Report: Microsoft Endangers Pentagon to Chinese Cyberattacks

Welcome back!

Here’s your must-read news this morning:

• $92 billion investment in Pennsylvania

• Microsoft risks DoD cyberattacks from China

• DOGE cuts advance 

I’ve got all the details for you, so let’s dive in.

— Josh

MARKETS

💰 Trump Announces $92 Billion in AI, Energy Investments Across Pennsylvania

The Scoop: President Donald Trump announced $92 billion in private investments for data centers and energy projects at the Pennsylvania Energy and Innovation Summit in Pittsburgh on Tuesday, aiming to bolster the U.S. power grid and AI leadership.

The Details:

• CoreWeave plans a $6 billion, 100-megawatt data center in Lancaster, expandable to 300 megawatts, creating 600 construction and 175 operational jobs.

• Google committed $25 billion for data centers and AI infrastructure across the Midwest and Mid-Atlantic, plus $3 billion to modernize two Pennsylvania hydropower facilities.

• Blackstone will invest $25 billion in Pennsylvania data centers and power infrastructure, supporting 6,000 construction jobs and 3,000 permanent jobs.

• Homer City Redevelopment will buy $15 billion in Pennsylvania natural gas to power a 4-gigawatt plant, creating 1,000 onsite jobs and 10,000 construction jobs.

What’s Next: The announcement comes as the U.S. seeks to win the AI race against China, with Energy Secretary Chris Wright likening the effort to the WWII Manhattan Project. Meanwhile, a Department of Energy report warns of a hundredfold blackout risk increase by 2030 due to AI and manufacturing-driven grid strain.

Markets Roundup

🏦 Economy & Policy

• ⭐ Editor’s Pick: The consumer price index rose 0.3% month-over-month, with the 12-month inflation rate holding steady at 2.7%, meeting analyst expectations. (CNBC)

• Trump announced a trade deal cutting Indonesia’s tariffs to 19% from 32%, with Jakarta agreeing to buy 50 Boeing jets, $15 billion in U.S. energy, and $4.5 billion in agricultural products. (TG)

• Treasury Secretary Scott Bessent announced a "formal process" has begun to identify a successor to Federal Reserve Chairman Jerome Powell. (BBG)

• Trump will meet British Prime Minister Keir Starmer in Scotland from July 25 to July 29 to refine a U.S.-UK trade agreement. (INV)

• Home Depot co-founder Ken Langone, once critical of Trump’s tariffs and a Nikki Haley supporter, now fully backs Trump, predicting he could be among America’s greatest presidents. (RCP)

📈 Stock Market

• ⭐ Editor’s Pick: Bank of America reported second-quarter earnings of 89 cents per share, topping Wall Street’s expected 86 cents, while revenue of $26.61 billion slightly missed the $26.72 billion forecast. (CNBC)

• Johnson & Johnson reported second-quarter earnings per share of $2.77, surpassing analyst estimates of $2.68, with revenue of $23.74 billion. (BAR)

• Citigroup’s second-quarter net income rose 25% to $4.02 billion, surpassing estimates with $1.96 per share and $21.67 billion in revenue, driven by strong markets and banking performance. (CNBC)

• Renault shares fell 18% after a profit warning, with June sales underperforming and the 2025 profit margin cut to 6.5% from 7%. (RTS)

• Chinese AI startup MiniMax confidentially filed for a Hong Kong IPO, targeting a valuation over $4 billion. (WSJ)

🏢 Industry

• ⭐ Editor’s Pick: Troy Jones, Tesla’s vice president of sales, service, and delivery in North America, has left the electric-car maker after 15 years. (WSJ)

• Rolls-Royce will invest $75 million to increase manufacturing capabilities at its engine plant in Aiken, South Carolina. (RR)

• Joby Aviation doubled its Marina, California, manufacturing facility to 435,500 square feet, targeting 24 eVTOL aircraft annually, while expanding operations in Ohio and adding a sixth aircraft to its fleet. (JA)

• Fox News will license the conservative "Ruthless" podcast, hosted by GOP veterans, and launches a new media division for its opinion and non-news podcasts. (AX)

💵 Energy & Commodities

• ⭐ Editor’s Pick: Westinghouse plans to construct 10 large AP1000 nuclear reactors across the U.S. by 2030. (CNBC)

