Good morning from the Financial Times.
Today is Thursday, May 29th, and this is your FT News briefing.
Nvidia is still riding high on the AI wave and the Trump administration is playing rough with Venezuela.
Plus Delaware was the spot for companies to incorporate.
Now, Nevada and Texas are challenging that.
I'm Mark Filippino and here's the news you need to start your day.
A US court invalidated President Donald Trump's so -called Liberation Day tariff scheme yesterday.
The move could throw Trump's global trade policy into disarray.
The US Court of International Trade found that the president did not have the power to introduce the levies using emergency economic powers legislation.
Trump cited that legislation when imposing the sweeping tariffs on countries around the world last month.
A White House spokesperson defended using the emergency powers, the Trump administration says it will appeal the ruling.
The Trump administration said this week that it will not renew Chevron's oil license in Venezuela, which means the company can no longer produce oil in the country.
The announcement by the U .S. State Department complicates an increasingly tense relationship between Washington and Caracas.
Here to talk about it is the EFT's Washington bureau chief James Politti.
Hey, James. Hey, Marc.
So bring us up to speed.
Why is Chevron's presence in Venezuela kind of a sticky situation?
So when he came into office at the beginning of this year, President Trump had said he didn't want to do anything to enable the regime of President Nicolás Maduro.
and he had warned that Chevron's oil license might be in jeopardy.
And this week he followed through with the decision to pull the plug on the license.
And of course that raises tensions between Washington and Caracas at a time when America's kind of relationship with Latin America is definitely in flux.
Why is this such a blow to Venezuela?
Well, it's a blow to Venezuela because the regime run by Maduro, obviously earns quite a bit of revenue from the oil industry, having a big American oil major producing and exporting from the country helps sustain it, and so depriving it of that is quite problematic for the regime.
Why did the Trump administration eventually pull the plug on Chevron's license?
Well it just decided that it didn't want to help the Maduro regime anymore and it was time to kind of crack down.
And that comes amid a sort of split between the different personalities and officials, top officials in the Trump administration.
Secretary Marco Rubio has long been a Venezuela hawk and was out front championing the decision to remove the license, whereas others in the administration, such as Rick Grenell, the special envoy, has been negotiating the release of detained Americans in the country and had been in talks with Venezuelan officials about this and had actually suggested that the license might be renewed as recently as last week.
So there's been a bit of a tug of war within the administration over this conflicting messages, but for now, the sort of more hawkish approach championed by Secretary Rubio seems to have won out.
How does this move fit in with Trump's stance towards the oil industry?
He's talked a lot about oil since coming back into office.
Well, the oil industry has certainly cheered on some of the Trump administration's moves, especially when it comes to regulation and drilling and those kinds of policies.
On the other hand, the oil industry has not been very satisfied with President Trump's trade policies.
They've worried about the tariffs and how they could affect the energy industry and their ability to transact across the globe.
And this is a case where Chevron had been lobbying pretty hard to have this license renewed. And they weren't able to win that argument with the Trump administration.
They were able to get the Trump administration to issue a more limited license, which will allow it to maintain its assets in Venezuela just for ordinary care, but that won't allow Chevron to produce oil and export it.
Oftentimes, the Trump administration will do something as a bargaining chip.
Is there any way that Chevron's license could be reinstated if they get something they want from the Maduro administration?
That's hard to tell.
It's true that President Trump will use almost anything as a bargaining chip.
And so this could be a decision that's overturned, changed at any point.
There is another factor to consider however, which is that there are a number of Republican and members of Congress from Florida, who are also adamant that that license had to be stopped.
And if the Trump administration were to reverse course on this before passage of the final passage of the big, beautiful tax bill, as it's called, then it could put passage in the House in jeopardy, given that Republicans have such a slim majority in the House.
That's the FT's James Pleady.
Thanks, James. Thanks for having me.
The artificial intelligence boom seems to be alive and well for NVIDIA, despite economic uncertainty and increasing U .S. export controls.
