Washington, DC

1. Griffin warns of recession
2. EU v. Bessent
3. Peace deal optimism
4. Pope criticism reverberates
5. Swalwell blast radius

Today at Semafor World Economy — Meta President Dina Powell McCormick: CEO Mark Zuckerberg “has actually moved his desk and is seated in the AI lab... Maybe I wasn’t allowed to share that.”

Griffin: Prolonged strait closure threatens global recession

Ken Griffin, Citadel’s chief executive officer and a major Republican donor, warned today that the world faces a global recession if the Strait of Hormuz remains closed for the remainder of this year. “Let’s assume it’s shut down for the next six to 12 months,” Griffin said in an interview at Semafor World Economy. “The world’s going to end up in a recession. There’s no way to avoid that.” The International Monetary Fund drew the same gloomy conclusion in a report today. “The global outlook has abruptly darkened following the outbreak of war in the Middle East,” the IMF’s chief economist wrote in the report. This afternoon, White House economic adviser Kevin Hassett is getting a chance to present the administration’s perspective on the economy in an interview with Semafor’s Liz Hoffman.

EU economy commissioner dismisses Bessent criticism

The European Union’s economy commissioner dismissed criticism from Treasury Secretary Scott Bessent that the EU’s attempts to blunt the war-driven energy shock are “subsidizing demand.” “Our response is that it has to be temporarily targeted and measures need to be designed in a way that it does not increase demand for energy,” Valdis Dombrovskis said at Semafor World Economy in an interview with Editor-in-Chief Ben Smith. “From that point of view, we are broadly aligned on this advice.” Dombrovskis also renewed a warning that the EU faces a “stagflationary shock” from the Iran war. Bessent told Semafor last night that the current energy crisis is temporary. “I’m thinking that if ever there was ‘Team Transitory,’ it’s this,” Bessent said.

Markets optimistic about potential peace deal

In the first 24 hours of the US blockade, US Central Command said no ships from Iranian ports passed through the Strait of Hormuz, with six vessels reversing course under US orders. But diplomats and markets are looking past the immediate squeeze: President Donald Trump told the New York Post that talks “could be happening over next two days” in Pakistan, and the UN secretary-general called resumed talks “highly probable,” sending oil back below $100 a barrel. Meanwhile, Israeli and Lebanese officials held more than two hours of talks in Washington, though the State Department stressed “no link” to talks with Iran. While Lebanon’s president expressed hope that the talks “mark the beginning of the end of the suffering of the Lebanese people,” Israel and Hezbollah continued to trade fire as Lebanon’s death toll topped 2,100, dampening hopes for a ceasefire.

Trump continues to criticize Pope Leo

Trump’s combative stance toward Pope Leo XIV keeps reverberating, in Washington and beyond. Sen. Dave McCormick, R-Pa., said today at Semafor World Economy that he wasn’t a fan of Trump going after the pope. “I mean, I didn’t love it,” McCormick said. “I wish he hadn’t done it. And the reason is, I just think it’s distracting from this moment we’re in.” House Speaker Mike Johnson felt similarly about an image Trump shared after criticizing Leo that portrayed the president as Jesus Christ. Johnson said today that he told the president the image wasn’t landing well: “He agreed and he pulled it down. It was the right thing to do.” Trump isn’t backing away; he criticized Leo again today, telling an Italian newspaper that the pontiff “doesn’t understand and shouldn’t be talking about war, because he has no idea what is happening.”

Swalwell resigns officially after woman accuses him of rape

Democrat Eric Swalwell officially resigned from Congress this afternoon, hours after a woman accused him of raping her in 2018. “He raped me, and he choked me. And while he was choking me, I lost consciousness,” the woman, Lonna Drewes, said at a televised press conference. “I thought I died.” Swalwell, who ended his campaign for California governor Sunday, has denied wrongdoing as multiple women accuse him of sexual assault or harassment. Drewes plans to file a police report in California; Manhattan prosecutors opened an investigation into a separate allegation. On Capitol Hill, Sen. Ruben Gallego, D-Ariz., is still cleaning up after his initial decision to stand by Swalwell, who was his friend. “Eric Swalwell lied to all of us,” Gallego told reporters today. “This man led a double life.”

What happens when one of America’s sharpest energy traders takes on higher education — and the rise of sports betting? On this week’s Compound Interest, presented by Amazon Business, Liz and Rohan talk with John Arnold, the billionaire investor-turned-philanthropist who’s applying a data-driven, ROI mindset to reforming higher education, rethinking America’s sports betting boom, and making sense of the Trump-era turbulence shaking the energy markets.

Listen to the latest episode of Compound Interest now.

White House

• The Treasury Department said it will not extend a waiver of sanctions on Iranian oil that’s set to expire in coming days, after it made a similar call on a waiver of sanctions on Russian oil.
• Kevin Warsh, President Trump’s pick to lead the Federal Reserve, is worth more than $100 million, according to disclosure paperwork filed ahead of Senate Banking Committee hearings. — WSJ

Congress

• Rep. Tony Gonzales, R-Texas, followed Eric Swalwell, D-Calif., in officially resigning from the House this afternoon. They both faced expulsion resolutions after being accused of sexual misconduct.
• The Senate Republican leader said today that he’s “prepared” to quickly fill any Supreme Court vacancy that may arise before the midterm elections.
• Former Attorney General Pam Bondi missed a scheduled deposition with the House Oversight Committee in its Jeffrey Epstein investigation. A Republican spokesperson said the committee was rescheduling; Democrats threatened contempt proceedings.

Iran War

• Leaders in Saudi Arabia are pushing the US to end its military blockade of the Strait of Hormuz. — WSJ
• Indian Prime Minister Narendra Modi said he’d spoken with President Trump on the phone about “the importance of keeping the Strait of Hormuz open and secure.”
• US Central Command said the blockade of the strait required more than 10,000 US sailors, Marines, and airmen, and more than a dozen warships and aircraft. — WSJ

Technology

• The US Treasury wants access to Anthropic’s new Mythos AI model. — Bloomberg

Economy

• Prices businesses pay for goods rose by less in March than analysts had predicted.

— US Treasury Secretary Scott Bessent on the sidelines of the spring meetings of the International Monetary Fund and the World Bank.

Laura McGann, editor

With help from Elana Schor, senior Washington editor, and Morgan Chalfant, Washington briefing editor

Graph Massara and Lauren Morganbesser, copy editors

Contact our reporters:

Burgess Everett, Eleanor Mueller, Shelby Talcott, Nicholas Wu, David Weigel