Good morning. Andrew here. We often talk about the risks of “circular financing” in the A.I. ecosystem — namely, Nvidia’s investing in large portions of the industry. That has now caught the attention of the Justice Department, but in a different context: What does it mean for competition in the space? We’ve got the details below. (Was this newsletter forwarded to you? Sign up here.)
Pocketbook politicsBond investors have been rebelling against profligate government spending, ballooning deficits and inflation. But so far, they’re not panicking about President Trump’s latest political gambit: promising $5,000 “dividend” checks to every adult citizen if Republicans keep control of Congress after the midterm elections. Markets may see little chance of that happening. (Remember other Trump giveaway pledges that haven’t panned out.) But the prospect of a roughly $1.3 trillion payoff to the American public risks roiling the bond market as Treasury Secretary Scott Bessent seeks to calm it. The latest:
Trump’s dividend promise masks other fiscal and political pressures. In a nearly two-hour speech last night at a convention in Dallas, the president offered few details. He urged supporters to “pretend that I’m on the ballot.” But his trade wars, the affordability crisis and the largely unpopular war in Iran have dented the president’s poll ratings.
Bessent’s dilemma: The dividends promise risks sending a message that Washington isn’t serious about reining in spending — a source of the recent anxiety in bond markets — even after Bessent told CNBC last month that there was a “very good chance” that we’ve hit peak deficit under Trump. The Treasury Department’s plan to intervene in the markets by buying back long-dated Treasury notes and bonds has already faced setbacks. First, it drew criticism from Wall Street pros, including Stanley Druckenmiller, for going too far. Then yesterday, it disappointed others who thought it didn’t go far enough, sending bond yields soaring. Keep an eye on this: The department is set to auction $22 billion worth of 30-year bonds today.
Oil climbs again on Middle East war worries. Brent crude, the international benchmark for oil, surpassed $102 a barrel this morning; it’s up more than 40 percent since the U.S. and Israel attacked Iran in February. The average price of diesel this morning hit $5.98, a record, according to AAA. Separately, advisers to President Trump have warned him that the war could drag on through the remainder of his term, The Wall Street Journal reports. Key details emerge about the fatal crash of an Amazon cargo plane. The pilots were traveling too fast on their approach and tried to abort their landing after making contact with the ground at Miami International Airport on Sunday, according to federal investigators. That may have cost them crucial time and distance before crashing into two vehicles. Amazon said it was working with officials as the investigation continues. Tariff comments reportedly sink a candidate’s chances for an I.M.F. job. A London School of Economics professor, Ricardo Reis, was in line to become the organization’s chief economist, but his candidacy stalled after officials became aware of his critical comments about Trump’s trade war, The Financial Times reported, citing unnamed sources. (Another L.S.E. professor got the job.) Nvidia under the antitrust microscopeWhen Nvidia announced a partnership with the upstart chipmaker Groq in December, the technology giant described the pact as a “nonexclusive licensing agreement” — even as it planned to hire the start-up’s top executives. A Justice Department investigation of the arrangement, first reported by The Times, shows that antitrust regulators are examining whether such deals are ways of skirting government scrutiny. From The Times report: The Justice Department opened the investigation into the Groq deal shortly after it was announced in December and has sent Nvidia a formal demand for information about it, one of the people said. If the Justice Department does find fault with the way Nvidia handled the deal, the agency may fine the company, the two people said. It would probably not require the deal to be undone, they added. Regulators have grown concerned about so-called acqui-hire deals, which critics — including Democratic lawmakers — have accused of being mergers in all but name. The partnerships, they say, allow tech giants to essentially claim a start-up’s primary assets and top talent without having to go through an antitrust review. “We are beginning to examine these acqui-hires to make sure they aren’t an attempt to get around” antitrust review, Andrew Ferguson, the chairman of the F.T.C., told Bloomberg Television in January.
Are two screens better than one?That’s the question tech geeks and analysts are asking after the debut of the iPhone Duo, the new apex of Apple’s smartphone lineup. Most agree that the device — the first “hero” product of the John Ternus era at Apple — looks slick. How popular a phone that starts at $1,999 will be is another matter. Here’s what people are saying:
The big questions the iPhone Duo faces:
QUOTE OF THE DAY “These are basic misunderstandings, mistruths, whatever words you want to use, that could be cleared up in a simple five-minute call.”Jim Farley, Ford’s C.E.O., responding to a claim by Transportation Secretary Sean Duffy that the carmaker was becoming too reliant on technology from Chinese rivals.
Private equity’s new craze for fitnessInvestors looking to A.I.-proof their portfolios are increasingly turning to businesses where humans are the core product. Whether in live entertainment, sports or theater, investments in the so-called experience economy are booming, Niko Gallogly reports. The latest example: A group including the private equity firm L Catterton agreed to invest in Hyrox, the German company behind a global fitness craze. The deal values the Hamburg-based business at nearly $700 million, Bloomberg reported. The former DreamWorks Animation C.E.O. Jeffrey Katzenberg is also part of the consortium of investors backing Hyrox, through his WndrCo venture capital firm. How it works: Hyrox participants race to complete eight one-kilometer runs separated by eight strength exercises — from pulling a weighted sled to throwing medicine balls — in the fastest time. The idea behind the company was to turn going to the gym into a sport, Christian Toetzke, a founder and the C.E.O. of Hyrox, told DealBook. That approach has helped place it alongside other breakout fitness brands like CrossFit, SoulCycle and Orangetheory Fitness. Investors were initially skeptical. “We are not a digital business, and it was very hard to find money” when the business launched in 2017, Toetzke said. But Hyrox events caught on postpandemic. Now financiers are piling into experiential businesses. The P.E. giant Apollo started a $6 billion sports-focused fund last year and recently invested in the New York Yankees. And the entertainment mogul Ari Emanuel agreed to buy the global theater company ATG Entertainment last month for around $6 billion through MARI, his live-events company. Hyrox expects two million participants by the end of year. (The cost of participation varies by region: In Europe, for example, it’s about 120 euros, or $140.) Hyrox hopes to expand its business ventures to include:
What’s next? Toetzke hopes Hyrox will one day become an Olympic sport “in the same way the triathlon came around.” The risk: that Hyrox aficionados move on to another fitness concept, as the cautionary tales of CrossFit, F45 and others have shown. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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