• OPEC forecasts that U.S. trade deals could drive global economic growth in the second half of 2025. (INV)

• Massachusetts startup Phoenix Tailings is pioneering a novel process to extract rare earth metals from mining waste, aiming to challenge China’s dominance in the sector. (NE)

🌕 Crypto

• ⭐ Editor’s Pick: The Justice Department and CFTC have ended their investigations into prediction market platform Polymarket. (BBG)

• SharpLink Gaming has become the world’s largest corporate holder of Ether, amassing 280,706 ETH in its treasury. (TB)

• Cantor Fitzgerald’s SPAC, Cantor Equity Partners 1, is nearing a $4 billion deal to acquire 30,000 Bitcoin from Blockstream’s Adam Back. (FT)

• JPMorgan Chase CEO Jamie Dimon announces the bank will explore stablecoins and its own deposit coin to counter fintech competition. (CNBC)

• Citigroup is exploring issuing its own stablecoin and deposit tokens, while also developing reserve management and crypto custody solutions. (RTS)
  

TECH

💻 Microsoft Program Risks Exposing Defense Department to Chinese Cyberattacks

The Scoop: A ProPublica investigation revealed Microsoft employs China-based engineers to support Pentagon cloud systems under a “digital escort” framework, raising espionage fears despite the company’s efforts to expand its government contracts.

The Details:

• Microsoft’s “digital escort” program uses U.S. citizens with security clearances to relay commands from China-based engineers, who lack direct access but guide work on sensitive Pentagon systems.

• Escorts, often former military personnel paid as low as $18 per hour, lack the technical expertise to detect malicious code.

• The program handles “Impact Level” four and five data, including unclassified military operation materials.

• Chinese laws compel data sharing with the government, amplifying risks, especially after 2023 Chinese hacks of Microsoft’s cloud stole U.S. officials’ emails.

• Microsoft defended the model, claiming escorts pass federal background checks and global engineers have no direct data access.

What’s Next: The Pentagon is probing Microsoft’s program, with national security experts urging Congress to investigate potential compromises, citing China’s history of exploiting Microsoft’s systems. The Defense Department is moving to tighten oversight or ban foreign engineers, leaving the program’s future uncertain.

Tech Roundup

🧠 AI

• ⭐ Editor’s Pick: The Thinking Machines Lab, founded by former OpenAI CTO Mira Murati, secured a $2 billion seed round led by Andreessen Horowitz, valuing the AI startup at $12 billion. (TC)

• Mistral launched Voxtral, its first open-source AI audio model, expanding its offerings beyond text-based models to advance audio processing capabilities. (YF)

• OpenAI is developing ChatGPT agent features that enable users to create and edit spreadsheets and presentations compatible with Microsoft Excel and PowerPoint directly within the chatbot. (TI)

• Jason Wei, a former OpenAI researcher who contributed to GPT-2, and his colleague Hyung Won Chung have joined Meta’s superintelligence lab. (WIR)

• Nvidia CEO Jensen Huang praised AI models from Chinese firms Deepseek, Alibaba, and Tencent as "world class," during a speech in Beijing. (RTS)

🤖 Hardware & Robotics

• ⭐ Editor’s Pick: China deployed robot wolves in a human-drone military offensive drill for the first time. (MIL)

• HD Hyundai partnered with Germany’s Neura Robotics to test AI-powered humanoid welding robots in Korean shipyards. (IE)

• Shenzhen deploys AI-powered delivery robots to autonomously ride subways and restock 7-Eleven stores. (SCMP)

• Google DeepMind unveils Gemini Robotics On-Device, an AI model enabling robots to perform complex tasks offline. (INFOQ)

• Agxeed's autonomous tractor sets a world record by plowing 321.25 hectares in 24 hours. (EMAG)

• Harvard researchers have developed wriggling robot worms that collaborate in a thread-like blob to scale walls and navigate obstacles. (TEX)

🚀 Defense & Space

• ⭐ Editor’s Pick: The Pentagon’s Defense Innovation Unit is accelerating the integration of commercial AI and cutting-edge technologies into military operations. (CBN)

• SpaceX is working on a new line of business using its Starship rocket to develop commercial products in space, such as pharmaceutical drugs. (BBG)

• The U.S. initiated a national security probe into imports of drones, potentially leading to new tariffs and strengthening Washington’s position in trade talks with Beijing. (RTS)

