Pentagon's Broker | Rewire News Evening Brief

The Secretary of Defense's broker attempted to buy a defense industry ETF before the war, Pentagon requested FT to retract the article

1｜Hegseth's broker tried to buy a defense ETF before the war, Pentagon asked FT to retract

FT reported that US Secretary of Defense Hegseth's broker contacted BlackRock in February this year to buy the iShares Defense & Aerospace ETF, planning to invest millions of dollars. This fund has an AUM of about $3.1 billion, with its top three holdings being Raytheon Technologies (RTX), Lockheed Martin, and Northrop Grumman. On February 28, the US went to war with Iran. The trade ultimately did not go through, not due to compliance review, but because the fund had not yet opened to Morgan Stanley clients.

Pentagon's chief spokesperson Parnell called the report on X "completely false and fabricated" and demanded a retraction from FT. FT stood by its report, with CNBC and several other media outlets following up. This was not an insider trading case, the trade did not happen, and legally there is no case. But what it exposed structurally is more noteworthy than insider trading: there is only a broker account between the one directing the war and the one profiting from it. The trade failed because the product channel was not open, not because a conflict of interest was blocked.

(Source: FT / CNBC / Al Jazeera / US News)

2｜AI Infrastructure Meets Energy Wall: $635 Billion Spending Plan Hit by Iran War Shockwave

S&P Global's research head Melissa Otto warned that the total AI infrastructure spending of $635 billion by Microsoft, Amazon, Google, and Meta this year is facing an energy cost shock from the Middle East crisis. This figure is nearly double last year's $383 billion. Otto said that persistently high oil prices may force capital expenditure cuts in Q1 and Q2, leading to a "serious pullback across all markets."

Meanwhile, Mistral borrowed $830 million to build a data center in Paris, with 13,800 Nvidia GB300 GPUs installed. Nvidia-backed Emerald AI raised $25 million to use software for grid flexibility in data centers, aiming to release an additional 100 gigawatts of capacity from the existing US grid. The war has increased AI's energy bill, but capital is still pouring in.

(Source: Reuters / S&P Global / TechCrunch / Fortune / Bloomberg)

3｜Bitcoin Miners Shift Focus to AI: Network Hash Rate Sees First Quarterly Drop in Six Years

The total hash rate of the Bitcoin network experienced its first quarterly drop since 2020, falling back from 1 ZH/s at the end of last year to around 900-950 EH/s. The mining difficulty saw a 7.76% decrease on March 21. Publicly known mining firms are losing an average of $19,000 per mined Bitcoin, with over $70 billion in AI hosting contracts already signed.

Core Scientific plans to sell off most of its Bitcoin holdings by the end of the year to fund AI expansion, while Bitdeer had completely depleted its Bitcoin reserves in February. CoinShares estimates that by the end of the year, 70% of some mining firms' revenue may come from AI hosting, with operating profit margins of 80-90% and USD-denominated fixed income. Miners are not transitioning; they are putting AI in Bitcoin's shell.

(Source: Tom's Hardware / CoinDesk / The Block / CoinShares)

4｜China's AI Earnings Season: Doubling Revenue Is Standard, Doubling Losses Too

Zhipu released its first annual report after listing, with 2025 revenue reaching 724 million RMB, a 131.9% increase, but with a net loss of 4.72 billion RMB, expanding by 59%. On the same day, Wirement Technology submitted its first report with revenue of 1.035 billion RMB, a 207% growth, and a gross profit margin of 53.8%, yet losses remain high. Chinese AI companies are following the same trend: revenue is rising, but cash is burning.

EnglishSilicon Intelligence and Lilly signed a $2.75 billion AI pharmaceutical cooperation deal, with an initial payment of $115 million, focusing on a preclinical oral GLP-1 drug. The upfront payment is double EnglishSilicon's annual revenue. The Apple AI domestic version briefly went live and then was withdrawn due to "software issues," according to Gurman, citing human error, with Apple still needing approval from the Cyberspace Administration of China. Chinese AI is burning money, selling drugs, and the AI on phones is not yet approved.

(Source: 36Kr / SCMP / Bloomberg / STAT News / MacRumors)

Worth Knowing ↓

U.S. oil prices surpass $4 per gallon, marking a 35% increase since the start of the war. The national average reached $4.018, the first time it has exceeded the $4 mark since the Russia-Ukraine war in 2022. Diesel is at $5.454. The Strait of Hormuz remains closed to most vessels, blocking an estimated 4.5-5 million barrels per day of global supply. Analysts warn that if the strait does not reopen, oil prices could surge to $5 per gallon.

The Dubai and Abu Dhabi stock markets have collectively lost $120 billion since the war began. The Dubai Financial Market Index dropped by around 16% ($45 billion market cap), while Abu Dhabi dropped by about 9% ($75 billion). The tourism industry has been hit the hardest, contributing 13% of the UAE's GDP last year ($70 billion), but tens of thousands of flights have been canceled since the war began. (Source: Al Jazeera)

Stanford Study: AI's Approval Rate with Users 49% Higher Than Humans. A study by Stanford's Computer Science department published in the journal Science found that the majority of 2,400 participants preferred being complimented by AI rather than being told the truth by a human. AI agreed with users on social issues 49% more than humans. As more people turn to AI as therapists, approval is systematically reinforcing users' cognitive biases. (Source: Fortune / Stanford)

Eurozone March Inflation Rises to 2.5%, Exceeding ECB Target. Soaring energy costs are the main driver, and the surge in oil and gas prices due to the Iran war is transmitting to the European consumer end. The ECB faces a dilemma with both economic slowdown and rising inflation simultaneously. (Source: CNBC)

Cryptocurrency Used to Purchase Drones for Russia and Iran. Reuters cited a report stating that cryptocurrency is becoming the payment infrastructure of wartime economies, bridging the seemingly unrelated areas of crypto regulation and military conflicts. (Source: Reuters)