Good morning. Andrew here. Breaking: President Trump has renewed his threat to fire Jay Powell as Fed chair; we’ve got more below. Separately, we’re tracking a significant pivot in New York fiscal policy: Gov. Kathy Hochul is set to propose a “pied-à-terre” tax on secondary residences in New York City valued at $5 million or more. By aligning with Mayor Zohran Mamdani, Hochul is making an aggressive revenue push that may rattle some in the C-suite. The move specifically targets so-called tax refugees, like those who have relocated to Florida but kept a New York foothold. For them, the tax makes maintaining a dual-city lifestyle more costly. Critics warn that it could stifle big-ticket investments, while supporters argue that it is the fairest way to raise revenue. What do you think? Drop me a line. (Was this newsletter forwarded to you? Sign up here.)
Trump ramps up his fight with PowellJust as war jitters are beginning to subside in the markets, investors are bracing for new uncertainty over leadership of the Fed as President Trump threatens to again fire Jay Powell, the central bank’s chair. Trump’s declaration, in an interview that aired today, came after the Senate finally scheduled a confirmation hearing for Kevin Warsh, his pick to head the central bank. Warsh’s path through the Senate was already looking shaky, particularly after federal prosecutors appear set to press on with a criminal investigation into the Fed. Trump, who has repeatedly harangued Powell to lower interest rates, told Fox Business he wants Powell to leave the central bank next month, when his term as chair expires. Powell has indicated he would stay on the Fed as long as a criminal investigation into him continues. If Powell doesn’t leave, Trump told Fox Business, “I’ll have to fire him.” Which bring us to: Prosecutors made a surprise visit yesterday to the Fed’s construction site as part of their inquiry into the renovation of the central bank’s headquarters, The Times and others report. (They were turned away for not requesting permission beforehand.) The visit signals that Jeanine Pirro, the U.S. attorney in Washington and a Trump loyalist, is continuing to put heat on Powell. In the Fox Business interview, Trump said he supported the investigation. That’s despite a federal judge quashing Justice Department subpoenas of the Fed last month, finding that “the government has offered no evidence whatsoever that Powell committed any crime other than displeasing the president.” Robert Hur, a former federal prosecutor whom the Fed hired as outside counsel, accused the prosecutors yesterday of trying to circumvent that ruling. Warsh had just completed a procedural step toward confirmation: disclosing his financial assets, which total more than $100 million, some of which he said he would divest to comply with legal requirements. What next? Senator Thom Tillis, Republican of North Carolina and a key member of the Senate Banking Committee, has vowed to block the confirmations of Warsh and any of Trump’s other Fed picks until the investigation ends. Senator Lisa Murkowski, Republican of Alaska, has backed that stance. Senator Tim Scott, the chairman of the banking committee and a Republican, was somewhat vague on a timeline for Warsh’s confirmation. “I believe that the D.O.J. will finish and wrap this up in the next several weeks,” he told Fox Business yesterday.
Bank of America reports solid quarterly earnings. The lender said profits jumped 17 percent year-on-year, to $8.6 billion, thanks to strong results in trading and investment banking. Perhaps more important, its C.E.O., Brian Moynihan, said the bank had experienced “solid consumer spending” that indicated that the U.S. economy was “resilient.” Morgan Stanley also reported better-than-expected results, bolstered by trading revenue. Jeff Bezos muscles further into SpaceX’s turf with a big Amazon deal. Amazon’s roughly $11 billion acquisition of Globalstar, a satellite communications company, puts Amazon in greater competition with SpaceX’s Starlink in a market that’s expected to grow to perhaps $200 billion. The agreement also puts new focus on Bezos’ space race with Elon Musk. ASML shows the A.I. chip boom isn’t slowing down. ASML, a Dutch semiconductor equipment company, bested analysts’ profit expectations and raised its full-year sales forecast, saying that demand for chips that help run artificial intelligence is “outpacing supply.” One of ASML’s biggest clients, TSMC, reported record first-quarter revenues last week, breathing new life into the A.I. stock rally. Netflix is set to commemorate a deal that didn’t happen. Executives at the streaming giant and some of the advisers on its aborted takeover bid for Warner Bros. Discovery are expected to hold a dinner next week to thank those who worked on the effort, Lauren Hirsch reports. Netflix may have lost out to Paramount Skydance, but it did walk away with a $2.8 billion breakup fee. The China questionJudging by the latest market rally, investors appear to believe that the war in the Middle East is all but over. But many economists and Wall Street heavyweights remain concerned that economic blowback from the fighting is far from done. And the war may continue to strain important trading relations — including those between the U.S. and China. The latest:
