Good morning. Andrew here. I’m writing to you today from Aspen, where the Aspen Economic Strategy Group’s annual meeting is underway. A group of global policy leaders and economists have gathered for the two-day summit. Among those in the room: Jay Powell, the former Fed chair, as well as the former Treasury secretaries Hank Paulson, Tim Geithner and Janet Yellen. Also here is Neel Kashkari, the Minneapolis Fed president who recently made waves dissenting against Kevin Warsh. High on the agenda: the trajectory of Fed policy; the continued tensions around the Strait of Hormuz; whether the A.I. boom is treading into bubble territory and what it means for jobs; and the growing national debt. I’ll have much more for you tomorrow. I’ll have much more for you tomorrow. (Was this newsletter forwarded to you? Sign up here.)
Great gainsS&P 500 futures are edging higher today, approaching another record. That’s despite plenty of noise out there: a precarious U.S.-Iran cease-fire that’s whipsawing oil markets; growing odds of a Fed interest-rate increase; President Trump’s renewed trade war. The big reason: Corporate profits are blowing away Wall Street expectations. Eighty-six percent of the S&P 500 companies that have reported this earning season have posted earnings-per-share results that beat analysts’ forecasts, as of Friday’s market close, according to FactSet. Shares in Palantir, Snap and On Semiconductor are all soaring in premarket trading after the companies reported impressive results yesterday. Robust consumer and business spending, and companies’ pricing power, have helped pad bottom lines. “Otherworldly” sales growth, in the words of Alex Karp, Palantir’s C.E.O., powered his company’s latest quarter, prompting it to lift its full-year outlook.
“Expect earnings to be the primary driver of stock gains” this year, Jeff Buchbinder, the chief equity strategist at LPL Financial, wrote to investors yesterday. LPL hasn’t raised its year-end S&P 500 target, but analysts at Goldman Sachs, JPMorgan Chase and Citigroup have. Worries about spending on artificial intelligence aren’t dampening the mood:
Helping matters is that the bull market rally is no longer dominated by A.I. The equal-weighted S&P 500, a broader measure of the benchmark index, is at a record high. What could go wrong? Plenty, including:
And watch the yen. The joint intervention by Tokyo and Washington bolstered the battered currency yesterday. But the yen is dipping again today, as concerns grow that the move won’t be enough. Some market watchers see another risk: Intervention could undermine the popular “carry trade,” in which investors borrow cheap yen and reinvest in riskier assets, like emerging market currencies and tech stocks. Investors could rethink that trade now that Tokyo and Washington want to see a stronger yen.
Tech giants reportedly will meet with the Trump administration today to discuss artificial intelligence safety. Anthropic, Google and OpenAI are among those expected to participate, according to Bloomberg, as businesses and policymakers are on edge over reports of A.I. models going rogue and hacking other companies. The Trump administration also said it has devised a voluntary framework for evaluating the safety of frontier models. At the same time, competition from cheaper Chinese models is intensifying. Is Jeanine Pirro in the hot seat? Her future is being closely watched after President Trump said yesterday that Pirro, the U.S. attorney for Washington, D.C., had “choked” in dismissing his claims that the damage to the Lincoln Memorial Reflecting Pool was done by vandals. Trump has discussed ousting her, according to The Wall Street Journal, citing unnamed sources. But The Times reports that her job is safe for now. Twenty-five states sue the administration over tariffs. The coalition, consisting mainly of blue states including California and New York, argues that the administration acted illegally in imposing new duties under Section 301 of a 1974 trade law. While the Supreme Court struck down earlier tariffs, the so-called 301 levies are thought to be on safer legal ground.
