Good morning. McKinsey is changing the way it picks its leaders for the first time in years in an effort to circumvent the internal tensions and infighting that marked its past two elections.

• Governance changes: The elite consulting firm, as part of changes to its governance, will now elect a global managing partner to a single six-year term, and its partners will hold a confirmation vote at the four-year mark on whether the leader should serve the remaining two years of the term. McKinsey’s roughly 750 senior partners currently vote to elect a firmwide leader every three years, and that person can stand for two terms.
   
• How did they vote? The voting process is a forum in which partners express their support or displeasure with the overall direction of the firm, but it can be distracting as partners jockey for support internally. Last year, the election stretched to three rounds, with incumbent Bob Sternfels facing off against the then-head of McKinsey’s digital-strategy business, Rodney Zemmel.
   
• What happened? Sternfels, a roughly 30-year McKinsey veteran, ended up being re-elected and holding on to his seat, but not before dissent within the famously private firm spilled into public. Zemmel later left the firm and is now an executive at private-equity firm Blackstone.

U.S. delays new investment adviser AML rule.

The U.S. Treasury Department is postponing for two years the effective date of a new proposed rule that would require U.S. investment advisers to start detecting and reporting suspected money laundering to the government.

Background: Before the announcement Monday, FinCEN had twice in the past tried to put in place anti-money-laundering rules on the investment adviser sector by proposing rules, including as recently as in 2015. But neither proposed rule was finalized mainly due to industry pushback.

• China blocked Wells Fargo banker Chenyue Mao from leaving the country because she is required to assist in a criminal probe, China’s Foreign Ministry said Monday, marking Beijing’s first confirmation of the exit ban.
   
• Three former Texas investment advisors are facing charges relating to an alleged Ponzi scheme that prosecutors say bilked hundreds of clients out of millions of dollars, according to Barron’s.
   
• The European Union condemned what it called Russia’s “coordinated, and longstanding hybrid campaigns aimed at threatening and undermining the security, resilience and democratic foundations of the EU,” in a strongly-worded statement Friday, referring to Russian operations in both the physical and cyber domains.
   
• Non-sanctioned account holders can transfer investments and funds from designated Russian and Belarusian brokerage firms to non-sanctioned brokers, the U.K. Treasury said, providing a way for affected clients to access frozen assets.
   
• Russian oil giant Rosneft denounced European Union sanctions on the Indian refiner Nayara Energy as “unjustified and illegal,” claiming the restrictions violate international law and threaten India’s energy security.
   
• China has blocked a U.S. government employee from leaving the country after the person traveled there in a personal capacity, the U.S. Embassy in Beijing said. The employee of the U.S. Patent and Trademark Office was “made subject to an exit ban in China,” a spokesperson for the U.S. Embassy said Tuesday.

U.S. leading indicators show economic clouds gathering.

The U.S. economy is set to slow, leading economic indicators say, with the impact of tariffs becoming more pronounced in the second half of the year through higher prices.

The Leading Economic Index, or LEI, published Monday by research group The Conference Board, declined 0.3% to 98.8 in June, a stronger fall than the 0.2% expected by a consensus of economists polled by The Wall Street Journal. It followed an unchanged reading in May that was revised upward from the 0.1% downtick originally reported.

• The Global Economy Is Powering Through a Historic Increase in Tariffs

• Extreme weather events are driving short-term surges in food prices around the world.
   
• Turkey could announce a preliminary deal for a multibillion-dollar order of Eurofighter Typhoon fighter jets as early as this week, according to two people familiar with the negotiations.
   
• Big U.S. EV battery makers are stepping back from the market that got them started and betting on a new set of customers in an entirely different business.
   
• The outlook for the rest of the year isn’t rosy for toymakers.
   
• Canadian companies face higher costs to purchase goods and services but are limited in raising consumer prices due to competitive pressures and weaker demand, according to quarterly surveys published Monday by the Bank of Canada.
   
• China’s thirst for oil drove global demand for decades. Now a government campaign to curb that addiction is nearing a milestone, with national consumption expected to peak by 2027, then begin to fall.

• A $500 billion effort unveiled at the White House to supercharge the U.S.’s artificial-intelligence ambitions has struggled to get off the ground and has sharply scaled back its near-term plans.
   
• Harvard’s battle with the Trump administration over the future of the university reached a crescendo Monday in a federal courtroom here, as the Ivy League school argued the government had no basis to cut $2.2 billion of research funding.
   
• Hundreds of Marines who were deployed to Los Angeles last month during protests over immigration enforcement will withdraw from the city, the Pentagon said Monday.

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