKay, Larry Culp of GE, Richard Dickson of The Gap, and Carol Tomé of UPS all have something in common: They were appointed CEO after serving on the boards of companies they now run. Such board-to-CEO transitions have become more common for multiple reasons, from the complexity of the business landscape to a desire for boards to instil seasoned leaders they know and trust. For MacKay, serving on three public boards after retirement stoked her ambitions to take on a CEO role.

“Those three years that I spent in board seats, with a little more time for myself, were probably the most important years of my career journey, which is ironic, because I wasn’t working full time,” MacKay told Fortune in this week’s Leadership Next podcast. “I really hadn’t stepped back in a number of years and reconsidered my own path.”

Her background in finance and real estate were appealing at a time of declining revenues. When Cushman’s then-CEO John Forrester asked MacKay if she’d consider becoming CFO of the company, she said no, instead agreeing to become COO in 2020 with a clear path to becoming CEO in July of 2023. “It was a big challenge with a big brand and I had somebody who backed me from the onset. And I thought, ‘You know what? We got one version here, one life. I’m just going to go for it.’”

While tariffs, geopolitics and other issues continue to weigh on the global outlook for commercial real estate services, MacKay has led the firm to growth again. Board service gave her a holistic view of not only the company but also her career.With  CEO turnover near record highs for much of the past year, more leaders may find a period of pause on boards inspires them to return to corporate leadership with fresh eyes and purpose.  Said MacKay: “Can one be too engaged? I don’t think so.” You can listen to the podcast here on Apple or Spotify. More news below.

Contact CEO Daily via Diane Brady at [email protected]

This story was originally featured on Fortune.com

© Courtesy of Cushman & Wakefield

President Donald Trump abruptly left the Group of Seven summit Monday, departing a day early as the conflict between Israel and Iran intensified and the U.S. leader declared that Tehran should be evacuated “immediately.”

World leaders had gathered in Canada with the specific goal of helping to defuse a series of global pressure points, only to be disrupted by a showdown over Iran’s nuclear program that could escalate in dangerous and uncontrollable ways. Israel launched an aerial bombardment campaign against Iran four days ago.

At the summit, Trump warned that Tehran needs to curb its nuclear program before it’s “too late.” He said Iranian leaders would “like to talk” but they had already had 60 days to reach an agreement on their nuclear ambitions and failed to do so before the Israeli aerial assault began. “They have to make a deal,” he said.

Asked what it would take for the U.S. to get involved in the conflict militarily, Trump said Monday morning, “I don’t want to talk about that.“

So far, Israel has targeted multiple Iranian nuclear program sites but has not been able to destroy Iran’s Fordo uranium enrichment facility.

The site is buried deep underground — and to eliminate it, Israel may need the 30,000-pound (14,000-kilogram) GBU-57 Massive Ordnance Penetrator, the U.S. bunker-busting bomb that uses its weight and sheer kinetic force to reach deeply buried targets. Israel does not have the munition or the bomber needed to deliver it. The penetrator is currently delivered by the B-2 stealth bomber.

By Monday afternoon, Trump warned ominously on social media, “Everyone should immediately evacuate Tehran!” Shortly after that, Trump decided to leave the summit and skip a series of Tuesday meetings that would address the ongoing war in Ukraine and global trade issues.

As Trump posed for a picture Monday evening with the other G7 leaders, he said simply, “I have to be back, very important.”

Canadian Prime Minister Mark Carney, the host, said, “I am very grateful for the president’s presence and I fully understand.”

Crises abound

The sudden departure only heightened the drama of a world that seems on verge of several firestorms. Trump already has hit several dozen nations with severe tariffs that risk a global economic slowdown. There has been little progress on settling the wars in Ukraine and Gaza.

But in a deeper sense, Trump saw a better path in the United States taking solitary action, rather than in building a consensus with the other G7 nations of Canada, France, Germany, Italy, Japan and the United Kingdom.

British Prime Minister Keir Starmer, French President Emmanuel Macron, Italian Premier Giorgia Meloni and German Chancellor Friedrich Merz held an hourlong informal meeting soon after arriving at the summit late Sunday to discuss the widening conflict in the Mideast, Starmer’s office said.

And Merz told reporters that Germany was planning to draw up a final communique proposal on the Israel-Iran conflict that will stress that “Iran must under no circumstances be allowed to acquire nuclear weapons-capable material.”

The G7 leaders all signed a joint statement Monday night saying Iran “can never have a nuclear weapon” as they urged a “broader de-escalation of hostilities in the Middle East, including a ceasefire in Gaza.”

Trump, for his part, said Iran “is not winning this war. And they should talk and they should talk immediately before it’s too late.”

But by early Monday evening, as he planned to depart Kananaskis and the Canadian Rocky Mountains, Trump seemed willing to push back against his own supporters who believe the U.S. should embrace a more isolationist approach to world affairs. It was a sign of the heightened military, political and economic stakes in a situation evolving faster than the summit could process.

“AMERICA FIRST means many GREAT things, including the fact that, IRAN CAN NOT HAVE A NUCLEAR WEAPON. MAKE AMERICA GREAT AGAIN!!!” Trump posted on Truth Social, his social media platform.

It’s unclear how much Trump values the perspective of other members of the G7, a group he immediately criticized while meeting with Carney. The U.S. president said it was a mistake to remove Russia from the summit’s membership in 2014 and doing so had destabilized the world. He also suggested he was open to adding China to the G7.

High tension

As the news media was escorted from the summit’s opening session, Carney could be heard as he turned to Trump and referenced how the U.S. leader’s remarks about the Middle East, Russia and China had already drawn attention to the summit.

“Mr. President, I think you’ve answered a lot of questions already,” Carney said.

The German, U.K., Japanese and Italian governments had each signaled a belief that a friendly relationship with Trump this year can help keep public drama at a minimum, after the U.S. president in 2018 opposed a joint communique when the G7 summit was last held in Canada.

Going into the summit, there was no plan for a joint statement this year.

The G7 originated as a 1973 finance ministers’ meeting to address the oil crisis and evolved into a yearly summit meant to foster personal relationships among world leaders and address global problems. It briefly expanded to the G8 with Russia as a member, only for Russia to be expelled in 2014 after annexing Crimea and taking a foothold in Ukraine that preceded its aggressive 2022 invasion of that nation.

Beyond Carney and Starmer, Trump had bilateral meetings or pull-aside conversations with Merz, Japanese Prime Minister Shigeru Ishiba and European Commission President Ursula von der Leyen.

He talked with Macron about “tariffs, the situation in the Near and Middle East, and the situation in Ukraine,” according to Macron spokesperson Jean-Noël Ladois.

On Tuesday, Trump had been scheduled before his departure to meet with Mexican President Claudia Sheinbaum and Ukrainian President Volodymyr Zelenskyy. Zelenskyy said one of the topics for discussion would be a “defense package” that Ukraine is ready to purchase from the U.S. as part of the ongoing war with Russia, a package whose status might now be uncertain.

Tariff talk

The U.S. president has imposed 50% tariffs on steel and aluminum as well as 25% tariffs on autos. Trump is also charging a 10% tax on imports from most countries, though he could raise rates on July 9, after the 90-day negotiating period set by him would expire.

He announced with Starmer that they had signed a trade framework Monday that was previously announced in May. The trade framework included quotas to protect against some tariffs, but the 10% baseline would largely remain as the Trump administration is banking on tariff revenues to help cover the cost of its income tax cuts.

Canada and Mexico face separate tariffs of as much as 25% that Trump put into place under the auspices of stopping fentanyl smuggling, through some products are still protected under the 2020 U.S.-Mexico-Canada Agreement signed during Trump’s first term.

Merz said of trade talks that “there will be no solution at this summit, but we could perhaps come closer to a solution in small steps.”

Carney’s office said after the Canadian premier met with Trump on trade that “the leaders agreed to pursue negotiations toward a deal within the coming 30 days.”

This story was originally featured on Fortune.com

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• The pharma giant will lose its patent protection on semaglutide, which is sold as Ozempic and Wegovy, in Canada after not paying a nominal maintenance fee years before it became a blockbuster drug for fighting diabetes and obesity, Science reported. Novo Nordisk generates billions of dollars in revenue on the drug in Canada, but patent protection is due to end next year.

Years before semaglutide became a blockbuster drug for Novo Nordisk, the Danish pharma giant had a chance to maintain its patent in Canada but didn’t pay a small fee to do so, according to a recent report in Science.

The drug, which is sold as Ozempic and Wegovy, has made so much money for Novo Nordisk after exploding in popularity in the last few years that it has even impacted Denmark’s currency and interest rates.

To keep the semaglutide patent in Canada, the company had to pay an annual fee of just 250 Canadian dollars (~$185 USD). While it paid that amount in 2018, Science reported that it didn’t the following year.

The Canadian government offered Novo Nordisk another chance to keep its patent, this time with an additional charge that brought the total to 450 Canadian dollars ($331 USD).

“In order to prevent the patent from lapsing, the amount listed above, which includes the required maintenance fee and the late payment fee, must be paid within the one year period of grace following the filing date anniversary,” a letter from regulators said, putting the anniversary date at March 20, 2019. “Once a patent has lapsed it cannot be revived.”

Makers of generic drugs have taken notice, with Science pointing to recent comments from the company Sandoz that it has filed to launch a generic GLP-1 in Canada next year and expects approval sometime in the first quarter when exclusivity expires. 

“Interesting market. Novo never filed a patent in Canada. Never know why,” Sandoz CEO Richard Saynor told Endpoints News earlier this month. “I’m sure someone’s lost their job, but never mind. It’s the second-largest semaglutide market in the world.”

In a statement to Fortune, Novo Nordisk said there was no mistake regarding its patent maintenance fee in Canada and declined to comment on other drug manufacturers’ plans.

“All intellectual property decisions are carefully considered at a global level,” the company added. “Periods of exclusivity for pharmaceutical products end as part of their normal lifecycle and generic treatments may become available over time.”

The company confirmed that protection for semaglutide regulatory submissions in Canada will expire in 2026.

