Pentagon sends more Marines, warships to Middle East, Hegseth says Khamenei ‘likely disfigured’

Good morning. Here’s what happened overnight and what you need to know this weekend.

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1.

US-Iran war rhetoric: The Pentagon is moving additional Marines and warships to the Middle East as Iran intensifies attacks on the Strait of Hormuz, sources told the Wall Street Journal. US Defense Secretary Pete Hegseth reportedly approved a US Central Command request for an amphibious ready group and attached Marine expeditionary unit, typically consisting of several warships and 5,000 Marines. In a press briefing on Friday, Hegseth said the US will on Friday unleash the highest number of strikes yet on Iran, approximately 20% more than the number of attacks made in the previous most intense day of the conflict. Hegseth said the US will reopen the Strait of Hormuz, stating that there is “a reason why we chose as one of our primary objectives to destroy their navy,” and there is no clear evidence that Iran has mined the passage, as reports Iran has begun laying sea mines continue to circle. The Defense Secretary claimed Iran’s new supreme leader is wounded and “likely disfigured”, following President Trump’s earlier comments to Fox News that Mojtaba Khamenei was “damaged” in strikes that killed his predecessor. The President said Iranians living in the US are “under watch” as new concerns over domestic terrorism rise in an interview with Fox, adding that he thinks Putin is helping Iran in its war against the US and Israel. Earlier on Friday, NATO said it intercepted an Iranian ballistic missile in Turkish airspace for the third time this month. US Central Command confirmed all six crewmembers aboard a US refuelling aircraft that crashed in Western Iraq on Thursday have died. (WSJ)(Department of War)(Fox News)

2.

Request denied: A US federal judge threw out two subpoena’s the Justice Department had issued to the Federal Reserve, dealing a blow to US Attorney Jeanine Pirro’s criminal investigation into chair Jerome Powell. Pirro opened the probe to examine whether Powell gave false testimony to Congress last year about the Fed’s building-renovation project. US district judge James Boasberg rule that the subpoenas were improper, stating: “There is abundant evidence that the subpoenas’ dominant (if not sole) purpose is to harass and pressure Powell either to yield to the President or to resign and make way for a Fed Chair who will.” Pirro blasted the “outrageous” ruling at a news conference Friday, fuming that “Jerome Powell is now bathed in immunity,” and confirming the Department of Justice will appeal the decision. Republican Senator Thom Tillis has vowed to continue a blockage of President Trump’s nominee to replace Powell, Kevin Warsh, as incoming chair of the Federal Reserve and will not lift that block until the investigation of Powell is resolved. Tillis said via X that should Pirro appeal the ruling, it would “only delay the confirmation of Kevin Warsh as the next Fed Chair.” (WSJ)(CNBC)(The Hill)

3.

Oil and water: The S&P 500 dropped on Friday, closing its third consecutive losing week as conflict in the Middle East drags on and oil prices continue to climb. Crude prices had edged lower earlier on Friday after the US lifted sanctions on Russian oil, allowing the sale of Russian ​crude oil and petroleum ​products loaded on vessels until 11 April. But by close Brent crude ended above USD100 per barrel for its second straight session, settling at USD103.14 a barrel — the highest level in more than three years, while US crude futures ended the session near USD99 a barrel. The price spike comes after Iran’s new leader Mojtaba Khamenei said his country would keep the Strait of Hormuz closed and despite US Defense Secretary Pete Hegseth’s assurances that there is no “need to worry about” Iran’s effective chokehold on the key passage. The S&P 500 closed down 0.6%, a new low for 2026, while the Nasdaq and Dow Jones also finished the session down 0.93% and 0.26% respectively. Meanwhile, economic data released Friday showed US consumer spending barely rise in January while data from the Commerce Department showed US GDP expanded at an 0.7% annual rate in the fourth quarter of 2025, well short of the 1.4% pace it reported in its “advance” GDP report last month. (CNBC)(WSJ)(Bloomberg)

4.

