Goldman Cuts ARM To Sell On Shocking Smartphone Weakness
Arm Holdings ADRs sank nearly 9% in premarket trading, on track for the largest intraday decline in almost a year, after the chip-architecture company reported softer-than-expected fiscal fourth-quarter royalty revenue tied to a slowdown in the smartphone industry, while assuring investors that data center demand can offset the slump.
During an earnings call, Wells Fargo analyst Joe Quatrochi asked Arm CEO Rene Haas:
“Clearly, data centers are very strong and accelerating, but then how do you think about consumer electronics, smartphones, et cetera?”
Haas responded:
So in terms of Q4, as we said before the quarter, we had a bit of a tough comp in that. We had a particularly strong ramp of maybe 400 [ph], a year ago, more so than what we expected this year.
As a result, you saw a bit of a slowdown in royalty revenue. As indicated by our guidance, we’re expecting that to get back to the kind of 20% range by Q1.
So I would say within — you know, the assumptions within our expectations are, we will probably continue to see unit growth, I think actually flip to negative for the mobile market in this last quarter. We’re going to continue to see very flattish, maybe slightly negative numbers for the overall market.
Haas’ comments about the smartphone slowdown are key because Arm’s smartphone exposure remains large, and mobile application processors accounted for about 46% of its total royalty revenue in 2025.
Haas has made clear to analysts that the push into data centers and other markets will help offset Arm’s high exposure to a softening smartphone market.
Royalties, a closely watched metric for Arm, generated $671 million in fourth-quarter revenue, missing the Bloomberg Consensus estimate of $693.3 million.
“We’re seeing the acceleration of Arm being a significant player in the data center,” Haas said in an interview, quoted by Bloomberg.
As for the rest of fourth-quarter earnings, Arm beat on total revenue, adjusted EPS, operating income, margins, and licensing revenue. Revenue rose 20% year over year to $1.49 billion, slightly ahead of estimates, while adjusted EPS of 60 cents beat the 58-cent estimate. Adjusted operating income also beat at $731 million, with a very strong operating margin of 49.1%.
The strongest part of the report was license and other revenue, which jumped 29% year over year to $819 million, well above estimates of $775.6 million. That suggests strong customer demand for future Arm designs, particularly in AI, data centers, and new chip programs.
But as we noted above, royalty revenue missed expectations …
Here’s a snapshot of the fourth quarter (courtesy of Bloomberg):
Adjusted EPS 60c vs. 55c y/y, estimate 58c
EPS 29c
Total revenue $1.49 billion, +20% y/y, estimate $1.47 billion
License and other revenue $819 million, +29% y/y, estimate $775.6 million
Royalty revenue $671 million, +11% y/y, estimate $693.3 million
Annualized contract value $1.66 billion, estimate $1.58 billion
Adjusted net income $641 million, estimate $624.3 million
Adjusted gross profit $1.47 billion
Adjusted gross margin 98.3%, estimate 98.1%
Adjusted operating expenses $734 million, estimate $743.6 million
Adjusted operating income $731 million, estimate $696.4 million
Adjusted operating margin 49.1%
Adjusted free cash flow $152 million, estimate $374 million
Arm’s first-quarter forecast is broadly in line on revenue, better on earnings, and better on costs (courtesy of Bloomberg):
Sees revenue $1.21 billion to $1.31 billion, estimate $1.25 billion (Bloomberg Consensus)
Sees adjusted EPS 36c to 44c, estimate 37c
Sees adjusted operating expenses about $760 million, estimate $803.1 million
In markets, Arm ADRs sank nearly 9%, the largest intraday decline since July 31, 2025, of -13.5%. On the year, shares are up 117%.
Goldman analyst James Schneider told clients following earnings, “We expect the stock to be range-bound following revenue and EPS guidance that was just above the Street, with an increase to demand expectations for the company’s CPU business.”
“We are Sell rated on ARM given our concerns around the near-term pressures in the royalty business, the lack of clear competitive advantage relative to peers in chip manufacturing, and elevated valuation relative to peers – but could be more constructive if we see greater evidence of an acceleration in royalty growth or more visibility into greater scale in chip manufacturing,” Schneider added.
Additional analyst commentary (courtsey of Bloomberg):
Bloomberg Intelligence analyst Kunjan Sobhani
“Arm’s fiscal 4Q results reflect a mixed near-term setup, with handset and memory-related weakness weighing on royalties, but partly offset by persistent AI strength.”
Daiwa analyst Louis Miscioscia
Arm’s royalty revenue missed due to a shortfall in lower-end cell phone demand, which was weaker than expected due to the higher cost of memory.
Evercore ISI analyst Mark Lipacis (outperform, price target $326)
Lipacis was more bullish, saying that after examining other trillion dollar market cap companies, believe “ARM has the similar necessary ingredients to cross that $1T threshold themselves”
Bloomberg data shows most of Wall Street is bullishing on ARM… Goldman and AlphaValue are the only with “Sell” ratings …
Oil Slides On Reports Of ‘Breakthrough’ Coming For Stuck Ships In Hormuz, As US Awaits Tehran’s Response To Fresh Proposal
Summary
Sentiment in early morning trade was lifted after Al Arabiya reported that “the coming hours will witness a breakthrough for the situation of the ships stuck in the strait”.
Pakistani sources said Trump has demanded Iran’s “immediate response” to Washington’s peace proposal.
White House on Wednesday had said it expects a response to the latest offer within 48 hours.
French nuclear-powered carrier steams through Suez Canal in support mission as Europe seeks diplomatic influence over Hormuz outcome.
First Chinese tanker reportedly attacked: shipping industry source told Caixin that this was the first time a Chinese tanker was hit in the three-month-long war, calling it “psychologically very hard to accept.”
Oil Slides on Reports of ‘Breakthrough’ Coming for Stuck Ships
A very optimistic but unconfirmed early Thursday report: Sentiment in early morning trade was lifted after Al Arabiya reported that “the coming hours will witness a breakthrough for the situation of the ships stuck in the strait”.
