U.S. Water Systems Just Got Hacked & Why Trump Bought ¥8.45 Trillion

Hi readers, happy Tuesday! Today, we’re covering the U.S. intervention into Japan’s currency, a possible deal with Iran, Europe’s disappearing river problem, a migrant crisis in Spain, U.S. water systems being hacked, Trump’s new attorney general, and an AI hedge fund’s collapse.

“It isn’t normal to know what we want. It is a rare and difficult psychological achievement.” — Abraham Maslow

We Need An Yen-Tervention (Intervent-Yen?)

Over the weekend, President Trump confirmed that the U.S. had intervened in Japan’s currency last Friday, selling off some of its euros in order to purchase yen. The move was designed to raise the value of the yen after it slumped to a 40-year low in July, with $1 worth ¥163 at the lowest point. Just a year before that, a dollar could buy ¥147.

Trump was asked about why the Treasury Department had decided to prop up Japan’s currency on Sunday. “To support the Japanese currency,” he said. “Because we have a good relationship with Japan. We’re very strong, very, very strong financially,” he went on, adding, “Japan’s been very good to us, with the exception, of course, of Pearl Harbor.” The intervention marks the first time that the U.S. has intervened to prop up the yen since the 1980s, when the currency hit its all-time low in terms of dollars.

The government didn’t state how much yen it had purchased, but the Financial Times (citing various analysts) claims that the intervention was around $52.8 billion, or ¥8.45 trillion. Markets responded to the change on Monday, when the yen jumped to about 155 per dollar before closing at 156.50. Japan has historically tried to keep its currency lower-value in order to keep its exports competitive in global markets, but a cheaper currency increases inflation risk. Those risks have apparently gotten out of hand now thanks to the U.S.’s war with Iran, which has inflated the cost of global commerce by restricting the flow of oil out of the Middle East.

Deal Or No Deal?

On Saturday, Trump threatened to hit Iran “very hard” after the U.S. paused strikes on the country last Monday. That same day, the president reversed course, stating that he planned to push for a peace deal with Tehran instead.

Yesterday, Trump announced that the U.S. and Iran were indeed working on a peace deal, but warned that the negotiations were Iran’s “last chance” to end the five-month war. He added that “perimeters of a deal” were in place. “You’ll find out today or tomorrow,” Mr. Trump said about the deal terms. “They’re going to go quickly one way or the other. It’s not very complex.” The strait, he went on, could be open “literally by tomorrow… The first phase is the opening of the straits. The second phase will be the denuclearization.” A spokesman for Iran’s Foreign Ministry insisted that no negotiations were going on at all. 

Despite that claim, it does appear that Iran is involved in peace talks in some capacity. The New York Times reported yesterday that Iran and Oman were close to signing off on an agreement to reopen shipping in the Strait of Hormuz. According to the terms of the deal (it’s not clear if the U.S. is involved), Iran and Oman would open a shipping lane close to Oman’s shores in the Strait of Hormuz. In order to use the route, ships would have to pay a “service fee,” which would be split between both countries. It doesn’t seem like the U.S. would be very happy with that outcome, though – recently, Secretary of State Marco Rubio declared, “If we create a precedent in the Middle East where a nation state can decide that they are going to control an international waterway, charge a toll and if you don’t pay them blow up your ships, we have created a very dangerous precedent, which will repeat itself in other parts of the world,” adding, “the rules which have underpinned 150 years of international trade and commerce are also threatened, and that cannot be allowed to happen.”

Europe Runs Dry

• Europe’s heatwave briefly let up early last week, giving firefighters time to contain blazes in Western Europe, but it’s made up for time since then. According to recent water level measurements, the River Rhine has hit record low levels across multiple locations. At one point on Friday, the river measured just 25 centimeters (roughly 10 inches) deep at a key checkpoint in Western Germany. The water levels are a definite warning sign about climate change, but they will also have an immediate impact on the European economy – the Rhine is used to transport goods across multiple countries, and the super-low water levels mean larger shipping vessels simply can’t move through the river.

• Meanwhile, the Danube River is also reaching historically low levels, causing even more pressing problems elsewhere in Europe. The river is used to cool nuclear power plants in both Hungary and Romania. Yesterday, Romania’s navy was forced to use 180 kilograms of explosives to clear the way for the erection of a temporary dam. In turn, that dam will allow the country to cool its sole nuclear plant for… a whopping two more days.

• “Any day past Wednesday or Thursday that the nuclear power plant functions is a gain,” said Romania’s defence minister, Radu Miruțǎ. “A day of it functioning is three times more efficient than the costs of this operation.” Hungary is facing a similar crisis, and expects to shut down its sole nuclear plant next week if river conditions remain the same. “An energy crisis situation could arise beginning Monday,” said Hungarian Prime Minister Péter Magyar. “Coordinated steps and restraint will be needed to avoid more severe consequences. We are counting on everyone!”

Crisis Comes To Ceuta

• Late last week, roughly 50,000 people from Morocco rushed into Ceuta, a Spanish city with a population of just 84,000. The town, located in Spanish-controlled territory at the northernmost tip of Morocco (across the Strait of Gibraltar from the Spanish mainland), was totally unprepared for the influx of immigrants, and residents hunkered down in their homes for over a day while the crowd of Moroccans, who were also confused as to why they’d been let into Spanish territory, milled about with nothing to do and nowhere to go.

