Flying Out of the U.S. Now Costs 50% More

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0:33Airfares for U.S. flights skyrocket as the Iran war takes its toll. Plus, the White House considers whether new AI models pose a national security risk. And tough luck if you're a millennial waiting for a big payout from mom and pop. Americans over 55 control most wealth. And, you know, a lot of those folks could have decades left to live. So this idea that there's going to be this massive windfall for younger Americans is something that is just not really happening in mass yet. It's Tuesday, May 5th. I'm Daniel Bach for The Wall Street Journal, filling in for Luke Vargas. And here is the AM edition of What's News, the top headlines and business stories moving your world today.

1:16The U.S. and Iran are teetering on the edge of a new dangerous phase of the war, with both countries returning to military force to try to break the standoff in the Strait of Hormuz. Tehran has fired at U.S. warships trying to revive commercial shipping in the Strait, testing President Trump's desire to end the war. U.S. officials say Trump has been weighing two competing impulses for days, whether to order a new round of airstrikes to punish Iran for failing to abandon its nuclear ambitions or leaning into a diplomatic solution. Here he is speaking to conservative radio host Hugh Hewitt yesterday.

1:51One way or the other, we win. We either make the right deal or we win very easily from the military standpoint. We've already won that. Trump later said that he planned to stick with the status quo for now. He's called a press conference for senior Pentagon officials today, leaving it up to Defense Secretary Pete Hegseth and the chairman of the Joint Chiefs of Staff to outline the administration's next steps. That's scheduled for 8 a.m. Eastern. Meanwhile, a rise in fuel prices driven by the Iran war has piled pressure on U.S. airlines to increase fares. According to Kayak, the average price of a domestic airline ticket in the U.S.

2:25increased 24 percent between early January and the 20th of April. And prices for international flights departing the U.S. are up 50 percent compared to last year. But the rise in oil prices may not be bad for everyone. Later today, we've got a special bonus episode on how U.S. oil companies are navigating the crude crunch. The latest What's News in Earnings will be in your feed at midday. And it is another busy earnings day with all eyes on chipmaker Advanced Micro Devices, which releases its quarterly report this afternoon. Investors will be watching whether AMD can continue to benefit from tech companies looking to diversify their AI chip suppliers.

3:02It comes after data analytics firm Palantir said its quarterly revenue surged 85 percent year-over-year to more than$1.6 billion. The results were driven by strong U.S. military demand and a rapidly growing enterprise business for its data-crunching software. Still, on the earnings call, executives tried to play down concerns about AI competition that has led to its stock sinking 13 percent this year. And shares in Paramount rallied off hours after beating analysts' estimates for quarterly revenue. Streaming and studio growth offset declines in income from TV advertising and affiliates. The company is currently finalizing its blockbuster acquisition of Warner Brothers Discovery.

3:44The White House is considering a new government review process for AI tools deemed to pose cybersecurity risks. For more on this, we're joined by Journal Tech reporter Sam Schechner. Sam, what is the aim of this oversight and what would that look like?

3:57Rachel Louise Ensign:Well, the goal from the White House is to protect consumers and businesses, specifically from cyber attacks and other disruptions that could be caused by AI that's released without proper safeguards. The way it will work remains to be seen. The White House is considering an executive order that would formalize government oversight and create some standards for the most powerful AI models. We'll have to see what they actually come up with and announce. And is this a direct response to Anthropik's mythos model? Well, we know that Anthropic's model has caused shockwaves of concern in the U.S. government and in the private sector, both in the U.S.

4:38Rachel Louise Ensign:and overseas. This model from Anthropic is able to identify cybersecurity vulnerabilities at a level that AI tools haven't before. And the fear is that bad actors could use it to figure out how to hack into all kinds of systems and cause all sorts of disruptions. And And so for that reason, Anthropic has only released it to about 50 organizations involved in protecting critical infrastructure, all in the U.S. And we're talking about big companies like Google and also the U.S. government. Now, some of this is sounding like the guardrails and oversight the Biden administration was trying to put in place, which led to pushback from AI and tech companies.

5:22The president has voices inside his administration that have pushed him more towards a hands-off approach to AI. So why this changed now?

5:32Rachel Louise Ensign:Yeah, it really does seem a little bit like tiptoeing back towards some of the regulations from the previous administration that Trump tore out when he took office, canceling a Biden executive order on AI safety. And, you know, the Trump administration has renamed what was called the AI Safety Institute into what's now called the Center for AI Standards and Innovation. I think what's happening here is that there are national security implications to some of these new AI models. And there are voices in the administration and voices in the private sector who are saying, OK, the U.S. should get a handle on these potential issues before something potentially devastating happens.