Meanwhile, Ozempic patents expire several years later in other big markets like the U.S. (2032), Japan (2031), and Europe (2031), according to the company’s most recent annual report.

Last year, Novo Nordisk generated about $19 billion in global Ozempic sales and about $9 billion in Wegovy sales. In Canada, retail pharmacies there booked Ozempic sales of 2.5 billion Canadian dollars.

This story was originally featured on Fortune.com

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• Carry incentives have arrived in traditional finance as firms look to align executive compensation with growing parts of the business. If the trend continues, however, it could incite more blowback from proxy advisors, who have recently taken a sterner look at executive pay at both BlackRock and Goldman Sachs. 

Investment banks and traditional asset managers are starting to look more like private-equity firms—and the same may soon be said for how most pay their top executives.

In the alternative asset world, fund managers are paid a share of the profits, known as “carried interest,” if they achieve a minimum return. Leaders at Goldman Sachs and BlackRock will now get similar awards as part of their compensation, both firms announced this year, and an expert in industry pay expects these moves to be the start of a burgeoning trend.

It makes sense for Goldman Sachs and BlackRock to be first movers, said Bryan Liou, a managing director at compensation consulting firm Johnson Associates. Goldman has over $500 billion in private assets under its supervision, making it one of the top 10 alternative asset managers in the world, which the investment bank has used to justify a carry incentive program for CEO David Solomon, president John Waldron, and other firm-wide leaders.

BlackRock, meanwhile, has introduced a similar award for CEO Larry Fink. His firm is set to manage more than $600 billion in private assets after a series of major acquisitions last year, including a $3.2 billion takeover of alt market data company Preqin.

Most importantly, Liou said, both firms have signaled to shareholders and competitors alike that they are very serious about their positioning in private markets.

“Any firm that is taking alternatives seriously right now is going to be taking a look at what Goldman’s doing, what BlackRock is doing,” he told Fortune, “and at least asking the question if they should do the same.”

Carry incentive controversies

If the trend does pick up, Liou said, it could incite blowback from the major shareholder advisory firms, which provide guidance for clients to vote on proposals regarding executive pay, corporate governance, and other issues. 

Institutional Shareholder Services, also known as ISS, told investors to vote against approving Larry Fink’s $31 million compensation package from 2024, saying the new carry incentive (which was not distributed last year) added complexity without offsetting any other pay opportunities. Nonetheless, 67% of shareholders backed the pay package in a nonbinding vote last month, still below the 90% mark commonly hit before last year.

Goldman, meanwhile, came under fire from both ISS and the other major proxy advisor, Glass Lewis, for $80 million stock-based retention bonuses for Solomon and Waldron. Support from investors dropped to its lowest level in nearly 10 years.

For Liou, however, bringing carry incentives to traditional finance is a way to ensure executive compensation reflects the company’s emphasis on alternative assets as a key source of future growth. 

“If you look at the size of the awards relative to what these executives [are] getting paid,” he said of BlackRock and Goldman’s carry incentives, “it’s actually a relatively small proportion.” 

Of course, the topic of carried interest has also been controversial politically. Like long-term capital gains, it is typically taxed at a rate of 20%. A tax bracket of 22%, meanwhile, currently applies to any individual taxpayer who makes over $47,151; Steve Schwarzman, the CEO at alternative-asset giant Blackstone, took home nearly $900 million last year.

President Donald Trump has said he wants to end this carry “loophole,” telling Republican lawmakers in February it was a priority, White House Press Secretary Karoline Leavitt said at the time. However, no such measure is featured in the GOP spending bill under consideration in the Senate.

This story was originally featured on Fortune.com

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• Canva co-founder Cliff Obrecht is on the hunt for ‘AI natives’—even those who have dropped out of college. Speaking to Fortune at VivaTech in Paris, Obrecht said the company sees high value in hiring less traditional candidates who natively understand AI tools and workflows. As AI threatens to change the job market rapidly, Obrecht says that curiosity and adaptability are becoming more valuable than ever.

With anxiety mounting over the mass automation of entry-level jobs, job-seekers with AI skills may now have an edge over those with university credentials. Canva co-founder and COO Cliff Obrecht told Fortune the company is actively hiring AI-savvy college students regardless of whether they finish their degrees.

Obrecht said Canva is increasingly looking for “AI natives” when hiring new staffers and is benefiting from university dropouts when it comes to engineering talent.

“We are looking to actually hire second to fourth-year university graduates because they are AI natives,” Obrecht said in an interview at Viva Technology in Paris.

“Hiring a lot of junior people who are native at building agentic workflows and picking up AI first is just a different way of thinking about building products,” he added. “We are actually getting a lot of value from bringing in those university dropouts.”

Obrecht said most organizations are currently trying to up-skill engineers on AI coding tools in the hopes of productivity gains, but he was looking to hire less experienced talent who have a stronger grasp of the current AI tools on offer.

“They’re really good hires, especially when you add them to a nontechnical team and up-skill the rest of the organization. They’re AI natives and become evangelists in the organization and really help drive that mindset shift,” he said.

What is an ‘AI native’?

The discourse around AI-fueled job losses, particularly concerning entry-level work, has been heating up recently and has created somewhat of a divide in the tech industry.

Anthropic CEO Dario Amodei sparked a fierce debate with his recent prediction that AI could wipe out roughly 50% of all entry-level white-collar jobs within the next five years. While some, including Nvidia CEO Jensen Huang, have pushed back on Amodei’s predictions, recent data suggests that some entry-level work may already be under pressure from the rise of automation.

Companies are also increasingly looking to incorporate AI into their workflows in the hope of productivity gains, with some putting in formal requirements for workers to embrace the tech. But getting ahead of the curve when it comes to AI skills is less about using ChatGPT every day and more about being at the forefront of the technology, according to Obrecht.

“An AI native has got a deep understanding of the AI tools in their tool belt,” he said. “And they’re constantly at the forefront of creating agents, chaining multiple complex AI workflows together—maybe from different products and providers—to create unified experiences. They have a goal in mind, and that goal isn’t just delivered through single AIs. It’s connected to a bunch of different things.”

Obrecht sees AI natives as “curiosity-focused” rather than confined to one certain generation.

“You can be a hungry, curious person who sees this brand new technology changing our world, and be someone who’s like ‘I want to learn everything I can about this part of this.’ That curiosity is the key attribute that leads to someone being successful in companies now,” he said.

This story was originally featured on Fortune.com

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• The Federal Reserve is expected to hold interest rates steady. Investors will be keeping a close eye on Fed officials’ latest economic projections—known as the “dot plot.” Any variance between the most bearish and most bullish officials might hold a key for the future of U.S. monetary policy. 

As the Federal Open Market Committee prepares to meet on Tuesday and Wednesday, the financial world largely already knows what to expect: more patience. 

Throughout the year, the Fed has sought to remind investors the economy is still strong. Unemployment hasn’t spiked, and inflation has remained just north of 2%, despite fears to the contrary amid the White House’s aggressive tariffs. Even the stock market has mostly recovered from an extremely tumultuous April. 

But there are some signs of sagging across the economy. Continuing jobless claims are at three-year highs, suggesting it’s harder for unemployed people to find new jobs, and manufacturing surveys have come in below expectations. 

The key question investors and the Fed are trying to answer is whether this slight slackening presages a far worse outlook, even a recession, or whether reports of rising uncertainty merely reflect people’s feelings, not economic reality. 

Despite the relative stability of inflation and the unemployment rate, a wave of uncertainty swept over investors this year, in large part because of the rampant changes to trade policy that upset global markets.  Yet, Fed Chair Jerome Powell has argued the strength of the economic data, not sentiment, meant the central bank didn’t have to rush into making a decision on interest rates. 

Investors expect the Fed will keep interest rates at their current levels of 4.25%-4.5% when policymakers wrap up their meeting Wednesday afternoon. They also see a rate cut later this year as a practical certainty, with a 93% probability of easing by the end of the year, according to CME FedWatch. 

Meanwhile, President Donald Trump (and more recently Vice President J.D. Vance) have complained that Powell is taking too long to lower rates. Trump has also repeatedly questioned the merits of keeping the Federal Reserve independent, believing he should be involved in setting interest rates. Despite Trump’s unprecedented level of commentary about the Fed, Powell has always refused to comment on the White House’s criticisms. 

“The Fed always seems to look for ‘the preponderance of evidence’ and has done so even when it has been accused of being too slow to act,” Melissa Brown, managing director investment decision research at SimCorp, told Fortune. “I think now they particularly want to assert their independence, so until there is something resembling a preponderance—one way or another—it seems to me they are most likely to keep rates where they are.”

The second dot plot of the year

The upcoming FOMC meeting will also include the latest iteration of committee members’ expectations for the federal funds rate. The so-called “dot plot” will help clue in investors to the variety of opinions on the committee, even as they expect the median response to be between one to two cuts in 2025. 

It’s important for investors to get a sense of where the outliers on the dot plot are as well because that will help them understand whether Fed officials are more concerned about high inflation or low growth, according to Mike Reynolds, vice president of investment strategy at Glenmede. 

There are “two completely separate policy playbooks on how to deal with each,” Reynolds said.  

It’s common for Fed officials’ outlooks to be somewhat similar around this time of the year. But that may not be the case currently. “Generally the dots for the year tend to coalesce around a consensus, given uncertainty we wouldn’t expect that [this year],” he told Fortune. “The dots will remain more dispersed than usual.” 

Last quarter’s dot plot showed committee members expected slower growth and higher inflation compared to their December forecasts. This time around, they are contending with slightly more conflicting data, as manufacturing metrics and GDP outlooks fell despite the fact job growth has continued and corporate earnings remain strong, according to Brown. 

The new developments that saw manufacturing investment slow and GDP growth slip in the first quarter still aren’t enough to spur action from the Fed. Given that the Fed will likely stay its hand on rates, investors will take to parsing Powell’s words even more closely. They’ll want to know if and how this new batch of data is affecting Powell’s outlook. 

After several months of rampant instability and rising anxiety about the future of the U.S. economy, investors will be eager to see if the Fed believes all that concern is having an effect. 

