EXCLUSIVE

Bill Ackman: How a short-seller became a culture warrior

In recent years, Ackman has become more ideological, expanding his crusades into cultural and academic realms.

His style isn’t for everyone. The financier Carl Icahn, Ackman’s longtime nemesis, famously denounced him as a self-righteous crybaby. More recently, former Harvard president Lawrence H. Summers said Ackman’s call to publicly release the names of student protesters was “the stuff of Joe McCarthy.”

Now—Ackman told Fortune’s Jeff John Roberts—American capitalism itself needs to be rescued. Ackman worries that the tradition of celebrating hard-won success is being displaced by a politics of envy. Too many people, he argues, fail to understand that the American Dream is built upon free-market gumption.

“When I grew up, if a guy in my neighborhood got a Corvette, no one resented the guy,” he observes. “We want to get back to that version of America, where people admired people’s success, as opposed to AOC basically saying, ‘If you’re a billionaire, you either committed fraud or you stole from people.’ ” Read the whole thing here.

THE MARKETS

Wall Street is ignoring the war and betting on peace instead

U.S. futures were up this morning following broad rises in the markets of Europe and Asia. Even Bitcoin seems to be showing signs of life—it’s now above $66K per coin. The price of oil stayed above $88 per barrel but traders seem to be looking at Q2 earnings, which have come in above expectations so far. They may also be looking through the chaos of the war with Iran to a new proposal to end the conflict in the Gulf, currently being considered by President Trump.

• S&P 500 futures were up 0.55% this morning. The index gave up 0.19% yesterday. 
• In Europe, the Stoxx 600 was up 0.35% in early trading and the U.K.’s FTSE 100 was up 0.29% before lunch.
• Asia: South Korea’s KOSPI was up 3.56%. Japan’s Nikkei 225 was up 3.26%. India’s Nifty 50 was down 0.21%. China’s CSI 300 was up 3.06%. 
• Brent crude was $88 per barrel this morning.
• Bitcoin was at $66K this morning and has risen 2.82% over the last month.

It’s too early to get excited about Q2 earnings, but analysts are getting excited anyway. “Only 10% of S&P 500 companies have reported earnings so far, but sales growth and earnings growth have both come in better than expected based on Bloomberg consensus estimates,” Northern Trust Wealth Management CIO Eric Freedman told Fortune in an email.

And, “roughly 88% of companies reporting so far have beaten expectations, a rate higher than both Q1 and the five-year average,” according to Jason Pride and Michael Reynolds at Glenmede.

Traders bought the rumors but are selling on the news. This chart from Wells Fargo shows that despite bullish numbers from companies reporting earnings so far, traders are still selling off after the numbers come out. “While still early, [earnings] reporters sold off -0.9% the day after on average so far, tracking to be one of the worst reactions in history,” the bank’s Ohsung Kwon said in an email.

MORE FROM FORTUNE

FIFA’s $15 billion World Cup payday shows commercialization is the real tournament champion - Marco Quiroz-Gutierrez

$5 billion tech CEO says unemployed Gen Z should be out 3 days a week building their network: ‘Sometimes those jobs you want, they’re never published’ - Orianna Rosa Royle

Jersey Mike’s IPO valuation could reach eight times Sweetgreen’s market cap - Sheryl Estrada

Hugging Face says it resorted to a Chinese AI model to battle a fully autonomous cyberattack because U.S. model guardrails stymied its defense - Emily Forlini

The Treasury is walking a tightrope on U.S. debt by relying so much on short-term rates that are at the mercy of a suddenly very hawkish Fed - Jason Ma

IRAN

A new ceasefire proposal would let Iran charge tolls on Strait of Hormuz—and buy Trump time before midterms

Although the U.S. conducted a tenth straight night of strikes on Iranian positions, behind the scenes mediators for the two sides have proposed a new peace plan, according to Axios. The plan asks both parties to agree to a 10-day ceasefire. Controversially, it would also give Iran administrative rights over the Strait—something it did not have before the war. “One option would allow Iran to collect ‘reasonable service fees’ for maritime security, environmental protection and other services,” Axios reported.

President Trump’s other option would be to launch yet another massive joint bombing campaign with Israel on Iran in hopes of forcing Iran to desist from harassing ships in the Strait, Axios said. 

That strategy has not worked so far, obviously. The clock is ticking for Trump as midterm elections approach and the president struggles to extract himself from exactly the type of endless war he promised not to start. The price of oil remains above $88 per barrel of Brent Crude, the price of gasoline in the U.S. remains above $4, “affordability” is the public’s No.1 issue, and Goldman Sachs argued this week that the price of oil could go to $120 if the Strait isn’t sorted out. Gas exports have fallen close to zero, according to this chart from Goldman:

Iran has another card to play that could drive energy prices higher still: The Houthis, its proxy terror group in Yemen, said they planned to shut the Bab al-Mandab Strait that allows passage into and out of the Red Sea—that is one of Saudi Arabia’s main oil export routes.

Meanwhile, Iranian President Masoud Pezeshkian said Iran was fighting a “full-scale war” against the U.S., according to the BBC. The IRGC said it “destroyed” a site owned by Amazon in Bahrain. Three ships in the Hormuz have been hit by Iranian weapons in the last couple of days.