President Trump said that he viewed the war as “very close to over,” reiterating that Iran was eager to strike a peace deal. He separately said that new talks could take place in Pakistan over the next two days. That said, Javier Blas of Bloomberg Opinion calculates that Iran has made about $175 million a day from oil sales since the strikes began, up sharply from prewar levels, giving it a big financial cushion. Whether the blockade will soften Tehran’s stance at the negotiating table remains to be seen. The state of the Strait of Hormuz: U.S. Central Command said that the American blockade had completely stopped all commercial traffic to and from Iranian ports. (Confirmation from independent sources wasn’t immediately available.) But China looms as an X factor. The U.S. blockade is also weighing on major customers of Iranian oil — notably Beijing. The naval blockade will deprive China of an important source of crude, potentially forcing it to tap into strategic reserves. Without mentioning the U.S. or Trump by name, China has declared the blockade “dangerous and irresponsible.” Its effect on broader U.S.-China relations will almost certainly be tested if Trump goes to Beijing next month to meet with Xi Jinping, the country’s top leader, as planned. The Gulf is hemorrhaging money on canceled eventsNegotiations between the U.S. and Iran are bolstering markets, with hopes rising for an end to the war in the Persian Gulf. But the war continues to wreak havoc on business activity in the region, including the jampacked calendar of tech and finance conferences, Vivienne Walt reports. The latest victim is LEAP, Saudi Arabia’s global tech conference, which was set to begin this week in Riyadh, the capital. It has been rescheduled for Aug. 31 — at least for now. The bigger concern for business and government leaders? How to sustain the Gulf’s soaring events economy now that the region’s image of peaceful stability has been shattered. A destination for dollars: LEAP (short for Leading Edge Advancement and Progress) has become an investment bonanza for Saudi Arabia since it began in 2022. Attending companies inked some $14.9 billion in deals last year. That included a $1.5 billion Saudi partnership with Groq, the California artificial intelligence hardware company (not to be confused with Elon Musk’s Grok chatbot), to build out A.I. infrastructure in the kingdom. There were also investments from Alibaba, Google and Qualcomm. We’re postponing, not canceling. That’s the message from event organizers keen to portray the war as a temporary blip. But several conferences have effectively been canceled, in part because Western airlines have suspended flights to the region, and because events and individual travelers face huge insurance costs during wartime. Token2049, a major global crypto conference that was scheduled to begin on April 29 in Dubai, United Arab Emirates, has been rescheduled for next April. Entertainment and sports, other big sources of money, have also been affected. This weekend’s Formula 1 race on the Jeddah seafront was canceled, as was last weekend’s F1 fixture in Bahrain.
Wall Street bends to Musk’s willAs SpaceX, Elon Musk’s giant start-up, gears up for what could be the biggest I.P.O. in history, it is using its leverage to extract preferential treatment from Wall Street. Musk has demanded that potential advisers on its I.P.O. buy subscriptions to Grok, the chatbot made by xAI, which is now part of SpaceX, The Times has reported. And the company may allow insiders to sell shares on the first day of trading, instead of waiting out a typical 180-day lockup period. Now Musk is demanding changes to index fund rules to quickly open the gates for SpaceX. The move could bolster the company’s stock price and, some fear, hurt investors, Niko Gallogly reports. Nasdaq goes all in. The exchange is in fierce competition with the N.Y.S.E. to land SpaceX’s listing. Under its current rules, SpaceX would be blocked from entering the coveted Nasdaq 100 index, which includes technology giants like Apple, Nvidia and Alphabet. Those rules are changing, paving the way for SpaceX to quickly join the Nasdaq 100. Starting May 1, the index will:
Some market watchers are worried. Adding a company with a small market float to major indexes can bolster its stock price, because large index funds will be forced to buy from a constrained supply of shares. The new fast-entry rules will exacerbate that effect, according to Tyler Gellasch, who runs the Healthy Markets Association, a financial policy nonprofit group that calls for more market regulations. The market won’t have time to assess “the true value of the company” before index funds snap up shares, he told DealBook. A Nasdaq spokesperson told DealBook: “We believe our latest enhancements will continue to ensure that the Nasdaq 100 index remains timely and representative of the market it measures.” The stakes are high. More than $1.4 trillion investor dollars are invested in exchange traded funds, mutual funds and other financial products tied to the Nasdaq 100. One of the largest E.T.F.s tracking the index, Invesco QQQ, manages about $400 billion in assets. Other indexes may follow suit. FTSE Russell is considering fast entry for large companies. So is the S&P 500. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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