Iran's blockade has escalated in step with the Fed's cracks. Rewire News Morning

Warships in the Straits of Hormuz and Washington voted to push the market in two directions within the same 24 hours. While oil prices hit $120, the Fed had the largest crack in 34 years。

1 IRANIAN BLOCKADE ESCALATION: $15 BILLION IN MILITARY BILLS IS TAKING OVER THE AI BUDGET

THE UNITED STATES ANNOUNCED A FULL-SCALE NAVAL BLOCKADE ON IRAN, WITH BRENT CRUDE OIL RESPONDING TO AN ACOUSTIC SHOCK OF $120, UP FROM 2022. THE PENTAGON REVEALED A FIRST-MONTH OPERATING BUDGET OF $15 BILLION. THIS FIGURE IS NOT SURPRISING IN ITSELF, BUT RATHER IN DIRECT CONFLICT WITH ANOTHER PIECE OF MONEY. THE UNITED STATES GOVERNMENT SPENT A TOTAL OF $32 BILLION ON INFRASTRUCTURE FOR FISCAL YEAR AI. THE COST OF A MILITARY OPERATION IN THE MIDDLE EAST FOR TWO MONTHS COULD EAT ALMOST HALF OF THE AI BUDGET。

DEEPER CONTRADICTIONS ARE AT THE ENERGY END. APPROXIMATELY 20 PER CENT OF THE WORLD ' S AI DATA CENTRE SITES DEPEND ON THE SUPPLY OF MIDDLE EASTERN GAS (EIA DATA), AND ACCESS RESTRICTIONS IN THE STRAIT OF HORMUZ DIRECTLY INCREASE THE OPERATING COSTS OF THESE FACILITIES. CHINA HAS SIMULTANEOUSLY EXPANDED ITS RARE-EARTH EXPORT CONTROLS, INCLUDED TUNGSTEN AND TUNGSTEN IN ITS RESTRICTIONS LIST AND FURTHER TIGHTENED THE SUPPLY CHAIN OF MILITARY ENGINEERS AND CHIPS. ENERGY AND RARE EARTH LINES ARE TIGHTENING, AND THE PHYSICAL CONSTRAINTS OF AI ' S EXPANSION ARE BECOMING MORE REALISTIC THAN ALGORITHM BOTTLENECKS。

(Source: Reuters / Bloomberg/ U.S. Central Command / EIA)

Two of the Fed's biggest differences in 34 years: Powell's exit has recast power structures

The Fed maintained interest rates at 8:4 by voting, with four against being the largest disagreement since 1992. More important than decision-making itself is the transfer of power signals. Powell confirmed that he would no longer serve as Chairman after the end of his term, but chose to remain as a member. This is not a normal departure, but an unprecedented arrangement。

Retention means that Powell retains the right to vote and influence banking regulation. Kevin Walsh, as the most likely successor, will face the situation of a former President sitting in his own room. George Selgin, an economist at the Cato Institute, noted that there had never been a precedent in the history of the Federal Reserve for the former Chairman to counterbalance the new Chairman as a member. Two out of four votes came from the Chairman of the Regional Federal Reserve, advocating an immediate reduction of interest rates by 25 basis points, reflecting a shift from an academic debate to a vote against the difference between inflation and growth。

(Source: Wall Street Journal / Financial Times / Kato Institute)

# 3 CLOUD HEADER SEASON #

Google Clouds lost $20 billion in quarterly revenue, an increase of 35 per cent over the same period. AWS received $37.6 billion and AI earned more than 20 per cent for the first time. Both sets of data appear to confirm the narrative of the demand for AI, but Meta's capital expenditure figures tell another story. For the whole year, Capex went up to over $60 billion, down 4 per cent。

Market panic is not about Meta spending too much money, but about a structural problem. AI Demand is growing faster than infrastructure. In Weida Q1 data centre revenues exceeded $40 billion, but the growth slowed, not because of insufficient demand, but because of the inability to keep up with capacity. Goldman Sachs estimates that the global AI data centre will face a power deficit of 15-20% by 2027. The difference between the demand curve and the supply curve is causing cloud producers to move from "growth competition" to "capacity distribution competition"。

(Source: Bloomberg/ Reuters/ Financial Times/ Goldman Sachs)

4 | stabilization currency penetration accelerated: when Visa and Meta joined the scene

Visa's stable currency settlement exceeded $7 billion, and the ring grew by 40 per cent. On the same day, Meta announced the use of a stable currency to pay the author's share. Securitize was approved by SEC to monetize US stock, opening a 70 trillion-dollar market gate. Three pieces of information were linked to the same signal and the stabilization currency was penetrating from the encrypted scene to the traditional financial infrastructure。

The key turning point is that users have changed. Visa ' s $7 billion settlement came not from an encrypted exchange, but from business receipts and cross-border remittances. Meta ' s stabilization currency payments cover millions of creators around the world, who do not care about block chains, but rather pay faster and lower fees. Securitize was approved to move directly into the chain the largest traditional asset class, equities. When the payment giant uses the money as a conduit, the technology giant uses the money as a tool, and the securities service provider uses the money as a product, the "large-scale adoption" of the encrypted currency may not happen in the way people think。

(Source: Bloomberg / CoinDesk / Financial Times / CNN)

And it's worth knowing, Zoo

Rainbow Semiconductors are included on the United States export control list. The United States continues to tighten the limits of the Chinese chip industry, which is the latest Chinese semiconductor enterprise to be included in the list of entities, mainly affecting mature production capacity. (Source: Financial Times)

Business soup releases large models of fully suitable national chips. It's the first commercial model in the country that publicly claims to be completely free of Yvette GPU's reliance on, using Chinese fortified and cold-blooded chips. (Source: South China Morning Post)

The Hong Kong office in Goldman Sachs prohibits employees from using Claude and ChatGPT. This is another Wall Street agency following Morgan Chase tightening its policy on the use of external AI tools in the Asia-Pacific region, and data cross-border compliance is a major concern. (Source: Financial Times)

Apple switched the Siri Large Model to a self-study structure, working with OpenAI. Apple abandons ChatGPT as a siri backend, turning to a completely self-researched side model. This means that OpenAI lost its largest distribution channel partner. (Source: Wall Street Journal)

Microsoft Copilot Enterprise Users over 100 million. From 40 million at the end of last year to 100 million now, Copilot is growing at a much faster rate than expected. Microsoft is moving AI from a functional selling point to a default layer for Office. (Source: CNBC)

A group of residents of the Canadian town of Tumbler Ridge sued OpenAI. This may be the first community-based AI training data privacy class action in the world, where the plaintiffs claim that OpenAI training data contain their personal information and community files. (Source: NPR)

Google signed an AI data analysis contract with the Pentagon. Google returned to the Defence AI market after withdrawing from the Maven project in 2018, a contract that focused on non-operational data analysis, but still provoked internal controversy. (Source: CNBC)