Good morning. Andrew here. How high will SpaceX’s stock price go? It continues to defy gravity, with Elon Musk’s company now worth more than Amazon. And what will happen when the lockup on SpaceX shares for insiders expires? Those questions are on our minds; we get into more below. Also: We’ll be watching Kevin Warsh’s first news conference as Fed chair this afternoon (which we previewed yesterday). How much will he say? And if he hints at raising interest rates, after calling for lowering them, how will he spell that out to the public — and to President Trump? (Was this newsletter forwarded to you? Sign up here.)
SpaceX flexes its musclesShares in SpaceX are up again today in premarket trading, after the company’s market value — now nearly $2.6 trillion — surpassed Amazon’s yesterday. But the $60 billion deal that SpaceX formally struck to buy Cursor, a popular coding tool, showed that Elon Musk’s company has gained something more important than bragging rights from its I.P.O. It also has the financial resources to buy its way into greater relevance in artificial intelligence. SpaceX is using its stock to buy Cursor. While the terms of the deal mean that Cursor’s shareholders missed out on plenty of SpaceX I.P.O. upside, as Bloomberg Opinion’s Matt Levine points out, they’re still getting shares in what’s one of the most sought-after stocks in a while.
Buying Cursor will make SpaceX’s xAI more attractive to corporate users, who have flocked to Anthropic’s Claude largely because of its coding abilities. DealBook hears that Cursor’s revenue run rate from enterprise customers grew 50 times year-on-year, and tripled in the first quarter alone. Cursor is banking on the benefits of a deep-pocketed parent. Among the attractions of the transaction for the start-up was SpaceX’s huge supply of computing power — it has so much extra that it’s leasing some to Anthropic and Google for billions of dollars. That will be important for training Cursor’s latest A.I. software. The deal illustrates the power of the public markets. SpaceX’s Grok model is seen as less capable than rival offerings from Anthropic and OpenAI. But being publicly traded gives Musk a powerful currency for acquisitions to catch up. (Remember, too, that SpaceX raised a record $85 billion in cash from its I.P.O.) Both are benefits that Anthropic and OpenAI could hope to reap when they also go public, perhaps as soon as the fall. How much will the A.I. market consolidate? An A.I. executive told DealBook’s Michael de la Merced that one company probably won’t end up dominating the industry, but maybe just three or four will, since the technology is so resource-intensive. Is there room for smaller A.I. companies to thrive when bigger rivals have the cash and stock to buy up resources and start-ups? And what do antitrust regulators think?
The Justice Department asks a federal court to toss a lawsuit against Elon Musk’s xAI. The agency argued that Musk’s artificial intelligence company has the right to run polluting gas-burning turbines to power a data center in Mississippi, as the company is a corporate partner supporting the Defense Department in the U.S. war with Iran. (The suit, brought by the N.A.A.C.P., claimed the turbines violate the Clean Air Act.) The filing underscores the Trump administration’s push to prioritize “A.I. dominance” while it continues to fight environmental causes. New Mexico reportedly widens its investigation into Jeffrey Epstein by looking at corporate giants. State investigators ordered more than two dozen companies, including Google and JPMorgan Chase, to preserve documents pertaining to the convicted sex offender’s activities at his New Mexico ranch, The Wall Street Journal reported, citing public records it had obtained. Other companies contacted include payment platforms, airlines and travel bookers. President Trump cancels Jay Clayton’s confirmation hearing. The move puts in limbo the potential appointment of Clayton, the U.S. attorney in Manhattan, as the next director of national intelligence. It also keeps Bill Pulte, a housing official with no intelligence experience, as acting director. A former S.E.C. chair, Clayton had been expected to receive a speedy Senate approval. But Trump appears to be holding up the nomination so he can get Jamie McDonald, his choice to replace Clayton as U.S. attorney, approved.
