Business

1. SpaceX eyes telco
2. Warsh’s black box
3. Meta’s credibility gap
4. An AI Archegos
5. Affirm CEO’s AI bet

Trump’s poll numbers are sliding and the national mood is souring. So when the Fed again ignored his demands to cut interest rates, one might have expected him to lash out.

He didn’t. Kevin Warsh, his pick to run the central bank, is “fantastic… a brilliant guy, smart,” the president said yesterday. Trump threw some drive-by blame on the rest of the Fed board, but couldn’t muster the vitriol he had for Warsh’s predecessor, Jerome Powell.

No economic issue besides tariffs has animated Trump more than interest rates. He wants them lower — a preference forged by his decades in the real-estate business, which thrives on cheap borrowing, and sharpened by the belief that rate cuts mean faster growth and higher stock prices.

But Trump cares less about any specific outcome than about declaring victory. And in getting Warsh in and Powell out, Trump got his guy. He lost on policy but won on personnel, undercutting the Reagan-era governing principle that having ideological allies in key seats will deliver outcomes. Investors are putting 2-to-1 odds on a hike at the Fed’s next meeting in September, and Warsh is comfortable letting investors do the work of cooling the economy for him: “We haven’t done much in 42 days,” he said at yesterday’s presser. “Markets have done quite a bit.”

Trump is unlikely to get the rates he wants, but he got his rate-setter, and seems OK with that for now.

SpaceX’s telecom aspirations

What is Elon Musk up to? That’s a question telecom executives have asked themselves for months now, and Semafor has some clues. SpaceX is hunting for terrestrial spectrum that works well in cities and dense areas, either by buying a rival company or competing at an upcoming FCC auction. Shares of Verizon and T-Mobile fell 4% on the news, and SpaceX shares rose 3% — a swing of more than $80 billion from old-line telcos to an aspiring one.

Some Verizon executives are concerned that SpaceX has set its sights on them, given the company’s recent bout of cost-cutting, a suggestion Verizon spokespeople have pushed back on: “Any assertion that Verizon is being positioned for a sale to SpaceX — or any other entity — is unequivocally false, unsubstantiated, and entirely without merit.” Questions about the $200 billion company’s succession plan have also come more into focus.

— Rohan Goswami

Bond markets flinch at Fed’s non-guidance

US long-term borrowing costs hit their highest levels since 2007 as investors balked at Warsh’s new stripped-down communications strategy. Yields on 30-year Treasury bonds touched 5.24% after Wednesday’s Fed meeting, when the central bank’s chair made good on his promise to pare back guidance that, in his view, the market has come to overanalyze and overrely on.

Warsh is retraining investors to do their own work. But that muscle will take a while to rebuild after more than a decade of hand-holding by a central bank wary of surprising the market. The immediate result was chaotic: a spike in bond yields, paired with declines in stocks and the dollar, that Bank of America’s strategist called “a classic central-bank credibility shock” in a note to investors.

Zuckerberg hedges on Meta’s AI future

Mark Zuckerberg’s defense of Meta’s AI bets is falling flat. Its shares fell 10% after a second-quarter earnings drop and a dampened revenue forecast, and Zuckerberg failed to convince investors that the social-media giant has a right to play on the AI frontier.

What’s the plan for scaling the nascent cloud business, a recent pivot meant to show that Meta can profit from, not just spend on, AI? “We will have more to share soon,” he told investors Wednesday night. “There’s kind of only so much that I can say on an earnings call,” he later said. (He had a lot to say heading into the earnings report, with a whirlwind interview blitz).

Contrast that with Microsoft, whose shares jumped 15% on Thursday after its cloud business posted its fastest growth since 2022. Microsoft also tapped the brakes on new capex spending.

AI hedge fund collapses

A high-flying hedge fund founded by former OpenAI researcher Leopold Aschenbrenner dumped its stock holdings to Citadel, an AI-age sequel to the Archegos fiasco that rocked Wall Street a few years ago.

Situational Awareness sold its public book to Ken Griffin’s hedge fund, people familiar with the matter said. The trade came after it suffered losses on some big stock positions recently hit by AI jitters, and banks that had lent to the fund against its holdings put pressure on it, one of the people said. WSJ previously reported Citadel’s purchase.

The fast-moving situation mirrors the 2021 unraveling of Archegos, Bill Hwang’s investment firm brought down by its concentrated, debt-fueled stock bets. Slow-moving lenders were left holding the bag — the episode started the clock on Credit Suisse’s downfall — and prompted some banks to tighten their risk limits around such trades.

— Liz Hoffman

AI will find the hidden fees

Affirm should be like your smarter older sister, saving you from making bad financial decisions, buy-now-pay-later founder Max Levchin tells Semafor’s CEO Signal show. But he also believes AI agents will soon make consumers even smarter, automatically spotting the hidden fees that traditional lenders depend on for much of their profitability.

Affirm, which doesn’t charge late fees or compound interest, should benefit from the growth of agentic commerce, Levchin says, because AI tools will not skip over the fine print that traps consumers into paying unexpected charges. “Your agent has a PhD in consumer finance,” he says: “Agents will not make mistakes on your behalf.” The PayPal Mafia member tells Penny Pritzker and Semafor’s Andrew Edgecliffe-Johnson he hopes Affirm will not be the last company he starts. At the same time, “I am in zero danger of leaving.”

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➚ BUY:  DeepMind. Google’s AI research lab unveiled an upgraded model that gives humanoid robots finer control, bringing us closer to a world where bots can operate in unpredictable environments.

➘ SELL: Deep mines. Anglo American is in talks to sell its diamond business, De Beers, for about $1 billion, Bloomberg reported.

Companies & Deals

• ICE-d in: NYSE parent company ICE is buying electronic bond-trading firm MarketAxess for $6 billion. Meanwhile, it’s a tough morning for MarketAxess’ biggest rival, Tradeweb, whose shares fell 12% after it reported shrinking fees in every asset class it trades.
• Depth check: A single Polymarket bet wildly shifted the odds in California’s gubernatorial race, according to a Bloomberg investigation that shows how bets of as little as a few hundred dollars, timed right in thin order books, can snowball into political momentum.

Watchdogs

• Token effort: Crypto’s $140 million political war chest — one of the midterm’s juiciest pots — is on the sidelines for now as a bill the industry badly wants is stalled in the Senate, Semafor’s Eleanor Mueller reports.