The chipmaker reported yesterday a nearly 70 % surge in quarterly revenues year on year, that beat analysts' expectations.
But its revenue projections for this quarter came in slightly below Wall Street estimates.
The company is navigating the impact of US President Donald Trump's trade war with China.
It's also dealing with new export restrictions.
Those have prevented it from selling AI chips designed specifically for China.
Nvidia shares jumped in after hours trading following the earnings report.
The U .S. states of Texas and Nevada are in the middle of a showdown of sorts.
No, it's not a sports rivalry or a political face -off, it's a battle to become the next Delaware.
Texas and Nevada are competing to have the most attractive corporation law and become a hotspot for companies to incorporate.
Here to explain is the FT's Wall Street editor, Sujit Indap.
Hey, Sujeet. Hey. Great to be here, Mark.
So just give me some background on what state -level corporation law is and why it's such a big deal to American companies.
Yeah, so state -level corporation law essentially governs how companies make decisions and then how it is shareholders who are upset with those decisions if they want to file a lawsuit, how those lawsuits are brought, what's the law that applies to that.
Delaware is the market leader in this area, has been for several decades, almost a hundred years.
And because Delaware dominates this world, they have literally like a million different corporate entities that are incorporated there.
Those entities pay taxes, and those taxes are so much in volume that Delaware does not have a state sales tax.
But now that dominance is being challenged, and the risk is these fees and, frankly, this prestige are going to go away too.
But why is Delaware looking somewhat less attractive to these corporations?
So this goes back to a high -profile court fight.
Elon Musk, obviously the world's richest man, famously had this $56 billion pay package that was awarded to him by the Tesla Board of Directors in 2018.
A shareholder sued, saying that package was excessive.
And the lower court in Delaware said the board of directors of Tesla and awarding that was too cozy with Musk, and therefore was not independent, and therefore it just invalidated the package.
And so Tesla very quickly moved its incorporation to Texas, and a bunch of other companies that are like Tesla decided to rethink whether Delaware made sense for companies like them.
Okay, so you mentioned Texas.
what kind of changes have Texas and Nevada been making to their corporate law to become more attractive?
So I think we'll go out to Delaware for one second.
It is a state that is very flexible and gives a lot of freedom to boards of directors to make the decisions that they want to without being second -guessed.
If shareholders don't like that, typically they can just replace the directors.
But there is an exception to that.
And that relates to companies like Tesla have a dominant shareholder or founder, their decisions get a much higher level of review, and that's where Elon Musk and Tesla got tripped up.
And so, Nevada and Texas have created systems where founders like Elon Musk are just not going to be second -guessed by shareholders in the same way.
And they are using that to tell founders and boards of directors, come to our state because you're not going to have a situation where your $56 billion pay package is going to be invalidated by an unelected judge.
So, Sujita, is Delaware just taking this lying down, or is it doing something to try and stay competitive?
Yeah, they are definitely not taking this lying down.
In the last two years, the legislature have made a series of changes to Delaware law to make it harder for shareholders to win lawsuits in an effort to prevent this exodus, which they're calling Dexit.
And that's been controversial again, because Delaware has been a jurisdiction that's been very neutral and even -handed between shareholders and companies.
And that balance has definitely tipped.
So in that kind of framework, there is this competition to see who can have the strictest rules on shareholder actions.
And the question now is, a, will companies actually decide to leave Delaware, which again, has like 60 % or two -thirds of S &P 500 companies, or will companies say, you know, we don't want to actually anger the big mutual funds, those shareholders will be upset if we move.
And what they'll do is they'll sell our shares.
And that's not good for anyone.
So that's a question to see how it's answered in the next two or three years.
Sujeet Indap is the FTU's Wall Street editor.
Thanks Sujeet. Thanks, Marc.
You can read more on all these stories for free when you click the links in our show notes.
This has been your daily FT News briefing.
Check back tomorrow for the latest business news.
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