The G7’s “kill switch” dilemmaWorld leaders and tech moguls are meeting in the French Alps today at the Group of 7 summit. High on the agenda: artificial intelligence. Discussions about how to deploy bleeding-edge A.I. tools will take place amid diplomatic tensions over the Trump administration’s decision to block access to Anthropic’s most powerful models. Who’s there? Guests at a lunch meeting today include Dario Amodei of Anthropic; Sam Altman of OpenAI; Demis Hassabis of Google; and Arthur Mensch of Mistral AI. They’re expected to discuss how to safely regulate social media and A.I. on a global scale. A.I. has become a dominant issue at the G7. Some U.S. allies fear that Washington forcing Anthropic to shut down its Fable and Mythos models over security concerns means it has effectively deployed a “kill switch” for the technology. A Bloomberg report, based on unnamed sources, shed more light on the administration’s move: Howard Lutnick, the commerce secretary, wrote to Anthropic on Friday threatening the A.I. lab with criminal and civil penalties if it tried to give foreign nationals access to its most advanced models without first getting government permission. Some experts have questioned the legality of threatening Anthropic or other A.I. labs with export controls over their models. Fears over access have led to some fierce back-channeling at the G7. Some U.S. allies have discussed a carve-out that would give them “trusted partner” status for frontier A.I. models, Reuters reported. The Trump administration appears unlikely to budge. An unnamed administration official told The New York Post that such an exemption would be “completely illogical,” and that the hope was that a solution could be worked out with Anthropic.
What’s in the Iran deal?We’re two days away from the signing of a framework deal to potentially end the U.S. war with Iran, and hard-liners in Israel and some within President Trump’s own party don’t like what they’ve heard so far. But investors are pleased, even if big questions remain over the implementation of the plan, which reportedly would involve significant financial relief for Iran, and may involve U.S. companies. The latest: Brent crude, the international benchmark, traded around $79, a three-month low, as traders assessed an agreement. Bloomberg reports that it could end the U.S. blockade of Iran, reopen the Strait of Hormuz and restore the level of ship traffic through the vital corridor to prewar levels within 30 days. What else has been reported:
The reaction has been divisive. World leaders at the Group of 7 summit, many of whom have been briefed on the deal, praised President Trump’s “strong leadership” in securing a “breakthrough” with Iran. Closer to home, it’s been more frosty. “If this is true, Iran wins. There should be zero sanctions relief day one,” Nikki Haley, who served as the U.S. ambassador to the United Nations during Trump’s first administration, wrote on X. Trump told reporters today that the reports of a $300 billion fund were false. DealBook has questions. What’s been leaked so far appears to reflect what Trump aimed for in his proposed business-led redevelopment deals for Gaza and Ukraine.
Prediction markets’ big bet: hedgingKalshi and Polymarket became multibillion-dollar businesses by drawing in millions of users to bet on the Super Bowl, where Taylor Swift will get married and what President Trump might say at events. But both the platforms and major trading firms are betting that the future of prediction markets lies in much bigger trades made by much bigger users, such as institutions hedging business risks, Michael de la Merced reports. Prediction markets are courting businesses that want to offset their risk, pitching themselves as an alternative to traditional derivatives markets, which are usually opaque and often more expensive. How to hedge on prediction markets: The Jeffrey, a New York City bar, offered to comp many customers’ tabs during Game 1 of the N.B.A. finals if the Knicks won. It offset that potential cost by betting $5,000 on a Knicks victory — netting it just under $8,000, which helped pay for $9,500 worth of patrons’ tabs. “The Kalshi hedge worked like a charm,” Andrew Freedman, a corporate lawyer who owns the Jeffrey, told DealBook. Will Hall, a founder and the C.E.O. of Game Point Capital, which helps manage the financial risks of performance incentives in athletes’ and coaches’ contracts, said his firm now arranges millions of dollars in hedges via Kalshi. (Game Point traditionally arranged for specialized insurance, something it still does.) Wall Street giants see potential for hedging even bigger things. Trading shops like Susquehanna International Group and Jump Trading Group have set up shop on Kalshi, helping to arrange transactions for clients. “It could end up being one of the largest businesses that come out of prediction markets,” Jeremy Maletz, Susquehanna’s head of macro trading and prediction markets, told DealBook. It isn’t just about sports. In April, Kalshi completed its first block trade, brokered by Greenlight Commodities on behalf of a hedge fund that wanted to hedge against carbon allowances, with Jump Trading on the other side. Proponents think institutions will want to hedge in more areas, including against political risks like elections — and even for things like the price of DRAM memory chips. Kalshi recently took a big step to making hedging easier. It unveiled perpetual futures contracts — “perps” in industry parlance — that allow bettors to track whether the price of something goes up or down, with no expiration date. Importantly, “perps” can be traded on margin, meaning that traders don’t have to front the full amount of their wagers and can essentially borrow money to control much bigger positions. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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