Defence stocks drop despite US-Iran war
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Good morning from the Financial Times. Today is Thursday, April 30th, and this is your FT News Briefing. Investors don't love Meta's plans for AI, and the special relationship between the US and the UK held up this week. Plus, shouldn't war be good for defense stocks? The adage goes, you buy the tension and you sell the war. I'm Mark Filippino, and here's the news you need to start your day.
Meta reported quarterly earnings yesterday, and things looked pretty good on the surface. Revenues jumped 33% in the first quarter year on year. That beat Wall Street expectations.
What are Meta's plans for AI spending in 2023?
And what's more, Meta expects revenues to rise this quarter. But the tech giant lost the crowd when it started talking about plans for artificial intelligence. Meta said it's going to expand its AI spending spree this quarter. The company raised its expected capital expenditure for this year to be as much as $145 billion. That ceiling is $10 billion higher from what Meta shared last quarter. Investors weren't too thrilled with this. Meta's share price dropped in after-hours trading. Jay Powell gave his final press conference as chair of the Federal Reserve yesterday, but he's probably not leaving the U.S. Central Bank anytime soon.
I welcomed the announcement last Friday by the U.S. attorney for the District of Columbia that she had closed the criminal investigation.
He's referring there to U.S. prosecutors dropping a criminal probe against him. It was related to cost overruns in a Fed building project. But over the weekend, U.S. attorney Jeanine Pirro said she would not hesitate to restart the investigation.
I've said that I will not leave the board until this investigation is well and truly over with transparency and finality, and I stand by that. After my term as chair ends on May 15, I will continue to serve as a governor for a period of time to be determined.
In the meantime, Powell's successor, Kevin Warsh, cleared yet another hurdle yesterday on the road to taking up the mantle at the Fed. The Senate Banking Committee voted 13-11 to advance its candidacy to a full vote on the Senate floor. Powell's remarks came after the Fed opted to keep interest rates on hold for the third straight meeting. The committee cited higher inflation, which is due in part to the ongoing effect of U.S. tariffs and rising energy prices from the war in Iran.
In sort of the textbook, you would look through an oil shock because they tend to be short-lived and they tend to revert. But looking through energy really is not in front of us right now. It hasn't even peaked yet. And I think we'd want to see the backside of that and progress on tariffs before we even thought about reducing rates.
Brent crude jumped yesterday to just above $120 a barrel, its highest level since 2022. That came after U.S. President Donald Trump said he did not want to end the U.S. blockade of the Strait of Hormuz.
Things between the U.S. and the U.K.? They've been better. King Charles visited Washington this week. He addressed Congress and met with U.S. President Donald Trump. And despite the tensions, the two heads of state tried to project their relationship isn't a good place. The FT's Whitehall editor, Lucy Fisher, joins me now to discuss the trip. Hi, Lucy. Hi, Mark. So there was a lot of tension between the two countries going into this visit. Get us up to speed. What was going on?
Well, look, there's been a lot of antipathy between Donald Trump and Keir Starmer. And the latest raft of that has stemmed largely from what the US president sees as the UK's insufficient support for its war with Israel against Iran. the UK not allowing the US to use British bases to launch the initial strikes against the Tehran regime. And since then, we've heard Trump lashing out at the UK, suggesting that he might withdraw US support for British sovereignty in the Falkland Islands. Trump has been attacking Starmer very personally, saying he's no Churchill. And those attacks have scaled up in recent weeks.
And if that wasn't enough, some leaked audio that the FT got a hold of showed that things were even more tense.
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