6:14We've heard about the Trump administration and Anthropics battle. Tell us a little bit more about the AI companies working more closely with the government. How important would that be for the Trump administration?

6:26Rachel Louise Ensign:Well, yeah, Anthropic and the Trump administration have been feuding for quite some time. That was over a fight with the Pentagon about how Anthropics models could be used. That fight is ongoing and that sort of complicated things with the release of Mythos. Anthropics CEO actually met with White House officials to talk about how to handle the mythos rollout. It's an interesting situation because on one hand, you have this laissez-faire approach to AI generally, but that's conflicting with some of the business and political imperatives to take on cybersecurity risk. The Trump administration appears to be wanting to regulate or put some standards on cybersecurity risks in AI, that doesn't necessarily mean they're walking back the approach to AI regulation more generally when it comes to other types of issues that might arise.

7:20Rachel Louise Ensign:You know, there are initiatives to try and regulate AI at the state level that the Trump administration has opposed. So we will have to see where that nets out. Journal tech reporter Sam Schechner. Sam, thanks for your time. Thanks so much for having me. Coming up, foreclosures are rising in a sign of just how unaffordable U.S. housing has become. That story and more after the break.

8:02to learn more.

8:17We're exclusively reporting that FINRA, the Financial Industry Regulatory Authority, has opened an inquiry into a Morgan Stanley investment banking program in Hungary. The program was launched in Budapest two years ago, recruiting bankers from across Europe, offering them a chance to one day work in the big leagues in New York or London. For the bank, it was a way to offshore low-level jobs typically done by well-paid young investment bankers in the first years of their careers. The probe is in the early stages and started after a whistleblower said the bank violated rules meant to protect confidential information about clients and transactions from being mishandled.

8:53Morgan Stanley and FINRA declined to comment. U.S. foreclosures have jumped after the Trump administration ended a generous Biden-era a subsidy. During the pandemic, homeowners with a federal mortgage who got into financial difficulty could apply for a partial claim to clear any unpaid balance on their mortgage. Some borrowers also got a loan modification to make their monthly payments more manageable. But as Heard on the Street columnist Carol Ryan explains, the Trump administration has now tightened the rules. The Trump administration scrapped it because it was only ever supposed to be a temporary thing to help people during the pandemic.

9:27It was brought in by the Biden administration. And while most people who used it were in real distress, there are signs that some homeowners are abusing it. We found examples of people who claim nearly$100 ,000 over five years. The new rules are much tighter. There is some help available for people who are in arrears, but homeowners can only get that help once every two years now. In one way, the housing market is getting back to normal. The subsidy kept foreclosure numbers artificially low for the last four or five years. So tens of thousands of distressed borrowers have built up in the system.

9:59But it's also definitely a story about how unaffordable housing has become in America. And if you're worried about mortgage rates, inflation, or the economy affecting your ability to own or buy a home, we'd like to hear from you. Send a voice memo to wnpod at wsj.com or leave a voicemail with your name and location at 212-416-4328. We might use it on the show.

10:25And finally, as Americans live longer, younger generations are going to have to keep waiting for their inheritance. Economics reporter Rachel Ensign says baby boomers and older Gen Xers are hanging onto their assets longer. The idea that these big wealth firms have about the great wealth transfer, you know, this idea that millennials are going to be getting a big windfall, that's something that, you know, will eventually happen. You know, no one lives forever, but it is not happening anytime in the absolutely near future. While wealthy Americans are spending on longevity and travel and parceling out wealth in small doses to children and grandchildren, people 55 and older are sitting on one hundred and ten trillion dollars of wealth.

11:10That's a huge force in the economy in all sorts of different ways. And it's largely happened because they own a bunch of stuff like stocks and privately held businesses that have increased a lot in value in the last two decades. So they've owned these things for a long time. They've owned houses for a long time, stocks for a long time. And time has been good for them financially. Of course, no one has figured out how to live forever. So those assets will be handed over. Research firm Sorelli Associates says Gen X is set to inherit the most money of any group for the next 12 years. So millennials will just have to keep waiting.

11:47And that's it for What's News for this Tuesday morning. Today's show was produced by Hattie Moyer. Our supervising producer is Sondra Kilhoff. And I'm Daniel Bach for The Wall Street Journal. We'll be back tonight with a new show. Until then, thanks for listening.

12:10This message is brought to you by Nuveen. How would you invest if you knew the future was watching? At Nuveen, this isn't a theoretical question. It's a perspective that comes from navigating 125 years of market cycles, using foresight to innovate and adapt to the changing needs of investors and remaining steadfast in the pursuit of lasting performance. Nuveen. Invest like the future is watching. Visit nuveen.com slash future to learn more. Investing involves risk. Principal loss is possible.