Good morning. Andrew here. We’re keeping an eye today on credit fears roiling global markets — and also how politics has come to the workplace, again. Marc Benioff of Salesforce is under fire, this time from the left, for seeking to do business with ICE under President Trump. The pushback is coming not only from activists, but from allies as well. Remember when Google staff members staged a mass walkout over the company’s military work, or when Amazon employees protested the sale of surveillance products to the government? Here is the question of the morning: Is there a red line for companies doing business with the government? Should they have one? (Was this newsletter forwarded to you? Sign up here.)
Watching for ICE falloutFor years, Marc Benioff, the C.E.O. of Salesforce, loomed over San Francisco as the city’s most generous donor, and a decidedly progressive one. But Benioff’s growing embrace of President Trump underscores how some tech leaders have shifted to the right, a turn that is increasingly alienating some allies. The latest: Heather Knight, a Times reporter, obtained screenshots of internal documents and communications about Salesforce pitching ICE on using its artificial intelligence tools to help staff up. Among them was a five-page memo to the agency arguing that the company could help “nearly triple its work force.” (A caveat: Salesforce had also contracted with ICE during the Obama and Biden administrations.) San Francisco officials leveled fresh criticism at Benioff over the news. “For someone to claim that they support San Francisco and then be embedded with ICE like this is deeply concerning,” Danny Sauter, a member of the city’s Board of Supervisors, told The Times. That’s on top of the heat Benioff got over his support of a National Guard deployment to San Francisco. “We don’t have enough cops, so if they can be cops, I’m all for it,” he told The Times. (Trump himself suggested this week that he might do just that.) Benioff’s comments prompted Ron Conway, a prominent venture capitalist and longtime friend, to resign from the board of Salesforce’s philanthropic arm. “I now barely recognize the person I have so long admired,” Conway, a big Democratic donor, wrote in his resignation note. Benioff is the latest sign of a rightward turn in the tech world. Apple, Google and Meta all donated to Trump’s inaugural committee, and their leaders have since attended presidential events at the White House and abroad. Worth noting: The U.S. government is Salesforce’s biggest customer, with federal contracts worth billions. Falling afoul of Trump could also lead to negative consequences. Could others in Benioff’s orbit turn on him? The Times said its information came from “an individual with ties to Salesforce.” Over the past decade, tech employees have spoken out against policies they oppose. Most recently, employees at Microsoft staged a protest at the tech giant’s headquarters over its contracts with the Israeli military. (Microsoft later barred the sale of some A.I. products to an Israeli defense unit that were used as part of Gaza operations.) Whether that will happen at Salesforce is unclear. In an internal Slack channel discussing the ICE memo, some employees responded to it with fire emojis. One wrote, “I wish you the best of luck with this one!”
The U.S. Chamber of Commerce sues over new H-1B visa fees. The business group argued that the Trump administration’s new $100,000 charge for skilled-worker visas violated the Immigration and Nationality Act and was “misguided policy.” Silicon Valley start-ups and tech giants have complained that the steep fee would make it impossible to hire employees with specialized skills. The Trump administration reportedly weighs tariff relief for the U.S. auto industry. The Commerce Department is set to extend an arrangement that lets automakers reduce duties they pay on imported car parts to five years from two years, Bloomberg reports. That would be a major win to carmakers, which have lobbied the White House to ease the hit they’ve taken from the president’s levies. Instagram unveils new A.I. chatbot teen safety features. The Meta-owned social network said it would let parents block their children from having conversations with certain A.I. characters, limit chats on topics like self-harm and romance and send parents summaries of their children’s chats. It’s the latest change by the company after criticism over its effects on young people’s mental health. Saudi Arabia is said to discuss a defense deal with the U.S. The kingdom has talked with the White House about an agreement that would be similar to the one between the U.S. and Qatar, in which Washington would see any attack on it as a threat to American “peace and security,” The Financial Times reports. Saudi Arabia spent months negotiating a defense pact with the Biden administration before talks were upended by Hamas’s 2023 attack on Israel. Credit contagionAlarm bells are ringing in global markets this morning as fresh worries about the banking sector — and the possibility of more cracks emerging after a yearslong credit boom — prompt a broad stock sell-off. The latest: Shares in European banks fell sharply, and the S&P 500 looks set for another rough open. The CBOE Volatility Index, the so-called fear gauge, jumped to its highest