“The American naval blockade in the Strait of Hormuz is likely to be lifted after Washington and Tehran reportedly reached an agreement in this regard,” the Saudi media report says. “The agreement between both the sides on lifting the naval blockade was reached upon on Thursday (may 7) after US agreed for a gradual reopening of the Strait of Hormuz.”
President Donald Trump’s constant belittling of Iranian leaders is alarming some Arab and U.S. officials familiar with the Middle East who worry that such insults could prove a major obstacle to truly ending a war that has strained the world economy. At the core of their concern is whether Trump is willing to show Tehran’s Islamist leaders enough respect to let them claim some level of victory, even if they agree to U.S. demands that leave them militarily weaker.
“He badly wants this to end,” a senior Gulf Arab official familiar with the peace talks said of Trump. “But the Iranians are so far refusing to give him what he needs to save face and leave. And he does not seem to understand that they need to save face, too.”
French Nuclear-Powered Carrier to Enter Red Sea, Gulf of Aden
France and Britain could be poised to very belatedly join the US military in Middle East regional waters, according to movements of warships as well as fresh statements. Egypt and France on Wednesday oversaw the transit of the French aircraft carrier Charles de Gaulle through the Suez Canal as part of a southbound convoy, the Suez Canal Authority announced.
The French Ministry of the Armed Forces has announced the nuclear-powered carrier is deploying to the Red Sea and Gulf of Aden as part of a multinational effort to restore navigation through the Strait of Hormuz, according to a fresh statement. So it’s clear the convoy will remain largely in a background support role when compared to the US naval blockade in the Gulf of Oman region. Paris and London have also made clear their ships would only directly join Persian Gulf operations only once the war ended.
(Reuters) – Iran’s President Masoud Pezeshkian said he met recently with Supreme Leader Mojtaba Khamenei, state media reported on Thursday, offering a first public account of him meeting Khamenei after the latter suffered severe wounds at the start of the U.S.-Israeli war on…
On a technical level, the White House has just this week sought to pronounce that Operation Epic Fury has ended, and Project Freedom has begun. It’s unclear whether the European allies buy this designation, however. Marcon has sought to make clear that France is not a party to the conflict, but Europe is seeking a diplomatic voice at the table after spending the last two months largely on the sidelines.
Two Key Gulf Allies Reportedly Suspended Base, Airspace Access For US
President Trump abruptly halted plans to support commercial shipping through the Strait of Hormuz after Saudi Arabia suspended US military access to its bases and airspace for the operation, two US officials told NBC. Kuwait is reported to have imposed similar restrictions in wake of being on the receiving end of Iranian missiles.
According to the officials, Trump caught Gulf allies off guard when he announced Project Freedom on Truth Social, triggering anger in Riyadh. Saudi Arabia is said to have responded by informing Washington that US forces would not be permitted to operate aircraft from Prince Sultan Air Base southeast of Riyadh or transit Saudi airspace in support of the mission. Other Gulf allies were also reportedly surprised by the development, with Drop Site News also reporting Kuwait has made a similar move to cut or restrict base access.
But here is how Trump framed the pause at the time in a Truth Social post: “Based on the request of Pakistan and other Countries, the tremendous Military Success that we have had during the Campaign against the Country of Iran and, additionally”… and he also said it was necessary “to see whether or not the Agreement can be finalized and signed.“ By the following day it became clear that the two sides were no closer to getting to the negotiating table, much less actually inking an agreement to end the war.
President Trump has laid out a clear choice for Iran: Reach a deal, or the bombing resumes. pic.twitter.com/isThSrLwo9
The White House is meanwhile denying the main content of the NBC report, with one official insisting that “regional allies were briefed in advance.”
First Chinese Tanker Attacked Near Hormuz As Beijing Urges Waterway Reopened
There have certainly been escalating tensions in the Strait of Hormuz this week amid a wave of Iranian attacks on commercial ships after a U.S. military effort to escort merchant vessels through the maritime chokepoint. By midweek, tensions had simmered, and Iran is still reviewing a 14-point U.S. proposal to end the war, with Tehran expected to send its response to Pakistani mediators later today.
President Trump said talks with Iran have been “very good” and suggested a deal remains possible. Iran’s Foreign Ministry confirmed the U.S. proposal is still under review. But when chaos erupted on the world’s most critical waterway at the beginning of the week, a new report said that a large refined-products tanker owned by a Chinese shipowner was attacked off the UAE’s Al Jeer port on Monday, according to Reuters.
Beijing-based business media outlet Caixin reported that the vessel’s deck erupted in flames after the attack. The outlet noted the vessel was marked “CHINA OWNER & CREW.” A shipping industry source told Caixin that this was the first time a Chinese tanker was hit in the three-month-long war, calling it “psychologically very hard to accept.”
Shortly after the Chinese tanker was attacked, it became clear why, two days later on Wednesday, China’s Foreign Minister Wang Yi called for the swift reopening of the Hormuz chokepoint. “The international community shares a common concern for the restoration of normal and safe passage of the strait,” Foreign Minister Wang Yi told Iran’s Abbas Araghchi, according to an official Chinese statement. “China hopes that the parties concerned will respond to the strong appeal of the international community as soon as possible.”
China’s urgency to resolve the highly disrupted Hormuz chokepoint comes just over a week before President Trump flies to Beijing to meet with President Xi Jinping. The big question is whether China will cooperate with the U.S. to end the conflict and reopen the Strait, as much of the tanker flow through this critical waterway is destined for Asia, and the disruption has led to fuel shortages and soaring prices of crude oil and related products in the region.
“China likes to present itself as a great stabilizing force in the world, but imagine if they had a genuine diplomatic achievement, such as brokering the opening of the Strait of Hormuz, as proof of that,” Richard McGregor, senior fellow at the Lowy Institute, told Bloomberg. He noted that some in Beijing would advocate for using the moment to “squeeze some concessions out of the US” on issues such as Taiwan. The first Chinese tanker attacked in the U.S.-Iran conflict, as well as the upcoming Trump-Xi summit, might be the catalysts for the international community to pressure Iran into a peace deal with the U.S. Meanwhile, a French aircraft carrier is transiting through the southern part of the Suez Canal and into the Red Sea, preparing to restore Hormuz tanker flows.
