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Chapter 1: What is the main topic discussed in this episode?
Good morning from the Financial Times. Today is Tuesday, June 9th, and this is your FT News Briefing. OpenAI is officially going public, and U.S. investors are getting the rate increase heebie-jeebies. Plus, the White House is trying to figure out how to handle Israel's recent strikes on Lebanon. I'm Mark Filippino, and here's the news you need to start your day.
OpenAI confidentially filed for an initial public offering yesterday. The chat GPT maker will likely be valued at more than a trillion dollars. This comes just a week after OpenAI's rival Anthropic filed its own IPO paperwork and just days before SpaceX, Elon Musk's company, is set to go public.
Chapter 2: What recent developments are occurring with OpenAI's IPO?
But OpenAI's IPO might not come so quickly. The company said in a statement that it hadn't decided on timing yet and that it, quote, may be a while because there are things we want to do that are likely easier as a private company. OpenAI's potential listing will test the appetite that investors have for a company with unprecedented revenue growth, but also huge losses.
Okay, we're going to zoom out and talk about the U.S. equities market as a whole now. Wall Street had a slight change of heart yesterday. U.S. equities rebounded a bit after a rough day on Friday for AI-related stocks. The tech-heavy Nasdaq rose nearly 1% on Monday after it fell more than 4% on Friday.
And all this volatility is happening during an important week for the market, like I just mentioned. OpenAI filed IPO paperwork, and SpaceX is expected to list on Friday in what could be the biggest initial public offering of all time. Here to tell us more is Robert Armstrong. He's the FT's U.S. financial commentator and host of the Unhedged podcast. He also writes the Unhedged newsletter.
Hi, Rob. How are you? It's good to be back on the show. I'm very happy to have you, Rob, because there's a lot of stuff happening at this moment that is very confusing.
Well, I think with the route on Friday, you have to distinguish... between the proximal cause and the ultimate or underlying cause. The proximal cause is that we got the third consecutive quite strong monthly jobs report that show some life in the jobs market.
And when the economy is suddenly humming and we have a little bit of an inflation problem, it is very hard for the Federal Reserve to justify a cut in rates and they may even be pushed. into raising rates. And stock markets do not like higher interest rates. But I would say there is a more significant underlying cause, like one rate increase between friends.
It's not going to change the picture all that dramatically. I think this is a case where a very, very strong market that had been rising powerfully now for quite a while. And when markets get that much momentum, you get these events where it's like the market needs to take a breather.
So it did get its breather, right? Saturday and Sunday. And, you know, it came back a little stronger on Monday. But what a week to have all this volatility crop up because, as I mentioned, OpenAI filed and SpaceX plans to launch, pun intended, perhaps the biggest IPO of all time. Could this volatility hurt those initial public offerings? You know, what's going on?
I would think of it like this. Everybody is paying very high prices for stocks right now. They're chasing the price of the stock market up. And along comes Elon and says, you know what? I'm going to add even more supply of stocks. right? He's going to give investors more things to spend money on.
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Chapter 3: How did Wall Street react to recent market volatility?
BP apparently told shareholders that they're going to stay the course on that strategy. Around the time Manifold was sacked, BP's interim chair Ian Tyler said the board had, quote, deep conviction in the plan and that it's moving along. Shareholders said they still need more clarity on what's next. BP said it's committed to delivering value for its shareholders.
Turning now to the Middle East, Israel hit Lebanon over the weekend, targeting a Hezbollah stronghold in Beirut. Iran backs Hezbollah and retaliated by hitting Israel shortly after. Tehran and Israel halted any military operations against each other on Monday, but Tel Aviv's war strategy is increasingly leaving the U.S. between a rock and a hard place.
Here to discuss is the FT senior foreign affairs correspondent, Mehul Srivastava. Hi, Mehul. Hi, guys. So why hasn't the ceasefire stopped the fighting between Israel, Lebanon, and Iran?
I think the best way to think about it is as two separate but interconnected ceasefires. There's the U.S. and Israel war in Iran, and then Israel's war with Hezbollah. And Hezbollah is supported by Iran, and Iran's other proxies in the region have been decimated over three years of war with Israel.
Hezbollah remains standing and projecting itself as being the protector of the Lebanese homeland has become part of Iran's posture.
Yeah. And what about Israel? Why is Prime Minister Benjamin Netanyahu striking Lebanon despite the ceasefire?
Well, you have to look at it through two lenses. One is Israel has elections coming in October, and some 60,000, 70,000 residents of northern Israel have been displaced from their homes for about two and a half, three years now. The Israeli army has invaded Lebanon, has occupied hundreds of square kilometers of southern Lebanon, but Hezbollah is not defeated.
It has rockets, and it has declared its intention to defend Lebanese territory by attacking at least northern Israel and further on.
Now, Mehul, this really complicates things for the U.S. because while President Donald Trump can negotiate directly with Iran, he can't control how Israel approaches Iran or Lebanon. So how is this impacting how he treats his relationship with Benjamin Netanyahu?
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