Crisis Cubano: Cuban President Miguel Díaz-Canel confirmed for the first time that his government has been negotiating with the Trump administration, as the Communist island struggles under a US oil blockade and worsening economic crisis. In a rare, televised press conference in Havana, Díaz-Canel said US and Cuban officials had “recently” met with his full backing and were exploring “potential solutions for our bilateral differences.” Foreign Minister Bruno Rodríguez Parrilla posted a readout of Díaz-Canel’s comments on social media. Díaz-Canel said Cuba hasn’t received fuel in three months which is creating a humanitarian crisis, with over 10,000 people having had to delay surgeries due to power outages. He added that the US FBI would be visiting the island to investigate an incident in February which Cuba says saw 10 heavily armed men arrive by fishing boat, opening fire when confronted. Earlier this week Trump reiterated his threat of a “friendly takeover” of the Caribbean island. (Bruno Rodriguez X)(WSJ)(Bloomberg)(CNBC)(Capital Brief)

5.

To the Cor(tical): Cortical Labs went viral in 2022 for making a culture of human cells learn to play the computer game Pong. Four years later, the Melbourne-founded startup has announced what it claims is the world’s first biological data centre. Founded by Hon Weng Chong in 2019, Cortical Labs is building computing facilities that run on human neurons instead of silicon chips, consuming a fraction of the energy of traditional GPU-based infrastructure. The startup, which has raised USD12 million ($17.11 million) to date, has launched proof of concept data centres in Melbourne and Singapore. These biological data centres have their origins in the Pong demo; it was the catalyst for Cortical Labs to consider commercialising its technology. Chong is especially enthusiastic about the technology’s energy efficiency. A single GPU can use up to 6,000W, whereas a single CL1 unit runs on just 30W, significantly lower electricity demand and therefore demanding less cooling power, which accounts for the high water usage in the sector. (Capital Brief)

6.

Trashed talent: Elon Musk ordered a fresh wave of layoffs at its AI company xAI, with more co-founders pushed out after growing dissatisfaction with the poor performance of the company’s coding product. Sources familiar with the decision told the Financial Times that managers from SpaceX and Tesla, Musk’s other companies, have been seconded to review xAI employees’ work and have fired some staffers after assessing their efforts as inadequate. Guodong Zhang, who had run the pre-training of xAI’s chatbot Grok’s models, reportedly told colleagues that he was leaving after being blamed for issues with the coding product and relieved of his primary duties by Musk. Sources told the FT that staff were sent a memo denying that there would be mass lay-offs on Wednesday, but researchers continue to quit because of burnout caused by Musk’s “extremely hardcore” work demands or after receiving better offers from rivals. Recruiters are trying to plug the holes in talent by contacting previously unsuccessful candidates to offer them jobs, often on better financial terms, sources said. (FT)

7.

Temporary reprieve: China’s state-backed iron ore trade, China Mineral Resources Group (CMRG) told steel mills that it will temporarily ease restrictions on BHP’s Jimblebar iron ore, after reports over a widening of bans against the mining giant pushed up prices. CMRG will allow select Chinese steelmakers to pick up their cargoes of BHP’s Jimblebar iron ore that have been building up in ports since the firm imposed a ban on purchases, trading and use of the grade in 2025, sources told Bloomberg. Iron futures in Singapore jumped 6% earlier this week when CMRG informally asked mills to avoid buying another BHP grade, Newman fines. The move triggered a rush to buy ahead of an anticipated broadening of bans on the company’s cargoes. Sources said the easing for BHP’s Jimblebar iron ore hasn’t been extended to traders and the move is being viewed as a concession to mills during the long-running commercial dispute between BHP and CMRG. (Bloomberg)

8.

Petrol probe: The Australian Competition and Consumer Commission (ACCC) is seeking meetings with major petrol companies to discuss recent price increases following its latest fuel monitoring update, which showed prices in petrol and diesel have increased as rapidly as wholesale prices, which is unusual. The ACCC said pricing data indicated that after the start of the Middle East conflict, daily average retail petrol prices increased almost immediately alongside wholesale prices, rather than following the typical lagged response. The regulator warned it would take action against any retailers found to have engaged in misleading or deceptive conduct regarding price rises or breaches of competition laws. The news comes after the federal government on Friday released 20% of the country’s fuel reserves after war in Iran led to a doubling of fuel demand. The AFR reports that the government is in the final stages of negotiations with Australia’s two remaining oil refiners, Ampol and Viva Energy, over changes to subsidies designed to keep them in business beyond their existing mid-2027 deadlines. (Capital Brief)(ACCC)(AFR)