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Get your copy wherever books are sold. Good morning from the Financial Times.
Today is Thursday, August 7th, and this is your FT News Briefing.
Companies in Europe are having a hard time right now, and Coreweave's deal to buy its landlord is hitting some speed bumps.
Plus, Iranian nuclear scientists took a covert trip to Russia last year.
We'll tell you what an FT investigation learned about it.
I'm Marc Filippino, and here's the news you need to start your day.
European companies are falling behind their American counterparts.
European stocks actually outpaced their Wall Street peers at the beginning of this year.
But now, Bank of America found that the stock 600 index is on track for no earnings growth last quarter compared with a year ago.
Meanwhile, the members of the S&P 500 are expected to report 9% average growth year on year.
That's largely due to banger earnings from Silicon Valley's tech giants and Wall Street banks.
U.S. President Donald Trump's new tariff regime has been an obstacle for many European exporters, but the direct impact of the tariffs is still yet to be seen.
CoreWeave's deal to buy its landlord could be facing a revolt.
Now, CoreWeave operates AI data centers, and it wants to take over the AI infrastructure company Core Scientific, which leases out those data centers.
But some top Core Scientific shareholders are worried they're getting a bad deal.
Here to talk more about this is Amelia Pollard.
She's the FT's U.S. Deals and Activism Correspondent.
Hey, Amelia. Hey, Mark. Thanks for having me.
Good to have you. So just give me some more details about this deal.
What would each side get out of it? It's a $9 billion all-stock takeover of Core Scientific.
And basically, Core weaves interest in this deal because over time, it would cut back $10 billion of lease costs that they're going to pay to Core Scientific over the coming years.
And this is coming at a time where CoreWeave has been public for almost six months now, and they need to rein in their costs.
They have a big amount of debt, and those interest payments will be costly in the coming two years.
So they realize that they need to really focus on their balance sheet and cut back on costs wherever they can.
Amelia, before we get too far into it, I think it's important for people to understand the significance of CoreWeave.
Why is this a company that we care enough about to talk about it right now?
Yeah, so CoreWeave has been one of the most closely watched IPOs of this year.
And it really is like the poster child for just how insanely frothy and buzzy the AI economy has become.
So they have huge relationships with OpenAI and Microsoft.
And as the company that provides a lot of the infrastructure that kind of underpins so much of the computing power that's going on today, It has really ridden that wave and its stock has soared since it initially went public.
So it sounds like CoreWeave is successful and wants to keep riding that wave you mentioned through an acquisition like Core Scientific where it can, you know, save a little bit of money.
But what about the Core Scientific side of things?
What are their investors worried about? So by most metrics, you'd think that Core Scientific shareholders would be psyched about this deal.
Core Scientific was originally a crypto miner, and they filed for bankruptcy just a few years ago.
So this is a huge turnaround story for them, but it really comes down to the terms of the deal.
Core Scientific will get a fixed amount of shares, a small fraction of every CoreWeave share for each Core Scientific share they hold.
And the problem is that there's been a lot of volatility in the CoreWeave stock.
So Next week, we're going to have an earnings report, and that'll be a huge benchmark to see how CoreWeave's done.
But even more importantly, there's a huge share lockup with CoreWeave, which means that a lot of the insiders and pre-IPO investors who bought into the stock right around when it went public in March already are going to be able to sell their shares for the first time.
And so the big concern, according to core scientific shareholders, is that the stock has the potential to crater or at the very least drop to some extent in September when that share lockup expires.
I see. So these core scientific shareholders would, you know, become core weave shareholders and they're worried about that stock falling.
But Amelia, how big of a threat are the unhappy investors to getting this deal across the line?
That's the big question. At this point, you know, there are a lot of different hedge funds and other investors that own the stock, and there's no one clear big player who's in there yet to really shake things up.
But the fact that so many people seem to share the same concerns is a sign that Core Scientific will have to reckon or deal with the fact that there is upset.
And there are a lot of caveats on this because it depends how CoreWeave does next week and its earnings.
And it also depends on what happens with the share lockup.
But there is definitely some tension mounting and it's a situation to keep an eye on.
Amelia Pollard is the FT's U.S. Deals and Activism Correspondent.
Thanks, Amelia. Thanks for having me. A little while ago, we told you that Boston Consulting Group estimated the costs of relocating Palestinians out of Gaza.
There was a massive fallout for the firm because of that.
