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So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions, not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business IBM.
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The President notches another GOP win as Trump critic Thomas Massie loses in Kentucky
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I mean, we stirred up something.
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There is a yearning in this country for somebody who will vote for principles over party. Plus, a global sell off in bonds starts to bring down stock markets and the EU finally agrees to move forward with its US trade deal. It's Wednesday, May 20th. I'm Daniel Bock for the Wall Street Journal, filling in for Luke Vargas. And here is the AM edition of what's News, the top headlines and business stories moving your world. Now my focus is on advancing the president's and the party's agenda to put America first and Kentucky always President Trump's hand picked House candidate, former Navy SEAL Ed Gallrein, has defeated longtime GOP antagonist Thomas Massie in their Kentucky primary. Journal, Congressional reporter Siobhan Hughes says it's another sign of the president's iron grip on the Republican Party and potential consequences for lawmakers who defy him. Heading into the midterm elections, Trump had
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opposed Massie because Massie voted against his $3.4 trillion big beautiful bill Massey didn't like the cost of those tax cuts and spending increases. Massie also opposed the war in Iran, Trump's tariffs and perhaps most personally, Massie led the charge to enact legislation forcing the release of files related to convicted sex offender Jeffrey Epstein, an issue that Trump had initially dismissed as a hoax. Massey fought back, assembling a coalition of young people opposed to the war in Iran. Libertarians, fiscal conservatives, make America healthy again. Moms, small farmers. But in the end, it wasn't enough. He faced an onslaught of $19 million in advertising, most of it courtesy of hawkish pro Israel groups.
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I would have come out sooner, but I had to call my opponent and concede. And it took a while to find Ed Gowran in Tel Av.
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In the end, it was the most expensive House primary in American history. But this may not be the final word. As Massie addressed a crowd of his adoring supporters who cheered 2028 and Massie for president, Massie said. I started running a campaign and we have ended up with a movement.
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In other votes yesterday, Trump aligned Georgia congressman Mike Collins will face former football coach Derek Dooley in a runoff next month after neither captured enough votes to advance in the GOP Senate primary. President Trump didn't endorse a candidate in the challenge to Democrat Jon Ossoff for his Senate seat. Democrats have already notched some key wins in the red leaning state ahead of the midterms that will determine control of Congress. And to that end, three Democrats in Pennsylvania, backed by governor Josh Shapiro, won their primaries yesterday as the party looks to flip the state's four swing districts in hopes capturing a House majority in November. In the 4th swing district, Scranton's mayor was unopposed for the Democratic nomination. Meanwhile, just days after the president celebrated the loss of Senator Bill Cassidy in a Louisiana GOP primary, Cassidy voted in favor of advancing a resolution that would limit Trump's ability to wage war in Iran without congressional approval. The procedural ballot passed by three votes. The senator hadn't supported similar measures in seven previous votes going back to the start of the war with while he was in the midst of a reelection campaign where Trump urged voters to oust the politician who had voted to convict Trump in his second impeachment trial over the Capitol riots. In a statement on X, Cassidy said the White House and Pentagon have left Congress in the dark over the Iran conflict. War powers resolutions in both chambers have inched closer to passing in recent days where Republicans have narrow majorities, though Trump has largely ignored Congress in his overseas military strikes. Coming up, a look at the regulatory probe into suspicious oil trades worth $800 million and the EU agrees to move forward on a US trade deal. Those stories after the break.
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Just moments before President Trump called off strikes on Tehran's energy infrastructure in late March, a flurry of off hours trades came in with more than $800 million worth of oil futures changing hands in a matter of moments. And now we're exclusively Reporting that officials are trying to gauge whether an insider traded on that information or leaked it to someone who could. For more, I'm joined by Journal Finance editor Alex Frangos. Alex, what do we know about these trades and what regulators are looking at?
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The Commodity Futures Trading Commission, the cftc, which is a big regulator in Washington that looks over trading of oil futures and things like that, identified a bunch of firms that they want to find out more information about, firms that traded ahead of the President calling off the strikes. Oil prices plunged when that happened. And so these firms made as much as $5 million in one case, $10 million in another. And so the question is, did they have inside information or were they just trading based on other signals?
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Now, we should note the firms being looked at haven't been accused of wrongdoing and it couldn't be determined why officials are interested in them. But what are they saying about the timing of these trades?
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So what the firms are saying is they're pointing to this news report from news website Semaphore that came out around that time that pointed to the White House maybe considering moving in a more peaceful direction at that point. The other thing is some of these firms are quantitative firms. They're not manually looking at news headlines. They're responding to all sorts of inputs coming from the market. And you know, they're trading all the time. And one of the things that the regulators could be looking at is was this burst of trading unusual for these firms or was it kind of what they normally do?