Who owns how much of OpenAIInvestors have committed more than $180 billion to OpenAI — and they’re expecting a hefty payoff when the artificial intelligence start-up goes public, possibly early next year, near a $1 trillion valuation. On March 31, OpenAI announced that it had raised a colossal $122 billion from investors including Amazon and Nvidia at an $852 billion “post-money” valuation, which includes the new funds. Who holds how much of OpenAI’s stock is closely held information. But Sri Muppidi obtained the company’s capitalization table after its recent funding round, confirmed by two additional people with knowledge of the matter. Here’s what the cap table tells us: OpenAI’s founders and employees own the largest share of the company. Those with vested shares hold Class A common stock equaling 48.93 percent of the company, the document shows. That group also includes investors that participated in OpenAI’s 10 employee tenders over the years, including Thrive Capital and SoftBank, according to one of the people.
Microsoft owns more than a quarter of the company. An early backer of OpenAI, Microsoft has invested more than $13 billion in the company since 2019. Investors from previous rounds own nearly 20 percent. These hauls include:
Investors in OpenAI’s latest round own about 6 percent of the equity so far. That’s because the money is being invested in installments:
OpenAI’s nonprofit arm owns a stake, too. The OpenAI Foundation owns Class A common stock and additional shares from OpenAI’s 2019 round, according to one of the people with knowledge of the cap table. It’s not clear how much stock the foundation now owns. It was 26 percent last fall, before being diluted by the $122 billion round. QUOTE OF THE DAY “Uber’s strategy recycles an old and ugly script: If a woman drank, if she rode alone, if it was late, if her memory is imperfect, then maybe she is to blame.”Nora Freeman Engstrom, a legal ethics professor at Stanford Law School, to The Times on the aggressive defenses Uber has used in lawsuits against the company over allegations of sexual assault by drivers. Tony West, Uber’s chief legal officer, said in a statement: “Defending the company in a lawsuit and treating survivors with humanity are not mutually exclusive; we must do both. ”
JPMorgan gets yellow card for failed FIFA dealFor FIFA’s president, Gianni Infantino, the plan to spin off FIFA’s commercial assets into a new entity, in which the soccer giant would sell a 20 percent stake, has been a disaster. The now-abandoned deal, which would have valued the spinoff at $20 billion, has resulted in boycott threats and calls for Infantino’s resignation. For JPMorgan, which worked with Infantino on the deal, the fiasco probably feels familiar, writes Tariq Panja of The Times. The bank played a similar role in a 2021 plan to create a so-called Super League featuring only the richest soccer clubs, which drew condemnation from fans and governments alike: Chastened, the Wall Street titan issued an unusual apology for its role in the fiasco. The bank pledged to learn from how it had “misjudged” the effect the plan would have on the feverish world of global soccer. Even Jamie Dimon, the bank’s outspoken and all-powerful chief executive officer, acknowledged that the company had misunderstood the passions that would be aroused. This time around, JPMorgan’s involvement was led by Mary Erdoes, the head of the bank’s asset and wealth management division. (JPMorgan sports investment bankers also worked on the deal.) Infantino worked with Josh Kushner, the venture capitalist and the brother of President Trump’s son-in-law Jared Kushner, on the plan. JPMorgan’s role was to recruit investors to join the deal with Thrive Eternal, a new subsidiary of his firm Thrive Capital: The depth of JPMorgan’s involvement in the plan was underlined by its logo appearing on a 25-page FIFA sales deck that leaked to the news media. The bank, according to the person with direct knowledge, had analyzed the reputational risks associated with the project before going ahead. The deal being proposed was for the investors to own a slice of the new company, like they would a professional sports team, and hope for the valuation to increase in the years to come rather than to expect regular dividends. Part of FIFA’s pitch to its 211 member associations was to share a portion of the profits back with them from its proposed new commercial entity, FIFA Forward Enterprise. Sri Muppidi obtained a copy of the slide deck FIFA had prepared. Excerpts are below.
The growth in future distributions would come from increased revenue via broadcasting and sponsorships, among other things:
Where FIFA got things wrong: “The recurring mistake is to assume that fans are a captive audience,” Ronan Evain, the executive director for Football Supporters Europe, an umbrella body for fan groups, told Panja. “The Super League proved we are not.” What’s next: Lawyers for European soccer’s governing body have demanded that FIFA retain all documentation related to the project — including any correspondence with JPMorgan. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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