• At least 60 people died in the chaos, which was eventually ended when Spain’s government sent a detachment of soldiers to Ceuta with the goal of sending the would-be Moroccan migrants back into their nation’s territory. At the moment, it’s still unclear what exactly happened to draw 50,000 people into the tiny Spanish town. 

• According to multiple Moroccan people from the crowd, they heard about the opportunity to cross into Spanish territory over social media. When they got to the border, they were reportedly urged by Moroccan border guards to “come to Spain” – hoping for some economic opportunity, they did so by climbing the unguarded border fence or swimming along the beach into Spanish territory. Fortunately, most of the people were returned to Morocco with little incident, but Spanish anti-immigrant groups are using the incident to drum up anger towards the country’s left-leaning government.

Additional World News

• Europe wants to kick its Palantir habit (Politico)

• Stop all outdoor activities’: South Korea records its highest ever temperature (Guardian)

• Ukrainian drones kill eight in Russia and strike Wildberries warehouse, governors say (Reuters)

• Red Cross visits Aung San Suu Kyi after Myanmar military pushed to prove she is alive (Guardian)

• Board of Peace envoy meets with Netanyahu on Gaza disarmament deal and urges a halt to strikes (AP)

• After Trump Pardon, Former Honduras President Hernández Faces Charges in His Home Country (NYT, $)

You Wouldn’t Hack A Water Tower, Would You?

• According to the FBI, at least 7 states across the country had portions of their water systems hacked last week. Luckily, authorities say that there’s no indication that the water supply had been made unsafe to drink or use, but the widespread incidents reveal some serious cyber-vulnerabilites in U.S. infrastructure.

• Federal authorities have mostly kept quiet about the actual effects of the hacking incidents. On Thursday, the U.S. Cybersecurity and Infrastructure Security Agency let some information trickle out, stating that attackers were “targeting water entities of all sizes,” and recommending that water infrastructure facilities cut off potentially vulnerable controllers from the internet. The agency also stated that the attacks had “resulted in boil water notices and sustained manual operations” in some areas. The 7 states affected include Michigan and Minnesota; those states had at least 9 and 36 municipal water systems hacked in last week’s incident, respectively.

Back To Work, No Fund Allowed

• Trump’s pick for attorney general has finally received the green light to take over as nation’s top lawyer. The attorney general’s office has been vacant since April 2, when Pam Bondi was given the boot over her mishandling of the Epstein files – now, Todd Blanche, a former Trump lawyer is lined up to take over the position.

• Up until now, Blanche has been serving as the U.S.’s deputy attorney general, and has also been working as the acting attorney general since Bondi’s departure in April. Before that, he worked as Trump’s defense lawyer in the hush-money case brought against him by Stormi Daniels.

• Blanche’s confirmation was held up in Congress due to Trump’s “anti-weaponization fund,” a $1.8 billion slush fund that the Department of Justice wanted set up as part of a settlement between it and the IRS. On Sunday, Blanche posted that he’d met up with Senate Republicans to tell them that the DoJ would be cancelling its push for the fund. In response, Senators Thom Tillis and John Cornyn said they would agree to confirm him, saying, “We are pleased that the Department of Justice has issued a formal order terminating the anti-weaponization fund” in an official statement.

Additional USA News

• Jay Clayton Sworn In as Director of National Intelligence (NYT, $)

• First US deaths in cyclosporiasis outbreak recorded in Michigan (Reuters)

• Suspect identified in Idaho In-N-Out Burger shooting that left 3 dead (NBC) 

• ‘Making too much money’: Trump blasts Exxon Mobil, Chevron profits (Politico)

• ICE Collected Nearly 1 Million People’s DNA Last Year—Including Young Children (Wired, $)

• Raging Washington state wildfires destroy homes and force 60,000 people to evacuate (Guardian)

Disaster Strikes The “Nostradamus Of AI”

• Over the past few years, the messaging from the tech world has been that AI is an unstoppable force that must be invested in, will take your job, and could also destroy society. But last week, that narrative was (briefly) disrupted when a prominent AI-focused hedge fund was forced to sell off a massive chunk of its holdings just to stay afloat. 

• That hedge fund, ironically named Situational Awareness, was “worth” $45 billion at its peak, and was valued at $30 billion heading into July. But last week, the company was forced to sell off $20 billion of its stock holdings Citadel (another, larger hedge fund) in order to stay afloat, leaving it with just $8 billion left.

• The massive collapse was due to two related factors: increased market skepticism that insane investments into AI would actually yield returns, and the firm's short positions against traditional software companies. Those short positions were essentially bets that software companies would lose value due to AI’s coding capabilities – the theory being that companies could just spin up their own software using AI in-house instead of paying other companies to provide software tools. But as investors pulled back from AI stocks, they pivoted back toward those very same software staples, slapping Situational Awareness with a double blow that decimated its valuation. The company will continue to exist (for now), and could make a resurgence when AI giant Anthropic IPOs, as much of its remaining value is tied up in privately-traded Anthropic shares.

Additional Reads

• What would it take to get peptides on the shelf? (NPR)

• Why we should learn to embrace the middlebrow (Psyche)

• You could be taking way better photos on your phone (Verge)

• A new cholesterol pill could change the fight against heart disease (Vox)

• Stock market turmoil sheds stark light on the opaque AI economy (Guardian)

• The Great Romance Slump: Why are so few young people finding love? (Atlantic, $)

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Peanut For Your Thoughts

Apparently the founder of Situational Awareness had his wedding on Saturday right after the collapse. Talk about emotional whiplash…

Editor + Writer: Marcus Gee-Lim

Designer: Joe Stella