Now, more FT reporting has found that BCG looked at moving those Palestinians to Somalia.
That's according to people familiar with the work.
BCG's model would have involved relocating hundreds of thousands of people to not only Somalia, but also the United Arab Emirates, Egypt, and Jordan.
This project grew out of BCG's work helping to set up a controversial aid program.
BCG then fired the partners involved in that work back in June, saying they misled their superiors.
BCG declined to comment beyond its previous public statements.
Iran's nuclear program has been an important topic this year.
The strikes by Israel and the U.S. on Iranian nuclear sites escalated an already tense relationship.
Now it turns out that last year, an Iranian delegation visited Russian scientific institutes, those that produce components that have potential relevance to nuclear weapons research.
Iran's government did not respond to the FT's questions about the trips.
I'm joined now by FT investigative reporter, Miles Johnson, who helped break this story.
Hey, Miles. Hi. So, Miles, tell us a little bit more about this trip to Russia by this Iranian delegation.
So, this was a story that we reconstructed using a lot of different primary sources, which showed that these nuclear scientists traveled to Russia last year, and ostensibly they were working for a sort of civilian consulting company.
But in fact, they were traveling on Iranian diplomatic passports, and they were meeting with Russian companies, which are sanctioned by the US, which are connected to the Russian military, and they produce what would be called dual-use technology.
So that's technology which has both civilian and military applications.
So our story is sort of flagging that trip and how this fits into this sort of quite suspicious, but sort of obviously quite ambiguous types of Iranian covert activity around the nuclear program, which has often caused Western governments to become concerned and also unclear about what the intentions behind that activity really are.
Yeah, I want to get into that trip and the intentions behind it a little later.
But first, tell me what the history is between Russia and Iran when it comes to nuclear development.
I mean, this isn't out of nowhere, right?
They have some sort of relationship. Well, this is, you know, a really important part of the story, which is that Russia and Iran have a long history of collaborating on civil nuclear projects in terms of Russia helping Iran build nuclear reactors and power plants and the like.
Russia also has always, you know, is a signatory to the Non-Proliferation Treaty and has always maintained that it is very much against any possible attempt by Iran to obtain nuclear weapons.
But this trip is different and interesting because the nature of the trip is covert.
And so all of that sort of begs the question of what exactly are they doing and why did they go in that way?
Well, let's pick that apart a little bit, Myles.
What else do we know about the trip? So in terms of the sort of broader context of this, our reporting shows that these individuals were connected to an entity called the SPND, which is an Iranian entity, which the US government and others say is the direct successor organization to Iran's previous nuclear weapons program, which was stopped around 2003.
And so the SBND is sanctioned by Western governments for its role in nuclear weapons relevant research.
And also there was this very interesting element to the story where The scientists, the nuclear scientists who arranged the delegation made a request around the same time of three isotopes, one of which, tritium, is heavily controlled because it can be used to boost the power of modern nuclear warheads.
So Miles, do we have a sense then whether or not this trip fundamentally changed Iran's capability to build a nuclear weapon in the future, or is that still unclear?
We certainly don't know that. And, you know, we wouldn't want to overstate our conclusions from our investigation.
I think this is part of a pattern of activity.
In May, the U.S. State Department sanctioned SPND-linked individuals and a business for engaging in what it called dual-use scientific research, which would be potentially applicable to nuclear weapons.
And it has long been this sort of conundrum where different analysts have been able to sort of look at similar activity and draw different conclusions.
So, you know, a very well-known example is obviously Iran's uranium enrichment, where Iran has been in the last few years enriching uranium to levels which are way beyond any civilian use or justification.
And some people have interpreted that as a clear signaling that they would be, let's say, shortening the timeline to potentially develop a nuclear weapon in the future.
But others would say, oh, it's a type of signaling or attempting to gain leverage in nuclear negotiations with the United States.
And so this is a very, very tricky area where it's very hard to draw definitive conclusions.
Miles Johnson is an investigative reporter for the FT.
Thanks so much, Miles. Thank you. Before we go, do you have a question about U.S. politics and the economy?
Well, if you do, I want to help you get some answers.
Send your question to the email in the show notes, and I'll try to answer them on the other podcast that I host, Swap Notes.
Make sure to include your name and where you're writing from, and we love voice memos.
If you include one, we may even play it on the show.
This has been your daily FT News Briefing.
Check back tomorrow for the latest business news.
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