More Regional Developments
via Newsquawk
Al Arabiya reported that “the coming hours will witness a breakthrough for the situation of the ships stuck in the strait”, spurring pressure in the crude complex.
Iran is expected to provide its reply to the US proposal for ending the war to mediators on Thursday, according to CNN, citing a regional source.
US President Trump could turn to military action without an agreement with Iran ahead of the China trip, according to Axios, citing US officials.
Iran is expected to provide its reply to mediators on Thursday, CNN reported citing a regional source.
“Arabic sources: Reaching understandings regarding easing the siege in exchange for the gradual opening of the Strait of Hormuz “, Al Arabiya reported; “The coming hours will witness a breakthrough for the situation of the ships stuck in the strait”.
Pakistani Foreign Ministry spokesperson said, “We do not talk about war and instead talk about dialogue and diplomacy. However, if any aggression similar to what we saw last year, we will respond; Pakistan will respond just as it did”, Mallick posted.
Pakistani Foreign Ministry Spokesperson said “We have not yet received a response from Iran regarding the US amendments”, Al Jazeera reported.
“Pakistani source to Al Arabiya said Iran may hand over its response to the US proposal to the Pakistani mediator today”, Al Arabiya.
“No arrangements for any direct meetings between the Iranians and the Americans so far.”.
“Contacts with the Iranians are ongoing and there are no obstacles hindering continued”.
“Discussions are ongoing regarding the status of the Strait of Hormuz, and reaching understandings is still possible”.
Pakistani Foreign Ministry said “We expect an urgent agreement between Iran and the United States”, Al Araby reported.
“Israel was informed that Iran has agreed to transfer its stockpile of 60% enriched uranium to a third country that remains unknown”, Sky News Arabia reported citing Israeli Channel 12.
Pakistani Foreign Ministry spokesperson, on US-Iran agreement, said “we would expect an agreement sooner rather than later”, Pakistani journalist Mallick posted.
“We will welcome any settlement wherever that takes place, if it takes place in Islamabad, it would be an honour and privilege.”.
The proposed agreement between the US and Iran may limit the IDF’s action in Lebanon, Israeli press reported citing an Israeli official.
US President Trump, on Iran, said it will all work out very quickly.
IDF said it has intercepted suspicious aerial target launched from Lebanon towards Israel following sirens that sounded in Manara, Margaliot and Kiryat Shmona.
Lebanon’s PM Salam said it is not seeking normalisation with Israel and it is too early to discuss any possible meeting with Israeli PM Netanyahu.
Iran has issued a message to commercial vessels in the Strait of Hormuz, saying Iran’s port is fully prepared to provide general maritime services and support to the vessels, IRNA reported.
US President Trump could turn to military action without an Iran agreement ahead of the China trip, Axios reported citing US officials.
US President Trump’s reversal on his plan to help ships go through the Strait of Hormuz came after Saudi Arabia suspended the US’s ability to use its bases and airspace to carry out Project Freedom, NBC reported citing US officials.
IRGC Navy Political Affairs Official said we will impose our control over the Strait of Hormuz, and any attack will be met with a plan beyond the enemy’s calculations, Al Jazeera reported.
Almost half of students in Vienna’s public middle schools are now Muslim, according to new figures from the Vienna Education Directorate, marking the latest sign of a rapid demographic and cultural shift inside the Austrian capital’s classrooms.
The data, cited by Heute, shows that Muslim students account for 49.4 percent of children in Vienna’s public middle schools — just short of an absolute majority. Across the city’s public compulsory schools more broadly, including elementary, middle, special needs, and polytechnic schools, Muslim students now make up 42 percent, up from 41.2 percent in the previous school year.
Catholic students, once the dominant group in the city, now account for just 16.7 percent of children in the public schools included in the figures. Orthodox students make up 14.2 percent, while children with no religious affiliation account for 23.2 percent.
The figures also reveal a stark divide between Vienna’s public and private schools.
In private schools, Catholics remain the largest group at 45.39 percent, followed by students with no religious affiliation at 25.1 percent and Orthodox students at 10.6 percent. Muslim children account for just 7.6 percent of students in Vienna’s private schools.
Taken together, across both public and private schools, Muslim students now form the largest single group at 38.3 percent. Even when Catholic and Orthodox children are combined, they reach only around 33.6 percent.
The numbers reveal how the city’s public schools are becoming the front line of a much broader cultural transformation. Earlier this year, Remix News reported that more than half of first-grade students in Vienna were listed as Muslim for the first time, while separate reporting from Profil described one secondary school where a Christian boy was allegedly the only Christian in his first-grade class.
At that school, 230 of the 390 students were Muslim, while 99 percent of the students had an immigration background. Only five children in the entire school were reported to have no migrant background. The Christian boy was reportedly mocked by classmates and called a “pig,” while teachers described classrooms marked by language barriers, social problems, and growing religious pressure.
The school was said to include students speaking 32 different languages, with Turkish, Arabic, and Chechen among the most common home languages. One teacher said that the problems were so extensive that every class could use its own social worker.
Concerns over integration have also spilled into the school canteen. In October 2025, the Austrian Farmers’ Association warned that pork dishes such as schnitzel, ham noodles, and roast pork had become rare or had disappeared entirely from some Viennese school menus. The association said some schools now offered only vegetarian meals or meat dishes without pork, citing a mother who said her daughter could choose only between vegetarian food and “pork-free” food.
“No one has to eat pork, but it must be offered. Pork is part of our culinary culture,” said Corinna Weisl, director of the Farmers’ Association.
The group’s president, Georg Strasser, said preserving choice was the key issue, arguing that “diversity on the plate means freedom of choice for everyone.”
For some parents, however, the question is whether public schools can still deliver basic education. In February, Remix News reported the case of a Vienna mother who withdrew her daughter from a public primary school in Rudolfsheim-Fünfhaus after two years, saying only four children in the class spoke German fluently.
