AI Rout Finds a Floor. For Now.

The episode begins by discussing the rebound in AI stocks after a period of market sell-off, highlighting that the NASDAQ experienced its worst day since June. Despite some global tech stocks struggling, futures were slightly higher as investors continue to evaluate the large borrowing that fuels AI development. A specific case mentioned is South Korea's SK Hynix, which canceled a U.S. listing for its memory chip unit due to market conditions, although they stated this move did not indicate a negative outlook for the unit. Further, the episode covers the political controversy surrounding AI investments, especially how U.S. public pension funds have heavily invested in AI-related stocks, which accounted for 57% of their stock gains over four years. Politicians in states like New York and Pennsylvania are pushing back against AI projects, including data centers, creating a split between economic gains from AI and ethical/environmental concerns. As midterm elections approach, the political landscape is heated, with coverage of a controversial ad in Ohio's gubernatorial race involving Democratic candidate Amy Acton, whose estranged mother made accusations during the campaign.

The focus shifts to rising tensions in the Middle East, particularly Iran's threats to target U.S. military assets and civilian infrastructure if Israel and the U.S. continue strikes after the midterms. Iran has warned it will attack U.S. warships, bases, and Gulf infrastructure, and has targeted undersea cables critical for internet connectivity, signaling potential cyber or physical attacks. The episode features Middle East correspondent Benoit Fokon discussing Iran's moves and the fears of escalation. Moving to Europe, the episode reports on Russian efforts to ramp up sabotage against NATO countries, specifically targeting transportation hubs like the Leipzig airport in Germany, and attacking factories in Estonia, Poland, and Slovakia linked to Ukraine's war effort. These actions reflect Vladimir Putin's order to intensify sabotage on NATO territory, aiming to weaken support for Ukraine, with attacks also believed to include arson and drone assaults on commercial shipping off European coasts. NATO's response remains cautious, given the challenges of democracies responding to covert sabotage while avoiding escalation.

During the episode, the discussion touches on potential U.S. diplomatic efforts, including the Biden administration’s consideration of talks with Vladimir Putin and Xi Jinping, despite opposition from Ukraine and concerns over escalations. Europeans, particularly NATO countries like Finland and Germany, are increasingly aware of the threats from Russia and are trying to bolster their defenses independently, given a perception that the U.S. is becoming less involved. Finnish officials expressed that NATO is viewed as an addition rather than a core component of their defense, illustrating the shift in European defense postures. The episode highlights the difficulty NATO faces in responding to sabotage and cyber threats, with the challenge being how to deliver effective deterrence without provoking further escalation, given the rules of democracies. The discussion underscores a growing sense of European self-reliance amid ongoing geopolitical tensions.

The episode concludes with the news that New York City Council voted to ban horse-drawn carriages, a tradition in Central Park for over 160 years. The legislation aims to shut down the industry by 2028, following several safety incidents, including the death of a tourist and a horse collapse. Queen Alexandra Lawson, a carriage driver, questioned the motivation, suggesting that safety and facts are not the main drivers, pointing out that drivers will have two more years of work. Mayor Zoran Mamdani supported the legislation but emphasized the need to support the affected workers and explore alternatives like sanctuaries or farms for the horses. The union representing carriage workers announced plans to sue to reverse the ban, arguing that other forms of transportation, such as e-bikes and scooters, pose comparable or greater risks without resulting in bans. The episode ends with a note on the ongoing debate between animal welfare, safety, and economic concerns.