level since the April sell-off that followed President Trump’s “Liberation Day” tariff announcement, according to Deutsche Bank. All this came after tremors in the KBW regional bank index, which fell more than 6 percent. The scare is over losses at two regional U.S. banks, Zions Bancorp and Western Alliance Bancorp, which reported exposure to what they said was fraud by two investors. (Lawyers for the two men “vehemently deny” the allegations.) Neither bank lost much money — Zions said it had taken a $50 million hit — but the lenders saw their stocks plunge by double-digits yesterday on the news. Regional banks have been causes for concern since 2023, when Silicon Valley Bank collapsed and set off a mini-implosion in the industry. Both Zions and Western Alliance got hammered during that crisis. Worries about bad loans have been growing in recent weeks as investors increasingly fear that the boom in private credit and other lending has led to costly mistakes. Shares in Jefferies, which disclosed that it could lose about $715 million from the collapse of the auto-parts maker First Brands, have tumbled 26 percent over the past month as details of its exposure have emerged. Analysts have peppered bank C.E.O.s with questions about their exposure to First Brands and the auto lender Tricolor. Jamie Dimon of JPMorgan Chase, which reported a loss tied to Tricolor, warned that more bad news might yet come to light: “When you see one cockroach, there are probably more,” he told analysts this week. Some bank watchers say the latest drop has gone too far. The sell-off in Zions and Western Alliance shares looks “overdone,” Jon Arfstrom, an analyst at RBC Capital Markets, wrote yesterday in a research report. He noted that regional bank stocks have improved their finances significantly since 2023. Still, investors will be keying in on the sector’s finances, with several regional lenders set to report results in the coming days, including Zions and Western Alliance next week.
Mamdani faces a grillingLast night’s New York City mayoral debate had several big moments. But it failed to deliver any body blows to the front-runner, Zohran Mamdani, the democratic socialist and Democratic Party candidate whose campaign has roiled the city’s business community. Andrew Cuomo and Curtis Sliwa, the Republican candidate, landed some jabs in what’s likely to be their final face-to-face confrontation before Election Day. The city’s affordability crunch was a main topic, as were hot-button issues like policing, Israel and President Trump. A breakdown:
Here are The Times’s takeaways. Mamdani has successfully reached out to business leaders recently. He has gained audiences with the likes of Jamie Dimon of JPMorgan Chase and Mike Bloomberg as his wide lead in the polls solidifies. But Mamdani’s foes dug in on debate night. Bill Ackman, the hedge fund billionaire who has donated $1.25 million to help stop Mamdani, asked on X how the candidate would “pay for your programs and ideas if you drive away the biggest NYC taxpayers?” While Cuomo has attracted much of Wall Street’s support, it was Sliwa who impressed at least one prominent voice. “Sliwa proved that he is ready for prime time,” Kathryn Wylde, the C.E.O. of the Partnership for New York City, told The Times.
Talking A.I. with the C.E.O. of DuolingoEvery week, we’re asking a chief executive how he or she uses generative artificial intelligence. Luis von Ahn, who leads the language learning app Duolingo, told DealBook that he keeps the technology’s limitations in mind. His answers have been condensed and edited. How do you personally use A.I.? The usual: I search for things like recipes; I use it for health symptoms — like, my body aches, what do I have?; and every now and then I use it to simplify emails. What directives have you given your employees on A.I.? On Fridays, we’re giving everybody two to three hours to just experiment. We have Slack channels where people can share A.I. wins. We’ve now added Slack channels for A.I. losses. Because it turns out there are all these things people tried to do, and it just did a horrible job. For example, we have a model that generates images of our green owl. It insists on putting a headband on it. Even when you say, please generate this image with no headband, the guy comes out with a headband. You sent a memo to employees about your “AI-first” philosophy. Did it have its intended effect? I think the most important thing is to give context, both internally and externally, about what you mean. In my case, I failed to make it clear that our use of A.I. is not meant to save costs. It really is meant to try to augment the productivity of our employees. And we are seeing that it is doing that. At the same time, people sometimes think it has already completely changed everything. This is just not true. In general, my biggest advice is, No. 1, be curious about all the new technology. And then No. 2, understand that anybody who’s talking about A.I. usually has a vested interest. So the people who sell you vibecoding tools will tell you they are perfect. I’ve personally tested out a lot of the tools, and you can really see they’re great at some things and really bad at others. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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