The mother, identified as Sabine G., said teachers spent much of the day translating instructions and managing basic communication rather than teaching. By the end of the first school year, she said her daughter still could not recite the alphabet, while several classmates had to repeat the grade.
She also said her daughter had begun refusing pork after being told it was “unclean” and had started rejecting certain summer clothing.
“I felt my child was being strongly influenced,” she said.
Teachers’ representatives have voiced similar concerns. In November last year, Thomas Krebs of the Christian Trade Unionists Group warned that some students and parents were increasingly unwilling to learn German or accept local values. He said female teachers had faced disrespect, insults, and even physical assaults from male students and parents, and claimed that religious rules were often being placed above Austria’s national curriculum.
“Our educational principles are often rejected. For example, religious content is prioritized over the content of the curriculum prescribed by Austrian law,” Krebs said. He called for mandatory German-language instruction and compulsory integration programs outside school.
The cultural tensions have also reached school leadership. In December, Christian Klar, headmaster of the Franz Jonas European School in Vienna-Floridsdorf, used his book “How Do We Save Our Children’s Future?” to warn of what he called a growing “clash of cultures and religions” in the classroom.
Klar cited the case of a gay teacher at a public elementary school whose sexuality prompted a Muslim father to demand his removal. The school refused to dismiss or transfer the teacher, but allowed the father’s son to change classes. Klar called the decision “de-escalating” but questioned what precedent it set.
“When is it time to say ‘Stop!’? I think we should have done that a long time ago!” he said.
The school figures reflect wider demographic changes across Vienna. In January, Statistics Austria data showed that 40.5 percent of babies born in the capital did not have Austrian citizenship, double the share recorded two decades earlier. In districts such as Favoriten, Ottakring, and Rudolfsheim-Fünfhaus, the figure has passed 50 percent.
At the same time, more than 44 percent of Vienna’s roughly 16,700 first-graders reportedly lacked sufficient German to follow lessons. In the 2018/2019 school year, the share was 30 percent. Officials have noted that around 60 percent of those children were born in Austria, intensifying concerns that poor German language skills are being passed on inside migrant communities rather than solved by birth and schooling in the country.
UK Jet Fuel Rationing Risks Emerge As Goldman Warns Of “Extreme Physical Tightness”
Brent crude futures briefly tumbled below $100 a barrel on Wednesday morning after an Axios report indicated the Trump administration and Tehran were working toward a one-page memorandum of understanding to end the war and reopen the Strait of Hormuz.
Still, any near-term peace deal would not immediately normalize the badly fractured global energy supply chains. Crude products markets remain physically tight, and the damage from months of disrupted tanker flows will take time to unwind. Some countries may already be entering a critical point, with jet fuel and diesel inventories at risk of being drawn down to dangerously low levels in the months ahead.
Goldman analysts, led by Michele Della Vigna, warned about diesel and jet fuel availability in Europe ahead of the summer months, noting that “extreme physical tightness in summer/early autumn” is a scenario they are forecasting.
“We believe jet fuel prices in Europe will need to remain elevated to redirect cargoes from other regions, covering 50% of the shortfall in disrupted volumes from the Middle East through Hormuz and from Asian exporters no longer exporting to Europe,” Della Vigna told clients.
Della Vigna, the head of EMEA natural resources research at Goldman, pointed out that “some countries (the UK in particular) could end up with extremely low inventories, and it’s possible that rationing measures would be put in place to slow inventory draw.”
Readers have been well informed about the looming jet fuel crisis set to hit Europe this summer (read here & here & here & here), as well as JPMorgan’s March take on how the energy crisis is spreading across regions (read here).
As we detailed on Tuesday, President Trump’s push to reopen the Hormuz chokepoint at the start of the week likely reflects the beginning of a one-month countdown to accelerated energy chaos if the critical waterway is not reopened. The risk is no longer confined to crude markets. Prolonged disruption through Hormuz is spreading into refined-product supply chains, with Europe’s jet fuel and diesel inventories facing the brunt of physical tightness heading into summer and early autumn.
Della Vigna estimated that Europe faces a gross jet fuel loss of about 500,000 barrels a day from Gulf-area exporters and Asian tankers transiting Hormuz, and assumes that half of that shortfall can be offset by redirected U.S. and West African energy flows, leaving a net loss of approximately 250,000 barrels a day. For diesel, he assumes the full 220,000 barrels-a-day loss is absorbed by European stocks.
Exhibit 3: We estimate a gross jet fuel loss of c.500 kb/d from Middle East Gulf and Asian exporters and we show the sensitivity to different % of exports subtitutions coming from other regions
He singled out the UK as having the highest-risk jet fuel market because it is Europe’s largest net importer of jet fuel, at about 195,000 barrels a day, and lacks proper reserves. He warned that UK commercial stocks could fall below 10 days of cover by midsummer, raising the risk of rationing, which in turn would impact commercial flights.
Della Vigna continued:
Under our commodities teams’ base case (Gulf normalization in June), we see European jet fuel inventories – on commercial stocks alone, excluding government emergency reserves – falling to the IEA’s critical 23-day shortage threshold by end-May and breaching it in June, slightly more aggressive than the IEA’s own assessment as we account for the disruption of Asian-origin cargoes transiting the Strait.
Under an adverse scenario (normalization delayed to July), stocks could be depleted entirely by year-end (Exhibit 1). Diesel faces a more gradual erosion given lower ME import dependence.
At the country level, the UK appears most at risk of rationing (Exhibit 4), with commercial stocks falling below 10 days of cover by mid-summer given high starting import dependence and no government reserves. Net exporters such as the Netherlands and Greece are more insulated but would still be affected through higher prices.
Exhibit 1: Jet Fuel is the tightest oil product market
Exhibit 4: For jet fuel, the UK is most at risk with low inventories and high reliance on imports
To offset losses, Europe has drawn in more jet fuel and barrels from Nigeria’s Dangote refinery, but Della Vigna said prices will need to remain elevated to redirect even more tankers to the energy-stricken continent.