Iran’s attacks are taking a toll. One hundred U.S. troops have been injured in the last 10 days and four killed, the FT reports.

• Shipowners Offer Huge Bonuses to Get Crews to Sail Hormuz - Bloomberg

THE ENEMY IN THE NORTH

Trump slaps Canada with 50% tariffs, but markets say ‘meh’ as investors increasingly tune out Truth Social posts

President Trump on Monday imposed 50% tariffs on most Canadian goods, potentially unleashing a new wave of economic chaos, with risks of higher inflation and further fraying of relations between two nations that had been closely woven together before Trump’s return to the White House, Fortune’s Jason Ma reports.

“However, markets offered a muted response—the Canadian dollar and U.S. inflation-linked bonds remaining relatively calm. Investors seem inclined to discount or dismiss such threats,” Paul Donovan of UBS advised clients this morning.

• In fact, there is statistical evidence that investors are learning to ignore Trump’s tweets. J.P. Morgan studied whether his posts on Truth Social appeared to move the bond market and found that there were moves of greater than 1 basis point in the yield on the 2-year Treasury, but only for about 30 minutes, and that the effect “has decayed over time.”

QUANTUM AT WAR

Anduril is working with D-Wave Quantum on missile-shield strategies

One thing that has become clear about the wars in both Iran and Ukraine is that missile defense is often more important than firing missiles.

Although Iran has been consistently droning the UAE, Bahrain, and Kuwait, those countries have been fairly successful in taking out the barrages before they hit their targets. Similarly, the success of Russian and Ukrainian attacks on each other largely depends on whether they can evade each other's countermeasures.

An attack missile only needs to find a target on a map. A counter-missile, however, needs to see the incoming projectile, track it, anticipate where it is going, and then strike it in the minimum amount of time possible.

That's a challenging math problem, according to D-Wave Quantum CEO Alan Baratz. "The countermeasures tend to be a lot more expensive than the drones themselves, and so they need to be used very efficiently," he told Fortune recently.

So D-Wave has been working with Anduril, Palmer Luckey's defense contractor, on how to block incoming missiles in the least-wasteful way possible.

It’s a perfect problem for quantum computing, Baratz believes, because it involves a vast number of variables, moving very quickly, and the optimal pattern for taking down a large number of missiles with the fewest number of defenders isn't obvious.

Classical computers can't crunch the numbers fast enough, Baratz says. But his quantum system can. "In that particular case, the 'time to solution' was 10 times faster using our quantum computer, with a 10% improvement in the takeout rate,” he told this newsletter.

CHART OF THE DAY

Not all of Europe is a high-tax area (but most of it is)

For Americans, the stereotype of Europe is that it’s a high-tax area where the government will take half your paycheck. As this chart from ING shows, that stereotype is, er, mostly true. In the U.S., the average tax burden for a person on an average wage is about 29.9%, according to the Tax Foundation. In Europe, only Switzerland has lower taxes than that.

NUMBER OF THE DAY

81%

The chances of this year’s El Niño weather event being “very strong” during October to December, according to the U.S. Climate Prediction Center, making it one of the strongest in the last 75 years. That’s bad, according to Deutsche Bank’s Henry Allen, because El Niños don’t just disrupt the food supply. They “have been correlated with the spread of climate-sensitive diseases, and one study found that the El Niño in 2015 contributed to the spread of the Zika virus since it created conditions beneficial for mosquito-borne transmission,” he said in a recent note. “An El Niño is capable of hitting agricultural production, hydropower, shipping, and even has effects on public health and political stability. In other words, it operates as a multi-channel supply shock.”

THE FRONT PAGES TODAY

Judge approves Anthropic’s $1.5B settlement of authors’ AI copyright lawsuit — first major case to settle - NY Post

Tom Hayes says UBS’s ‘Project Chocolate’ probe shows he was targeted from outset - FT

Samsung Electronics shares rise as robotics move highlights push into physical AI - CNBC

The Man Who Runs the IRS Spied on Colleagues When He Worked at JPMorgan - WSJ

Hacker Breaches South Korean Database of Nearly All Diplomats - Bloomberg

Google Is Building an A.I. Fence Around the Internet It Once Championed - NYT

ONE MORE THING

When life hands you stolen lemons, make stolen lemonade

On a Monday in late March, a member of Nestlé’s marketing team walked into the company’s office in Vevey, Switzerland, with unusual and costly news. More than 400,000 KitKat bars—12 tons—had been stolen by thieves who hijacked a truck.

For a few hours, the disappearance was an office joke, Mélanie Brinbaum, Nestlé’s European head of marketing and consumer communications, told Fortune’s Sam Birchall. But then an idea took root: What if, instead of staying quiet about the theft, Nestlé leaned into the absurdity of the situation? “A colleague on my team half in jest, wondered aloud whether the story should be made public,” Brinbaum said.

So Nestlé began tweeting about it. The post drew 393,000 likes overnight—the highest total in the account’s history. In just 10 days, the campaign generated media buzz that Nestlé’s analysts estimate would have cost $224 million if the brand had paid for the equivalent advertising.  

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