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Good morning.
Fifth Third’s $11 billion acquisition of Dallas-based Comerica, which created the ninth-largest bank in the US earlier this year, has sparked an “internal civil war,” The Wall Street Journal reported Monday. Over chili, that is.
Employees at Fifth Third HQ in Cincinnati, a city famous for its thin, soup-like chili that contains beans and tomatoes, are apparently not aligned with their new Texan colleagues, who prefer their state’s trademark stew-like version of the dish that strictly prohibits beans and tomatoes. The Journal said CEO Tim Spence played diplomat when questioned at a recent town hall, declining to take a pro-bean or anti-bean stance. To resolve this clearly urgent matter, Spence told the paper he’s in the early stages of organizing a bank-wide chili contest. It’s no Jamie Dimon succession bake-off, but it takes bean-counting at financial institutions to a new level.
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Microsoft is all but declaring “Game Over” on Xbox.
Xbox CEO Asha Sharma announced plans to eliminate about 20% of the gaming console’s staff by the end of fiscal 2027, starting with 1,600 Xbox employees who got the pink slip yesterday. Across Microsoft, 3,200 total jobs were eliminated, with 6,400 total planned, or about 3% of the wider company.
The layoffs are part of a massive restructuring meant to reset Microsoft’s struggling gaming biz. The company will also sell off four game-making studios and consider parting ways with a fifth.
Stuck at the Same Level
Sharma took the Player 1 controller as Xbox’s CEO in February and has already decided the company needs a hard reset. She wrote in a memo last month that annual revenue fell by half a billion dollars over the past five years despite the company pouring in $20 billion. Microsoft also spent a whopping $69 billion acquiring “Call of Duty” publisher Activision Blizzard in 2023.
Xbox’s problems aren’t a new game. It has been losing the console wars to competitors Sony and Nintendo, whose PlayStation 5 and Switch 2 have dominated.
While rivals captured more playtime from Xbox over the years, AI simultaneously ramped up the difficulty mode:
- Demand for AI chips has caused a crunch for the gaming industry, which needs high-tech chips to power its games. Console makers have raised their prices in turn: Sony jacked up prices of its PlayStation 5s by $100 to $150 this spring, while Nintendo said the price of the Switch 2 will jump by $50 this fall. Sharma said last month Xbox expects its memory and storage costs to be five times higher in 2027 than they were last year.
- At the same time, AI is starting to revolutionize how games are made. Last year, the Indie Game Awards retracted the prestigious Game of the Year Award from “Clair Obscur” for its use of generative AI. Microsoft’s chief people officer said roles aren’t being replaced by AI but did caveat that “AI is changing how work gets done.” The company has set aside $190 billion for AI.
  Low Score: Xbox had already shifted its priorities away from physical consoles and toward its gaming subscription service Game Pass, which has less than half the subscribers the company had targeted this year. Under previous CEO Phil Spencer, Xbox scooped up smaller studios to create games for Game Pass and compete with indie titles known for low costs and high returns … when they’re hits. Sharma said it’s not possible to compete with indie studios and major game publishers at the same time and Xbox will instead focus on the latter. Mojang and King, the businesses behind “Minecraft” and “Candy Crush,” will report to Sharma.
Written by Jamie Wilde
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Photo via MetaMask
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The North Atlantic Treaty Organization is holding a big summit this week in Ankara, Turkey, and big spending is sure to be on the agenda. Lockheed Martin wants the group to know it offers all the tools that money can buy to defend the North Atlantic (and, well, any other body of water on the globe).
On Monday, the defense contracting giant agreed to pay $3.5 billion to take over naval-defense company Ultra Maritime, a division of an Advent International-owned company specializing in undersea technology that the Strait of Hormuz conflict has rendered a hot commodity.