Bloomberg’s Javier Blas notes, “US refiners are going gangbusters trying to solve the global jet-fuel shortage (and to cash in record high margins).”
CHART OF THE DAY: US refiners are going gangbusters trying to solve the global jet-fuel shortage (and to cash in record high margins).
The chart shows seasonal jet-fuel output from 2000-to-date (2026 is top line in blue). The bottom outliers are 2020 and 2021 during Covid. pic.twitter.com/fllcX6EM5y
On the topic of airlines, he said carriers on the continent have already slashed summer capacity by low single digits, while Middle East schedules have been reduced by high double digits through late June.
Exhibit 8: Low single-digit capacity cuts on EU short-haul post conflict
Exhibit 9: Similar cuts on Transatlantic capacity
It’s clear Europe has a jet fuel problem. And this won’t be solved by Brussels’ weird obsession with ‘green’ energy.
Germany just found a new way to lower its own healthcare costs: make Americans pay more.
In late April, German policymakers proposed changes that cap spending growth, restrict care, and force drugmakers to provide steep discounts.
These changes are supposed to save Germany money. But drugmakers still need to recoup the high costs of research and development. When a country like Germany suppresses the prices it pays for innovative medicines, those costs don’t disappear — they simply shift elsewhere.
And because many other wealthy countries use similar price controls, that cost burden is increasingly falling on the United States.
The global imbalance is already stark.
American patients generate roughly three-quarters of global pharmaceutical profits despite accounting for just a quarter of global GDP. In effect, the United States is underwriting much of the world’s drug innovation while patients abroad pay far less for the same treatments.
President Trump has spent months trying to end this freeloading by pressing other countries to pay fair value for new treatments — and he shouldn’t let Germany get away with refusing to cooperate.
Foreign mooching off American medical innovation is a real and longstanding problem. Wealthy governments around the world — and especially in Europe — set drug prices by decree, effectively refusing to pay manufacturers fair value for treatments they spend years, sometimes decades, developing.
As a result, drugmakers disproportionately rely on revenue from the United States to sustain research and development. While patients abroad often pay cut-rate prices, Americans pay far more for the same meds. That imbalance is fundamentally unfair.
Of course, America can’t simply stop paying for innovation. If U.S. leaders copied other countries’ price-control tactics — as Democrats have often suggested — companies would struggle to earn returns on new research, and global development of life-saving new drugs would grind to a halt.
That leaves only one viable solution: force other countries to start paying their fair share for innovation.
President Trump has made progress on this front by pressuring wealthy allies directly. In April, for instance, he convinced the United Kingdom to increase its spending on new medicines. The deal proved that a firm U.S. stance could yield meaningful results.
But Germany is now testing America’s resolve. Germany already spends far less than the United States on medicines, even when factoring in its smaller population and economy. Its new plan will deepen that divide by imposing strict limits on health spending growth and taking money directly from manufacturers to fund drug coverage.
Soon, Germany will pay even less than it already does for innovative medicines. The result will be higher costs concentrated in the U.S. market — or reduced investment in new cures. Either way, American patients will bear the burden.
And if Washington fails to respond, its broader effort to end foreign free-riding will lose credibility. Other countries will assume that they can continue to free-ride without facing consequences.
The United States needs to make a stand.
Fortunately, the Trump administration has real negotiating leverage. As the recent deal with the UK shows, U.S. trade officials have plenty of tools to obtain cooperation from foreign governments. They should use these tools to ensure fair pricing, knock down barriers to market access, and make clear that continued freeloading will come with consequences. This can and should start with a Section 301 investigation of other countries’ drug-pricing policies. Such a move would expose unfair practices and empower U.S. officials to impose trade penalties, forcing allies like Germany to pay fair value for innovative medicines.
Ultimately, policymakers should ensure that all of America’s allies pay their fair share. President Trump ended a different form of international leeching last year when he convinced NATO members to spend a greater percentage of their GDP on defense. If U.S. negotiators can secure similar spending targets for innovative medicines, they can end free-riding for good — and allow drugmakers to lower prices at home without hurting innovation.
American patients shouldn’t have to subsidize the world’s medicine cabinet. The policies of countries like Germany have inflated U.S. drug costs for too long.
By standing up to Germany now, President Trump can reaffirm that the United States no longer tolerates foreign freeloading on American medicines, while helping to reduce costs for American patients and preserving the breakthroughs they depend on.
Iran Oil Official In Surprise Admission: ‘Fate Of Our Refineries Now At Risk’ As US Blockade Begins To Bite
Summary
Iran oil sector official admits “serious threat” – telling NYT: “export of our oil and energy and the fate of our refineries is now at risk.”
US Navy jet fires on Iran-flagged tanker trying to reach Iranian waters & port.
Axios reports that the White House is nearing a preliminary deal with Iran to end the war, as Trump post appears to offer olive branch. Other reports say just hammering out at ‘framework’ for ‘monthlong’ talks.
White House says it expects a response to the latest offer within 48 hours.
Iran’s initial response via media & national security spox: US demands are unrealistic & do not reflect reality, & Axios report based on too much ‘speculation’.
A key caveat of the US offered deal is that Iran would commit to a moratorium on uranium enrichment, & Washington wants a 20-year ban on this; Iran & China FMs coordinate messaging in Beijing, denying Iran’s intent to build nuclear bomb.
Surprisingly Frank Admission Out of Iran’s Oil Sector
An Iranian energy official just conceded something in a surprise admission that the US naval blockade has begun to bite the Islamic Republic’s oil industry. According to new reporting in the NY Times:
The blockade has halted Iran’s oil exports, choking off crucial revenues, and the country risks running out of places to store its oil. It is also affecting the import of other goods, forcing Iran to seek alternative routes through neighboring countries and its smaller ports on the Caspian Sea. And the economic pain inside Iran, already dire before the war, is becoming much worse.
