We all have our own south side that we think of immediately. 

When I first saw the name South Loop Ventures, I thought of Chicago, where I lived for almost six years—and I told Zach Ellis, the Houston-based firm’s managing director and founder, as much. The firm’s name references Houston’s South Loop, which connects various historically diverse neighborhoods and is near the historically Black Third Ward, Beyoncé’s birthplace. But the fact that I thought of my own touchpoint is, actually, somewhat ideal. 

“It’s not just Chicago, there are all these regions around the country where diverse communities are,” said Ellis, who served as a U.S. Naval Officer before he was a VC. “South Central Los Angeles, Southeast D.C., South Philly, South Bronx, Southwest Atlanta—SWATS—all these areas. You’re ‘othered’ because you’re from the wrong side of the tracks, and you get this neighborhood affiliation. But it also becomes this point of pride. I’ve even played with the idea of one of our slogans, being ‘we’re all from the south side of somewhere.’”

Ellis recently launched South Loop’s first $21 million fund. Rice Management Company and Chevron Technology Ventures served as anchor LPs, with additional backing from Texas Capital Bank and The Great Commission Foundation of the Episcopal Diocese of Texas. It’s a busy time for Ellis, who was just this week announced as a Kauffman Fellow, the longstanding VC leadership development program. He’s building South Loop Ventures—just an hour’s drive from Galveston, where the Juneteenth holiday has its historical origins—on a strategy that looks quite rebellious right about now: Investing in entrepreneurs of color in Houston and similar urban ecosystems, who are working on problem-solving in sectors like healthcare, biotech, and advanced materials. 

“I don’t do this out of a sense of fairness,” said Ellis, who was previously manager at CVC PepsiCo Technology Ventures and managing director at Rev1 Ventures. “I do this out of a core belief that intentional innovation is good for society. We have problems that need solving and it’d be a crime not to get as many brains as possible trying to solve these problems. Why leave talent on the bench and profit on the bench by not investing in everyone?” 

South Loop’s portfolio currently includes breast milk freeze-drying company Milkify, life science sales AI platform PraxisPro, AI-powered tax software SmartWiz, and AI drug discovery platform CircNova. The firm invests beyond Houston, but it does represent a significant bet on the city and on Texas—which is home to four of the ten fastest-growing counties in the U.S. by percentage growth. Ellis looks to build on Texas’ talent, institutions, and economic strength to generate outsized returns in a high-potential market that remains underserved. When most people think of tech in Texas, they probably think of Austin—but Houston has the right ingredients to be a hub in its own right, he said.

“Houston has the third-most Fortune 500 companies of any city in the country,” said Ellis. “If you think about the IT departments, the engineers at energy companies—from mechanical engineers to systems engineers—the talent is here. It’s just about awakening that talent.”

See you tomorrow,

Allie Garfinkle
X: @agarfinks
Email: [email protected]
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This story was originally featured on Fortune.com

© South Loop Ventures

• OpenAI says its next generation of AI models could significantly increase the risk of biological weapon development, even enabling individuals with no scientific background to create dangerous agents. The company is boosting its safety testing as it anticipates some models will reach its highest risk tier.

OpenAI is warning that its next generation of advanced AI models could pose a significantly higher risk of biological weapon development, especially when used by individuals with little to no scientific expertise.

OpenAI executives told Axios they anticipate upcoming models will soon trigger the high-risk classification under the company’s preparedness framework, a system designed to evaluate and mitigate the risks posed by increasingly powerful AI models.  

OpenAI’s head of safety systems, Johannes Heidecke, told the outlet that the company is “expecting some of the successors of our o3 (reasoning model) to hit that level.”

In a blog post, the company said it was increasing its safety testing to mitigate the risk that models will help users in the creation of biological weapons. OpenAI is concerned that without these mitigations models will soon be capable of “novice uplift,” allowing those with limited scientific knowledge to create dangerous weapons.

“We’re not yet in the world where there’s like novel, completely unknown creation of bio threats that have not existed before,” Heidecke said. “We are more worried about replicating things that experts already are very familiar with.”

Part of the reason why it’s difficult is that the same capabilities that could unlock life-saving medical breakthroughs could also be used by bad actors for dangerous ends. According to Heidecke, this is why leading AI labs need highly accurate testing systems in place.

One of the challenges is that some of the same capabilities that could allow AI to help discover new medical breakthroughs can also be used for harm.

“This is not something where like 99% or even one in 100,000 performance is … sufficient,” he said. “We basically need, like, near perfection.”

Representatives for OpenAI did not immediately respond to a request for comment from Fortune, made outside normal working hours.

Model misuse

OpenAI is not the only company concerned about the misuse of its models when it comes to weapon development. As models get more advanced their potential for misuse and risk generally grows.

Anthropic recently launched its most advanced model, Claude Opus 4, with stricter safety protocols than any of its previous models, categorizing it an AI Safety Level 3 (ASL-3), under the company’s Responsible Scaling Policy. Previous Anthropic models have all been classified AI Safety Level 2 (ASL-2) under the company’s framework, which is loosely modeled after the U.S. government’s biosafety level (BSL) system.

Models that are categorized in this third safety level meet more dangerous capability thresholds and are powerful enough to pose significant risks, such as aiding in the development of weapons or automating AI R&D. Anthropic’s most advanced model also made headlines after it opted to blackmail an engineer to avoid being shut down in a highly controlled test.

Early versions of Anthropic’s Claude 4 were found to comply with dangerous instructions, for example, helping to plan terrorist attacks, if prompted. However, the company said this issue was largely mitigated after a dataset that was accidentally omitted during training was restored.

This story was originally featured on Fortune.com

© Sven Hoppe—picture alliance via Getty Images

• With the Fed’s interest rate decision out of the way and a national holiday for the U.S. stock markets, investors are turning their attention to whether President Trump will bomb Iran. Stocks were largely down in Asia and Europe this morning, following a decline in the S&P 500 yesterday.

The human cost of global conflict is unbearable for the victims, of course, and it comes with an economic cost too, which analysts are trying to estimate right now.

President Trump has reportedly approved a plan to bomb Iran but not yet given the green light for action. The main issue for investors is what the Iran conflict might do to the price of oil and how that will affect the strength of the dollar. That, in turn, will likely influence the U.S. Federal Reserve’s future decisions on whether or not to cut interest rates.

Trump, of course, wants Fed Chair Jerome Powell to lower interest rates. He insulted Powell early this morning on Truth Social to underline that point: “Too Late—Powell is the WORST. A real dummy, who’s costing America $Billions!”

One possible outcome is that if Trump decides to bomb Iran and the conflict produces a prolonged disruption to the supply of oil, that might strengthen the dollar while damaging the global economy. (Oil markets are settled in dollars, and rising oil prices would thus trigger greater demand for U.S. currency.) Those two factors—economic weakness but dollar strength—could push the Fed to make the interest rate cuts that Trump wants.

Convera’s Antonio Ruggiero sent a note to clients on the dollar issue this morning: “Rising geopolitical tensions in the Middle East this week lent support to the greenback, with the DXY briefly pushing above 98.800 on Tuesday before paring gains. Behind the façade of safe-haven appeal lies the true driver of the dollar’s rebound: rising oil prices, now hovering near a five-month high. Since most global oil trades are settled in U.S. dollars, surging crude demand tends to drive additional demand for USD. This rebound in sentiment is also reflected in the options market, where—for the first time since April—traders have backed off from bearish dollar positions. Escalating tensions could amplify this further.” 

At JPMorgan, Joseph Lupton and Bruce Kasman published a note that argued: “The rise in risk premia associated with the Mideast war, if sustained, is already sufficient to fully offset the cushion provided by the oil supply increase [from Saudi Arabia]. This leaves a net drag on global GDP growth of 0.6% this year. Concentrated in the second half, this drag should lower 2H25 global GDP growth by more than 1% at an annualized pace,” they said.

“A full curtailment of Iranian oil exports (1.8mbd) would, according to our model, lift oil prices to near $100/bbl and, if sustained, reduce global GDP by a full %-point (or, more likely, 2%-point annualized in 2H25), threatening a global recession,” they said.

