Pentagon Broker | Rewire News Evening Report

The defense minister’s broker contacted BlackRock to buy defense-industry funds before the war began. The deal didn’t go through because the channel wasn’t opened—not because someone blocked it.

1｜Hegseth’s broker tried to buy a defense ETF before the war began; the Pentagon demanded FT pull the story

FT reports that U.S. Defense Secretary Hegseth’s broker at Morgan Stanley contacted BlackRock in February this year, requesting a purchase of an iShares Defense Industry Active ETF, with plans to invest millions of dollars. The fund’s assets under management are about $3.1 billion, and its top three holdings are Raytheon (RTX), Lockheed Martin, and Northrop Grumman. On February 28, the U.S. went to war with Iran. The transaction ultimately didn’t close. The reason wasn’t regulatory review, but that the fund had not yet opened to Morgan Stanley clients.

Pentagon chief spokesperson Parnell said on X that the report was “completely false and fabricated,” and demanded that FT pull it. FT stood by the story, and multiple outlets including CNBC followed up. This is not an insider-trading case—since the trade didn’t happen, there’s no legal basis to pursue it. But what it reveals is a structure more worth noting than insider trading: between the person who directs the war and the person who profits from it, there’s only a broker account separating them. The trade failed because the product channel wasn’t connected—not because a conflict of interest was intercepted.

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

2｜AI infrastructure hits an energy wall: a $635B spending plan gets buffeted by the Iran-war shockwave

Melissa Otto, head of research at S&P Global, warned that Microsoft, Amazon, Google, and Meta’s combined $635B AI infrastructure spending this year is facing an energy-cost shock from the Middle East crisis. The figure is nearly double last year’s $383B. Otto said that sustained high oil prices could force cuts to capital expenditures in the first and second quarters, bringing “a severe market pullback across all markets.”

At the same time, Mistral borrowed $830M to build a data center in Paris, installing 13,800 Nvidia GB300 GPUs. Nvidia-backed Emerald AI raised $25M, using software to perform flexible power-grid scheduling for the data center, aiming to release an additional 100 gigawatts of capacity from the existing U.S. power grid. The war is driving up AI’s energy bills, but capital is still being added.

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

3｜Bitcoin miners collectively pivot to AI: network hash rate falls for the first time in six years on a quarterly basis

Total bitcoin network hashrate saw its first quarterly decline since 2020 in Q1, dropping from around 1 ZH/s at the end of last year back to roughly 900–950 EH/s. On March 21, mining difficulty was cut by 7.76%. Public mining companies average a loss of $19,000 per mined bitcoin, and more than $70B in AI hosting contracts have already been signed.

Core Scientific plans to sell most of its bitcoin holdings by year-end to raise funds for AI expansion, and Bitdeer cleared all of its bitcoin reserves in February. CoinShares estimates that by year-end, as much as 70% of revenues for some mining firms may come from AI hosting, with operating profit margins of 80–90% and dollar-fixed income. Miners aren’t transforming—they’re using the shell of bitcoin to dress up AI.

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

4｜China’s AI earnings season: doubling revenue is standard; doubling losses is also

Zhipu released its first full-year earnings report after going public. In 2025, revenue was RMB 724 million, up 131.9%, and net loss was RMB 4.72 billion, widening by 59%. Biren Technology delivered its first earnings report on the same day: revenue of RMB 1.035 billion, up 207%, gross margin of 53.8%, but losses are still elevated. China’s AI companies have drawn the same line: revenue is rising, while cash is burning.

In addition, iFlytek?—sorry—Inflection? (No.) In fact: Inflection?
—China’s AI firms are drawing the same line: money is burning, while products are being sold. The text above continues as follows:

Inflection Intelligence and Eli Lilly signed a $2.75B AI drug-discovery collaboration, with an upfront payment of $115M, and the core target is preclinical oral GLP-1 drugs. The upfront payment is two times Inflection Intelligence’s full-year revenue. Apple’s AI domestic-version briefly went live due to “software issues” and was then withdrawn; Gurman said it was a mistaken action, and Apple still needs approval from the Cyberspace Administration. China’s AI money is burning, the drugs are being sold, and the AI on phones hasn’t cleared entry yet.

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

Also worth knowing ↓

U.S. oil prices broke $4 per gallon, up 35% since the war began. The national average reached $4.018, the first time since the Russia-Ukraine war in 2022 that it has crossed the $4 mark. Diesel: $5.454 per gallon. The Strait of Hormuz remains closed to most vessels, leaving the global supply of about 4.5–5 million barrels per day obstructed. Analysts warn that if the strait isn’t reopened, oil prices could hit $5 per gallon. (Source: Axios / GasBuddy / Time)

Dubai and Abu Dhabi stock markets have evaporated $120B since the war began. Dubai Financial Market Index fell about 16% ($45B market cap), while Abu Dhabi fell about 9% ($75B). Tourism has been hit the hardest: last year it contributed 13% of the UAE’s GDP ($70B), but since the war began, tens of thousands of flights have been canceled. (Source: Al Jazeera)

Stanford research: users’ tendency to flatter AI is 49% higher than with humans. A study published by Stanford Computer Science in the journal Science found that among 2,400 participants, most preferred to be flattered by AI rather than told the truth by humans. On social issues, AI agrees with users 49% more than humans do. As more and more people treat AI as a therapist, flattery is systematically reinforcing users’ cognitive biases. (Source: Fortune / Stanford)

Eurozone March inflation rose to 2.5%, exceeding the ECB target. Soaring energy costs are the main driver, and oil and gas prices boosted by the Iran war are flowing through to European consumer demand. The ECB faces a dilemma—economic slowdown and inflation rebound occurring at the same time. (Source: CNBC)

Cryptocurrency has been used to buy drones for Russia and Iran. Reuters, citing a report, says cryptocurrency is becoming the payment infrastructure for wartime economies, linking two areas that seem unrelated: crypto regulatory oversight and military conflicts. (Source: Reuters)

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