“We haven’t seen concrete action that’s followed through on this heightened uncertainty,” Reynolds said.

This story was originally featured on Fortune.com

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• Trump’s former Commerce Secretary, Wilbur Ross, warns that while the U.S. has achieved notable progress in trade negotiations, overconfidence could lead American negotiators to push too hard for concessions foreign governments cannot make. He is particularly concerned that “chesty” tactics with complex partners like the European Union could stall agreements—something Jamie Dimon has warned could ultimately strengthen America’s rivals.

As the world’s largest economy, America can be fairly confident in its negotiating power with trading partners. However, the Trump administration cannot overplay its hand as it may result in allies being pushed into the arms of rivals, according to experts like former Commerce Secretary Wilbur Ross and Jamie Dimon.

This is a scenario which JPMorgan Chase CEO Dimon has sounded the alarm on since Trump made his tariff agenda public. Writing in this year’s letter to shareholders, the “white knight of Wall Street” wrote that America-first is “fine” as long as it doesn’t result in “America alone.”

Meanwhile President Trump’s former Commerce Secretary, Wilbur Ross, is concerned that the administration’s Achilles heel may prove to be its confidence—potentially spurred by quickly signing framework deals with the likes of the U.K. and China.

Ross said that overall he believes President Trump and his team are handling negotiations well and have already achieved some major goals. But he added his one fear is that the government may get too “chesty.”

He told Fortune in an exclusive interview: “The very fact that they’ve made as much progress as they have shows the basic power of the U.S. to get people to come around.”

“In fact my one fear is that if our government feels too chesty with their progress, they may overplay the hand and get to levels that are hard—maybe even impossible—for the other countries to give in. That’s my biggest worry right now because it’s easy to get carried away with early successes.”

As well as a deal with the U.K. being reached and a framework with China, positive signals are also coming out of talks with India and Japan.

“What I think is very important [is] …  even though they’ve taken initiatives with some 70-odd countries, in reality, there are only about four or five that make a lot of difference because they’re the ones that move the needle, and [Trump] seems to be doing pretty well,” Secretary Ross added. 

“With, I would say, the exception of the EU … it’s very difficult for the EU to make trade concessions because it’s not really one entity. You’ve got the 27 member states and each one of those has a different set of objectives, but each one has veto power, so it’s very tough to get a deal with the EU.”

The EU may be one of the “slower” deals, he added, while Japan, China, and Vietnam he expects to be “fairly quick.”

Problem areas

The European Union, which Trump has previously claimed was created with the sole purpose of working against America, is among the regions most likely to pose a problem if the Oval Office is too confident in its approach, said Secretary Ross.

Already, the president has vented his frustrations with a lack of progress when it comes to negotiating with the EU, previously posting an outburst on Truth Social saying the EU would be facing a 50% tariff because of its lack of action. This 50% tariff was then paused for 90 days.

When asked by Fortune which region may lead to a stalemate in talks, Secretary Ross said: “The EU is definitely a possibility, simply because it’s hard for them to take a united front. 

“But someone like a Vietnam, on whom he has imposed huge tariffs … that one frankly surprised me a little bit in that the reason our trade deficit suddenly shot up with Vietnam is there was a lot of factory movement from China to Vietnam.”

Keeping the European Union close in particular is a key concern of Dimon’s, on account of its history and the potential fragmentation of the bloc.

“This is going to be hard, but our country’s goal should be to help make European nations stronger and keep them close. If Europe’s economic weakness leads to fragmentation, the landscape will look a lot like the world before World War II,” he wrote earlier this year. Such fragmentation, over time, would increase European dependency on China and Russia, essentially turning Uncle Sam’s former allies into “vassal states” of its rivals.

This story was originally featured on Fortune.com

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Blackstone CEO and co-founder Steve Schwarzman would have a strong case to be in a circumspect mood as he visits the company’s European headquarters in London.

In addition to celebrating Blackstone’s 25th anniversary of European operations this week, the 78-year-old Schwarzman is on the cusp of tipping Warren Buffett to the mantle of the longest-running, still-serving Fortune 500 CEO, once the Berkshire Hathaway boss steps down at the end of the year.

Scharzman’s response to a question about his thoughts on his legacy, though, was to quickly brush it aside: “I don’t think about legacy,” he told Fortune in London.

“I think about what our opportunities are and what we can build, and that’s the way I’ve always thought.”

It was a fitting, then, that Schwarzman rang in the anniversary by revealing last week that Blackstone intended to invest at least $500 billion in assets across Europe over the next 10 years.

Blackstone’s latest pledge represents a significant ramp-up in the company’s European operations, adding to the current $350 billion worth of assets built over the last 25 years. 

“The fact that Europe hasn’t been as creative in terms of new products and other types of innovations is, frankly, great for us.”

Steve Schwarzman, Blackstone CEO and co-founder

The group has steadily amassed a portfolio of property assets, data centers, leisure facilities, and logistics centers in a bid to capitalize on the country’s lagging infrastructure push this century, with government support weighed down by the global financial crisis and ensuing austerity policies.

“The fact that Europe hasn’t been as creative in terms of new products and other types of innovations is, frankly, great for us,” said Schwarzman.

“It’s a very large economy, and it’s got a lot of friction, and that’s often when you could make very good investments.”

Europe’s opportunity

Blackstone, for the last 25 years in Europe, has made hay while most of the region’s economies struggled with low growth. The U.S.-originating company has been able to use its vast swathes of capital to buy up real estate assets below their value and develop them to make sizeable profits. 

When it first moved in on Europe, Blackstone identified historic, unloved assets that could quickly build value, with a $850 million deal to buy the historic Savoy hotel its first major U.K. investment. 

Blackstone bought the short-break holiday chain Centre Parcs in 2006, before selling it for reportedly double the value in 2015. Alongside the Lego founding family, Blackstone took the Merlin Group, which runs attractions like Madame Tussauds, the London Eye, and Legoland, private in 2019. Blackstone had previously grown the group from an initial value of £100 million to £5 billion when it listed on the London Stock Exchange in 2013. The group has since pivoted to identifying high-growth sectors that outshine Europe’s average underlying GDP growth numbers. Blackstone is emboldened by recent developments on both sides of the Atlantic.

“In the last couple of months, Europe has sent some of the most positive signals we’ve seen in a long time,” says Lionel Assant, Blackstone’s co-chief investment officer and European head of private equity. He cites Germany’s relaxation of its fiscal rules to allow a $1 trillion-plus investment drive to bump up its defense industry and wider infrastructure.

“Right neighborhood, right price, right intervention.”

Lionel Assant, Blackstone’s co-chief investment officer and European head of private equity, on Blackstone’s three cardinal rules for investing

The U.K., which Blackstone’s president and COO, Jon Gray, also praised under the Labour government, got kudos from Assant for its attempts to rebuild ties with the EU after Brexit. 

While Gray expects the U.S. to continue to grow faster than any developed market, he says the uncertainty caused by the Trump administration is playing into the European investment proposition.

Assant says Blackstone’s investments need to abide by three cardinal rules: “Right neighborhood, right price, right intervention.” In Europe, where growth has been lower than the U.S. and Europe, those rules are even more important, according to Assant. 

Assant says the group has identified logistics centers closer to cities, betting that online shopping is only likely to increase and customers will pay to get their goods quicker. Electricity providers and data centers have also become more crucial with the growth of AI: “It takes way more electricity if you use ChatGPT than if you use Google,” Assant uses as an example. 

“Europe has had a tough run, and there has been, I think, a feeling from a lot of investors, like, ‘Oh, I don’t want to invest in Europe.’ And I think it’s nice to say no, Europe matters, the U.K. matters, London matters,” said Gray.

Europe’s quirks

The bane of many in Europe has been the continent’s relatively weak public markets. More than 96% of the region’s $100 million-plus revenue companies are private, according to analysis by Apollo Global Management. By comparison, the group calculates the U.S. share at 87%. Blackstone puts the figure at around 90% for Europe.

Some of Europe’s biggest financial players, including EQT, have called for an overhaul of public markets to improve liquidity and inspire more risk and investment. 

For Blackstone, though, that phenomenon has proved a goldmine. 

“If you don’t have access to these businesses, then you’re missing 90% of the market,” said Assant. “I would say it’s probably not very prudent. It means you’re not very diversified.” The company has taken private several European firms, like Merlin, removing them from the scrutiny of quarterly reports and pressure for immediate returns on investment.

“What matters is a starting point and the end point, and because these two points are five to 10 years apart, we can take the time to make the right decisions and the right investment,” said Assant.

As a private equity and real estate company in Europe, Blackstone has faced inevitable skepticism. 

Leon Neal/Getty Images

Gray describes how the movie Pretty Woman had played a part in perceptions of private equity globally. In that movie, released in 1990, Richard Gere’s character specializes in buying up distressed, long-running businesses and stripping them for parts. 

The Blackstone president says the comparison “frustrates” him: “When we first showed up to buy the Savoy, if you went back, it was a little bit of, ‘Oh my gosh, the American vultures are here.’”

It’s different now, he says, as Blackstone focuses on buying assets that have the potential to improve in value. “The emphasis on cost takeout is really not what it’s about. It’s really about growth.” That the company has consistently grown its European assets in the face of the global financial crash, the sovereign debt crisis, and Brexit is testament to that mantra.

Blackstone is particularly fond of its work on places like the Savoy and Claridge’s. The King of Greece, a frequent patron of the latter before and after Blackstone’s involvement, sent Schwarzman a personal letter of thanks for the company’s restoration of Claridge’s.

Still, Blackstone has felt the firm hand of local regulations on some of its value-building endeavors. Housing has been a sensitive matter. Denmark intervened to regulate how much Blackstone and other large private investors could hike rents after renovations. The group faced similar obstacles in Spain. Blackstone has also faced accusations of contributing to gentrification through its strategy of renovating properties before increasing their price. The company has refuted those claims, arguing it has contributed to increased housing supply in Europe.