The Fed, as always, is waiting for more data and less uncertainty.

The uncertainty of war won’t help, according to Daiwa Capital Markets: “The Trump administration has yet to take a definitive stance on intervention in the Iran-Israel conflict–with the plotted course either facilitating a return to calm or potentially triggering a broader conflict that could disrupt energy markets. Thus, uncertainty remains high and officials have demonstrated that they are willing to wait for additional clarity,” Lawrence Werther and Brendan Stuart told their clients in a note seen by Fortune.

Here’s a snapshot of the action across global markets this morning:

• South Korea’s Kospi was up 0.19%.
• India’s Nifty 50 was flat.
• The S&P 500 closed flat yesterday. The market is closed for the Juneteenth holiday today.
• The U.K.’s FTSE 100 slipped 0.3% in early trading.
• China’s SSE Composite was down 0.82%.
• Japan’s Nikkei 225 was down 1%.
• Hong Kong’s Hang Seng was down 2%.

This story was originally featured on Fortune.com

© From left: Andrew Harnik—Getty Images; Yasin Ozturk—Anadolu/Getty Images

London is seeking to attract more Chinese firms to list on its stock exchange as the city struggles with a shrinking equity market and a deal drought across Europe. 

“We need to get more IPOs happening in London,” Chris Hayward, policy chairman of the City of London Corp., said in an interview from Shanghai. “We don’t want to lose business across the Atlantic.” 

The authority for London’s Square Mile financial district can provide opportunities for Chinese firms to secure customers and funding in the UK and drive them to list in the city via its connect scheme with Shanghai, Hayward said. The city can also encourage UK firms to raise capital and list on the Shanghai Stock Exchange, he said.   

China introduced its stock connect program with the UK in 2019, allowing listed companies to issue depository receipts on each other’s exchanges. It later expanded the program to include Switzerland and Germany. Six years later, only a handful of Chinese firms, including Huatai Securities Co., have listed in London, raising a total $6.6 billion, and trading has been muted.

Beijing and London vowed early this year to deepen economic and financial ties, promising efforts to boost the China-UK stock connect.

“You’ve got to proactively go out there and encourage listings on your exchange,” said Hayward, drawing lessons from Hong Kong’s success in igniting a boom in initial public offerings in the first half of this year. Hayward, who was in Shanghai this week for China’s annual financial Lujiazui forum, is traveling to Hong Kong later in the week for IPO discussions.

Hong Kong’s share-sale bonanza this year saw new listings and additional offerings fetch more than $27 billion as of early June. That eclipsed annual totals in the last three years, and is the most since records were reached in 2021, according to data compiled by Bloomberg. The London bourse, on the other hand, has had just four pending or trading IPOs this year, as its valuation discount to the rest of the world discourages firms. 

London, as a key offshore yuan center, has also worked with China’s central bank to help promote the internationalization of its currency. 

London established a working group with the People’s Bank of China in 2018 to monitor the yuan market in the UK capital. The authority has been pushing global asset managers in the city to issue new products in yuan to facilitate greater use of the currency, said Hayward. 

He downplayed the potential impact that UK’s recent tax for wealthy non-domiciled residents and its immigration crackdown could have on London’s appeal as a global financial center, while urging efforts to resolve the non-dom issue.

“I would encourage the government to continue to review this matter,” he said. “It’s important to us to try and keep wealth creators in this country.”

This story was originally featured on Fortune.com

© Christoph Meyer/picture alliance via Getty Images

Good morning. As more graduates view finance as a promising career path, companies have a unique opportunity to attract the next generation of CFOs.

According to the CFA Institute’s 2025 Graduate Outlook Survey, interest in finance careers is on the rise. This year, 37% of surveyed respondents named finance as the most promising career path—a notable increase from 30% in 2024 and just 24% in 2023. The global survey, which included over 9,000 participants ages 18-25 who are either pursuing or have recently completed a bachelor’s degree or higher, highlights a clear upward trend for the industry.

Meanwhile, salary remains the top motivator for graduates, with 58% citing it as their primary career driver. However, flexibility and favorable working arrangements are also highly valued, with 49% saying these factors are important when considering a job offer.

“This position of privilege for the finance industry should not be taken for granted,” Margaret Franklin, president and CEO of CFA Institute told me. “Employers must listen to the priorities of new career entrants and make necessary adjustments to attract and retain top talent.”

Franklin emphasizes that today’s graduates also seek meaningful work. The survey found that 90% of U.S. graduates want to make a positive societal impact through their careers. Finance can indeed be included in that scenario—think financial planning. “We need to lean into this messaging more, especially during recruitment,” she said.

Embracing technology is another key to attracting top graduates. The survey revealed that 66% of U.S. graduates are more interested in roles that offer AI training.

Today’s graduates and students are eager to grow their skillset around AI, Franklin noted. Companies that invest in robust AI training programs and foster environments that embrace technological innovation will be best positioned to attract ambitious young professionals, she said.

“Graduates don’t want to work for companies that will be left behind,” Franklin said.

Sheryl Estrada
[email protected]

This story was originally featured on Fortune.com

© Getty Images

• Lukas Walton, an heir to the Walmart fortune, has quietly invested $15 billion of his wealth into Builders Vision, a Chicago-based organization focused on environmental and societal impact through sustainable investments in clean energy, food, and agriculture. Preferring to stay out of the spotlight, Walton believes in engaging the business community for scalable change and insists that impactful projects can deliver financial returns comparable to traditional investments.

In the current economy, the work, opinions and battles of billionaires can be hard to avoid—yet the dynasty behind the leading business in the Fortune 500 tends to stay out of the spotlight.

Every now and again members of the Walton family, whose relatives began the Walmart empire, will quietly share their thoughts on the political or economic outlook before returning to their work.

And that’s precisely how Lukas Walton has wanted it to be. The man worth $39 billion courtesy of the business founded by his grandfather, Sam Walton, established Builders Vision in 2017 as an umbrella for his philanthropic, investment, and advocacy work.

The focus of the Chicago-based company is to deploy capital, advocate for change, and support partners more widely in a range of endeavors across clean energy, food and agriculture, and ocean preservation.

Walton had declined all media interviews, but spoke to the Financial Times for the first time in an interview published today, saying he had made the decision to prevent people “leading with their assumptions” about him.

Instead Walton has directed his time and funds towards environmental efforts and told the FT he had plowed $15 billion of his own funds into Builders Vision—to bankroll endeavors that come with both financial and societal returns.

Walton, 39, is adding his voice to a wider push from other billionaire philanthropists for a greater focus on a more sustainable and equal planet.

Earlier this year, for example, Microsoft co-founder Bill Gates confirmed the largest philanthropic donation from an individual in modern history. He announced the Gates Foundation will receive the vast majority of his wealth—approximately $200 billion—to be spent within the next two decades.

While Walton’s motives are clear—he wants the world to be more “humane and healthy”—he has experienced first-hand the benefits that access to good nutrition can bring.

As a preschooler Walton was diagnosed with a rare form of cancer and, according to the Walton family, was cured in part thanks to his mother feeding him an all-natural diet.

Walton said he is “constantly reminded” of how lucky he is to be alive, and added: “My parents taught me the good habits that have kept me around. My mom basically raised me out of her garden, and that way I got to learn where our food comes from.”

The Colorado College graduate continued: “Starting with food and agriculture, I want to put my money to work and I saw there was a space for innovative, flexible capital.

“My gut feeling all along has been to engage the business community because of its size and scale.”

Not charity

Fundamental to Walton’s belief is that investors—and indeed his high net worth peers—need to see returns if they are going to fully engage their capital in projects which have societal or environmental benefits.

As such, he told the FT, his projects should not be framed as charitable because they have a very clear focus on returns that either match or outperform the rest of the market.

Walton has already undertaken significant projects which he says demonstrate returns, for example backing a business in Nebraska that purchases and then leases farmland for organic agriculture.

Making the green economy a more palatable investment than markets is certainly no small undertaking, but Walton, the CEO of Builders Vision, maintains: “The opportunities are out there.