• Jeff Bezos’ Amazon turned to rival SpaceX to launch 24 Kuiper internet satellites on a Falcon 9 rocket. (CNBC)

• French startup Harmattan AI unveiled “Gobi,” a new high-speed drone built to intercept enemy unmanned aerial vehicles within a minute from launch. (DP)

💰 Venture Capital & Deals

• ⭐ Editor’s Pick: OpenEvidence, an AI medical search platform used by 40% of U.S. doctors, secures $210 million led by GV and Kleiner Perkins, boosting its valuation to $3.5 billion. (FOR)

• Unify, an AI-powered platform for enhancing revenue pipelines, secured a $40 million Series B led by Battery Ventures, valuing the company at $260 million. (UM)

• Mantis VC, co-founded by The Chainsmokers’ Alex Pall and Drew Taggart with investors Jeffrey Evans and Milan Koch, has closed its $100 million Fund III. (SOU)

• XTEND secures $30 million Series B extension, led by Aliya Capital Partners, to scale its AI-powered tactical autonomous robots across the U.S. (NW)

• Amogy secured $80 million, led by Hanwha Systems and SK ecoplant, to advance ammonia-based power solutions for ships and data centers, boosting its valuation to $700 million. (YF)

FREEDOM

🪚 Vance Breaks Senate Tie to Push Trump’s DOGE-Inspired Budget Cuts

The Scoop: Senate Republicans, with Vice President JD Vance’s tiebreaking vote, moved closer to approving President Donald Trump’s $9.4 billion rescissions package on Tuesday, targeting foreign aid and public broadcasting funds.

The Details:

• The 51-50 vote discharged the rescissions package from the Appropriations Committee, overcoming opposition from Sens. Lisa Murkowski (R-AK), Susan Collins (R-ME), and Mitch McConnell (R-KY).

• The package cuts $7.9 billion from USAID and $1.1 billion from the Corporation for Public Broadcasting, funding NPR and PBS, to codify DOGE savings.

• Republicans spared $400 million for PEPFAR, a Bush-era HIV/AIDS program.

What’s Next: Congress faces a Friday deadline to pass the bill, or the $9.4 billion will be spent by September 30, 2025. Trump allies see the rescissions package as a trial for gauging the spending cuts Congress’s narrow GOP majorities can tolerate.

Freedom Roundup

🏛️ Policy

• ⭐ Editor’s Pick: Trump announced that the GENIUS Act, aimed at establishing a regulatory framework for stablecoins, is set to pass the House on Wednesday after securing support from key holdouts. (TB)

• Trump accused Sen. Adam Schiff (D-CA) of mortgage fraud, alleging he falsely claimed a Maryland property as his primary residence to secure better mortgage rates while representing California. (FOX)

• Commerce Secretary Howard Lutnick says the U.S. allows Nvidia to sell only its "fourth best" H20 AI chip to China. (INV)

• The Manhattan Institute’s Statement on Higher Education urged Trump to adopt six principles—truth, neutrality, equality, free speech, civil discourse, and transparency—to restore integrity in universities. (FP)

💬 Free Speech & Woke Overreach

• ⭐ Editor’s Pick: The UK government under Rishi Sunak secured a superinjunction to suppress media coverage of a data breach about the relocation of 20,000 Afghans who supported British forces. (SKY)

• A judge allowed a lawsuit by a Catholic flight attendant, who alleges United Airlines fired him for expressing religious beliefs in a workplace conversation. (RTW)

• A new survey reveals that nearly half of Britons feel unable to express their true opinions due to increasing restrictions on free speech. (TEL)

• The UK government has abandoned its plans to develop a Green Taxonomy, a proposed framework for classifying climate-friendly and environmentally sustainable economic activities. (ESGT)

• The Wichita City Council voted to suspend its civil rights, diversity, and inclusion board. (KWCH)

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DISCLAIMER: The CAPITAL newsletter is for informational purposes only and does not constitute financial, investment, or professional advice. Readers should conduct their own research and consult a qualified financial advisor before making investment decisions. The CAPITAL newsletter and its owner and operator, Josh Caplan, are not liable for any loss or damage resulting from reliance on this information. The CAPITAL newsletter is solely owned and independently operated by Josh Caplan, separate from any employer affiliations.