“That’s the segment where the bar is highest, in terms of making sure we get things as right as we possibly can,” said James Seppälä, Blackstone’s head of European real estate about his unit’s residential assets. “We need to be acutely conscious of that and we need to do the very best jobs we can in that context,” he said, while admitting the company sometimes makes mistakes.

The group has since focused on putting capital towards increasing the supply of housing, and has built up a portfolio of affordable housing and shared ownership units across the U.K., becoming the largest provider of affordable homes in England for the past four years. Last year, Blackstone sold £405 million ($548 million) worth of U.K. homes it had helped build to the USS pension fund.

Blackstone’s people

As he approaches 40 years at the helm of the company he co-founded, CEO Schwarzman is naturally a fountain of knowledge on recruiting. Blackstone now has around 800 employees across Europe and the Middle East, with more than 650 of them based in London. A new headquarters is under construction in the affluent Berkeley Square in Mayfair.

Courtesy of Blackstone

“It usually starts out with an American landing on the beach, putting together a team,” Schwarzman said of how he has built a Blackstone culture in Europe over this century.

Each Blackstone employee, Schwarzman says, has the same traits.

“First, they’re very nice people. Secondly, they’re quite smart. Third, they’re extremely hardworking. Fourth, they have the will to win. Fifth, they don’t sleep much. And sixth, they’re working in a place that’s a meritocracy, that’s designed for each of their individual successes.” That final point is reflective of an arguably European mindset and was informed by Schwarzman’s time in the cutthroat culture of Lehman Brothers. 

Even as Europe locks in for a new era of growth, Schwarzman is confident it will continue to take advantage of the region’s historic pessimism to unlock value.

“One person’s pessimism is another person’s opportunity,” said Schwarzman. “And so that’s one reason we like Europe. 

“Europeans become somewhat more pessimistic, certainly than Americans. And from time to time, that’s inappropriate.” 

This story was originally featured on Fortune.com

© Courtesy of Blackstone

Being in the C-suite is a high-pressure job with long hours, board responsibilities, and intense scrutiny. But what is it like to be a top executive when you’re off the clock?

Fortune’s series, The Good Life, shows how up-and-coming leaders spend their time and money outside of work.

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Today, we meet Doina Ionescu, general manager of the healthcare division at Merck.

Raised in Romania, the 56-year-old joined the Fortune 500 pharmaceutical giant, Merck, after being personally impacted by the 1986 Chernobyl power station disaster. 

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Merck’s ranking on the Fortune 500

In 1998, her father, along with others in their village, passed away from cancer after experiencing radiation exposure from Chernobyl. 

“On his deathbed, he urged me to move away from nuclear physics, a moment that reshaped my journey,” she recalled to Fortune. “I re-entered academia, working on a PhD in physical chemistry, joining Merck shortly after that.”

Ionescu’s been quietly scaling its ranks since. Promotion after promotion has taken her from a project manager to one of the company’s most senior leaders. Today, she’s a managing director of U.K. and Ireland at the $235 billion’s giant.

Looking back, while Gen Z grads snub their degrees as a waste of time and money, she tells Fortune that her Master’s in Nuclear Physics, PhD in Physical Chemistry, and an Executive MBA to add to the list of qualifications were her best investments yet. 

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The finances

Fortune: What’s been the best investment you’ve ever bought?

My MBA was definitely my best investment; it is something that no matter what happens in your personal or professional life, nobody can take away from you. Long after I finished the course, I am still relying on that experience and learning. It has fundamentally changed me as a person and clearly shaped my approach to leadership and personal development.

And the worst?

I don’t tend to look back and think of things in terms of bad investments. Everything I have ever invested in with a positive mindset has benefited me in one way or another!

What personal finance advice would you give your 20-year-old self?

Never focus on the money; focus on personal development and the contribution you bring to your work, your team and your career. In my experience, if you guide yourself in this way, the finances will follow. When you do get your rewards, though, always save rainy and sunny days.

What’s the one subscription you can’t live without?

It would have to be iCloud—I really need somewhere to store all my memories! Other than that, there are a couple of financial news outlets that I couldn’t possibly comment on here!

Where’s your go-to wristwatch from?

It’s a vintage Omega that belonged to my father-in-law. He passed away many years ago, but he would be very happy to know I am wearing it.

The necessities

How do you get your daily coffee fix?

I make my own coffee, white and without sugar. In the office, we have our coffee machine in the kitchen, but I prefer the one I have at home. I don’t often have breakfast, but when I do, it’s protein-based only.

“Never focus on the money; focus on personal development and the contribution you bring to your work, your team and your career.”

Doina Ionescu, general manager for healthcare, Merck

What about eating on the go?

My favourite place to get lunch is actually my office canteen; we have a wonderful chef who creates interesting and varied dishes each week! Our office canteen is also a fantastic place for me to catch up with different members of the team about everything outside of work, so I enjoy the social aspect. Other than that, I make my own lunch at home, and if I have a business meeting, I go to the Ivy Kensington, which is not far from me.

Where do you buy groceries?

Normally from Waitrose! It is convenient for me and has good choices.

Where do you shop for your work wardrobe?

I usually don’t; I haven’t bought clothes in ages. If I do ever need to get something nice and branded, however, I will go to Bicester Village to hunt a bargain. Over time in my career, I have gone from wearing business suits to dresses to silk shirts, but one thing that has definitely changed is that I have given up wearing heels.

The treats

How do you unwind from the top job?

I recently bought all the books written by the Bronte sisters to reread. They have a wonderful effect on me, taking me back to something of a timeless period. I also like to refresh my French, which can help me switch off and turn my mind away from the daily job. I’m a big fan of Duolingo because of its competitive element! During my last holiday, my daily objective was to be at the top of the Duolingo leaderboard.

What’s the best bonus treat you’ve bought yourself?

I usually put any bonuses away to save for something sensible, but if I had to pick the best purchase I have made previously, it would be a pair of Cartier earrings. They were a one-off treat for me, and I was drawn to the classic, clean look they had.

Take us on holiday with you, what’s next on your vacation list?

I have just been on holiday in France, where I have a flat, but for my next trip, although it’s a way away, it could be Thailand or Vietnam. I haven’t made my mind up! I also go to visit my mother’s countryside home in Romania each year; it’s the one place on earth where I regain my energy and ground myself. Life is very settled there, so I love it.

Fortune wants to hear from leaders on what their “Good Life” looks like. Get in touch: [email protected]

This story was originally featured on Fortune.com

© Courtesy of Merck

• The cofounders of WhatsApp resisted ads in the app for years, including after the company was acquired by Meta for $22 billion in 2014.  Brian Acton and Jan Koum left the company in 2017 and 2018, respectively, and on Monday Meta introduced ads in the “Status” feature as well as sponsored Channels in the the “Updates” tab of WhatsApp.

WhatsApp cofounders Jan Koum and Brian Acton never wanted to include ads in their messaging platform, but new owner Meta moved forward Monday with a plan to do just that.

Facebook and Instagram’s parent company, which bought WhatsApp in 2014, said Monday it would introduce ads in the app’s “Updates” tab, which the company said counts on 1.5 billion users daily. The “Status” feature, which shows disappearing photos or videos, will now include ads much like Instagram “Stories” and advertisers can also now pay to boost their own WhatsApp channels. People and companies that run their own channels will also be able to sell subscriptions to their content, the company said in a blog post.

The new ad features run counter to WhatsApp’s cofounders’ vision. When Koum and Acton first launched the app in 2009 after quitting their jobs at Yahoo! the pair actively resisted adding advertising following previous bad experiences. Instead, they charged users $1 per year for using the service after a free year.

Former CEO Koum reportedly kept a note from Acton on his desk to remind him of the company’s mission, according to Sequoia Capital partner Jim Goetz.

“Jan keeps a note from Brian taped to his desk that reads ‘No Ads! No Games! No Gimmicks!’ It serves as a daily reminder of their commitment to stay focused on building a pure messaging experience,” Goetz wrote in a 2014 blog post. 

When Koum and Acton sold the company to Meta (then Facebook) for $22 billion in 2014, Meta assured them it would keep WhatsApp ad-free and the pair wouldn’t have to compromise their principles, Goetz wrote in the blog post. In their own blog post, the cofounders also promised “absolutely no ads interrupting your communication,” the Washington Post reported in 2018.

Still, WhatsApp’s cofounders reportedly later clashed with Meta’s leadership on the monetization of WhatsApp. Both Acton and Koum left WhatsApp, in 2017 and 2018, respectively, after a long battle over pressure for WhatsApp to share more data with Facebook as well as the push by Meta to include ads in WhatsApp.

In 2019, Acton said in an interview with Forbes that Meta’s plans to include ads in WhatsApp’s Status feature broke a social compact with the app’s users. “Targeted advertising is what makes me unhappy,” he said.

When Acton proposed an alternative to advertising on WhatsApp, which included charging users for messages sent after a cutoff of free messages, Sheryl Sandberg, then the company’s chief operating officer, shot him down because it wouldn’t scale, Acton said.

“I called her out one time,” Acton told Forbes. “I was like, ‘No, you don’t mean that it won’t scale. You mean it won’t make as much money as . . . ,’ and she kind of hemmed and hawed a little. And we moved on. I think I made my point. . . . They are businesspeople, they are good businesspeople. They just represent a set of business practices, principles and ethics, and policies that I don’t necessarily agree with.”

A spokesperson for Meta said in a statement to Fortune that the company has been talking about incorporating ads into WhatsApp for years, and added that the new ad features won’t interrupt users’ chats.

“We think this reflects how people want to use WhatsApp and means if you just you WhatsApp to send personal messages to friends and family, nothing changes,” the spokesperson said.

This story was originally featured on Fortune.com

© Patrick T. Fallon—Bloomberg via Getty Images

This year’s Southeast Asia 500, Fortune’s second annual ranking of the area’s largest companies by revenue, is a snapshot of a region ready to take advantage of global supply chain shifts and booming industries like mining, EVs, and AI—even as U.S. tariff policy threatens to roll back some of last year’s gains.

