The United Arab Emirates is leaving OPEC. Saudi Arabia is ending its splashiest foreign sports venture. The two U.S. allies are in the midst of a messy divorce, even as both face fire from Iran.

Why it matters: One year after President Trump's grand tour of the Gulf, the region's vision of a geopolitically stable post-oil future — powered by tourism, AI and American capital — has taken a major blow, Axios' Dave Lawler, Barak Ravid and Zachary Basu write.

• The trillions of dollars in investment pledges that Trump secured on his trip are in limbo.
• So is the American "golden age" he claimed would be bankrolled in part with Gulf money.

The big picture: Trump's trip may prove the high-water mark for the idea that the future of AI, global investment and geopolitics would all flow through the Gulf.

• The Saudi sovereign wealth fund's exit from LIV Golf, after pouring more than $5 billion into the PGA competitor since 2022, is the first major casualty of the kingdom rationing cash as oil exports sink.
• No one is rushing to build $20 billion data centers in Saudi Arabia or the UAE after Iran proved it can strike them with cheap drones, as Constellation CEO Joe Dominguez told Axios.
• Gulf leaders have spent a generation perfecting the Dubai model — selling stability as a luxury good to foreign tourists, expats and investors. Iran's attacks on luxury hotels and airports have undercut that premise.

Friction point: The UAE's break from the Saudi-led oil cartel is the latest fracture in a regional rivalry driven by clashing alliances and views on Yemen, Sudan and Palestine, as well as personal animosity between the two leaders. The Iran war has only deepened the rift.

Behind the scenes: The Trump administration was slow to grasp how serious that rift between the UAE and Saudi Arabia had become — and chose not to get involved as it deepened, U.S. and regional sources told Axios.

• Senior officials are deeply concerned that Washington's two most important Arab allies will emerge from the war more adversarial than ever.

Reality check: The Gulf states still have deep reserves of energy and capital, plus a security relationship with Washington that the war has only strengthened.

• Some analysts see the Iran crisis as a temporary shock for the Gulf economies, not an existential crisis.

The bottom line: A year after his Gulf tour, Trump's promised investment bonanza has collided with the consequences of his Iran war. Fixing the damage may take longer than the time he has left in office.

• Share this story.

AI is wiping out some entry-level work that trains the next generation of elite lawyers, writes Axios' Russell Contreras.

• Why it matters: Big Law's entire business model depends on armies of junior associates learning on the job. If AI erases that rung, the profession faces a long-term talent crisis.

🧠 The big picture: The legal profession's most important classroom, the early-career grind of junior and summer associates, is quietly reshaping, as the path to partnership is being rewritten in real time.

• Firms are racing to "extract the knowledge of their lawyers" and embed it in AI workflows, client portals and self-service tools, Stanford Law professor David Freeman Engstrom tells Axios.

Between the lines: If AI removes the low-level reps, firms must invent a new apprenticeship system or risk creating lawyers who can supervise AI outputs without having built the judgment to know when those outputs are wrong.

• As AI automates some law firm work, the traditional "leverage model"— the pyramid system where a few partners sit atop a massive base of billing associates — faces a structural threat.

The bottom line: The future lawyer won't be a document reviewer. They'll be a "symphony conductor" who pieces together AI outputs, data and legal scenarios, Engstrom said.

• Share this with a 1L ... Axios CEO Jim VandeHei: A letter to young people on the AI shift.

Intel from Axios Macro maestros Courtenay Brown and Neil Irwin, who examine new research that says our bad-vibes economy might be the same as it ever was:

The uncomfortable new normal for the U.S. economy: spending growth concentrated at the top of the income ladder, a split largely explained by wealth gains from financial assets.

• Why it matters: The K-shaped economy is real, though it is not particularly new. That's the conclusion of new research from the Federal Reserve Bank of New York.