“The sea blockade is a much more serious threat than even war, and the current stalemate must be broken because the export of our oil and energy and the fate of our refineries is now at risk,” said Hamid Hosseini, an expert on Iran’s oil sector who serves on the energy committee of Iran’s Chamber of Commerce, in an interview from Tehran.
This as Kpler has stated based on its data that since the US blockade took effect on April 13, no Iranian oil-laden tankers have been able to exit the strait.
“The bottom line is that Iran could run out of storage space in about 25 to 30 days if the blockade is not lifted, according to Homayoun Falakshahi, Kpler’s head of oil analysis,” continues the Wednesday report. “Other experts have given different estimates ranging from a few weeks to a month or more.” Last month we offered the following, saying a likely 15 days – probably followed with a few weeks left on the clock before the Iranians run out of storage space…
Tehran Timeline: Iran Has 15 Days Until Its Oil Industry Begins Full Shut-Ins https://t.co/21WPtRfINW
So much for that ceasefire and alleged ‘pause’ in US naval blockade actions, as things just took another escalatory turn. In this case, a rare live fire incident unfolded Wednesday in Gulf waters as a US jet launched from the Lincoln carrier fired on and possibly disabled an Iranian-flagged tanker, per the officials US Central Command statement:
U.S. forces operating in the Gulf of Oman enforced blockade measures by disabling an Iranian-flagged unladen oil tanker attempting to sail toward an Iranian port at 9 a.m. ET, May 6.
U.S. Central Command (CENTCOM) forces observed M/T Hasna as it transited international waters enroute to an Iranian port on the Gulf of Oman. American forces issued multiple warnings and informed the Iranian-flagged vessel it was in violation of the U.S. blockade.
After Hasna’s crew failed to comply with repeated warnings, U.S. forces disabled the tanker’s rudder by firing several rounds from the 20mm cannon gun of a U.S. Navy F/A-18 Super Hornet launched from USS Abraham Lincoln (CVN 72). Hasna is no longer transiting to Iran.
The Pentagon/CENTCOM statement then emphasized, “The U.S. blockade against ships attempting to enter or depart Iranian ports remains in full effect. CENTCOM forces continue to act deliberately and professionally to ensure compliance.” Tehran’s response to this will be interesting, and follows prior alleged attacks this week on the UAE.
‘Framework’ Being Hammered Out for ‘Monthlong Period of Talks’
Iran’s Foreign Ministry has said that Iran’s response to the United States has not yet been presented to mediator Pakistan, as the WSJ reports that the US and Iranian sides are currently trying to hammer out a one-page memorandum of understanding which features 14-points. This would “lay out a framework” – the report says, for a “monthlong period of talks to end the war.”
Given that agreement cannot even be found on the ‘framework’ for future talks, it seems the process is not very advanced at all – but is perhaps still back at square one, with headlines in the US way out front, and likely overly optimistic.
CNN citing the White House: “The White House received positive feedback from Pakistani mediators on Tuesday that the Iranians were progressing toward a compromise.” And more from WSJ:
Iran’s mission to the UN said that “the only viable solution in the Strait of Hormuz is clear: a permanent end to the war, the lifting of the maritime blockade, and the restoration of normal passage.”
Key Timing of Wang-Araghchi Meeting in Beijing
During Iranian Foreign Minister Araghchi’s visit to Beijing on Wednesday, China’s Foreign Minister Wang Yi pushed for the rapid reopening of the Strait of Hormuz and a halt to the fighting. Araghchi echoed the urgency, saying, “Currently, it is possible to resolve the issue of reopening the Strait of Hormuz as soon as possible.” Wang called for a “comprehensive ceasefire” and stressed that “the international community shares a common concern for restoring normal and safe passage through the Strait,” urging swift action.
The coordinated messaging reflects shared economic and strategic interests, especially as US naval actions have disrupted Iranian oil flows to China. Wang also signaled support for Tehran’s position, stating China “appreciates Iran’s pledge to not develop nuclear weapons,” while Iran continues to insist its nuclear program is peaceful and maintains its right to uranium enrichment as a matter of sovereignty.
Wang reinforced Beijing’s stance by warning that “a comprehensive ceasefire brooks no delay” and that negotiations must continue, while US Secretary of State Marco Rubio has called on China to pressure Iran to ease its blockade of the strait.
Alarmed Reaction from Israel
An Israeli official cited in Times of Israel said Israel did not know that President Trump was close to a deal with Iran to end the fighting and reopen the Strait of Hormuz, even as global headlines pointed to progress. The official said Israel had been preparing for escalation, reflecting recent reports that Prime Minister Benjamin Netanyahu’s government was waiting for US approval to resume its aerial campaign following 38 days of strikes under Operation Epic Fury.
US messaging has shifted rapidly. with Secretary of State Marco Rubio on Tuesday having announced the end of Operation Epic Fury and a pivot to Project Freedom focused on reopening Hormuz, while Trump later declared a pause to allow negotiations. The mixed signals from Washington created confusion as diplomacy and military positioning unfolded simultaneously.
Both Iran and Israel signaled readiness to escalate despite the diplomatic push. Iran warned its “finger is on the trigger,” while Israeli military chief Lt. Gen. Eyal Zamir said forces have multiple targets prepared inside Iran and remain on high alert. He emphasized ongoing coordination with US forces and readiness to resume a broad campaign if fighting restarts.
More Official Iran Denials: Too Much ‘Speculation’
The latest response out of Tehran via Tasnim: “Despite claims by US media that Iran and the US are close to a final one-page agreement to end the war, Iran has not yet given an official response to the Americans’ final text, which contains some unacceptable clauses.”
And separately Iran’s ISNA calls parts of the Axios report “speculation” – also reiterating the country has rejected some recent US proposals, as they are “unrealistic”. However, an Iranian spokesperson has said that Iran is indeed “reviewing the US proposal to end the war.”
Trump Admits: ‘Too Soon’
And now a bit of rapid narrative reversal, coming from President Trump himself, after once again a likely premature early morning Axios report with overly optimistic language. Trump’s fresh words are via the NY Post:
President Donald Trump said it’s “too soon” to plan peace talks with Iran despite reports of a near deal, downplaying prospects of imminent negotiations in Pakistan. He warned that if Iran accepts terms, hostilities could end and the Strait of Hormuz reopen—but failure to agree would trigger intensified military action.