Companies on this year’s 500 list generated $1.82 trillion in revenue last year, up 1.7% from the year before. That lags the 4.1% GDP growth reported across the seven economies covered in this ranking: Cambodia, Malaysia, the Philippines, Indonesia, Thailand, Singapore, and Vietnam.

Indonesia, the region’s largest country and economy, has the largest presence on the Southeast Asia 500, with 109 companies; Thailand comes in second with 100. Measure by revenue, however, and the tiny city-state of Singapore takes the lead. Singapore-based companies generated $637.1 billion in revenue last year, just over a third of the region’s total.

The top five companies on this year’s list were big enough in revenue terms to make last year’s Fortune Global 500. They each trade in commodities, whether metals (Trafigura), oil (PTT and Pertamina), or agricultural products (Wilmar and Olam).

No. 6 in revenue this year is Perusahaan Listrik Negara (PLN), Indonesia’s state-owned power company. Its ranking underscores another quality of this list: Energy—whether resource extraction, power generation, or electrical transmission—is the dominant sector on the Southeast Asia 500, generating almost a third of its total revenue. Thai energy company Bangchak breaks into this year’s top 20 with a 47% jump in revenue.

The three most profitable companies on the Southeast Asia 500 are Singapore’s “Big Three” banks: DBS, OCBC, and UOB. DBS, the youngest of the three, takes the lead with $8.5 billion in profits.

Despite predictions of a booming digital economy, tech has a small footprint on the Southeast Asia 500. Just one tech company, the e-commerce and gaming firm Sea, sits in the top 20. The next internet company, ride-hailing platform Grab, ranks much further down the list at No. 128—although it did climb more than 20 spots in 2024.

But Southeast Asia can’t escape the latest tech trends. The biggest revenue jump on the list belongs to Malaysian contract manufacturer NationGate Holdings, No. 243, whose sales jumped by a whopping 723% over the past year, surpassing $1 billion. NationGate’s story is an AI story: As Malaysia and the region try to ride the technology with data centers and new AI startups, companies like NationGate—Nvidia’s sole contract manufacturer in the region, assembling AI servers—stand to benefit.

This story was originally featured on Fortune.com

The Southeast Asian super apps GoTo and Grab have a lot in common. Both started in the early 2010s to fill a hole in the on-demand, private-hire transport and delivery service sector before moving toward the idea of a super app (much like what is seen in China), later adjusting their strategies to streamline offerings.

Now, after a decade or so, Grab (No. 128 on the Fortune Southeast Asia 500) has arguably risen to the top. The firm’s on-demand services are available in eight of Southeast Asia’s 11 countries, while GoTo’s on-demand arm, Gojek, is lagging in the sector’s market share and has exited all Southeast Asia markets for on-demand services save for Singapore and its home market, Indonesia. But GoTo (No. 266) remains formidable in Indonesia, the region’s largest market—so much so that the rumor mill is spinning with talk of Grab seeking to buy some, or nearly all, of its chief competitor.

Grab has denied reports of acquisition talks. And even if GoTo were to agree to sell its on-demand services to Grab, the deal would likely need to be cleared by regulators in Singapore and Indonesia. Still, the very fact that the topic has drawn so much attention signals a recognition that GoTo has lost the on-demand sector battle. Instead, the company is making a big bet on fintech to drive future growth.

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With “G” names, green branding, and ride-hailing roots, Grab and GoTo have long been locked in rivalry. Grab’s ascendance to a position in which it can snap up slices of GoTo’s business can be traced back to how the two companies diverged from their early days, eventually leading to Grab’s regional expansion and GoTo’s regional retreat to focus almost entirely on its home market.

Grab, established in 2012 as MyTeksi in Malaysia, moved quickly to expand into other Southeast Asian countries: It entered the Philippines, Singapore, and Thailand in 2013, and Vietnam and Indonesia a year later. GoTo, founded in 2010 as Gojek in Indonesia, didn’t expand into Vietnam until 2018, entering Singapore and Thailand the following year.

But it made commercial sense for Gojek to entrench itself in its home turf first, says Daniel Seah, an assistant professor of law at Singapore Management University, whose research areas focus on technology. “The size of the Indonesia market is the bee’s knees within Southeast Asia,” he adds. “Over 50% of the population is under 30 years old, and it has one of the highest mobile and internet penetrations within the region.”

Edgar Su—Reuters

Whereas Grab focused on “horizontal expansion,” involving strategic acquisitions and fintech infrastructure, Seah explains, GoTo focused on “vertical depth” in Indonesia’s market. Fortune Asia’s executive editor Clay Chandler chronicled the battle between the rivals in 2019, with a similar finding: Grab preferred partnerships and joint ventures that allowed it to reach more markets faster, while Gojek opted for partnerships through acquisition that enabled tighter control of its home market.

Gojek’s then CEO, Nadiem Makarim, believed the super-app model would win in the long run. He quickly expanded its suite of offerings, creating several other services like GoMassage, GoClean, and GoGlam. Although Grab also created its own set of services, it more quickly pivoted away from them, saving costs at an earlier stage.

“The size of the Indonesia market is the bee’s knees within Southeast Asia. Over 50% of the population is under 30 years old.”

Daniel Seah, Assistant Professor of Law, Singapore Management University

In 2018, Grab acquired Uber’s Southeast Asia operations, which “strengthened its regional dominance,” Seah says. “This strategy consolidated its market share, early user acquisition, and cross-border brand entrenchment across Southeast Asia.”

Etta Rusdiana Putra, an analyst at Maybank Sekuritas Indonesia, says that working with the likes of Uber allowed Grab to gain expertise at a faster pace and learn from the previous failings of its partners. He also pointed to under-the-hood investments: “One of the key aspects is about the platform itself, meaning it’s the cost of maps and cost per order.”

Grab built its own hyperlocal mapping system, and has been using it since late 2022. It has said on earnings calls the improved efficiency and accuracy have resulted in cost savings.

Meanwhile, Gojek was steadfast in building out in Indonesia. It evolved into GoTo in May 2021, merging with Tokopedia, Indonesia’s leading e-commerce company, to form Indonesia’s biggest tech startup.

The rationale was perhaps obvious: Collaboration would allow both Gojek and Tokopedia to tap into their user base for GoTo’s own financial services, a business where margins are higher. But while teaming up with an e-commerce venture seemed good in theory, external factors posed significant challenges.

TikTok entered the e-commerce business in Indonesia in April 2021, changing the landscape. Owned by China’s ByteDance, it’s a behemoth compared with GoTo in terms of financial resources, pumping in money to drive consumer habits toward social commerce. Indonesia quickly became an important market for TikTok Shop, whose success prompted the Indonesian government to ban its operations in late 2023 when Jakarta accused TikTok Shop of predatory tactics.

Fintech focus: GoTo is prioritizing the development of its financial arm

$344.8 million

The value of GoTo’s consumer loan book for Q1 of 2025

108%

The increase in GoTo’s consumer loan book from the same period last year

Source: GoTo earnings call

David vs. Goliath competition aside, there’s also the question of whether moving earlier into Singapore, a high-income country with a small population, instead of focusing heavily on Indonesia, the region’s largest economy but whose GDP per capita pales in comparison with Singapore’s, would have helped GoTo.

Last October, Kevin Aluwi, one of Gojek’s cofounders and now a venture partner at Lightspeed, argued that Singapore is Southeast Asia’s most important market. He claimed that while the city-state had 1% of Southeast Asia’s population, it contributed 23% of Grab’s revenue in 2023. The country had the highest concentration of what he called “power users,” consumers with enough income to spend on comfort and experiences. Aluwi pointed to data compiled by the World Bank: The monthly per capita income of Singapore residents was $5,957 in 2023 compared with $388 in Indonesia.

So while Indonesia, with its large population and annual average GDP growth of 4.2% from 2015 to 2024 represents an attractive market, Singapore was arguably an easier market for a startup focused on providing services requiring frequent consumer spending. While Aluwi was still optimistic about Southeast Asia’s growth potential, he noted it’s a diverse region made up of individual economies at varying stages of development.

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The pandemic ended the mid-to late-2010s easy venture fund money for tech startups as investors looked for more immediate returns on investments and exit strategies. GoTo consequently wound down its suite of non-finance and non-mobility-related services over a three-year period, allowing it to save on incentives.

Its shareholders also appointed Patrick Walujo, one of Gojek’s early backers, as CEO in 2023. His focus: turning GoTo’s finances around. In its two most recent quarters, the company’s on-demand services turned positive on an adjusted earnings before interest, taxes, depreciation, and amortization (Ebitda) basis.

Indonesia’s TikTok Shop ban also presented an opportunity. In early 2024, TikTok resumed its e-commerce operations in the country after buying a 75.01% stake in Tokopedia worth $1.5 billion. Analysts Fortune spoke to said the deal enabled Walujo to monetize an expense-heavy platform, allowing GoTo to receive an e-commerce service fee every quarter.

Niko Margaronis, a former research analyst at BRI Danareksa Sekuritas, says Walujo also made the company more “focused” after going through different leaders who emphasized growth and valuations. “Under Patrick, it’s a very clear distinction of transiting from growth toward a cycle of profitability. GoTo has improved significantly and is more focused toward efficient operations,” he says.

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A big part of that focus is a pivot to fintech, GoTo’s long-term play regardless of whether it retains its on-demand services business or gets bought out by Grab or another company. On an October 2024 earnings call, GoTo started reporting its financial services results ahead of its on-demand services business, signposting where the company’s attention is directed.

GoTo’s consumer loan book grew to 5.72 trillion rupiah ($344.83 million) for the three months ended March 2025, a 108% increase from the same period the year before. Its financial services are also positive on an adjusted Ebitda basis.

While GoTo’s on-demand services and financial services segments are adjusted Ebitda positive, analysts see a longer runway for GoTo’s fintech arm, even if it’s starting from a lower base. “Financial inclusion in Indonesia is relatively low,” notes Margaronis.

A 2023 ISEAS–Yusof Ishak Institute report estimates that about 80% of Indonesia’s population is either unbanked or underbanked—exactly the kind of market where a smartphone-friendly fintech provider can thrive.