“[The finance gap] is not for lack of pipeline. But people first need to realize that the environment is industry, it’s infrastructure, it’s financial products, it’s not simply trees.”

It seems Walton—ranked 37th on Bloomberg’s Billionaires Index—is happy to get on with the job in his own way. He’s often spotted cycling to the office in Chicago, and drives a Volvo SUV instead of the higher-end luxury vehicles preferred by other billionaires.

His urge to stay out of the limelight extends to his hobbies. The quiet of trail biking, he says, is a draw because “it’s one of those places I can’t be on a phone call.”

This story was originally featured on Fortune.com

President Donald Trump’s immigrant deportation efforts have escalated dramatically over the past few weeks, setting workers on edge and stirring up fear in workplaces across the U.S. 

From Los Angeles to Texas and Florida, agents from the U.S. Immigration and Customs Enforcement (ICE) have shown up at businesses to check for undocumented workers and make arrests. Trump wrote in a social media post on Sunday that ICE agents would “do all in their power to achieve the very important goal of delivering the single largest Mass Deportation Program in History.” 

These efforts have created a new sense of urgency among business leaders about how they should prepare their workforces if ICE comes knocking. “This week was the first time ICE raids actually came up in conversations I had with CHROs,” says Kevin Martin, chief research officer and CHRO advisor for research firm i4cp. “If you are potentially subject to raids, and are not communicating something out to your employees about this, to me, that’s negligence.”

Even if their workplace is unlikely to attract ICE attention, the latest developments should make bosses consider how these policy changes may affect employees—whether staffers are just reading headlines, or of they’re affected by the immigration crackdowns through their friends, family, or community at large.   

Here’s what communication experts told Fortune about how managers should address an increasingly fearful atmosphere around immigration in the U.S. 

Tell employees if the company has a plan if ICE comes knocking.  Some businesses have created detailed protocols to help guide employees about what to do if immigration agents actually show up at work. Having a clear policy around what’s expected in these instances can help workers feel prepared and less anxious. That includes knowing who to notify, and where these agents are allowed to go (public spaces only, not private). 

These plans can include reminders for workers about their rights. For instance, employees don’t have to answer direct questions from ICE officers or other government agents about their citizenship status, even if they are on the premises, legal experts previously told Fortune. They also have the right to remain silent and ask for legal representation.

“It requires a kind of training that goes down to a granular level,” says Nonnie Shivers, an employment lawyer and managing shareholder at firm Ogletree Deakins. “All companies, no matter the culture, have a duty to provide a safe workplace for their employees, and that requires being aware of exactly what’s transpiring in real time, and having a plan of action.”

Internal messaging is key. Many business leaders are reluctant to speak publicly about ongoing immigration crackdowns around the U.S. But communication experts that Fortune spoke with say they should still address the issue among their own workforce. 

“We live in such a divided culture that it’s difficult to step out and become involved in politics. But that being said, I absolutely think companies need to address the stress that this is creating in the workplace and acknowledge that it exists,” says Diana Scott, a former CHRO and current leader of the U.S. human capital center at The Conference Board, a non-profit business membership and research association.

Acknowledge it’s a personal issue for many people. Simply recognizing that there are people who have friends and relatives fearful of getting deported can go a long way, says Scott

“It can be as simple as saying ‘This is a difficult time for all of us, and we need to be focused on caring for one another,’” she tells Fortune. “Remind people that we’re all human beings and that no matter what the situation is, many of us are going to be impacted by this.”

Offer flexible work arrangements. The recent protests in Los Angeles, and subsequent deployment of the National Guard, closed some areas of the city and resulted in evening curfews. It’s unclear how the protests will unfold over the course of this summer, but bosses should have a plan in place if employees are physically barred from the office.  

“Every leader needs a contingency plan right now that would allow the business to operate even if certain spaces are shut down, or office buildings are inaccessible,” says Edward Segal, crisis management expert and author of The Crisis Casebook: Lessons in Crisis Management from the World’s Leading Brands. 

Offer to connect employees with legal resources. While company leaders should avoid giving out legal advice, they can connect employees to outside counsel and provide them with referrals to local immigration attorneys, support groups, or emergency hotlines, says Shivers. Some companies even offer legal services as a company benefit, which employees should be reminded of. “I think we have to look at all of the tools in our toolkit as employers, that allows people to be successful,” she says.

Highlight emotional support systems. Many employees feeling anxious right now, and bosses should remind them of any mental health care resources available to them. That includes things like access to counseling benefits through work, or even employee resources groups that might allow them to talk about their experiences in a setting away from management. 

“This is a good time to lean into employee resource groups as a safe space where employees can talk about how they’re feeling and share access to different kinds of support,” says Scott.

This story was originally featured on Fortune.com

© (Carlin Stiehl / Los Angeles Times via Getty Images)

US Health and Human Services Secretary Robert F. Kennedy Jr. said Starbucks Corp. Chief Executive Officer Brian Niccol vowed to further align the company’s menu with the administration’s health goals. 

The two men met Tuesday, Kennedy said in a post on X. Niccol “shared the company’s plans to further MAHA its menu,” the secretary wrote, using the acronym for the “Make America Healthy Again” campaign to lower sugar and remove artificial ingredients from the US food supply, among other changes.

Kennedy didn’t provide details in his post, but Niccol has said that the chain wants to expand in health and wellness as customers look to lower their sugar intake and get more from their beverages than just a caffeine hit. 

In a statement, Starbucks reiterated its commitment to offerings that cater to healthy lifestyles. 

“Our diverse menu of high-quality foods and beverages empowers customers to make informed nutritional decisions, with transparency on ingredients, calories and more,” a Starbucks spokesperson said.

The company said last week that it’s testing drinks such as a sugar-free vanilla latte topped with protein banana cold foam. The new drinks will have at least 15 grams of protein that will come from a powder. Diners will be able to add the protein, which is unsweetened, to any cold foam flavor. 

Competitors such as fast-growing Dutch Bros Inc. have had success with coffee drinks with protein-infused milk, which particularly appeal to younger consumers.

Other recent moves include removing sugar from the company’s matcha powder, which lifted matcha sales 40% from the prior year, Niccol said on the company’s April 29 earnings call. Starbucks is undertaking a broader overhaul of its menu as part of Niccol’s plan to jolt sales after five straight quarters of declines. The Seattle-based chain also removed the upcharge for nondairy milk. 

Kennedy said he was “pleased to learn that Starbucks’ food and beverages already avoid artificial dyes, artificial flavors, high-fructose corn syrup, artificial sweeteners and other additives.” 

The company’s summer menu includes beverages such as a berry iced drink called Summer Skies, which has 26 grams of sugar in a 16-ounce serving. The American Heart Association recommends that men consume less than 36 grams of added sugar a day and women less than 25 grams.

This story was originally featured on Fortune.com

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• The U.S. will pay $1 trillion in interest on the $36 trillion national debt next year, more than it spends on Medicare and defense. If lawmakers wait too long to address deficits, Goldman economists warn, a historic austerity push could be needed to avert disaster.

President Donald Trump has claimed the GOP’s “Big, Beautiful” bill will put the U.S. on a sustainable fiscal path. Economists at Goldman Sachs say it won’t prevent the nation’s debt from surpassing levels only seen during World War II.

The spending bill passed by House Republicans, combined with increased tariff revenue, will slightly lower the budget deficit when excluding interest payments, Goldman’s Manuel Abecasis, David Mericle, and Alec Phillips acknowledged in a note Tuesday. Coupled with rising borrowing costs, they said, the bill leaves the total deficit’s course essentially unchanged.

“But that path remains unsustainable: the primary deficit is much larger than usual in a strong economy, the debt-to-GDP ratio is approaching the post-[WWII] high, and much higher real interest rates have put the debt and interest expense as a share of GDP on much steeper trajectories than appeared likely last cycle,” the Goldman team wrote.

Goldman Sachs

As the charts above show, the scale of the debt going forward depends greatly on how interest rates move over the next couple decades. Right now, the $36 trillion national debt accounts for roughly 120% of GDP, and the Treasury Department finds itself borrowing more just to meet the rising cost of servicing it.

