Good morning. Andrew here. Despite all the hand-wringing about the economy and its prospects, the stock market hit another record high. Why? Earnings and the expectation of future profits continue to beat estimates, even as interest rates creep up. The real question is no longer whether the bears are wrong, but how long the huge corporate spending boom can defy the gravity of rising borrowing costs. Also: Lauren Hirsch has a scoop on the sale of the Chrysler Building to Tishman Speyer, bringing the famous skyscraper under the same ownership as Rockefeller Center. More below. (Was this newsletter forwarded to you? Sign up here.)
Worries about the status quoU.S. stock futures are pointing down this morning, after the S&P 500 set yet another record yesterday. Analysts still expect major indexes to keep climbing. Yet the economic risks that have dogged markets in recent weeks, including rising bond yields and energy prices, don’t appear to be going away anytime soon. “This bull market is about nothing but earnings growth,” Michael Purves, the founder of the research firm Tallbacken Capital, told The Times. What’s happening now is “the best earnings and margin growth in our lifetime,” Steve Chiavarone, the chief investment officer for equities at Federated Hermes, told The Financial Times. That momentum should carry on through the corporate earnings season, which begins next week: Over 70 companies in the S&P 500 have raised profit estimates for the recent quarter, a record, according to FactSet. Among them are energy companies that have benefited from rising prices and technology giants that are reaping huge profits from the artificial intelligence boom. (By contrast, eight of the 11 sectors in the S&P 500 are down.) Those two sectors are benefiting from points of pain for the economy. Higher energy prices, driven by the conflicts in the Middle East, are putting pressure on other industries. Brent crude, the international benchmark for oil, traded above $101 a barrel this morning. And the eye-popping buildout of A.I. infrastructure — which shows no sign of stopping, as SpaceX’s reported plan to borrow $40 billion to buy Nvidia chips demonstrates — is helping to push up bond yields. The yield on the 10-year Treasury bond, which is linked to many home and commercial loans, ticked above 5.3 percent today, around a decades-long high. Worries about the status quo continue to grow. The president of the San Francisco Fed, Mary Daly, told Axios that she’s worried those two factors combined could further push up inflation, potentially forcing the Fed to raise rates. And Ray Dalio, the founder of Bridgewater Associates, told Bloomberg Television that the increasing borrowing by A.I. companies could further tighten other types of credit, and that even some tech giants are starting to hit debt limits.
The trade deficit spikes to a 17-month high. The gap between U.S. exports and imports climbed sharply in August for the second month in a row. (Overall imports for the month hit a record $420.8 billion.) Despite efforts by President Trump to shrink the gap, including by imposing steep tariffs, many economists say there’s no alternative to many foreign goods for now, especially chips for artificial intelligence.
The U.S. pressures Russia for news about a lab death. The State Department warned Moscow in a confidential diplomatic communication that it had failed to meet its international health obligations by not disclosing details about the death of a lab worker in a plague research center in Siberia, The Wall Street Journal reports. The mysterious episode has raised fears that a deadly infectious disease could spread internationally, just six years after the Covid pandemic. Trump said he would speak with Vladimir Putin, Russia’s leader, about the incident. The E.U. is said to consider new ways to tax U.S. tech giants. The European Commission, the bloc’s executive branch, is weighing new taxes on companies like Apple, Meta and Google that would not single them out and draw the Trump administration’s ire, The Financial Times reports, citing unnamed sources. Brussels is considering a proposal that would require very large companies operating in the E.U. to pay an annual lump-sum tax, according to the FT. Porsche is cutting a quarter of its work force. The German sports car maker announced sweeping layoffs and a pullback from China after its profit margins collapsed last year, amid a drop-off in Chinese demand, U.S. tariffs and a reversal on electric cars. Turning around Porsche is key for its parent company, Volkswagen. Sinking odds for a tax on California billionairesThe battle over California’s proposed billionaire tax is continuing to intensify with less than a month to go before Election Day. The campaign against Proposition 40, which would impose a one-time 5 percent tax on the state’s wealthiest, has marshaled a war chest that’s making the fight over the initiative tighter than expected, Niko Gallogly reports. The context: The state’s largest health care union proposed the tax last fall as a way to offset federal health care funding cuts. It comes as support for more taxes on billionaires has grown nationwide. But critics, including Gov. Gavin Newsom, have argued that the measure would drive away innovators — and their tax revenue. Its popularity appears to be slipping. In March, polling showed the proposal was more likely than not to pass. But support dipped to 45 percent in a recent poll from Politico. Other polls tracked by The Times show a mixed outlook.
