Good morning. Andrew here. The upcoming U.F.C. bout on the White House lawn isn’t the only combat spectacle in Washington. At a Senate committee hearing yesterday, Treasury Secretary Scott Bessent was asked about reports that he had threatened Bill Pulte, the federal housing chief who was just named acting director of national intelligence, and who has drawn backlash for helping instigate criminal prosecutions of Trump political targets like the Fed governor Lisa Cook. “Did you actually tell Pulte you were going to punch him in the face?” Senator Thom Tillis, Republican of North Carolina, asked. “No sir,” Bessent replied. “I actually said I was going to kick his ass.” (Tillis said he shared “the emotion” and vowed to block Pulte’s intelligence appointment.) Presented without comment. (Was this newsletter forwarded to you? Sign up here.)
Take it or leave itIt’s official: Elon Musk wants to set an astronomical record with SpaceX’s I.P.O. A revised prospectus from SpaceX shows that Musk is exceptionally confident about demand for its market debut, slated for next week. But the company is increasingly staking its future not on its moneymaking rockets and satellite internet businesses, but on its artificial intelligence division that isn’t an industry leader. How confident is SpaceX? Most companies propose a price range for their offerings, then home in on a specific price after talking with investors. Not SpaceX. It just set its offer price at $135 a share. Here’s what that means:
There are reasons to think SpaceX’s I.P.O. will shoot the lights out.
But there’s reason for some skepticism. In its prospectus, SpaceX talked up a $28.5 trillion potential addressable market, a vast majority of which is in A.I. Yet the company’s xAI division is considered far behind Anthropic and OpenAI, and Musk’s goals like building data centers in space are expensive and potentially constrained by physics.
Yet SpaceX will suck up a lot of investor attention and dollars. That has widespread consequences, including further depressing the price of Bitcoin and raising the stakes for Anthropic and OpenAI, the next A.I. giants set to go public.
Oil prices dip after a cease-fire in Lebanon is announced. Brent crude, the international benchmark for oil, fell near $96 a barrel this morning on the agreement, which requires the cooperation of Hezbollah, the Iran-backed armed group. War in the Middle East has sapped U.S. crude stockpiles, prompting new inflation worries and growing political backlash, with the House passing a rebuke of President Trump’s handling of the fighting. Private equity concerns batter investment giants. Shares in Blackstone, Blue Owl, Carlyle and other private equity giants sold off sharply yesterday after Partners Group moved to limit withdrawals from one of its flagship funds. Investors have been growing worried about valuations of private market holdings. New York State opens an antitrust inquiry into Compass, the real estate giant. The office of Letitia James, the attorney general, is investigating the brokerage after it acquired Anywhere Real Estate, which owns Century 21 and Coldwell Banker. The Justice Department declined to pursue an extended examination of the deal this year despite concerns among some enforcement officials. Jeffrey Kessler’s Paramount debutWall Street is still buzzing over the decision by Jeffrey Kessler, one of the country’s top litigators, to help Paramount as it races to seal its acquisition of Warner Bros. Discovery, and as potential legal challenges mount. Kessler, an executive chairman of Winston Taylor, is fresh off helping 33 states and Washington, D.C., in their antitrust lawsuit that found that the ticketing giant Live Nation had acted as a monopoly. One of those states, California, is threatening to sue to block the Warner Bros. Discovery deal. Now Kessler is revealing some of the game plan if the states were to sue, in Paramount’s response to a lawsuit by current and prospective Paramount+ subscribers seeking to block the acquisition, Lauren Hirsch reports. The deal is good for the industry, Paramount argues in new legal filings. In one of them, Kessler calls the latest suit an attempt to “politicize antitrust law.” And, he argues, the deal would bolster competition against streaming giants like Netflix, Amazon and Disney. The filings include two sworn declarations from Paramount executives, the first time that Paramount executives have promoted the deal’s potential benefits under oath.
Why did Kessler join the case? “I have a lot of respect for the states, but my whole career as an antitrust lawyer is taking on the biggest, most interesting cases that I believe in — and this is one where Paramount came to me,” Kessler told DealBook. He added: “I took a look at it, and I looked at what the facts were, and I said, ‘Yeah, this is not an antitrust violation.” He doesn’t see a conflict of interest. “When I took on the Live Nation representation, the states knew” that Winston Taylor defended “a lot of clients, including in state investigations,” Kessler said. In some of those cases, he said, “we are adverse to some of the states.”
What’s riding on the California election runoffsWith many of the votes from California’s primary elections counted, it appears the state is headed toward a handful of high-profile runoffs in November. The governor’s race features ideological opposites. Steve Hilton, a Republican and former Fox News host, is leading in the primary, followed by Xavier Becerra, a Democratic former representative and a health secretary under President Joe Biden. The billionaire climate activist Tom Steyer is in third place. It’s unclear whether Hilton will maintain that lead or make the runoff, as California counts mail-in ballots — which are likely to lean Democratic — over the coming weeks. Becerra leads in bets on prediction markets. Mayor Matt Mahan of San Jose conceded after a dismal showing, in what was a bad day for tech-friendly candidates. What’s at stake? The next governor of the state, which has a $4.25 trillion economy, will shepherd policy on issues with significant national implications: Artificial intelligence. Last year, California became the first state to pass a law regulating the frontier A.I. labs, requiring them to disclose safety test results. Members of the State Legislature have proposed an array of bills targeting the sector.
The California billionaire tax will probably be on the ballot in November, too. In a new poll, a majority of likely voters said they approved of the proposed tax, which would place a one-time 5 percent levy on Californians with a net worth north of $1 billion. The initiative has ignited an outcry from the state’s wealthiest individuals and caused some to leave California. If it’s approved, the next governor will oversee its enforcement.
In the Los Angeles mayoral race, the incumbent, Karen Bass, will face a runoff against either Nithya Raman, a progressive City Council member, or Spencer Pratt, a Republican and a veteran of reality TV who received a surge of donations from prominent business executives. While Pratt is currently running in second place, it’s unclear whether he’ll make the runoff once all mail-in ballots are counted. Number of the day: 210% debt to G.D.P.That ratio would be roughly when the U.S. federal debt load becomes unsustainable — a kind of fiscal breaking point — according to a new study by the Penn Wharton Budget Model shared exclusively with DealBook. At the end of March, U.S. debt held by the public |