The U.S. pays more in interest on its debt than it spends on Medicare and defense. Those interest payments will hit $1 trillion next year, trailing only Social Security as the government’s biggest outlay, according to the Committee for a Responsible Federal Budget, a think tank.

“If the debt grows large enough,” the Goldman team wrote, “interest expense could become so large that stabilizing debt-to-GDP would require running persistent fiscal surpluses of a size that has seldom been sustained historically because it is economically costly and politically difficult.”

The first Trump and Biden administrations responded to the COVID-19 pandemic with a wartime-like budget. But the spigot never got turned off, even when the U.S. economy moved back to full employment.

The nonpartisan Congressional Budget Office estimates the version of the GOP spending bill passed by the House would increase deficits by $2.8 trillion over the next decade. The White House and some Republican lawmakers argue that projection should not include the cost of extending Trump’s 2017 tax cuts, which are set to expire this year without the bill.

But the crux of the $36 trillion problem is that no one knows at what level the debt becomes unsustainable, Gennadiy Goldberg, the head of U.S. rates strategy at TD Securities, told Fortune.

Treasury Secretary Scott Bessent has said the U.S. government has a “spending problem,” but not a “revenue problem.” Goldberg agrees with the former argument, but he said the U.S. also does not tax much compared to both the size of the country’s GDP and government outlays. 

“So either taxes have to go up, spending has to come down, or some combination of the two,” Goldberg said last month. “And it sounds simple, but it’s politically very, very complicated to figure out.”

Higher interest rates would increase deficit pressure

Continuing to avoid taking action puts future lawmakers in a tighter spot, however, especially if borrowing costs rise.

Yields on long-term U.S. Treasury bonds have remained elevated as investors wait for a patient Federal Reserve to cut interest rates, and concerns about the burgeoning deficit and a possible resurgence of inflation might also continue to put upward pressure on rates.

Fixed-income experts are also closely monitoring any changes to foreign demand for U.S. debt. If rising trade and geopolitical tensions undermine the dollar’s status as the world’s reserve currency, the U.S. government would also find itself borrowing at higher rates than it’s become accustomed to.

That means Congress may eventually be forced to make increasingly tough choices when it comes to both spending and taxes. If lawmakers wait too long, a historic austerity push could be needed to avert disaster, the Goldman team said.

“In that scenario, one might worry either that a large fiscal consolidation and a persistent fiscal surplus could be self-defeating—if GDP declines enough, the debt-to-GDP ratio might not shrink,” they wrote.

Of course, politicians would also face the temptation of printing way more money to pay the government’s bills. Germany’s Weimar Republic tried that tactic in the aftermath of World War I. It resulted in ruinous hyperinflation, fueling the economic malaise and social unrest that led to the rise of the Nazi Party.  

That warning from history, however, is not always heeded by governments.

This story was originally featured on Fortune.com

© Kevin Dietsch—Getty Images

The U.S. has approved the world’s only twice-a-year shot to prevent HIV, the first step in an anticipated global rollout that could protect millions – although it’s unclear how many in the U.S. and abroad will get access to the powerful new option.

While a vaccine to prevent HIV still is needed, some experts say the shot made by Gilead Sciences — a drug called lenacapavir — could be the next best thing. It nearly eliminated new infections in two groundbreaking studies of people at high risk, better than daily preventive pills they can forget to take.

“This really has the possibility of ending HIV transmission,” said Greg Millett, public policy director at amfAR, The Foundation for AIDS Research.

Condoms help guard against HIV infection if used properly but what’s called PrEP — regularly using preventive medicines such as the daily pills or a different shot given every two months — is increasingly important. Lenacapavir’s six-month protection makes it the longest-lasting type, an option that could attract people wary of more frequent doctor visits or stigma from daily pills.

But upheaval in U.S. healthcare — including cuts to public health agencies and Medicaid — and slashing of American foreign aid to fight HIV are clouding the prospects.

Millett said “gaping holes in the system” in the U.S. and globally “are going to make it difficult for us to make sure we not only get lenacapavir into people’s bodies but make sure they come back” twice a year to keep up their protection.

Gilead’s drug already is sold to treat HIV under the brand name Sunlenca. The prevention dose will be sold under a different name, Yeztugo. It’s given as two injections under the skin of the abdomen, leaving a small “depot” of medication to slowly absorb into the body. People must test negative for HIV before getting their twice-a-year dose, Gilead warned. It only prevents HIV transmission — it doesn’t block other sexually transmitted diseases. Some researchers who helped test the shot advise cold packs to counter injection-site pain.

Global efforts at ending the HIV pandemic by 2030 have stalled. There still are more than 30,000 new infections in the U.S. each year and about 1.3 million worldwide.

Only about 400,000 Americans already use some form of PrEP, a fraction of those estimated to benefit. A recent study found states with high use of PrEP saw a decrease in HIV infections, while rates continued rising elsewhere.

About half of new infections are in women, who often need protection they can use without a partner’s knowledge or consent. One rigorous study in South Africa and Uganda compared more than 5,300 sexually active young women and teen girls given twice-yearly lenacapavir or the daily pills. There were no HIV infections in those receiving the shot while about 2% in the comparison group caught HIV from infected sex partners.

A second study found the twice-yearly shot nearly as effective in gay men and gender-nonconforming people in the U.S. and in several other countries hard-hit by HIV.

Ian Haddock of Houston had tried PrEP off and on since 2015 but he jumped at the chance to participate in the lenacapavir study and continues with the twice-yearly shots as part of the research follow-up.

“Now I forget that I’m on PrEP because I don’t have to carry around a pill bottle,” said Haddock, who leads the Normal Anomaly Initiative, a nonprofit serving Black LGBTQ+ communities.

“Men, women, gay, straight – it really just kinds of expands the opportunity for prevention,” he added. Just remembering a clinic visit every six months “is a powerful tool versus constantly having to talk about, like, condoms, constantly making sure you’re taking your pill every day.”

Gilead said the U.S. list price, meaning before insurance, is $28,218 a year, which it called similar to some other PrEP options. The company said it anticipated insurance coverage but also has some financial assistance programs.

Most private insurers are supposed to cover PrEP options without a co-pay although the Supreme Court is considering a case that could overturn that requirement. Congress also is considering huge cuts to Medicaid. And while community health centers still are an option, the Trump administration has largely dismantled HIV prevention work at the Centers for Disease Control and Prevention that would normally get the message to vulnerable populations who’d qualify for the shot, said Carl Schmid of the nonprofit HIV+Hepatitis Policy Institute.

Schmid worries the shot won’t meet its potential because “we’re basically pulling the rug out of HIV prevention and testing and outreach programs.”

Gilead also has applications pending for the twice-yearly shot in other countries. Last fall, the company signed agreements with six generic drug makers to produce low-cost versions of the shot for 120 poor countries mostly in Africa, Southeast Asia and the Caribbean. Gilead plans to make enough shots to supply 2 million people in those countries, at no profit, until the generics are available, said company senior vice president Dr. Jared Baeten.

Winnie Byanyima, executive director of UNAIDS, said in a statement the price is still too high. If it’s unaffordable, she said, “it will change nothing.”

And HIV experts worry the arrangements Gilead has made to reduce costs in some countries leave out middle-income countries like some in Latin America.

“Everyone in every country who’s at risk of HIV needs access to PrEP,” said Dr. Gordon Crofoot of Houston, who helped lead the study in men. “We need to get easier access to PrEP that’s highly effective like this is.”

This story was originally featured on Fortune.com

© Gilead Sciences via AP

• In today’s CEO Daily: Diane Brady talks to Javier Rodriguez, CEO of DaVita.
• The big story: The world is waiting on Trump’s decision to bomb Iran.
• The markets: A mild selloff.
• Analyst notes from UBS on Trump v Iran, Pantheon Macroeconomics on consumer spending, and Oxford Economics on the labor market.
• Plus: All the news and watercooler chat from Fortune.