To put things in perspective, Bank Mandiri, ranked No. 23 on the Fortune Southeast Asia 500, has about 41.7 million accounts for 35 million customers as of March 2025. Bank Central Asia, ranked No. 36, also has about 41 million accounts. These large Indonesian financial institutions have also entered the digital finance space, but GoTo’s advantage is that it’s a tech-first company not bogged down by legacy banking services and systems.

GoTo created a stand-alone GoPay app in July 2023, months after Walujo joined. It uses less mobile data, making it easier to access for those in developing cities outside Jakarta using less powerful smartphones.

Many businesses in Indonesia also accept e-wallet payments, and GoTo’s payment platform is accepted in many parts of the country. The hope, then, is for GoTo to convert those using its e-wallet into banking customers, whether they are drivers; micro, small, or medium e-commerce enterprises; or just people buying stuff online or booking rides.

GoTo holds a 22% stake in Bank Jago, which allows users to access banking services, such as savings accounts. Regular digital banking activities would then allow GoTo to accumulate data that could augment its existing consumer loan business and possibly enable it to provide other services like investment and insurance products. Loans can be a revenue driver, as fintechs sometimes charge higher interest rates to cover the increased risks of lending to people traditional banks often don’t extend loans to.

The fintech focus also comes at a time when GoTo is setting its sights solely on the Indonesian market; GoPay is a for-Indonesia play.

Yet the fintech bet comes with challenges. Any potential deal involving Gojek is still uncertain; Walujo told the Financial Times in March he was open to anything that enhances shareholder return in the long term.

It’s also unclear if any deal will affect operations with TikTok through Tokopedia. GoPay is currently available as a payment option on TikTok Shop, which gives GoTo user data to build credit profiles. Losing access to that, coupled with the loss of access to Gojek data, could make customer acquisition more expensive. And the middle-income squeeze in Indonesia amid rising costs and a stagnant job market means people might not even have enough cash to save.

So while financial services may be the calculated long-term bet, the question remains if the Indonesian market is ready for such a service from a tech startup. And if it isn’t, that could make GoTo even more vulnerable to a takeover.

On May 7, a Reuters report quoting anonymous sources said GoTo would sell off its entire international unit and operations in Indonesia except for its fast-growing finance arm. When Fortune reached out for comment, Grab declined to discuss any deal-related reports, and GoTo pointed to a May 8 filing on the Indonesia stock exchange. In it, the company’s secretary, R.A. Koesoemohadiani, said GoTo receives offers from various parties from time to time, but had not decided on offers that may have been known or received by the company at the date of disclosure. In June, Grab went further, denying that it had been involved in acquisition talks related to GoTo.

As GoTo deal speculations continue to swirl, one thing is certain: The Indonesian startup is preparing itself for a slimmed-down fintech future, a sector where the reward may be substantially higher than in the ride-hailing space.

This articles appears in the June/July 2025: Asia issue of Fortune with the headline “A second life for a super app.”

This story was originally featured on Fortune.com

© Dimas Ardian—Bloomberg/Getty Images

I woke up from surgery groggy, with three minuscule incisions in my abdomen and huge peace of mind. I’d just had my fallopian tubes laparoscopically removed, as it’s the best—and possibly only—defense against ovarian cancer, which, though rare, is the most lethal gynecological cancer there is.

There is no detection method for ovarian cancer (a common misunderstanding is that it’s the pap smear, but that’s for cervical cancer). That’s largely because of something discovered relatively recently: About 80% of the time, cancer of the ovaries forms in the fallopian tubes, which are not easily reached or biopsied. So the cancer is not found until it spreads beyond the tubes, by which point it has typically reached a later stage and is harder to treat, with cure rates as low as 15%. 

The cancer and its pre-cancer lesions are also not detectable through blood tests. 

I myself had no idea about any of this until 2023, when I wrote about the Ovarian Cancer Research Alliance (OCRA) making sweeping recommendations: that all women get genetically tested to know their risk of the disease, and that all women, regardless of their risk factor, consider having what’s called an opportunistic salpingectomy—the prophylactic removal of fallopian tubes if and when they are already having another abdominal surgery.

The strategy—endorsed by the American College of Obstetrics & Gynecology since 2015—was believed to cut down the risk of ovarian cancer by up to 60%. It was adopted as a wide recommendation after a sobering U.K.-based clinical trial followed 200,000 women for more than 20 years and found that screening and symptom awareness do not save lives.

As a breast cancer survivor, the idea of ovarian cancer possibly hanging out in my fallopian tubes was haunting. So when I had the opportunity to get them removed during a recent minor abdominal surgery, I seized it. 

Recovery from the anesthesia—along with incision-site soreness and uncomfortable bloating from the gas the surgeon pumped into my belly so she could see her way around—slowed me down for about a week, while waiting for the internal healing kept me out of the gym for a month. But now I feel incredibly relieved about my decision. 

That’s especially true in light of major new findings out of Vancouver, British Columbia, which started a public campaign about prophylactic salpingectomy in 2010 and has been following about 80,000 people—half who opted for the procedure and half who did not—ever since. The results, announced in March 2024 at a meeting of the American Association for Cancer Research and again at a recent annual meeting of the Society of Gynecologic Oncology, were major: that salpingectomy cuts down one’s risk of ovarian cancer by a staggering 80%.  

“There’s very little in medicine that gets you an 80% risk reduction,” says study lead Gillian Hanley, associate professor of obstetrics and gynecology at the University of British Columbia. “It’s remarkable.”

So why don’t more women know about it?

The effort to raise awareness of opportunistic salpingectomy 

Dr. Rebecca Stone, a gynecologic oncologist at Johns Hopkins Medicine, is a leader in the effort to get the word out about preventing ovarian cancer—diagnosed in about 20,000 Americans a year and killing over 12,000. Seeing so many patients die was something that kept the surgeon awake at night. 

She began to truly make opportunistic salpingectomy her mission starting in 2023, when the dismal U.K. trial results prompted organizations like OCRA to make headlines with the new recommendations.

“When all that came out, I was like, ‘Oh, great. Thank God.’ But I was also like, ‘We’re not ready yet,’” Stone tells Fortune.  

That’s because there was no infrastructure around making salpingectomy the norm—no educational materials for women to leaf through while waiting at the gynecologist’s office, no awareness among non-gynecological (and even some gynecological) surgeons about offering the procedure, and not even any billing codes that would make insurance coverage for the procedure possible.

Around the same time, Stone was asked to join a meeting of the scientific advisory board for Break Through Cancer, a collaborative effort among top researchers and physicians to prevent and cure the deadliest cancers. Someone asked her if she knew how to cure ovarian cancer. 

“I was like, ‘Believe me, I’ve been trying. Sometimes we get lucky, but most of the time I bury my patients,’” she says. “And then I said, ‘But we do know how to prevent it.’” At that, she recalls, “People’s hair blew back.” Not even the top cancer minds on the call had heard about the effectiveness of salpingectomy.

That call led to the creation of a new Break Through Cancer initiative, Intercepting Ovarian Cancer, which aims to both improve detection of fallopian tube pre-cancers and to expand salpingectomy as a prevention tool within the general population. Stone has already succeeded in working with the Centers for Disease Control and Prevention to create specific billing codes for the procedure, and is now gearing up to launch the Outsmart Ovarian Cancer Campaign with Memorial Sloan Kettering gynecologic surgeon Dr. Kara Long.

Courtesy of Break Through Cancer

“Remember when smoking cessation was a cancer prevention strategy that people got behind? The billboards and advertisements? That is, I think, what we need here,” says cancer biologist Tyler Jacks, Break Through Cancer’s president. 

“This is a systemic problem that will take true cultural change within the medical community and beyond to solve,” adds OCRA president and CEO Audra Moran about the slow adoption of salpingectomy. “We know it’s not being adopted as widely as it could be.”

Indeed, there are still barriers to the effort—including how to present the issue with sensitivity in some communities of color, which carry the historic U.S. burden of coercive sterilization; convincing some surgeons that there is enough evidence behind it, as all of it up until the Vancouver findings has been based on historic data; and also the idea of surgical prevention itself, which can be off-putting. 

But there is another surgical prevention embraced as the norm, Stone is quick to point out. “It’s called a colonoscopy,” she says, “And the risks of the colonoscopy are much higher,” including the possibility of bowel perforation. “And then, guess what? You have to do it all again in five or 10 years.” Salpingectomy, she argues, is a one-and-done, and is “much more cost-saving” in the long run.  

Plus, notes Hanley, “of course, we are not suggesting that every person with fallopian tubes needs to go and have them surgically removed. That will never be the recommendation. It is a surgical intervention, and surgery is not without risk.” But she does see the approach as “exciting,” as, “for so many years, we have not had a lot of cancer prevention that was not lifestyle-focused—revolving around diet, exercise, environmental exposure to carcinogens, and things that are really challenging to change.”

Is salpingectomy right for you?

Anyone finished having children or not planning on having children who is already going to have another abdominal surgery—appendectomy, gallbladder removal, hysterectomy, for example—is a candidate for opportunistic salpingectomy.

“What we’re really saying is that if you are already having some kind of a surgery, because of some other benign disease that you’re treating, and the surgeon is there already, we have really compelling evidence that adding this to another procedure does not change your risks at all compared to what you would already risk with surgery,” Hanley says.

If you’re not having another surgery and really want your fallopian tubes removed anyway, you could opt to do it as a route to sterilization (instead of tubal ligation), which it technically is.

Women at high risk—such as the less than 1% who have a genetic mutation such as BRCA1 or BRCA2, which raises the risk of ovarian cancer from 1% to 5%—“should be recommended a stand-alone salpingectomy for risk reduction,” says Stone. They might also consider an oophorectomy—removal of the ovaries—depending on their age, she adds.

While the long-term risks of salpingectomy, if any, are not known, there are no short-term risks, as fallopian tubes don’t serve any known purpose beyond reproduction—as opposed to the ovaries, which still produce important hormones likely well beyond menopause, she says.

I opted to keep my ovaries. But these decisions are, of course, highly personal. I never thought I’d be someone to get elective surgery in the first place, but the statistics convinced me. 