The conclusion confirms an economic risk lurking beneath an economy that is navigating relentless disruption — a war driving energy prices higher, AI uncertainty and more — where spending growth is concentrated in a single cohort that could pull back sharply with a market downturn.

• Since 2023, the real net worth of the top 1% of earners climbed more than 25%, fueled largely by surging financial assets, while the middle 40% of households gained less than 10%, the New York Fed finds.

Share this story ... Get Axios Macro.

You thought Americans weren't feeling great? The British are among the most pessimistic in the world, according to a ranking of surveys across 139 countries from Gallup, Axios' Emily Peck writes.

• Why it matters: The low number speaks to the "depth of the economic malaise in the U.K.," writes Benedict Vigers, Gallup's senior global news writer.

📊 By the numbers: Just 21% of those surveyed in the U.K. last year said their local economy is "getting better." Only Lebanon, Bolivia and Turkey had meaningfully lower numbers.

• In the U.S., 47% of respondents said their local economy was getting better — slightly more than the global median of 42%.

Share this chart.

President Trump's allies are growing alarmed that GOP Rep. Nancy Mace — who infuriated him by calling for the release of the Epstein files — will defy expectations and win the South Carolina governor's race, reports Axios' Alex Isenstadt.

• Why it matters: Mace, who's running in a fiercely competitive June 9 primary, has been a thorn in Trump's side, most recently with her criticism of the administration's handling of the Iran war. She also threatened to side with Democrats on a war-powers resolution.

👂 What we're hearing: People close to the president don't want Mace as governor — a perch that could help sway the 2028 presidential primary given the state's early spot on the voting calendar.

• One possibility alarming the president's allies: Mace and Rep. Ralph Norman advance to a runoff. Norman crossed Trump during the 2024 primary when he endorsed former UN Ambassador Nikki Haley and called for "new leadership" in the party.

The intrigue: South Carolina Republicans are watching closely to see if Trump endorses. His support could swing the race.

• Mace has bewildered White House aides by repeatedly asking for Trump's endorsement despite her stands on the Epstein files and the Iran war.

Share this story.

If you want to bet on the horses running in the 152nd Kentucky Derby this evening, don't turn to prediction markets like Polymarket or Kalshi.

• Polymarket had a market for the race, but pulled it down after a request from Churchill Downs Inc., reports Louisville's Courier-Journal.
• Kalshi's website doesn't list a market for the Derby.

Churchill Downs CEO Bill Carstanjen said earlier this year: "To take wagers across any forum ... you need our express consent. You can't just do it without that. So we haven't agreed to provide our content to prediction markets."

Fast-food giants and coffee chains are racing to reinvent their drink menus — betting beverages can drive visits — no burger required, writes Axios' Kelly Tyko.

• Why it matters: Drinks are becoming one of the most profitable parts of the business as rising food costs — including beef prices — squeeze margins on core items.

The latest: McDonald's is launching six new specialty drinks on Wednesday, including refreshers and crafted sodas.

• Dunkin' rolled out new refreshers this week, a "dirty soda" and frozen coffee drinks.
• Wendy's added watermelon drinks, while chains like Taco Bell and KFC are expanding into energy and specialty beverages.

Drink up.

Expect Monday's Met Gala to come with "a sense of déjà vu," writes the N.Y. Times' Yola Mzizi.

• The culprit? This weekend's release of "The Devil Wears Prada 2," which features its own early museum gala scene that isn't the Met Gala but sure feels like it.

Vogue, which organizes the gala and whose longtime editor Anna Wintour served as the inspiration for Meryl Streep's Miranda Priestly, has been all in on cross-promotion.

• It selected "The Devil Wears Prada" as its April book club pick, with the push culminating in a Wintour-Streep cover for its May issue.
• It's a far cry from the original movie's release in 2006, when "[t]he handling of the Miranda character ... was enough to spook many fashion insiders into refusing to be associated with the film."

Movie trailer ... Keep reading (gift link).