Good morning. It’s easy to find CEOs complaining about the state of things in Washington, D.C., but I recently spoke with one who is newly optimistic. And he works in healthcare, a place where optimism is in short supply of late. Javier Rodriguez runs DaVita, a global leader in dialysis and kidney disease, with $12.8 billion in annual revenues and 76,000 employees.

“The administration is new but they’re very aggressive in trying to change the trajectory of health care,” he said. “There’s a curiosity about revisiting how the system is structured that’s pretty exciting.” Rodriguez points to the debate over how to code treatments for insurance payments to reward interventions that make people healthier as an example: “The invitation that I received from the head of Medicare was, ‘let’s reimagine the whole thing. What would we do differently?’”

He answers that question with some questions of his own: How are we going to balance the dynamic between freedom of choice and accountability? (If you want to smoke, who should pay for that?) Should healthcare be for profit, or is it a God-given right? Where do we invest and where can we cut costs? And he suggests some answers, such as incentivizing preventive care and using technology to free up caregivers to spend more time with patients.

 “The biggest frustration for me is that people don’t empathize enough with kidney failure,” he said, noting it’s “frustrating and deflating to those teams that wake up every single day and deliver 28 million treatments a year, safely … It’s hard to get people interested in health care,” he told me, “until they need it.”

More news below.

Contact CEO Daily via Diane Brady at [email protected]

This story was originally featured on Fortune.com

© Courtesy of DaVita

For a lot of people, the concept of a holiday in the middle of June is still taking some getting used to.

Juneteenth just became a federal holiday in 2021—and while it took a little while, it’s also now an official holiday in all 50 states and the District of Columbia. Many private businesses, however, still don’t observe it as a holiday, but a growing number, including Zillow, Nike and Lyft, now give workers the day off.

Looking to make sense of what is and isn’t open? We’ve got answers.

What is Juneteenth?

On June 19, 1865, the last Black slaves of the Confederacy were ordered free when Union troops arrived in Galveston, Texas. The Civil War had ended two months prior officially, but Galveston was a holdout and had to be secured. The day became known as Juneteenth and, for a long time, was only observed in Texas.

It began to spread over the years, though, and truly came to prominence following the 2020 unrest that followed the murder of George Floyd by a Minneapolis police officer.

When is Juneteenth?

Juneteenth is celebrated on June 19 each year. On years where it falls on a weekend day, it will be celebrated the following Monday.

Are banks open on Juneteenth?

They’re not. Juneteenth is a federal holiday, meaning most banks will be closed as well. You can, of course, still use ATM machines to get cash or put money into your account and online banking is operational, though nothing will be processed until tomorrow.

Will there be any mail delivery on Juneteenth?

There won’t be any from the U.S. Postal Service. UPS and FedEx, however, will operate normally.

Is the stock market open on Juneteenth?

Given the volatility the markets have seen this year, maybe a day off from trading is a good thing. The New York Stock Exchange, Nasdaq and bond markets are all closed today. Their next scheduled holiday is July 4.

Are government offices open on Juneteenth?

Federal offices will be closed on June 19. And since it’s an official holiday in all states, local government workers will also have the day off.

Are any retail and grocery stores closed on Juneteenth?

Basically none. While some small businesses could be closed, no major retailer shuts down for this holiday, though many pay employees time-and-a-half for working on today – and some are trying to make Juneteenth a retail event.

This story was originally featured on Fortune.com

© Paul Weaver—SOPA Images/LightRocket/Getty Images

Swiss watch exports dropped by almost 10% in May led by a slump in shipments to the US, reversing the previous month’s surge when manufacturers were trying to get ahead of a looming trade war.

Total shipments fell 9.5% to 2.1 billion Swiss francs ($2.6 billion), the Federation of the Swiss Watch Industry said in a statement Thursday. Exports to the US, the single-biggest market, were down just over 25%.

The latest data underscore the impact President Donald Trump’s trade policies are having on the watch sector. The US imposed a 10% levy on imports from Switzerland in early April, and has threatened as much as 31% if a new trade deal isn’t reached. The watch industry would be hit hard by any increase.

Shares of Swatch Group AG and Compagnie Financiere Richemont SA fell as much as 2.3% and 2.5% respectively in early trading in Zurich.

Asia continued to suffer, with shipments to China, Japan and Hong Kong all registering double-digit declines in the latest data.

“The rise of ‘luxury fatigue,’ a declining ‘feel-good factor’ from luxury purchases, and worsening consumer sentiment all contribute to a less optimistic outlook,” Vontobel analyst Jean-Philippe Bertschy said in a note.

The Swiss watch industry’s weakness matches a wider trend for the export-dependent country, as overall monthly foreign sales declined 42%, narrowing Switzerland’s trade surplus the most in almost five years.

This story was originally featured on Fortune.com

© Sedat Suna/Getty Images

Southern Mexico’s Pacific coast was braced for a Thursday morning impact with the approach of Hurricane Erick, which was upgraded to an “extremely dangerous” Category 4 early Thursday, the U.S. National Hurricane Center said.

The major storm threatens to unleash destructive winds near where the eye crashes ashore, flash floods and a dangerous storm surge, forecasters said.

The Miami-based center reported Erick was about 70 miles (110 kilometers) west-southwest of Puerto Angel, Mexico, and about 90 miles (145 kilometers) southeast of Punta Maldonado, Mexico. The storm had maximum sustained winds of 145 mph (230 kph) and was moving northwest at 9 mph (15 kph).

A hurricane is defined as Category 4 when wind speeds reach 130-156 mph (209-251 kph).

Storm moves south on approach

Late Wednesday, Erick’s projected path crept south, closer to the resort city of Puerto Escondido in Oaxaca state, and centered on a sparsely populated stretch of coastline between the Oaxacan resort and Acapulco to the northwest.

President Claudia Sheinbaum said in a video message Wednesday night that all activities in the region were suspended and she urged people to stay in their homes or to move to shelters if they lived in low-lying areas.

Waves were crashing onto the esplanade in Puerto Escondido by nightfall, swamping wooden fishing boats that had been pulled up there for safety. The beach disappeared under pounding waves and the rising tide had already reached the interiors of some waterfront restaurants.

Last-minute purchases ended at nightfall as stores closed and the streets emptied.

Earlier in the day, fishermen in Puerto Escondido pulled their boats out of the water ahead of the storm’s arrival. Some surfers continued to ride waves at the Zicatela beach, even with red flags up to warn people to stay out of the water.

The storm’s course shift could be welcome relief for residents of storm-battered Acapulco.

The city of nearly 1 million was devastated in October 2023 by Hurricane Otis, a Category 5 hurricane that rapidly intensified and caught many unprepared. At least 52 people died in Otis and the storm severely damaged almost all of the resort’s hotels.

Acapulco still scarred by Otis

Acapulco residents said they were bracing for Erick’s arrival with more preparation and trepidation because of the memory of the devastation wrought by Hurricane Otis two years earlier.

Guerrero state Gov. Evelyn Salgado said via X that all movement in Acapulco and other beach communities was to be suspended at 8 p.m. Schools across the state were to remain closed for a second day Thursday.

Carlos Ozuna Romero, 51, lost his restaurant at the edge of an Acapulco beach when Otis slammed the resort with devastating winds. On Wednesday, he directed workers storing tables and chairs.

“Authorities’ warnings fill us with fear and obviously make us remember everything we’ve already been through,” Ozuna Romero said in reference to Otis.

Elsewhere, workers nailed sheets of plywood over shop windows and stacked sandbags outside doorways. Cars lined up to fill their tanks and shoppers made last-minute purchases before rushing home.

Verónica Gómez struggled through the streets of Acapulco with a large jug of water. “We’re all afraid because we think the same thing could happen,” said the 40-year-old employee of a shipping company.

But she said she and others learned a lot from Otis. “Now it’s not going to catch us by surprise,” she said, holding out a bag of canned food as evidence.

In Acapulco on Wednesday, there was a strong presence of National Guard and police in the streets, but most visible were trucks from the national power company. Crews worked to clear drainage canals and brush.

