Good morning. Andrew here. The Fed’s unanimous decision to raise rates drew a sharp reaction from President Trump. “I’m relying on Kevin, but he’s got, you know, a very tough board,” Trump said, referring to Kevin Warsh, the Fed chairman. “He’s got a board that was put there by a lot of other people.” Trump went on to say. “I talked to Kevin, and I said, ‘You might as well vote with the board because it’s not going to matter.’ The board is very hostile.” That characterization stands in noticeable contrast to the record. While Trump’s comments cast Warsh as powerless against the board, Warsh made it clear that the decision to raise rates was his own — underscoring central bank independence despite pressure from the president who appointed him. (Was this newsletter forwarded to you? Sign up here.)
“Too high” and “too long”Bonds are rebounding and the S&P 500 looks set to snap its losing streak this morning after the Fed raised interest rates for the first time in three years. “The plain fact is that inflation is too high and has been for too long,” Kevin Warsh, the Fed chairman, said yesterday at a news conference. Investors may be OK with the move, but President Trump is anything but. That signals new friction between the president and the central bank, as Warsh makes combating inflation his highest priority. A recap:
A big question: With Fed officials now seeing inflation staying above their 2 percent target until 2029, will the central bank be in a position to cut again before Trump’s term ends?
The vote has dispelled some concerns about Fed independence. Many Fed watchers had said that anything but an increase yesterday would have battered Warsh’s credibility. “Warsh and the rest of the committee are building a strong reputation through their laser focus on defeating inflation,” Jeffrey Roach, the chief economist for LPL Financial, wrote to investors yesterday. Trump sees it differently. After the decision, the president wrote on social media that “Interest Rates in the United States should be 1%, or less.” He added, “LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!” He also told reporters that the central bank’s policymakers were “very hostile” — but notably didn’t lump Warsh with that group. Trump seems increasingly isolated on lowering rates. Wall Street overwhelmingly expects more rises. Several economists, including Mohamed El-Erian, argued that a higher benchmark rate could potentially ease the turmoil in the bond market. What might the president do next? He continues to show support for Warsh, but now appears to be pivoting back to the trade war. Trump told reporters yesterday that unless the Fed lowered rates, he would consider halting trade to some countries, including those that have a trade surplus with the U.S.
The release of “Musk” is reportedly in doubt. Universal Pictures has not set a date for the release outside the U.S. of the contentious documentary about Elon Musk and might return the movie rights to the filmmakers, according to The Hollywood Reporter, which cited unnamed sources. That could put Comcast, Universal’s parent company, under scrutiny at a time when media companies have faced criticism for appearing to avoid clashes with the Trump administration and its allies. The billionaires Mark Walter and Todd Boehly sell their stake in Chelsea F.C. The private equity firm Clearlake Capital will pay £950 million ($1.27 billion) for the duo’s combined 25 percent stake, giving it full control of the English soccer club. The sale comes a month after Walter struck a deal to sell his majority stake in the L.A. Lakers to Josh Kushner and Bob Iger at a record $12.5 billion valuation, amid federal investigations into his insurance companies. Bob Kraft pledges Gaza-related donations amid controversy over the Ed Sheeran tour. Kraft, the owner of the New England Patriots, said he would give $2 million to support people affected by the war there. The gesture came after Kraft became embroiled in a debate over free speech and antisemitism involving Sheeran’s stadium tour. A recap: Kraft demanded that Sheeran drop the rapper Macklemore from some tour dates over Macklemore’s pro-Palestinian comments. Other opening acts on the tour have quit. The A.I. flyaround
Drill, baby, drill — in VenezuelaHarold Hamm, an oil tycoon who is close to President Trump, is following the Trump administration’s call to take advantage of Venezuela’s vast energy reserves after the U.S. ouster of Nicolás Maduro as the country’s leader. Continental Resources, the Oklahoma-based oil producer that Hamm founded, has signed a preliminary deal with Venezuela’s national oil company to drill in the country. American oil companies wary of diminishing domestic drilling opportunities have been looking abroad for some time. South America has become more attractive as war in the Middle East has affected shipments from the region, sending global oil prices soaring.
Chevron said this month that it would more than double its production in Venezuela over the next five years, and Exxon Mobil is reportedly nearing a preliminary deal to invest there, according to The Wall Street Journal. Continental, a major player in the shale fracking boom that made the U.S. the world’s biggest oil and gas producer, has recently branched into Turkey and Argentina. But extracting oil from Venezuela won’t be easy, Brad Plumer and Rebecca Elliott of The Times report: If Mr. Hamm’s preliminary deal moves ahead, it would be Continental’s first foray into Venezuela. The country has a lot of oil but its industry has been eroded by years of mismanagement, underinvestment, corruption and U.S. sanctions. Much of Venezuela’s oil is so heavy that it has the consistency of asphalt. Few American oil producers have much experience handling such heavy oil. Continental did not say how much it would invest or how much oil it ultimately aimed to produce. And Hamm played down some concerns, including that the company would not be up for the challenge of Venezuela’s heavy oil, or that a change in the country’s government could void any agreement. “I believe that in the future they’ll recognize that it’s in their best interest,” he said. Congress screens ‘The AI Doc’With Congress struggling to find its footing on artificial intelligence, proponents of greater government checks on the A.I. industry thought a movie night might help. Last night, two nonprofit A.I. safety groups invited members of Congress and their staff members to the Capitol’s visitor center for a screening of “The AI Doc: Or How I Became an Apocaloptimist,” which focuses on safety concerns that have since risen to the national agenda after Anthropic’s C.E.O., Dario Amodei, called for a slowdown of A.I. development last week. The event, co-hosted by Representative Ted Lieu, Democrat of California, tapped into the time-honored Washington tradition of leveraging politicians’ concerns about their own children, Nancy Scola reports. The film is framed as a quest by a father-to-be. It follows the filmmaker Daniel Roher as he tries to work through his fears about the world that his child will inherit, with limited success: He balks at the assertion by Sam Altman, OpenAI’s C.E.O., that “our kids will never be smarter than an A.I.”(“It does unsettle me a little bit,” Altman says, “but it is reality.”) “I wish you could get people to care about the future, because we care about the future,” Tristan Harris, a former Google design ethicist who helped found the nonprofit group Center for Humane Technology, told DealBook at the screening. “But instead, sadly, sometimes you have to invoke people’s children, or the idea of children, just to get people to care.” “The AI Doc” underscores the need for legislators to act, said Riki Parikh, the policy director at the Alliance for Secure AI, one of the event’s hosts. That is one reason, he added, that his group wanted to bring the film to Capitol Hill. Anthropic’s Amodei tells Roher, for example, that “it’s up to all of us to push for the government to get involved.” Google DeepMind’s Demis Hassabis, who has backed Amodei’s call to rein in A.I. development, also appears in the film. Lieu, for his part, has championed the A.I. Kill Switch Act, which would require major developers to establish mechanisms for shutting down their models. The bill so far has only three co-sponsors, including Republicans. During a post-screening panel, Harris asked a crowd of several dozen to call out one-word takes on how the film made them feel. “Bummed,” one person said. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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