Greetings,

The US economy is experiencing big growth driven by the artificial intelligence boom, but economists warn that the economy's reliance on AI brings risks. More on that below.

Also in this edition:

• AI skills reshape expectations for CFOs' first 100 days
• Report: Human error now accounts for most cyber losses
• CLARITY bill runs short on time
• CFOs tackle weather-driven risks with tech, diversification

Economists estimate that AI investment and the stock-market boom have become major drivers of US economic growth, with annual AI-related business investment reaching $1.5 trillion, up from $1 trillion two years earlier. Barclays estimates bond issuance at five major hyperscalers and SpaceX will reach $285 billion this year, up from $109 billion last year. "It is very much an AI-driven economy right now," said Barclays economist Jonathan Millar. "It's hard to imagine that we would be anywhere near as resilient without that impetus."

The Texas Stock Exchange has started trading all tickers as it competes with the New York Stock Exchange and Nasdaq. In response to TXSE's debut, NYSE and Nasdaq have expanded their operations in Texas and attracted dual listings from companies such as AT&T and Huntington Bancshares. The Dallas-based exchange, backed by investors such as Goldman Sachs, JPMorgan Chase and Citadel Securities, has raised $275 million and received federal regulatory approval last year. Initial public offerings are planned for next year, and the exchange aims to attract companies from Florida to Texas.

Banks are increasingly using derivatives known as "crash puts" to hedge risk from leveraged exchange-traded funds, which offer the potential for double or triple the daily returns of individual stocks, Bloomberg reports. The practice has led to a surge in activity in a niche corner of the derivatives market.

A severe drought is causing water levels in major European rivers to drop, disrupting industries and power generation. In Romania and Hungary, nuclear power plants have shut down reactors due to insufficient cooling water. German companies like Thyssenkrupp are reducing production because of shipping difficulties on the Rhine. If the drought persists, economists warn of potential supply shortages and price increases for consumers across the region.

AI is rapidly changing the landscape for CFOs and altering what organizations expect in the first 100 days, according to FTI Consulting. CFOs are increasingly charged with modernizing finance and driving enterprise-wide digital transformation, and nearly one-third of organizations are seeking CFOs with AI skills. Early in their tenure, CFOs are expected to assess data maturity and implement AI tools that enhance reporting, forecasting and scenario planning.

AI has increased the effectiveness of cyberattacks that exploit human error, accounting for 85.3% of incurred losses, according to cyber risk firm Resilience. AI-driven attacks are more convincing, particularly in phishing and payment transfer fraud, Resilience says, noting that companies must enhance their cybersecurity measures and consider layered verification for financial transactions.

The Financial Accounting Standards Board has initiated a project to reconsider how and when goodwill impairment testing is conducted. The board is evaluating proposals to eliminate the current requirement for annual testing, citing feedback that such testing adds cost and complexity for all types of entities. Instead, entities would rely on existing processes to identify triggering events that may indicate impairment, potentially streamlining internal controls and reducing audit burdens.

The CLARITY Act is running out of time before the Senate recess, with the crypto market-structure bill still seven votes short of the 60 needed to advance. The measure would divide digital-asset oversight between the SEC and CFTC, but Democratic resistance and concerns over President Donald Trump's crypto ties are threatening the industry's push for a durable federal rulebook.

Some Democratic senators are calling for the Commodity Futures Trading Commission to restrict prediction-market trading on wildfires, warning that such contracts could create incentives for arson or misuse of sensitive fire-risk information. The letter adds pressure to the agency's review of guardrails for prediction markets, even as regulated platforms such as Kalshi and Polymarket US do not currently offer wildfire-specific contracts.

Weather-related risks pose significant challenges for seasonal businesses, particularly those reliant on summer travel. Alaska Seaplanes, for example, faces unpredictable weather that can ground flights and disrupt revenue streams, prompting heavy investment in advanced navigation systems. To manage weather risks, CFOs are adopting new technologies, refining demand models, and, where possible, diversifying their business to buffer against weather-driven volatility.