Rain could be Erick’s legacy

Forecasters said Erick was expected to lash Mexico’s Pacific coast with heavy rain, strong winds and a fierce storm surge. Rains of up to 16 inches (40 centimeters) could fall across the Mexican states of Oaxaca and Guerrero, with lesser totals in Chiapas, Michoacan, Colima and Jalisco states, the center’s advisory said. The rainfall threatened flooding and mudslides, especially in areas with steep terrain.

A hurricane warning was in effect from Acapulco to Puerto Ángel. A hurricane warning means hurricane conditions are expected in the area, and preparations to protect life and property should be rushed to completion, according to the hurricane center advisory.

Laura Velázquez, Mexico’s national civil defense coordinator, said Erick was forecast to bring “torrential” rains to Guerrero, Oaxaca and Chiapas in southern Mexico. The mountainous region along the coast is especially prone to mudslides with numerous rivers at risk of flooding.

Guerrero Gov. Evelyn Salgado said all schools would remain closed and the state had alerted all of the fishing and tourism operators to make their boats storm-ready. Acapulco’s port closed Tuesday evening. Salgado said 582 shelters were set to receive people who might evacuate their homes.

Sheinbaum warned in her daily briefing that those in the hurricane’s path should heed government instructions and wait out the storm in their homes or designated shelters.

Erick quickly doubled in strength

Having doubled in strength in less than a day, Erick was churning through an ideal environment for quick intensification. Last year, there were 34 incidents of rapid intensification — when a storm gains at least 35 mph in 24 hours — which is about twice as many as average and causes problems with forecasting, according to the hurricane center.

This story was originally featured on Fortune.com

© FRANCISCO ROBLES—AFP via Getty Images

• Ryder System CEO Robert Sanchez led the transformation of a nearly century-old trucking and logistics company by applying a lesson he learned as a teenager about ice cream. The key, according to Sanchez, lies in challenging the “we’ve always done it this way” method of thinking and focusing on the way customer needs have evolved.

Ryder System, with $12.6 billion in revenue, is a leading provider of logistics and transportation services with more than 50,000 employees in North America operating a fleet of more than 250,000 trucks. It’s come a long way since it was founded in 1933 by James Ryder with a single Model A Ford truck and a $35 down payment. 

But the Ryder board, about a decade ago, wanted CEO Robert Sanchez to focus on innovation and how to lead the company beyond the core strategy and services that had sustained it for decades. The answer, for Sanchez, had its roots in a job he worked every weekend as a teenager: scooping ice cream at Carvel. 

In the late 1970s and early 1980s, Sanchez worked at a Carvel ice cream shop in Miami during a time the city saw an influx of Cuban immigrants. Cuban customers would stop into the store and ask if Carvel carried a flavor called mamey (mah-MAY) ice cream. The creamy Caribbean fruit has a delicate but firm texture like a papaya, but tastes like a delicious pumpkin pie. Kids grow up eating it fresh or in desserts, and it’s often blended into ice cream. 

“Folks would come into Carvel and ask if we had mamey, and obviously we didn’t have mamey because we’re Carvel, and they don’t have mamey,” Sanchez told Fortune. “So the owner of the ice cream store kept trying to lobby Carvel to make mamey ice cream, but they wouldn’t.”

Disappointed customers would leave Carvel and go across the street to the Cuban restaurant to get their mamey ice cream fix. Finally, the store owner had enough. 

“One day, the owner of the ice cream store got upset and he said, ‘You know what?

I’m gonna make my own ice cream,’” Sanchez recalled. “So he went, and he bought mamey at the store and he mixed it with the Carvel ice cream mix and he created Carvel mamey ice cream.”

Within two weeks, it was the third-best selling ice cream in the shop. 

“It’s what people wanted—they wanted mamey,” said Sanchez. “Carvel actually has great ice cream and you mix that with the right flavor and it sold great.”

Fast forward to about 10 years ago and the Ryder board was pressing Sanchez about innovation, pointing out that the company was still selling essentially the same services Jim Ryder had launched decades earlier. With mamey on his mind, Sanchez led Ryder to innovate by combining existing capabilities in new ways to solve customers’ problems. 

“This guy, it’s not like he split the atom, but he invented Carvel mamey ice cream by putting these two things together and giving the customers what they wanted,” Sanchez said. “We at Ryder keep selling vanilla and chocolate, but maybe there are customers that want something different.”

The company launched an e-commerce fulfillment business, which was an entirely new area for Ryder; a mobile maintenance business; and technology to track customer freight that it didn’t have before. Sanchez said the company also launched what he described as “the first Airbnb for trucks,” which ultimately didn’t work out as expected, but the company pivoted. 

“We now have a muscle for developing new products and services and innovating,” he said, which is similar to what his former boss at Carvel did with mamey ice cream.

“You’re not inventing the next iPhone, but you’re putting together services in a different way to meet customers’ needs.”

And if you think a CEO whose first job was at an ice cream store would put them off ice cream, that isn’t the case for Sanchez. Ice cream, he admits, probably has nothing to do with being fit or healthy, but it keeps him happy. Ben & Jerry’s Cherry Garcia flavor and a chocolate and vanilla soft-serve swirl—like the kind Carvel serves—are his two favorites. 

This story was originally featured on Fortune.com

© Courtesy of Ryder System

It just happens that one of the most accessible and budget-friendly forms of exercise is also the most beneficial for your health: walking. It’s been proven to help reduce heart disease risk, strengthen your joints and heart, boost your mood, and help you live longer.

There has been debate about how much walking is ideal. Should you be aiming for 10,000 steps a day or is 7,000 the right number? How fast should you move to reap the most benefits of your walking workouts?

Using the myriad scientific data, studies, and expert insight on walking, here is what Fortune has uncovered about the ideal amount of walking to do see benefits.

How many steps a day to aim for

While 10,000 steps has been floated around as the ideal number to hit every day, experts have said that number is fairly arbitrary—it’s actually more of a target range that experts advise to aim for.

“That 10,000 steps was never a peer-reviewed number,” Howard Luks, a New York-based orthopedic surgeon and the author of Longevity…Simplified: Living a Longer, Healthier Life Shouldn’t Be Complicated, told Fortune.

Research has indicated that people who hit around 7,000 steps a day are able to maintain good health, while another study from 2023 of 3,000 participants showed that those who took at least 8,000 steps one or two days a week were 14.9% less likely to die over a 10-year period than those who did not. People who took 8,000 or more steps three to seven days a week were 16.5% less likely to die over the same period as well.

That 7,000 to 10,000-step range is pretty much the sweet spot to see improvements in your fitness, according to National Academy of Sports Medicine trainer Mallory Fox. She says that is generally where people will start to achieve weight loss and see benefits to their cardiorespiratory systems.

However, it’s important to set realistic goals geared towards your individual improvement, according to NiCole Keith, professor of kinesiology at Indiana University–Purdue University and immediate past president of the American College of Sports Medicine.

“Ten thousand steps is a lot of steps,” she told Fortune. “If you’re an active person and you’re out walking all the time, or you work in a manual labor job and you’re on your feet and you’re carrying things and walking around…that’s great. But if you’re a receptionist and only getting 3,000, then make a goal to make it 3,500. Then see if you can push it up to 4,000.”

Fox agrees that people should take their time in increasing their step count, and advises taking a look at how much you’re walking each week—either with the help of a wearable device or the rough step estimate provided by smartphones—and aim to increase that by about 10% each week to ensure you don’t get injured or too sore.

She also echoes that the improvements you’ll see in your fitness, body composition, and overall health are largely dependent on your lifestyle and physiology.

“Everybody is different. Someone’s exercise history, their height, their weight will contribute to how much they need to do,” she says. You’re likely to see improvement just by doing “any additional movement beyond [your] normal activity level,” she adds.

It’s not just about step count—pace matters too

While there’s nothing wrong with leisurely strolls to relieve stress and clear your mind—and remember, every step counts—research indicates that your walking pace is another contributing factor for longevity in particular.

