US Security Officials Shocked by Abu Dhabi’s $3 Billion Fortress Takeover! What’s Really Going On?

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US national security officials are reviewing a planned $3 billion takeover by an Abu Dhabi sovereign wealth fund from New York-based Fortress Investment Group amid concerns in Washington over the UAE’s ties to China, people familiar with the matter told the Financial Times.

The review by the Committee on Foreign Investments in the United States, an intergovernmental agency that verifies whether transactions could harm national security, is in its early stages and a decision is not expected for several months, the sources added.

Abu Dhabi’s Mubadala agreed to buy a majority stake in Fortress, which manages around $46 billion in assets and specializes in distressed debt investing, in May from Japan’s SoftBank Group. Mubadala, which is led by chief executive Khaldoon al-Mubarak, said it intended to close the deal in the first quarter of 2024, subject to regulatory approvals.

The Cfius action comes as the Biden administration steps up scrutiny of China-related investments and prepares to unveil an executive order that would require U.S. companies investing in certain sensitive sectors — including semiconductors, artificial intelligence and quantum computing — to notify the federal government. It would also prohibit investments in certain areas. Read the full story.

Here’s what else I’m watching today:

• Economic data : Home prices in 20 major US metropolitan areas are expected to fall again in May. Elsewhere, the Conference Board’s consumer confidence index is expected to hit 111.8 in July, from 109.7 in June, its highest level since January 2022. The IMF is also updating its World Economic Outlook.

• Alphabet: Investors will listen to comments on ad revenue, cloud growth and artificial intelligence plans when Google’s parent company releases earnings after the bell. Analysts expect $72.8 billion in revenue in the June quarter, including $57.4 billion in ad sales, for earnings of $1.34 per share, according to Refinitv.

• Microsoft: The tech group’s stock hit a record high last week after announcing a price of $30 monthly premium for generative AI features in its Microsoft 365 software. Investors will be keen to learn of new integration intentions as weakness persists in its cloud and personal computing divisions. Analysts polled by Refinitiv expect Microsoft to have earned $2.55 per share on revenue of $55.5 billion in the three months to June, compared with $2.23 per share on sales of $51.9 billion in the same quarter of 2022.

• Other Earnings: Biogen, General Electric, Kimberly-Clark, LVMH, Raytheon, Snap Spotify, Unilever and Visa are also among the reports released today. See the full list in our Newsletter for the coming week.

Five other top stories

1. JPMorgan Chase reimbursed former executive Jes Staley for trips to meet Jeffrey Epstein, according to allegations in court documents. Staley, who later became chief executive of Barclays, also testified under oath that he informed JPMorgan boss Jamie Dimon of the disgraced financier’s misdeeds in 2006. Here’s more from the New York court filings.

2. The heat waves that hit North America and Europe in July would have been “virtually impossible without climate change”, said researchers who pointed out that extreme weather events would occur with greater frequency. The World Weather Attribution group, a university collaboration, added that human-induced warming has made recent extreme heat in China “at least 50 times more likely”. Learn more.

3. EY’s US chief legal officer has resigned after two years in the role, as the company nears the conclusion of an investigation into its failure to properly handle a staff cheating scandal. EY was forced, under an agreement with US regulators, to appoint an independent investigator to look into the actions of staff, including ‘lead counsel’. Learn more about Ann Cook’s departure.

4. Credit Suisse was fined $388 million by US and UK regulators over the collapse of Archegos Capital for “significant failures in risk management and governance”. The collapse caused a business loss of $5.5 billion and contributed to the demise of the Swiss lender. Rival UBS, which took over the bank, could face corrective action from Swiss regulators.

5. GlobalFoundries criticized the grants Berlin plans to offer TSMC, the world’s largest contract chipmaker, for a planned factory in the eastern German city of Dresden. The chief executive of the American chip company fears that the funds paid to its Taiwanese rival could distort competition, he told the Financial Times.

The big read

The latest productivity figures show the UK’s output per hour worked was just 0.6% above its pre-pandemic 2019 average in the first quarter of this year. Why British workers turn out less for every hour they work than their counterparts in other advanced economies such as the United States, Germany and France? The low level of investment and skills gaps may be partly to blame.

We also read. . .

Card of the day

Saudi football club Al Hilal have approached Qatar-owned Paris Saint-Germain with a Offer of 300 million euros to sign Kylian Mbappé, a record offer for the French striker who has been stuck in a contract dispute with his club. The approach of Al Hilal, which is owned by Saudi Arabia’s sovereign wealth fund, highlights Riyadh’s disruptive ambitions in sport.

Take a break from the news

Wristwatches are worn, coveted and collected by men and women, but the balance of power is changing. These five female figures of the world of watchmaking are gaining importance in different areas, from negotiation to design.

Additional Contributions from Additional Contributions from Tee Zhuo, Benjamin Wilhelm and David Hindley