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Now, all of this comes, of course, as Trump and his allies are facing scrutiny over a range of well timed trades related to White House policy.
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Yeah, this comes in this context of a bunch of situations where Trump has posted something on social media or said something that caused markets to move radically one way or the other because he was shifting his tone about the war and what seem like examples of traders in oil markets and prediction markets and other places trading ahead of that information. And so people want to know, is somehow the information getting out, out of the White House? The White House has told its employees, absolutely, do not do this. This is not good. Obviously we have the administration, through the CFTC and others looking at this, but there's Democrats on Capitol Hill are really concerned that there is someone kind of taking advantage of White House policy, though nothing has been proven in that realm.
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That's Journal Finance editor Alex Frangos. Alex, thank you.
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Thanks.
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European lawmakers have reached a provisional deal to remove some import tariffs on US goods, avoiding new 25% tariffs on EU car imports. The agreement comes after President Trump threatened the car duties if the trade deal wasn't in place by July 4. The deal eliminates tariffs on U.S. industrial goods and reduces duties on some seafood and agricultural products. For the EU, tariffs are being hiked by as much as 15% on most goods imported into the US and bond markets are finding their footing today after a weeks long sell off in government bonds hit fresh records yesterday. The 10 year treasury note is a key benchmark for mortgage rates and other borrowing costs and it soared to almost 4.7% yesterday while the yield on 30 year treasuries climbed to a new 18 year high. The Journal's Jason Douglas says anxious investors are driving yields higher.
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What investors are responding to is the war and the risk that this prolonged shutdown of the Strait of Hormuz has a much more longer lasting effect on energy prices. That pushes up inflation around the world, which tends to make bonds less attractive, which tends to cause central bankers to jack up rates to bring inflation back down. On top of that in a couple of places we have some fiscal worries. The UK has some political turmoil. It's not quite sure what's going to happen to the Prime Minister there. In Japan, the government here is talking about possibly a bit more borrowing to support households through the energy shock. And in the U.S. of course, there's still this big fiscal deficit and big spending plans there. So these kind of add to investors fiscal concerns.
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And while many retail investors have been piling into stocks of late, Jason said this bond route shouldn't be ignored.
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Rising bond yields do tend to take the wind out of stock market rallies. Higher borrowing costs tend to, you know, eat into corporate earnings and make it harder to make profits. And in a world where energy prices are going up, it certainly isn't good news for households and businesses. We have seen stocks come off a little bit in the last couple of days. Nothing too drastic, but it's certainly something that stock investors want to keep an eye on. A march higher in bond yield doesn't necessarily equal good news for stocks. Far from it.
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The S&P 500 notched its first three day decline since March yesterday where tech and industrial stocks took hit. With both sectors down more than 1.5% this week, Last minute talks to avoid a strike at the world's largest memory chip maker have failed. Samsung's management rejected union demands for workers to get a bigger share of the company's bumper AI profits, including removing a 50% bonus cap. The strike is set to begin tomorrow and lasts through 7 June. Alibaba is aggressively ramping up its tech ambitions with the release of a new artificial intelligence chip and an updated AI model. The company says the new chip delivers three times the performance of its predecessor and shares in a handful of old school. Companies making components vital to the AI buildout have become major and somewhat surprising beneficiaries of the AI boom. Journal reporter Jared Mitovitch says that includes a 175-year-old glass manufacturer, a heavy machinery giant, and Japan's leading maker of toilets.
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So I think the strangest one probably has to be Toto. It's this Japanese toilet maker. They've also got this other line of business in advanced ceramics, and they're now totally building that out, trying to embrace it as their next area for growth because the advanced ceramics are actually in high demand among semiconductor companies and those involved with the AI buildouts. And Corning is one of the companies that's also made strides in kind of pivoting what was historically a business focused on glass manufacturing. They were involved with Thomas Edison's light bulb, but they're also now diving into fiber optics and the sort of cables that are necessary to connect these data centers and bring them to life. They're now a favorite partner of hyperscalers like Nvidia and Meta, and Caterpillar is the literal pick and shovel trade right now. They're well known for their yellow bulldozers and dump trucks and equipment. And now they're literally building up the world of infrastructure that can support the intensive needs of artificial intelligence.
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And that's it for what's news for this Wednesday morning. Today's show was produced by Hattie Moyer. Our supervising producer is Sandra Kilhoff, and I'm Daniel Bock for the Wall Street Journal. We'll be back tonight with a new show.
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Until then, thanks for listening.
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