The same 2023 meta-analysis on walking also found that a faster pace was associated with a reduced risk of death, regardless of the number of steps taken per day. Researchers posit that’s because walking faster pushes your heart more, allowing you to get more moderate-to-vigorous physical activity that boosts cardiovascular health. The Centers for Disease Control and Prevention recommends 150 minutes of moderate-intensity activity each week for most adults, or 75 minutes of vigorous-intensity activity—and pushing the walking pace could help you reach that recommendation.

A 2022 U.K.-based study also found that walking quickly could lower dementia risk. And researchers on a 2022 Brazil-based study observed that the greater the number of daily steps—and the quicker the pace of those steps—the less likely someone was to suffer from arterial stiffness, a condition where the arteries, the blood vessels that carry blood away from the heart, become less flexible and more rigid, which could lead to heart problems.

So just how fast are we talking? Walking at a pace of around 100 steps per minute for 30 minutes a day, five days a week would meet the weekly requirements for moderate exercise for older adults, Brazilian researchers pointed out. A 2011 study supported that estimate, stating that 100 steps per minute equated moderate physical activity.

But as Fox pointed out, anything is better than nothing, especially if you’re starting from a lower baseline.

“There are many benefits of walking even at a slow walk or a leisurely stroll,” she says. “The intensity isn’t set in stone. It’s just moving the body more is the bottom line.”

Easy ways to add steps to your day

Here are 5 easy ways to naturally incorporate more walking into your day, according to the American on the Move Foundation:

• Take a walk after every meal.
• Walk while you’re on a work call.
• Play a tennis or pickleball match.
• Volunteer to walk dogs for an animal shelter.
• Tour a museum, zoo, or nature preserve.

Fox also encourages using a walking pad if you work from home. You don’t even need to put the speed very fast, she says—as long as you’re moving, you’re getting the benefits.

“The most important thing is being consistent,” Fox adds. Try to get out and move every day, instead of one long walk every once in a while, she explains—it’s better to be doing a half-mile walk every day rather than walking five miles once a week.

For more on fitness:

• The exact amount of time you need to lift weights to see muscle gains, according to research
• The potential benefits of the ‘Japanese walking’ workout which fans claim is better than 10,000 steps a day
• The top 6 exercises this strength coach thinks everyone should do to stay fit
• What’s your VO2 max? The most important health metric you’re probably not aware of shows how fit you really are

This story was originally featured on Fortune.com

© Getty Images

The U.S. State Department said Wednesday it is restarting the suspended process for foreigners applying for student visas but all applicants will now be required to unlock their social media accounts for government review.

The department said consular officers will be on the lookout for posts and messages that could be deemed hostile to the United States, its government, culture, institutions or founding principles.

In a notice made public Wednesday, the department said it had rescinded its May suspension of student visa processing but said new applicants who refuse to set their social media accounts to “public” and allow them to be reviewed may be rejected. It said a refusal to do so could be a sign they are trying to evade the requirement or hide their online activity.

The Trump administration last month temporarily halted the scheduling of new visa interviews for foreign students hoping to study in the U.S. while preparing to expand the screening of their activity on social media, officials said.

Students around the world have been waiting anxiously for U.S. consulates to reopen appointments for visa interviews, as the window left to book their travel and make housing arrangements narrows ahead of the start of the school year.

On Wednesday afternoon, a 27-year-old Ph.D. student in Toronto was able to secure an appointment for a visa interview next week. The student, a Chinese national, hopes to travel to the U.S. for a research internship that would start in late July. “I’m really relieved,” said the student, who spoke on condition of being identified only by his surname, Chen, because he was concerned about being targeted. “I’ve been refreshing the website couple of times every day.”

Students from China, India, Mexico and the Philippines have posted on social media sites that they have been monitoring visa booking websites and closely watching press briefings of the State Department to get any indication of when appointment scheduling might resume.

In reopening the visa process, the State Department also told consulates to prioritize students hoping to enroll at colleges where foreigners make up less than 15% of the student body, a U.S. official familiar with the matter said. The official spoke on condition of anonymity to detail information that has not been made public.

Foreign students make up more than 15% of the total student body at almost 200 U.S. universities, according to an Associated Press analysis of federal education data from 2023. Most are private universities, including all eight Ivy League schools. But that criteria also includes 26 public universities, including the University of Illinois and Pennsylvania State University. Looking only at undergraduate students, foreign students make up more than 15% of the population at about 100 universities, almost all of them private.

International students in the U.S. have been facing increased scrutiny on several fronts. In the spring, the Trump administration revoked permission to study in the U.S. for thousands of students, including some involved only in traffic offenses, before abruptly reversing course. The government also expanded the grounds on which foreign students can have their legal status terminated.

As part of a pressure campaign targeting Harvard University, the Trump administration has moved to block foreign students from attending the Ivy League school, which counts on international students for tuition dollars and a quarter of its enrollment. Trump has said Harvard should cap its foreign enrollment at 15%.

This latest move to vet students’ social media, the State Department said Wednesday, “will ensure we are properly screening every single person attempting to visit our country.”

In internal guidance sent to consular officers, the department said they should be looking for “any indications of hostility toward the citizens, culture, government, institutions, or founding principles of the United States.”

Jameel Jaffer, executive director at the Knight First Amendment Institute at Columbia University, said the new policy evokes the ideological vetting of the Cold War, when prominent artists and intellectuals were excluded from the U.S.

“This policy makes a censor of every consular officer, and it will inevitably chill legitimate political speech both inside and outside the United States,” Jaffer said.

The Trump administration also has called for 36 countries to commit to improving vetting of travelers or face a ban on their citizens visiting the United States. A weekend diplomatic cable sent by the State Department says the countries have 60 days to address U.S. concerns or risk being added to a travel ban that now includes 12 nations.

This story was originally featured on Fortune.com

© Alexander F. Yuan—AP

Nippon Steel and U.S. Steel said Wednesday they have finalized their “historic partnership,” a deal that gives the U.S. government a say in some matters and comes a year-and-a-half after the Japanese company first proposed its nearly $15 billion buyout of the iconic American steelmaker.

The pursuit by Nippon Steel for the Pittsburgh-based company was buffeted by national security concerns and presidential politics in a premier battleground state, dragging out the transaction for more than a year after U.S. Steel shareholders approved it.

It also forced Nippon Steel to expand the deal, including adding a so-called “golden share” provision that gives the federal government the power to appoint a board member and a say in company decisions that affect domestic steel production and competition with overseas producers.

“Together, Nippon Steel and U.S. Steel will be a world-leading steelmaker, with best-in-class technologies and manufacturing capabilities,” the companies said.

The combined company will become the world’s fourth-largest steelmaker in an industry dominated by the Chinese, and bring what analysts say is Nippon Steel’s top-notch technology to U.S. Steel’s antiquated steelmaking processes, plus a commitment to invest $11 billion to upgrade U.S. Steel facilities.

In exchange, Nippon Steel gets access to a robust U.S. steel market, strengthened in recent years by tariffs under President Donald Trump and former President Joe Biden, analysts say.

Anthony Rapa, a Blank Rome lawyer in Washington who advises firms on trade, operations and investments, said the government’s intervention in the Nippon Steel-U.S. Steel deal is another sign of a trend that the U.S. is increasingly equating economic security with national security.

He doesn’t see the government’s intervention as chilling foreign investment and said a “golden share” mechanism — to the extent it’s used again by the U.S. to ease national security concerns — is likely to emerge only in sensitive and complex cases.

Still, the episode could cause investors to be more strategic in how they approach transactions, Rapa said.

Anil Khurana, executive director of the Baratta Center for Global Business at Georgetown University, said the U.S. government’s interest in the deal is a sign of the growing importance it places on economic competition with China.

“Clearly the definition of what is national security has expanded to included national economic security, which is where I think this comes in,” Khurana said.

Nippon Steel and U.S. Steel did not release a copy of the national security agreement struck with Trump’s administration.

But in a statement Wednesday, the companies said the federal government will have the right to appoint an independent director and get “consent rights” on specific matters.

Those include reductions in Nippon Steel’s capital commitments in the national security agreement; changing U. S. Steel’s name and headquarters; closing or idling U.S. Steel’s plants; transferring production or jobs outside of the U.S.; buying competing businesses in the U.S.; and certain decisions on trade, labor and sourcing outside the U.S.