Indeed the Iranian reaction issued via media reports also suggests this is the case, that all the talk of an agreement being close is premature, and there remains immense hurdles and a long way to go. Axios’ Barak Ravid still insists that “the sources said this was the closest the parties had been to an agreement since the war began.”
Initial Word From Tehran: Doesn’t Reflect Reality
Iranian initial reaction through its media: “What US media outlets are publishing about the details of the negotiations does not reflect the reality of what is happening, according to AI Araby citing Iranian Sources.”
“Progress has been made in talks with Washington through Pakistan, but it has not yet reached a level that would lead to an agreement,” the statement says. The Iranians are also clearly sticking by their approach which says the nuclear issue is a non-starter and that talks must focus on opening Hormuz and finding a final end to the conflict. “The negotiations are focused on ending the war, not the nuclear issue,” the statement in Al Araby continues.
And then the final criticism of Washington’s approach: “The negotiations are still facing the intransigent American approach and excessive demands.” And further, this:
Ebrahim Rezaei dismissed U.S. demands as unrealistic, saying Washington won’t gain through conflict what it failed to secure in talks. He added Iran is ready to act and warned of a severe, regret-inducing response to any provocation.
Here is the full statement from the Iranian Spokesperson of the National Security and Foreign Policy Commission (via machine translation):
Trump Issues Carrot & Stick
The below is a fresh Trump Truth Social Post on Wednesday morning, warning the Iranians that the Hormuz Strait must be “open to all”. However, the president continues, if Tehran doesn’t agree then “the bombing starts” and it will be at a “much higher level and intensity than it was before”.
All of this has followed an awkward 24 hours of drastically different signals coming from various top officials of the US administration.
Marco Rubio says the goal of the war in Iran is now to restore it “back to the way it was” before Trump started the war in Iran pic.twitter.com/G1E9qyxMc4
Axios reports that the White House is nearing a preliminary deal with Iran to end the war. This is based on a 14-point, one-page memorandum that creates a 30-day negotiating window for a broader nuclear and Strait of Hormuz deal and follows President Trump’s announcement last night of “great progress” and a “complete and final” deal nearing.
“The U.S. expects Iranian responses on several key points in the next 48 hours.
Nothing has been agreed yet, but sources said this was the closest the parties had been to an agreement since the war began,” Axios wrote in the report.
Here are the key points:
Iran would commit to a moratorium on uranium enrichment. The duration is still under negotiation, with the U.S. pushing for 20 years, Iran offering five, and sources suggesting 12 to 15 years may be the likely spot.
Iran would also pledge not to seek nuclear weapons, accept enhanced inspections, potentially halt underground nuclear facility operations, and possibly remove highly enriched uranium from the country.
The U.S. would gradually lift sanctions and release billions of dollars in frozen Iranian funds.
Shipping restrictions through the Hormuz chokepoint and the U.S. naval blockade would be gradually lifted during the 30-day talks. If negotiations fail, U.S. forces could restore the blockade or resume military action.
Axios said talks are being led by Trump envoys Steve Witkoff and Jared Kushner with top Iranian officials, both directly and through mediators.
News of this sparked risk on in U.S. equity index futures, WTI fell to the $95-a-barrel handle, and U.S. Treasury yields dipped.
Medvedev: Russia Must Instill ‘Animal Fear’ In EU Warmongers As Goodwill Measures Futile
Head of the Russian Security Council and former president, Dmitry Medvedev, has penned an article ahead of the 81st anniversary of Soviet victory over Nazi Germany, or Russia’s V-Day, lambasting Europe’s new path of reckless militarization. As widely featured in state media, he argued that the “animal fear” of unacceptable losses will prevent Germany and the wider “United Europe” from launching another attack against Russia.
He wrote, “It is no secret that an attempt is being made to impose on us the doctrine of ‘peace through strength’. Our response then can only be ‘the security of Russia through the animal fear of Europe.’“
He stressed that “neither persuasion, nor demonstration of good intentions, nor goodwill and unilateral confidence-building steps should be our tools to prevent a big massacre.”
“Only the formation of an understanding among Germany and the United Europe supporting it of the inevitability of their receiving unacceptable damage in the event of the implementation of the Barbarossa 2.0 plan,” Medvedev concluded.
RT reviews and pinpoints why Medvedev is taking direct aim at Berlin in his written piece:
German Chancellor Friedrich Merz openly vowed to turn the German military into the “strongest conventional army in Europe” in a speech just days after the world marked the 80th anniversary of the fall of the Third Reich last May.
Last month, the German Defense Ministry unveiled a plan to reach this goal and field 460,000 combat-ready personnel by 2039, the 100th anniversary of Adolf Hitler’s invasion of Poland. German and other EU officials repeatedly cited 2029 as the first stage deadline to be “war-ready” for a potential conflict with Russia.
It is true that even after 4+ years of grinding war in eastern Europe, the Western powers have yet to intervene directly by sending their own forces, and after losses on both the Ukrainian and Russian sides have probably been in the hundreds of thousands.
The conflict is largely stalemated, with Russian forces in the east having had a very slow but steady, piecemeal momentum over the past year.
However, Ukraine’s drone strikes deep inside Russia have been devastating of late, inflicting serious damage on Russian oil refineries – in some cases hitting key sites multiple times, with Russia’s anti-air defenses appearing powerless to stop these attack waves.
The Moscow region itself has been coming under repeat drone attack. While these operations have little or no impact on the frontline situation in the Donbass, Kiev hopes to inflict serious costs on the Russian government and population, the latter which is surely growing tired and weary of the war.
But Medvedev’s point is also that if broader conflict with Europe opens one day, the European powers won’t be able to find an offramp before absorbing immense losses – no matter their efforts to revamp and expand their respective defense industries.
The UK government’s much-hyped age verification system for social media has been reduced to a joke overnight – and the punchline is being delivered by schoolkids armed with makeup pencils and fake facial hair.
