Good morning. Andrew here. JPMorgan Chase and Goldman Sachs posted huge earnings this morning. We have a breakdown below. Meanwhile, IBM’s shares are cratering after the company warned that its second-quarter earnings would be worse than expected, raising questions about the enterprise software industry all over again. (Was this newsletter forwarded to you? Sign up here.)
Paramount’s potential roadblockTwelve states have sued to block Paramount’s planned takeover of Warner Bros. Discovery, throwing a potentially major (and expensive) obstacle to the closing of the $111 billion media deal. It’s perhaps the most prominent test yet of states’ efforts to become meaningful antitrust regulators in their own right, especially after a recent Supreme Court ruling scrambled the regulatory outlook of federal agencies, Lauren Hirsch writes. What’s happening: The coalition, which includes California, New York and Washington, is arguing that Paramount’s takeover of Warner Bros. Discovery would hurt movie theaters by creating a giant new film distributor. Rob Bonta, California’s attorney general, also accused the Justice Department of an “abdication” of its antitrust duties after it cleared the transaction. The states are seeking to freeze the transaction, which could cost Paramount millions because it agreed to pay a $650 million “ticking fee” for every quarter the deal doesn’t close after Sept. 30.
Paramount is fighting back, calling the lawsuit “wrong on both the facts and the law.” The company also suggested that the state attorneys general — all Democratic — have politicized antitrust enforcement. The media titan has already secured approvals for the Warner Bros. Discovery deal from Washington, D.C., and nearly two dozen other regions. (It has yet to win clearance from the E.U. and Britain.) To help its case, Paramount has hired Paul Clement, a veteran Supreme Court appellate lawyer, and quietly supported a bipartisan bill to create a federal film tax incentive. How strong is the states’ lawsuit? “I think the states’ case is strong enough to create real headaches for the parties, William Kovacic, a former chairman of the F.T.C., told DealBook. States’ have notched some big antitrust wins, despite their attorneys general usually depending on the financial and legal support of their federal counterparts.
Corporate deal makers have told DealBook that they’re increasingly anxious about states’ antitrust scrutiny, and some say they have passed on potential transactions over those concerns.
A federal judge blasts President Trump’s lawsuit against the I.R.S. Trump’s legal fight against the agency over the leak of his tax details and the extraordinary proposed tax protections he was set to receive were improper self-dealing, Judge Kathleen Williams of the Federal District Court in Miami, ruled. Williams sent the order to the New York bar association, which is investigating Todd Blanche, the acting U.S. attorney general and Trump’s former personal lawyer, who faces a Senate confirmation hearing this week. The E.U. takes a step toward banning young children from social media platforms. A report commissioned by Ursula von der Leyen, the European Commission president, recommended that the bloc put limits for children under 13 and require the tech giants to introduce limits to features like infinite scrolling for those up to 18. A law enshrining the protections could be proposed as soon as September, adding to the growing list of jurisdictions, including several U.S. states, seeking social media bans for minors. Samsung is reportedly considering a U.S. stock market listing. The South Korean technology giant is weighing the move, according to Bloomberg, after a rapturous reception for American depositary receipts of a rival chip maker, SK Hynix. But recurring labor issues, and worries of an artificial intelligence bubble, could complicate a U.S. listing.
The Iran war’s inflationary effectOil prices hit a four-week high as the U.S. and Iran trade fire in the Persian Gulf, stoking fears about another global energy shock. The consequences of the fighting, including drastically limited ship traffic through the Strait of Hormuz, are rippling through global markets today and creating inflation concerns for central bankers. The latest:
Hormuz uncertainty is once again gripping markets. Stocks sold off sharply yesterday after President Trump said the U.S. would reimpose a blockade on Iranian ports beginning today. He also suggested the U.S. would charge a 20 percent toll on all ships passing through the trade route, drawing condemnation from E.U. officials. (Secretary of State Marco Rubio has called Iran’s plans for a cheaper levy a breach of international law.) Trump has often laid out extreme negotiating positions and later backpedaled. But experts warned that such a toll could turbocharge inflation by doubling the cost of shipping in the region, including by adding an extra $16 per barrel of oil. Worth watching: Gulf countries, including the United Arab Emirates and Iraq, are reportedly developing alternative transit routes to get around the strait. Markets were already on edge about inflation. Today, the Bureau of Labor Statistics is set to publish the Consumer Price Index for June, which is expected to show a slowdown in price hikes since the last report showed higher-than-expected inflation. But even a tame report may not assuage the Fed. Chris Waller, a governor of the central bank, warned yesterday of potential “near term” rate increases to lower inflation. The odds for a hike continue to climb, with some traders pricing in one for this month.
A big day for banksAmerica’s biggest banks have begun reporting second-quarter earnings today, and there’s a lot at stake. A surge in M.&A. and I.P.O.s and a torrid stock market rally are already lifting their bottom lines, the first reports show. Banks are also riding high after passing the Fed’s recent stress tests. But concerns remain that a slowing economy or spiking inflation could weigh on the sector. Here’s the latest:
Despite the positive earnings news, most banks’ stocks are down in premarket trading.
A big fund-raising round for an A.I. drug discovery start-upGeneral purpose artificial intelligence tools like Anthropic’s Claude and OpenAI’s GPT family of models may be grabbing most of the headlines, but more specialized ones are still reaping plenty of investor attention. That includes Chai Discovery, a two-year-old start-up focused on designing new antibody treatments that will announce today that it has raised $400 million, Michael de la Merced is first to report. The round values Chai at $3.8 billion. It was led by Index Ventures alongside Kleiner Perkins, Sequoia Capital and Dimension. Other participants included Bain Capital Ventures, Thrive Capital, OpenAI and Yosemite, the firm founded by Reed Jobs, the son of Steve Jobs. The fund-raising underscores growing investor interest in A.I. for advancing scientific breakthroughs. “I believe that life sciences is going to be one of the most consequential and biggest-impact applications of A.I.,” Nina Achadjian, a partner at Index, told DealBook. Chai is aiming to become the A.I. infrastructure of the pharma industry. Unlike other A.I. drug discovery start-ups, like the Google spinoff Isomorphic Labs, which has raised $2.7 billion since March 2025, Chai isn’t aiming to develop its own treatments. Instead, it partners with drugmakers like Eli Lilly, Pfizer and (as of yesterday) Novartis, with a focus on antibodies. Chai gives partners access to its models like Chai 3, which can be trained on those companies’ proprietary data. “We work with some of the top pharma companies to help them make the transition from pre-A.I. companies to post-A.I. companies,” Jack Dent, a Chai founder and its president, told DealBook. The business model is meant to strike a balance between risk and reward, following Isomorphic’s approach of developing its own treatments while using less integrated software with lower margins, according to Pat Grady, a partner at Sequoia. Grady added that to succeed, Chai didn’t need a monopoly over providing pharma giants with A.I., noting that many Fortune 500 companies use both Claude and ChatGPT. “Because it’s such a complex process to develop a drug, I don’t think we’ll end up with one company that does it all,” he said. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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