Nippon Steel announced in December 2023 that it planned to buy the steel producer for $14.9 billion in cash and debt, and committed to keep the U.S. Steel name and Pittsburgh headquarters.

The United Steelworkers union, which represents some U.S. Steel employees, opposed the deal, and Biden and Trump both vowed from the campaign trail to block it.

Biden used his authority to block Nippon Steel’s acquisition of U.S. Steel on his way out of the White House after a review by the Committee on Foreign Investment in the United States.

After he was elected, Trump changed course, expressing openness to working out an arrangement and ordering another review by the committee.

That’s when the idea of the “golden share” emerged as a way to resolve national security concerns and protect American interests in domestic steel production.

As it sought to win over American officials, Nippon Steel began adding commitments. Those included putting U.S. Steel under a board made up of a majority of Americans and a management team of Americans.

It pledged not to conduct layoffs or plant closings as a result of the transaction or to import steel slabs to compete with U.S. Steel’s blast furnaces in Braddock, Pennsylvania and Gary, Indiana.

In the final agreement, it pledged to produce and supply U.S. Steel from domestic sources — such as mining operations in Minnesota — and to allow U. S. Steel to pursue trade actions under U.S. law.

It also made a series of bigger capital commitments in U.S. Steel facilities, tallying $11 billion through 2028, it said.

Nippon Steel said its annual crude steel production capacity is expected to reach 86 million tons, closer to its goal of 100 million tons.

The United Steelworkers on Wednesday noted that its current labor agreement with U.S. Steel expires in 2026.

“Rest assured, if our job security, pensions, retiree health care or other hard-earned benefits are threatened, we are ready to respond with the full strength and solidarity of our membership,” its international president, David McCall, said in a statement.

This story was originally featured on Fortune.com

© Julia Demaree Nikhinson—AP

The Federal Reserve kept its key rate unchanged Wednesday as it waits for additional information on how tariffs and other potential disruptions will affect the economy this year.

The Fed’s policymakers signaled they still expect to cut rates twice this year, even as they also project that President Donald Trump’s import duties will push inflation higher. They also expect growth to slow and unemployment to edge up, according to their latest quarterly projections released Wednesday.

Fed policymakers had cut their rate three times late last year but have since have been on hold. Inflation has cooled steadily since January, but Fed Chair Jerome Powell said at a news conference that tariffs are likely to reverse that progress and push inflation higher in the coming months. The Fed expects the bump to inflation will be temporary, but they want to see more data to be sure.

“Increases in tariffs this year are likely to push up prices and weigh on economic activity,” Powell said. “This is something we know is coming, we just don’t know the size of it.”

Changes to the Fed’s rate typically — though not always — influence borrowing costs for mortgages, auto loans, credit cards, and business loans.

So far inflation has continued to decline while some cracks have appeared in the economy, particularly in housing, where elevated borrowing costs are slowing sales and homebuilding. Hiring has also slowed. Such trends would typically lead the Fed to reduce its key rate, which is currently at about 4.3%.

Yet Powell said the economy remains in good shape and the Fed has to consider the potential for prices to rise soon.

“You can see perhaps a very, very slow continued cooling” in the job market, “but nothing that’s troubling at this time,” he said.

“We have to be forward looking,” Powell said later. “We expect a meaningful amount of inflation to arrive in coming months and we have to take that into account.”

Powell also said the Fed will learn much more over the summer about how tariffs will affect the economy. George Pearkes, global macro strategist for Bespoke Investment Group, said he interpreted that to mean the Fed won’t cut until September, at the earliest. Its next meeting is in July.

“Unless we see a really, really rapid deterioration in the labor market we won’t see a cut until September, and maybe not even then,” he said.

Wall Street investors currently expect the Fed to cut in September, according to futures prices tracked by CME Fedwatch.

Fed officials see inflation, according to their preferred measure, rising to 3% by the end of this year, from 2.1% in April, according to the projections released Wednesday. They also project the unemployment rate will rise to 4.5%, from 4.2% currently. Growth is expected to slow to just 1.4% this year, down from 2.5% last year.

Claudia Sahm, chief economist at New Century Advisors and a former Fed economist, said that the projections show that policymakers do expect inflation to come down in 2026 and 2027, with the tariffs having just a temporary impact. Without the duties, officials would be more likely to cut rates soon, she said.

“The Fed seems to be in agreement that this will be temporary, but they don’t have high enough conviction yet,” she said.

So far, inflation has cooled this year to just 2.1% in April, essentially back at the central bank’s target of 2%. Core inflation, which excludes the volatile food and energy categories, remains elevated at 2.5%.

Trump has pointed to the mild inflation figures to argue that the Fed should lower borrowing costs and has repeatedly criticized Powell for not doing so. On Wednesday he called Powell “stupid” and accused him of being “political” for not cutting rates.

“So we have no inflation, we have only success,” Trump said, before the Fed announced its decision. “And I’d like to see interest rates get down.”

Trump has previously argued that a rate cut would boost the economy. Now his focus has shifted to the federal government’s borrowing costs, which have shot higher since the pandemic, with interest payments running at an annual rate of more than $1 trillion.

Pushing the Fed to cut rates simply to save the government on its interest payments typically raises alarms among economists, because it would threaten the Fed’s congressional mandate to focus on stable prices and maximum employment.

One of Trump’s complaints is that the Fed isn’t cutting rates even as other central banks around the world have reduced their borrowing costs, including in Europe, Canada, and the U.K. On Tuesday, the Bank of Japan kept its key short-term rate unchanged at 0.5%, after actually raising it recently.

But the European Central Bank, Bank of Canada, and Bank of England have reduced their rates this year in part because U.S. tariffs are weakening their economies. So far the U.S. economy is mostly solid, with the unemployment rate low.

The Bank of England has cut its rate twice this year but is expected to keep it unchanged at 4.25% when it meets Thursday.

This story was originally featured on Fortune.com

© Mark Schiefelbein—AP

Malaysia’s government is verifying media reports that a Chinese company may be circumventing U.S. export curbs on high-end AI chips by using servers housing Nvidia chips based in the Southeast Asian country.

The Wall Street Journal reported that Chinese engineers had flown to Malaysia in March carrying hard drives containing data to build artificial intelligence models in Malaysian data centers using advanced Nvidia chips.

The engineers planned to bring the AI models back to China, the report said.

The United States has cracked down on exports of advanced semiconductors to China, including those made by U.S. tech giant Nvidia, as it seeks to retain a competitive edge over the technology.

A Malaysian trade ministry statement on Wednesday said it was “verifying the matter with relevant agencies if any domestic law or regulation has been breached”.

The ministry said that while servers using Nvidia and AI chips are not classified as controlled goods under Malaysian law, the country “will cooperate with any government that requires assistance in monitoring trade in sensitive goods under the export control of their respective countries”.

Data centers in Malaysia “are free to make their own commercial decisions”, the statement said, but added that it was illegal for any person or firm to circumvent export controls.

The trade ministry said it “will always act firmly against any company operating in Malaysia, including those involved in semiconductor and AI industries, that violates Malaysian and international trading regulations”.

Asked about the reports, Beijing insisted it required Chinese firms to operate according to local laws and regulations.

“At the same time, it opposes any act of coercing other countries to restrict their cooperation with China,” foreign ministry spokesman Guo Jiakun told a regular press briefing.

“China is willing to work with countries in the region, including Malaysia, to jointly maintain a free and open international trade order,” he added.

Singapore in March charged three men with fraud in cases reportedly linked to the transfer of AI-powering Nvidia chips to China.

The Singaporean government said servers potentially containing AI-powering Nvidia chips shipped from the United States to Singapore had ended up in Malaysia, but that their final destination was unknown.

Local media linked their cases to the alleged movement of Nvidia chips from Singapore for use by Chinese AI firm DeepSeek.

In January, DeepSeek released its R1 chatbot, shaking the global tech market and claiming its tool can match the capacity of top U.S. AI products for a fraction of their costs.

This story was originally featured on Fortune.com

© Ying Tang—NurPhoto via Getty Images