As for Stone, she says she has spent too many hours in the operating room trying to save patients “with this horrible disease” to give up on awareness.  

“I am going to spend every minute of my remaining life to get this information out there,” she says, “and to reach as many people as humanly possible.”

More on women and cancer:

• 3 in 4 women are skipping a routine appointment and putting themselves at higher risk for cancer
• With ovarian cancer, there’s no such thing as early detection. Here’s what to learn from tennis great Chris Evert’s battle with the disease
• Women will now be notified about breast density after mammograms. Here’s what should happen next

This story was originally featured on Fortune.com

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The country’s biggest bank has applied for a trademark related to digital currency with the United States Patent and Trademark Office (USPTO). The move has led some to speculate the application for “JPMD” reflects the bank’s growing interest in stablecoins—a type of cryptocurrency that is designed to maintain a value in line with the U.S. dollar. 

The application was filed by JPMorganChase on June 15, according to the USPTO’s website. The application listed “JPMD” as a good or service that would provide “trading, exchange, transfer and payment services for digital assets,” among other categories related to cryptocurrencies and blockchain technology. 

While the bank has not confirmed its intent to launch a new cryptocurrency, some X users believe that “JPMD” is a reference to an upcoming stablecoin offering. “Stablecoin by JPMorgan is incoming,” one user wrote in a post on X. “$JPMD is the ticker.”

Another X user wrote, “ The world’s biggest bank embracing stablecoin is your sign to stay ultra bullish.”

The social media posts did not offer any additional evidence about the bank’s plans, and JPMorganChase did not immediately respond to a request for comment from Fortune. 

The speculation comes amid renewed interest in stablecoins as President Donald Trump embraces the industry. A number of companies have been exploring ways to implement stablecoins, which are often used to settle cross-border transactions and to protect fiat-currencies from inflation, into their payment infrastructure. 

In March, asset manager Fidelity announced that it was “actively testing” a stablecoin but had no plans to launch the product at this time. 

Last month, the Wall Street Journal reported that JPMorganChase was involved in conversations with Bank of America, Citigroup, Wells Fargo and other commercial banks about potentially issuing a joint stablecoin, citing people familiar with the matter. 

Companies outside of the world of finance are considering stablecoins, too. In May, Fortune reported that Mark Zuckerberg’s Meta was in talks with crypto firms to integrate stablecoins to manage payouts. Earlier this month, Fortune reported that in addition to Meta, Apple, X, AirBnB and Google were all exploring the use of stablecoins. 

Whether “JPMD” is a stablecoin or some other type of cryptocurrency, it is not the bank’s first foray into the digital assets space. JPMorgan launched JPM Coin, a cryptocurrency used for the bank’s wholesale payments business, in 2019. The company announced in 2023 that JPM Coin was handling $1 billion of transactions daily. 

Until recently, JPMorganChase CEO Jamie Dimon has been a staunch critic of the crypto industry. In 2021, Dimon called Bitcoin, the most popular cryptocurrency, “worthless.” In 2023, he told Congress that the only true use case for crypto is for “criminals, drug traffickers…money laundering, tax avoidance.”

However, as the regulatory environment in the U.S. warms to the idea of digital assets, Dimon has changed his tune. Last month, Dimon announced that JPMorganChase would allow clients to buy Bitcoin but would not custody it.

This story was originally featured on Fortune.com

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WASHINGTON — Rep. Tim Moore (R-N.C.) appears to have missed a required disclosure deadline under a federal transparency law, failing to properly disclose hundreds of thousands of dollars worth of personal stock purchases he made immediately before or after President Donald Trump’s April 2 “Liberation Day” tariff declaration, according to congressional financial records reviewed by Fortune.

Moore also appears to have profited from his flurry of purchases after he quickly sold his stock shares off as financial markets swung wildly during April.

Moore did not publicly disclose a dozen stock trades—involving American Airlines Group Inc., Ford Motor Company and Harley-Davidson Inc.—that he made throughout early- and mid-April until Friday, which is well after a federal deadline for doing so. The federal Stop Trading on Congressional Knowledge (STOCK) Act, a law designed to defend against conflicts of interest and insider trading, requires federal lawmakers to disclose any personal stock trade within 45 days of the trade’s execution.

Moore’s congressional office acknowledged a phone call and email from Fortune seeking comment but did not immediately respond to questions.

Moore—a freshman lawmaker who serves as vice chairman of the U.S. House’s Financial Services Subcommittee on Oversight and Investigations—disclosed making six separate purchases of American Airlines Group stock from April 1 through April 22, together worth between $90,000 and $300,000, congressional financial records indicate. (Lawmakers are only legally required to disclose the values of their personal stock trades in broad ranges.)

Then, on May 2, Moore sold American Airlines shares worth between $250,000 and $500,000 while indicating in a congressional financial document that he earned an undisclosed amount of capital gains from the transaction. American Airlines Group stock price trended upward during the time Moore bought and sold his shares.

Similarly, Moore disclosed making four purchases of Ford Motor Company stock from April 7 to April 10 together worth between $95,000 and $250,000. 

He then sold shares of Ford stock valued at between $100,000 and $250,000 on April 15, again indicating in a federal document that he earned an unspecified amount of capital gains. Ford shares increased in value in the days between Moore’s purchases and sale. 

On April 4, Moore purchased between $15,000 and $50,000 in Harley-Davidson stock. He bought more shares, also valued between $15,000 and $50,000, on May 1. 

On May 14, he disclosed selling between $50,000 and $100,000 in Harley-Davidson stock, again noting he earned capital gains from the sale.

In his capacity as vice chairman of the Financial Services Subcommittee on Oversight and Investigation, Moore’s congressional office said he would “help lead critical efforts to ensure transparency and accountability in financial regulations and federal spending.”

Although Moore, like all members of Congress, may legally buy and sell stock, “the timing of Congressman Moore’s stock trades certainly looks and smells bad,” said Aaron Scherb, senior director of legislative affairs for Common Cause, a nonprofit government watchdog group.

During his run for Congress last year, the Raleigh News & Observer reported that a personal financial disclosure filed by Moore—an attorney by trade—failed to disclose full information about legal clients or provide mandatory reasons for withholding the information.

As for Moore’s seemingly tardy stock-trade disclosures from April, first-time offenders are subject to a $200 late-filing fine administered by the House Committee on Ethics. The committee generally waives this fine for any trades that are less than a month past the federal deadline.

Repeat or willful STOCK Act disclosure offenders can face steeper penalties or even a criminal investigation, although such actions are rare.

“Even though Congressman Moore appears to have missed the deadline for reporting these stock trades, the penalties are just a slap on the wrist, which leads to many members just ignoring the law,” Scherb said.

Indeed, dozens of members of Congress have violated the STOCK Act’s disclosure provisions this decade, according to various media reports.

Meanwhile, Moore is not alone in making notable numbers of stock trades in the days before or after Trump’s April 2 tariff declaration: Reps. Byron Donalds (R-Fla.) Marjorie Taylor Greene (R-Ga.), Julie Johnson (D-Texas), Jared Moskowitz (D-Fla.), Dan Newhouse (R-Wash.) and Jefferson Shreve (R-Ind.) are among others.

These trades come at a moment when a bipartisan group of lawmakers—from Reps. Alexandria Ocasio-Cortez (D-N.Y.) and Rashida Tlaib (D-Mich.) on the far left to Sen. Josh Hawley (D-Mo.) and Rep. Chip Roy (R-Texas) on the far right—have sponsored several similar bills that each aim to ban or otherwise limit members of Congress from buying or selling individual stocks. 

They argue the current STOCK Act has proven inadequate and must be strengthened in order to strengthen the public’s trust in Congress.

Both Republican and Democratic Party leaders—including President Donald Trump, House Speaker Mike Johnson (R-La.) and House Minority Leader Hakeem Jeffries (D-N.Y.)—have each signaled support, in principle, for a congressional stock-trade ban. 

Beyond that, at least three members of Congress—Rep. Greg Landsman (D-Ohio), Dave Min (D-Calif.) and George Whitesides (D-Calif.)—have already voluntarily sworn off stock trading this year in order to avoid conflicts of interest, be them actual or perceived.

Trump, as president, is exempt from most of the STOCK Act’s requirements, although members of his Cabinet and broader administration, including Small Business Administrator Kelly Loeffler, are facing scrutiny for their personal stock trades made while in office, Fortune reported last week.

This story was originally featured on Fortune.com

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(Bloomberg) — Meta Platforms Inc. keeps writing bigger checks in pursuit of its artificial intelligence strategy, and traders keep cheering it on, encouraged that the expensive bets will keep paying off.

The stock is back near record territory after soaring about 45% from its April low. Last week, Meta finalized a $14.3 billion investment in Scale AI, whose leader is joining a team being assembled by Chief Executive Officer Mark Zuckerberg to pursue artificial general intelligence. That came just after Meta raised its capital spending forecast for 2025 to as much as $72 billion.  

“The amount of spending might give some pause, but we’re confident Meta can use AI to drive revenue and accelerate growth,” said Jake Seltz, who manages the Allspring LT Large Growth ETF. “This shows Meta is committed to making the investments it needs to maintain its leadership, and while the stock has had a nice run, we’re still bullish on the long-term opportunity.” 

Shares rose 2.6% on Monday. Earlier, the company said it would begin showing ads inside of its WhatsApp messaging service.

Meta’s rally has coincided with a resurgence in trader appetites for AI-related stocks, after the earnings season alleviated fears that Big Tech companies might rein in spending on expensive computing gear. The rebound marks a shift from earlier in the year, when stocks such as Nvidia Corp. tumbled on concerns about AI models developed on the cheap in China.

An exchange traded fund that tracks AI stocks including Amazon.com Inc. is up 32% from a low on April 8, the day before US President Donald Trump paused tariffs on trading partners, sparking a broad relief rally in stocks. Over that period, the Global X Artificial Intelligence & Technology ETF has outperformed the S&P 500 and the tech-heavy Nasdaq 100, which have gained about 20% and 27%, respectively, as of their last close.

