Morning Brief, Thursday 2 July

Donald Trump reported at least $2.2 billion in outside income for 2025, with more than $1.4 billion coming from cryptocurrency ventures that barely existed in his business empire a year earlier. The filings showed roughly $636 million from sales of the $TRUMP memecoin, more than $500 million from World Liberty Financial tokens and stablecoins, and large purchases by foreign-linked actors, including a UAE-linked stake in the family crypto platform. Asked about the figures, Donald Trump treated the money as vindication rather than a conflict problem.

The money story landed as Donald Trump took his first flight on a reconfigured Boeing 747-8 gifted by Qatar, a plane the White House calls a temporary bridge until delayed presidential jets arrive. The arrangement provides for the aircraft to move to Donald Trump’s presidential library after he leaves office, potentially giving him personal access to a foreign-donated jet. The interior kept much of its Qatari luxury while receiving security and communications upgrades, with refit estimates ranging from less than $400 million to about $1 billion.

The pattern matters because it fuses three normally separate lanes: presidential power, private profit and foreign influence. American voters have seen rich presidents before; they have less often seen a sitting president turn a speculative asset class and a donated aircraft into parallel tests of whether disclosure alone can contain temptation.

The United States declined to renew the USMCA in its existing form on July 1, choosing annual reviews instead of a 16-year extension. Jamieson Greer, the United States Trade Representative, cited trade deficits and disputes over automotive rules of origin, dairy access and third-country exploitation by China. The pact remains in force, but the failure to renew starts a ten-year countdown toward possible expiry in 2036.

Mexico and Canada tried to lower the temperature. Marcelo Ebrard said Mexico would address United States concerns, Claudia Sheinbaum argued the date was not a deadline, and Dominic LeBlanc said the agreement still runs until 2036. That reassurance will not erase uncertainty for firms that built factories, farms and energy flows around stable continental rules. The pact underpins roughly $2 trillion in annual trade, while existing United States tariffs on vehicles, steel and aluminium already strain the relationship.

The annual-review model gives Washington leverage, but it also turns supply-chain planning into a recurring political drama. North America’s trade machine will keep running; the problem is that every year someone in Washington can now walk over and rattle the gears.

Kevin Warsh used the European Central Bank’s Sintra forum to tell investors and politicians that the Federal Reserve would not bend to political pressure for easier money. His remarks followed Donald Trump’s demands for rate cuts and the administration’s failed attempt to remove Federal Reserve Governor Lisa Cook, which the Supreme Court blocked this week. Warsh also insisted that the central bank would not tolerate inflation above 2%, even after price pressures eased from May’s 4.2% peak.

Markets heard two messages at once. Warsh sounded firm on independence and inflation, but he also said risks had receded over the past month, which pushed Treasury yields and the dollar lower. Traders now price a possible rate rise as soon as September or October, a much earlier timetable than the March 2027 expectation that prevailed before his appointment. The Fed’s key rate sits around 3.6%, leaving little room for political theatre if inflation turns sticky again.

Warsh also promised a data overhaul within nine to 12 months, with task forces on communications, the balance sheet, data use, productivity and jobs, and the inflation framework. The institutional test is plain: a central bank can modernise its dashboard, but it cannot outsource credibility to better software.

A new CSIS study estimated that more than 2 million Russian and Ukrainian troops have been killed or wounded in four years of war. Russia has suffered about 1.4 million casualties, including 400,000 to 450,000 dead, while Ukraine has sustained 525,000 to 625,000 casualties, including 125,000 to 150,000 killed. Russian forces still outnumber Ukrainian defenders along the front, but their territorial gains have slowed to a crawl and even reversed in April and May.

The war also moved deeper into fuel systems. Ukraine has struck Russian refineries and depots more than 50 times since March, cutting oil processing by about 25% year on year and forcing Moscow to seek gasoline imports from India, Belarus and others. Russia has also intensified strikes on Ukrainian retail fuel infrastructure, including attacks in Dnipropetrovsk that killed a woman and wounded three people, and a drone strike on a bus in Kherson that killed two and wounded five.

Moscow’s overnight drone assault on Kyiv added another reminder that neither side has separated the front from the rear. Timur Tkachenko warned residents of drones approaching from several directions as air defences activated across the capital. The conflict is no longer just a map of trenches and towns; it is a contest over fuel, drones, replacement troops and the patience of societies asked to absorb all four.

Spain reported its second-hottest June since records began in 1961, with average temperatures 3.2°C above the 1991-2020 norm. The Carlos III Health Institute’s mortality system attributed 1,028 excess deaths in June to heat, the highest June toll since the system began in 2015. During the five-day heatwave from June 21 to June 25, authorities registered 353 deaths, overwhelmingly among older people and usually through the worsening of existing conditions rather than direct heatstroke.

Portugal and France showed how heat quickly spills into other risks. Portugal entered its fifth heatwave of the year, with forecasts of 40°C to 43°C in the Tejo Valley and Alentejo, while France counted 55 drownings since its heatwave began on June 18. Officials said many deaths occurred in unsupervised or unauthorised bathing areas, a grim pattern when overheated people seek water faster than public safety systems can manage them. Fire danger also climbed as dry weather, high nighttime temperatures and stressed power equipment raised the chance of outages and blazes.

This is the practical face of climate adaptation: hospitals, lifeguards, grids and fire crews must now plan for June as if it were August. Europe is learning that early summer no longer offers a gentle warning, just the bill arriving ahead of schedule.

The United States lifted export controls on Anthropic’s Fable 5 and Mythos 5 models after a three-week shutdown that had disabled both systems worldwide. The Commerce Department had acted three days after Fable 5’s launch, citing concerns about possible cybersecurity misuse and jailbreaks. Howard Lutnick then announced an agreement under which Anthropic committed to detect and address security risks, work with the government on protocols and standards, and report malicious activity.

Access will return unevenly. Fable 5 is being restored from July 1 across platforms including AWS, Google Cloud and Microsoft Foundry, while Mythos 5 remains limited to a narrow group of pre-vetted United States partners. Foreign governments, companies and financial institutions still face restrictions, and non-United States cybersecurity agencies in Europe and Asia remain outside the main circle for now. Anthropic said it would keep coordinating with officials through its Glasswing programme to widen access.

The episode marks the first known halt and negotiated restart of a major United States AI release. It shows that frontier models have moved from the world of app updates into the world of export controls, national-security protocols and diplomatic access lists. A chatbot that once spread by invitation and wonder now faces an older technology test: who may use it, under what rules, and who gets to decide.