It could just come down to money. More than $200 million has been spent on the campaign against Prop 40, including about $100 million from Sergey Brin, Google’s co-founder and the world’s fourth richest person. Brin moved his official residence to Nevada earlier this year to try to avoid the tax. The campaign against the proposed tax has also bankrolled two other ballot initiatives that could nullify Proposition 40. That windfall is funding a tsunami of anti-tax messaging. “You turn on the TV and it is just ads after ads against Prop 40,” Gabriel Zucman, an economist at the University of California, Berkeley, and an author of the proposal, told DealBook. “There’s a lot of demand for taxing billionaires,” Zucman added. But, he admitted, the amount of money opposing the effort “makes it anything but a sure win for Prop 40.” Supporters of the tax aren’t giving up. Senator Bernie Sanders, independent of Vermont, spoke on Monday at a rally in Los Angeles in support of the initiative.
‘Scott cannot fail’Treasury Secretary Scott Bessent has taken on an increasingly broad role in the Trump administration. He increased bond buybacks in a bid to push down yields that underpin mortgage rates; advised on China trade policy; and designed an economic pressure package aimed at ending the Iran war. (“Scott cannot fail,” an unnamed Trump administration official told The Wall Street Journal.) In this high-pressure situation, Bessent has gained a reputation for a hard-charging style that has led to the departure of a string of key officials, The Journal reports. More from inside the Treasury Department under Bessent, according to The Journal: In June 2025, a day after Treasury sanctioned three Mexican financial firms, the country’s president Claudia Sheinbaum at a press conference called for proof that the firms had been laundering money in connection with illegal opioid trafficking. “We are no one’s piñata,” Sheinbaum said. Bessent began upbraiding his staff, urging them to publicly push back on her remarks. Treasury staff in Mexico received emails from Bessent aides in Washington that laid out the secretary’s frustrations. The secretary is losing it, one of Bessent’s aides said at the time, meaning Bessent was losing his temper, according to a person who received one of the emails. But President Trump seems to like Bessent’s aggressive style. In April, during an event in Nevada, Trump described him as difficult, credited himself with turning the Treasury secretary into a “big star” and joked that he had “created a monster.” PICTURE OF THE DAY
It’s official: Warner Bros. Discovery and Paramount are now owned by David Ellison’s media giant, the newly rechristened Skydance. “We did it!” Ellison and his co-C.E.O., Ynon Kreiz, wrote to employees yesterday, promising to invest in both content and technology as Skydance competes with bigger rivals like Netflix and Disney. (Ellison and Kreiz also acknowledged that they will have to make “difficult decisions that affect our workforce” — meaning layoffs.) Investors didn’t seem as enthusiastic: Shares in Skydance fell 2.5 percent yesterday.
The Chrysler Building gets a new ownerThe Chrysler Building, the Art Deco skyscraper that has helped define the Manhattan skyline since 1930, is under new management. Tishman Speyer and other investors are buying the building for $235 million, Lauren Hirsch is first to report. The deal includes future lease payments to Cooper Union, the owner of the land beneath the building. And it’s expected to usher in a substantial upgrade of the famed building’s interiors. “We’re going to modernize the whole infrastructure of the building, whether it’s doing a total overhaul of the elevators, or the stainless steel at the crown of the building, polishing it so that it shines,” Rob Speyer, the C.E.O of Tishman Speyer, told DealBook. The building’s previous owners were accused of neglecting the building’s upkeep. That left it with vacancies, even as high-end office real estate is booming. Among Tishman Speyer’s plans: Turn the 61st floor, known for its stainless steel eagle gargoyles, into a clubhouse with an outside terrace open to all building tenants, and add wellness services to the arcade space below the building’s lobby. (Tishman Speyer made similar moves after it bought 30 Rockefeller Plaza in 2000.) The deal represents a sort of round trip for Tishman Speyer. The firm originally purchased the Chrysler Building and other properties in 1997 for $220 million. It sold most of its investment in 2008 to an Abu Dhabi investment fund for $800 million. Signa, an Austrian real estate company, and RFR, a New York-based development firm, bought the property in 2019 for about $150 million, a purchase price that partly reflected competition from newer buildings and significantly higher rent that Cooper Union charged. Signa filed for insolvency in 2023, and by 2024 RFR had fallen behind on its lease payments. A judge terminated its lease last year. Speyer said he had struck a “new deal” with Cooper Union, though he declined to elaborate. “It’s a structure that’s going to be sustainable both for Cooper Union and for us,” he said. Cooper Union has used the lease payments to help provide financial aid to students. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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