Allen Bond, portfolio manager at Jensen Investment Management, bought Meta shares for the first time in recent weeks, in part because of the company’s aggressive spending on AI. He also cited improved operational efficiencies and the shift away from the so-called metaverse, which prompted the company to change its name from Facebook in 2021.

“Using AI to optimize the data it has on users for revenue is a clear application, one that allows Meta to play offense while Alphabet is playing defense,” Bond said, referring to concerns that the Google parent could lose market share in the lucrative search business to AI services like ChatGPT. “While AI is expensive, there is good evidence that it is really paying off so far.” 

Meta’s return on invested capital hit a record high of 31% in the first quarter, more than double the levels from 2023 when the company’s metaverse ambitions were driving higher spending.

Meta uses AI to improve ad targeting and increase engagement across its apps, which also include Instagram and WhatsApp. The Wall Street Journal recently reported that Meta is looking to fully automate ad creation, using AI technologies. 

Dan Salmon, an analyst at New Street Research, estimated that generative AI creative tools could boost Meta’s annual ad revenue growth by 1% to 2% over the next several years, and as much as 4% by the end of the decade.

Still, long-term tailwinds from AI are widely expected, raising the question of how much further the stock can rally in the near term. Shares trade at 25 times estimated earnings, cheaper than other megacaps, but still above its own average over the past decade of about 22 times.

While Wall Street is broadly optimistic — nearly 90% of the analysts tracked by Bloomberg recommend buying — Meta shares are just shy of the average price target, suggesting limited expectations for additional gains.

“It is still in the buy range, since you’re getting pretty strong growth for a pretty reasonable price,” said Greg Halter, director of research at the Carnegie Investment Counsel. “Still, rallies like this don’t continue forever, and it certainly isn’t the screaming buy it was not too long ago.”

This story was originally featured on Fortune.com

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Standard Chartered Plc said it would maintain a flexible attitude toward its employees’ working arrangements, bucking a trend among some of its Wall Street rivals that are ordering workers to return to office five days a week.

After a recent assessment, the London-listed lender concluded that keeping the “current approach, with strong guardrails, remains right for us,” Chief Executive Officer Bill Winters said in an internal memo seen by Bloomberg News.

“There are many reasons to join and stay at Standard Chartered,” Winters wrote to the bank’s 81,000-strong workforce. “This element of our increasingly differentiated employee value proposition is undoubtedly one of them.”

The current hybrid work policy at the lender has remained largely unchanged since the pandemic led businesses around the world to embrace work from home. However, in recent years — after the end of the global health crisis — competitors including JPMorgan Chase & Co. have told their employees to return to the office five days a week. HSBC Holdings Plc recently told its UK retail banking staff to expect smaller bonuses if they failed to show up in office frequently enough.

Calling such mandates as “prescriptive policies,” Winters however added that while technology has enabled collaboration effectively from anywhere, it still cannot fully replace the unique benefits of face-to-face interactions.

Winters cautioned that for the current hybrid policy to be maintained would require “real commitment” from the company’s staff and that workers who failed to come to the office for extended periods of time could face action from their managers.

“The underlying principle is clear; flexible working and in-person collaboration are complementary, not mutually exclusive,” Winters wrote.

The memo was first reported by Financial News.

This story was originally featured on Fortune.com

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India’s deadliest plane crash in more than decade is set to send shock waves through the aviation insurance industry and trigger one of the country’s costliest claims, estimated at around $475 million.

“This aviation insurance claim could be one of the biggest in India’s history,” said Ramaswamy Narayanan, chairman and managing director at General Insurance Corporation of India, one of the firms that has provided coverage for Air India.

The claim for the aircraft hull and engine is estimated at around $125 million, according to Narayanan. He estimates additional liability claims for loss of life for passengers and others will be around $350 million. The sum is more than triple the annual premium for the aviation industry in India in 2023, according to GlobalData.

The financial repercussions of the crash that killed 241 people on board and others as it fell in a densely populated part of Ahmedabad in western India on Thursday will ripple through the global aviation insurance and reinsurance market. It’s also likely to make insurance costlier for airlines in India.

Insurance premiums across the aviation industry are expected to rise in India, either now or at the time of policy renewals, according to people familiar with the matter. 

On the Air India insurance payout, totals could climb, since there were foreign nationals killed in the accident, and those claims will be calculated according to the rules in their respective jurisdictions, the people said, who asked not to be identified discussing private matters.

A spokesperson for Air India did not immediately reply to request for comment. 

Insurers will first settle the hull claim followed by liability claims, according to Narayanan. “It will take some time for liability claims to be settled,” he said. 

The impact on the domestic market will be partly mitigated by the fact that both companies only generated about 1% of their total insurance premium from aviation, and ceded most of it to global reinsurers, according to GlobalData’s insurance data.

Broadly, domestic insurers have offloaded more than 95% of their aviation insurance direct written premium, or DWP, to global reinsurers. 

Due to this, “the financial burden will predominantly fall on international reinsurers, leading to the hardening of the aviation reinsurance and insurance market,” said Swarup Kumar Sahoor, senior insurance analyst at GlobalData in a release on Monday. 

This story was originally featured on Fortune.com

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Crude oil prices, maybe surprisingly, dipped modestly on Monday after spiking at the end of last week, even as Iran and Israel continue firing missiles at each other with no easy end in sight.

The U.S. oil benchmark hovered around $71 per barrel on June 16—about where it started the year—but up roughly 9% from a week prior. The current price tag is considered a relatively healthy value—profitable for most oil producers without creating particularly high fuel prices.

So, even though Israel successfully targeted some of Iran’s oil and gas infrastructure over the weekend, oil markets have stayed relatively calm, and Iran, which is not in a position of strength, is reportedly signaling its interest in returning to nuclear negotiations with the U.S.

Why? Here are four takeaways:

Even though Israel bombed oil and gas facilities and fields, notably, none of Iran’s oil-exporting infrastructure was touched.

Israel struck Iran’s South Pars gas field, the Shahran fuel depot, and the Shahr Rey oil refinery, but all of these targets are for domestic fuel and power consumption, and not global exports. That contributed to a run on fuel and potential shortages within Iran, but it has much less impact on global oil markets and Iran’s roughly 1.5 million barrels per day of crude oil exports.

“Everybody is taking a hands-off approach to oil [exporting] infrastructure because it meaningfully complicates and escalates the situation,” said energy forecaster Dan Pickering, founder and chief and investment officer for Pickering Energy Partners consulting and research firm. “Israel doesn’t want to do that, and I don’t think Iran does either.”

On the other hand, Pickering told Fortune. “You’re one stray bomb away from a problem. If you get to a point where people stop acting rationally, things get crazy quickly.”

That’s why the range of outcomes is vast from $55 per barrel oil if things calm down—a low price that hurts the bottom lines of oil producers—up to $120 or so if war escalates and overall OPEC production is impacted, Pickering said.

Iran sits next to the Strait of Hormuz, and the exports through that relatively narrow body of water account for about 20 million barrels daily, or one-fifth of global consumption. Impacting those flows changes everything.

To be clear, oil at or above $120 per barrel is bad for almost everyone because skyrocketing fuel costs would trigger widespread demand destruction around the world.

Israel’s attack on Iran comes two months after Saudi Arabia-led OPEC and its allies surprisingly announced production increases.

The so-called OPEC+ group increased their monthly quotas, essentially aiming to grow production by more than 2 million barrels daily by the end of the year, and undoing years of self-imposed curtailments.

While the decision didn’t necessarily anticipate a conflict in Iran, the OPEC’s move did give President Trump more leverage in the U.S. nuclear negotiations with Iran.

“If anything in this situation could be called elegant, it is a relatively elegant set up when dealing with the risk of problems in the Middle East,” Pickering said of OPEC’s moves. “It looks like the return of production pretty closely mirrors Iran’s exports, and so it was probably more geared toward a reduction of exports [through sanctions] as opposed to a conflict.”

Kathleen Brooks, research director the the XTB brokerage house, highlighted how Trump wants to keep oil and fuel prices low, and that the White House could actually have a “calming effect” on markets.

“Instead, we think that U.S. involvement could see the [Israeli] attacks on Iran narrow to nuclear sites, after Israel said that it gathered intelligence that Iran had enough uranium to make nine atomic bombs,” Brooks added.

U.S. fuel prices will rise in the days ahead, but the spikes should prove modest and potentially short-lived if escalations are avoided.

However, the math is changed with any prolonged war.

“With Israel and Iran trading attacks, oil prices have surged to multi-month highs—setting the stage for additional price hikes at gas pumps across the country,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “As long as tensions in the Middle East continue to escalate, the risk of further impacts on oil prices remains high.”

De Haan projects fuel prices could rise by 10 to 20 cents per gallon moving forward. “Motorists should prepare for what will likely be modest price increases—for now—but the situation has the potential to worsen at any moment.”

Thus far, the national average price of gasoline has risen 1.1 cents per gallon in the last week, averaging $3.08 per gallon as of the morning of June 16, according to GasBuddy. However, the national average is down 9.5 cents from a month ago and 32.7 cents lower than a year ago.

As Pickering said, “[Iran] is on the naughty list, but their sanctions haven’t been particularly aggressively applied because the world is so focused on oil prices and the impact on inflation and economies. The developed world has decided that cheap gasoline prices are better than truly punishing bad actors.”

The higher-for-now oil prices are unlikely to trigger any changes in the actions of U.S. oil and gas producers.

U.S. oil drillers were showing restraint and capital discipline—and not the ‘drill, baby, drill’ mentality—last year even when prices were a bit higher than today.

“The volatility is dramatic, OPEC is adding supply, and it’s not a given that Iran is going to reduce supply,” Pickering said. “So, why step up and spend capital speculatively when we could wake up in a month and oil is back to $55?”

So, how should everything in the Middle East be viewed from the energy perspective?

“This is a conflict that could have meaningful impacts, so people should be paying attention,” Pickering concluded. “Right now, it looks like an inconvenience with a potentially temporary price spike. It could become much worse, so pay attention and cross your fingers it doesn’t escalate.”

This story was originally featured on Fortune.com

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