A damning new report from Internet Matters reveals that more than a third of UK children have already figured out how to dodge the latest “safeguards” imposed under the draconian Online Safety Act.
Methods include entering fake birthdays, borrowing logins, and – most hilariously – drawing on fake moustaches to fool facial age estimation tech. One parent admitted catching her son using an eyebrow pencil; the system promptly verified him.
The UK government’s age verification checks have been brought down by children wearing fake moustache’s
This comes as ministers double down on plans to restrict or outright ban social media access for under-16s. Just days ago, Education Secretary Bridget Phillipson and junior minister Olivia Bailey confirmed the government will impose “some form of age or functionality restrictions” regardless of whether a full ban is enacted.
A national consultation on the policy closes later this month, with pilots already running in hundreds of homes testing bans, time limits, and digital curfews.
But the farce unfolding in real time shows exactly why these measures were always doomed to fail – or, more cynically, why they were designed to fail.
I suspect it’s fake news so they can push for ID verifications
Either the architects of this scheme are completely incompetent, or this is a deliberate ploy to make the whole thing look ridiculous.
Why? To curtail resistance and downplay the inevitable next step: mandatory digital ID.
Age verification, or more properly defined as “identity verification,” was designed to fail, so that the government could push for a full blown digital ID system.
The people behind this are utterly dastardly and machiavellian in their lust for total power over their fellow Man.
We’ve seen this playbook before. When Apple began forcing iPhone users to prove their age with government ID or lose unrestricted internet access, we warned it was the thin end of the wedge.
The government’s digital ID scheme is already being rolled out. A “dystopian experiment in mass surveillance,” with critics warning it will make proving your identity online unavoidable for everything from banking to browsing.
And it’s not just Britain. The EU is charging ahead with its own war on online freedom, forcing age verification and going after VPNs in the name of “saving the children” while quietly building the infrastructure for continent-wide censorship and tracking.
The EU has moved to protect children from harmful and inappropriate online content. On Wednesday, the EU Commission adopted a recommendation urging Member States to accelerate the roll…
Just coincidentally, the EU’s own age verification system was defeated in minutes after it was soft launched in April. So now, of course, there needs to be a further crackdown.
Digital ID systems always promise security and always deliver breaches. The EU’s new age verification app got hacked in under two minutes. Passport photos were stored unencrypted. PIN protection was bypassed with a text editor. Von der Leyen called it “technically ready.” Every…
This was never about protecting kids. They don’t care about kids. It’s about control. Every failed “safety” measure provides the perfect excuse to demand even stricter verification – biometric scans, national digital IDs, device-level monitoring.
The moustache kids aren’t the problem; they’re exposing the con.
In the US, President Trump has already drawn a line in the sand, declaring war on the Euro-style censorship machine and vowing to smash any UK-EU internet crackdown that threatens free speech.
While the UK government chases headlines with performative “child safety” gestures that collapse under the weight of a 12-year-old with a makeup pencil, the real threat isn’t social media – it’s the authoritarian apparatus being built in its name.
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While Africa remains far above this threshold, most of the world, including Asia, Europe, and the Americas, has already fallen below it.
This split highlights where future population growth is likely to be concentrated.
Africa Stands Apart
Africa’s fertility rate of 4.0 children per woman is the highest of any region. It is nearly double the global average of 2.2 and close to three times Europe’s rate of 1.4.
With a rapidly growing population base, Africa is expected to drive a significant share of global population growth in the coming decades.
Higher fertility rates are often linked to younger populations, lower urbanization, and differences in access to education and healthcare.
Below Replacement in Most Regions
Many parts of the world now have fertility rates below the replacement level of 2.1. Asia, North America, and South America each sit at 1.7, while Europe trails at 1.4.
These levels point to aging populations, slower natural population growth, and potential workforce pressures over time. In many countries, immigration and family-support policies are becoming more important parts of the demographic outlook.
Population Weight Matters
Asia accounts for 54% of the global population, meaning its relatively low fertility rate has an outsized influence on the global average.
By contrast, regions like Oceania and the Middle East have higher fertility rates but much smaller populations. This helps explain why the global average remains at 2.2 even as most major regions fall below replacement.
Amidst continued fears regarding Putin attacking beyond Ukraine and economic uncertainty caused by the continued closure of the Strait of Hormuz, Brussels is reportedly beginning to grumble, i.e., look for someone to blame and remove.
Now, according to a report by Finnish public service media Yle, cited by Világgazdaság, voices are growing to remove the president of the European Commission, Ursula von der Leyen.
Several European leaders, as well as NATO officials, have long warned that Moscow may potentially attack NATO states, which is why there has been a continued push for support for Ukraine to prevail in its war with Russia.
In the event of such a scenario, where Putin looks to further his ambitions and attack inside NATO, rapid and effective cooperation between European countries will be crucial, which is why, according to this recent report, some are wondering if von der Leyen is the right person for the job.
One name that has been put forth for “European war leader” is Finnish president, Alexander Stubb, an independent known for seeking greater EU integration and a higher profile for the EU in international policymaking.
The suggestion was also reportedly confirmed by defense expert Line Rindvig, who believes that the Finnish president may be particularly suitable for such a role.
The Finnish president is even said to have served as a “quasi-European representative” on several occasions in discussions on support for Ukraine.
Rindvig has actively been assisting Finland to boost its military defense capabilities in light of lessons learned from Ukraine.
He says that the Nordic country is at the forefront of preparations in Europe, which he attributes in large part to Stubb’s diplomatic activity and international acceptance.
He is, according to the expert, a good bet for leading broader European cooperation.
Significantly, Stubb also enjoys good relations with U.S. President Donald Trump, which is key for transatlantic coordination.
Rindvig even pointed to their closeness being aided by a shared interest in golf.
As the EU seeks to navigate its role in a world dominated by major powers and their wars, the right person at the helm will be critical if it ever wants a seat at the table — to discuss Ukraine, as well as NATO, foreign policy, and other economic matters.