Below the Surface
As with combat on land, the military conflicts in Ukraine and Iran have proven that modern naval warfare is increasingly defined by which side has the most numerous and sophisticated autonomous drones … and which side has the best systems to repel them. Enter Ultra Maritime, which makes advanced equipment to detect submarines, torpedoes and other underwater threats. Advent, the Boston-based private equity firm, created the company after acquiring UK-based Cobham for £4 billion ($5 billion) in 2019 and combining it with Ultra Electronics, which it bought in 2021 for £2.6 billion. According to a Financial Times report, Lockheed beat out several bidders for the unit, which has contracts with the US, UK, Canadian and Australian navies.
Business, unsurprisingly, has accelerated for the group in recent years:
- According to the FT, Ultra Maritime expects $784 million in revenue this year, up from $494 million in 2023.
- Global defense spending, meanwhile, grew 2.5% in 2025 to $2.89 trillion, according to the Stockholm International Peace Research Institute. That equated to 2.5% of total GDP, a record since 2009, the group said. NATO members, under pressure from the White House, have committed to increasing military spending to 5% of their GDP by 2035.
Offense/Defense: That increase means “tens of billions in new contracts” are likely to be announced at the NATO summit, which begins today and concludes tomorrow, NATO Secretary General Mark Rutte told CNBC on Monday. That’s enough to spur billions of dollars in deals. In completely related news, French defense giant Thales announced on Monday that it will buy a more than 35% stake in Paris-based naval drone maker Exail Technologies, a deal that values the company at $4.5 billion.
Written by Brian Boyle
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Photo via Superhuman AI
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After briefly topping $126 a barrel in April amid the US-Iran conflict, Brent crude prices have fallen faster than an Acme anvil destined for Wile E. Coyote’s head.
International benchmark Brent stood at roughly $72 per barrel on Monday, barely above pre-war levels. Ongoing negotiations for a permanent end to the conflict, which would stabilize shipping in the Persian Gulf, have oil-producing nations bracing for potential oversupply. Experts say it also means a price war may be in the offing.
The Price War Is Right
In late April, the United Arab Emirates announced its exit from OPEC, the world-leading energy cartel, signaling it would ignore production quotas. The country’s output hit a record 3.8 million barrels per day last month.
Saudi Arabia, OPEC’s largest producer, is traditionally seen as a mediator in global oil markets, using its large share of global supply to stabilize prices. But that doesn’t mean it’s above a price war, having tangled with Russia in 2020 and joined an OPEC attack on US shale producers in the mid-2010s.
On Monday, the Kingdom’s state producer Saudi Aramco slashed its light crude price to Asia for August by $11, the biggest month-over-month reduction this century. A day earlier, six OPEC+ members joined the Kingdom in raising output by 188,000 barrels per day starting next month, the fifth consecutive month of hikes:
- “It is increasingly looking like the Gulf producers are gearing up for a price war,” Robert Yawger of Mizuho wrote Monday.
- Soojin Kim, a commodities analyst at MUFG, said prices remain in “contango,” with spot or near-term futures prices cheaper than longer-term futures as a result of lots of supply. “Gulf producers are expected to lower official selling prices further,” she wrote.
What Goes Up: Maritime News said Monday that 108 vessels crossed the Strait of Hormuz from July 3 to July 5, with 43 on Friday alone, indicating the world’s most crucial oil chokepoint may be returning to normal. As it has reopened, US gas prices have fallen beyond analysts’ wildest dreams: A gallon went for an average $3.79 on Monday, according to AAA data, compared with its May 21 peak of $4.56.
Written by Sean Craig
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- Macro Positives: Hiring picked up among US service providers in June after three months of contraction, according to the Institute for Supply Management, and global supply chain pressures eased.
- Golden Ticket: Citi, the third-largest US bank, announced it’s joining the tiny, exclusive club of clearing banks that oversees London’s physical gold market, the largest in the world.
- You Already Rely on Your Inbox for Your Morning News. Join 200,000+ investors who trust Opening Bell Daily for their pre-market newsletter covering stocks, investment ideas and the data moving your portfolio. Subscribe for free.**
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