Good morning. Andrew here. Breaking: Trump Media & Technology Group, the publicly traded company that owns Truth Social, just announced that it was merging with TAE Technologies, a private company developing fusion technology. If you’re scratching your head, so are we. What does a media company have to do with fusion? Probably nothing, despite the unusual claim by the companies that they are building an “uncancellable infrastructure to secure free expression online for Americans, and now we’re taking a big step forward toward a revolutionary technology that will cement America’s global energy dominance for generations.” The better explanation is that Trump Media is using its overvalued stock to add a speculative fusion company to its business portfolio. It raises the question about why TAE would prefer to go public through this Trojan Horse transaction rather than do so on its own. And, of course, we will have to dig into the various personalities behind the deal, and questions about the role the White House will play in advancing and regulating the fusion industry. (Was this newsletter forwarded to you? Sign up here.)
Crunch timeFramed by festive holiday decorations, President Trump tried to flip the narrative on an issue that has dented his approval ratings and looms large before midterm elections next year: America’s affordability crunch. In Trump’s 18-minute prime time address last night, the president placed ample blame for it on his predecessor, Joe Biden, while offering surprise giveaways, too, including a promise to send $1,776 “Warrior Dividend” checks to U.S. soldiers, paid for by his tariffs. “Eleven months ago, I inherited a mess, and I’m fixing it,” the president said, rattling off at times overstated statistics of falling prices and wage gains. But will the American public buy Trump’s message that they and the economy are better off under his leadership? There is reason to doubt it. For starters, the unemployment rate rose and wage growth fell last month, the latest jobs report showed; and a fact-check by The Times found many of Trump’s talking points to be exaggerations and outright fibs. Trump also promised that “our prices are coming down dramatically,” and that his economic policies would mean Americans would soon find cheaper groceries, pharmaceuticals, mortgage payments and more. Those words could be tested today. The Consumer Price Index report set to be released this morning is expected to show that inflation remains stubbornly above the Fed’s 2 percent target. Watch what the report says about health care costs, too. There’s now a mini rebellion afoot in Trump’s party involving the suspension of Obamacare subsidies, which threatens to jack up insurance premiums for millions of Americans. And then there’s tariffs. Some polls show that Americans largely disapprove of the levies. But Trump yesterday said tariffs helped the administration close billions of dollars in investment deals with businesses. “Companies know that if they build in America, there are no tariffs,” he said. Trump inherited a headache from Biden: a split-screen economy. “The affluent are fine, if not thriving, while lower-income households struggle with high rent payments, rising delinquencies and job uncertainty,” Jeffrey Roach, chief economist at LPL Financial, wrote in a client note this week. “The K-shaped economy will likely persist in the coming year.” Those conditions may lead the Fed to lower borrowing costs next year, a move that Trump has been chiding policymakers to do. Christopher Waller, a Fed governor on Trump’s shortlist to become the next central bank chair, said yesterday that he saw room for more rate cuts. But, he added, there’s “no rush” to do so. Anticipation that the Fed will lower rates to bolster the labor market has helped underpin an impressive run for the S&P 500, which hit another record last week. But if the hiring slowdown continues, so, too, will the political debate over the true state of the economy.
Wall Street pledges matching funds for “Trump accounts.” BlackRock said it would match the U.S. government’s $1,000 contribution into the investment accounts for children known as “Trump accounts,” while the billionaire investor Ray Dalio and his wife, Barbara Dalio, announced that they would add $250 to the accounts of about 300,000 children in Connecticut. Chime Financial, the fintech firm, also said it would match the U.S. contributions for its workers’ children. Separately, the biggest overall donation of the year, however, was the Nike co-founder Phil Knight’s $2 billion pledge — for cancer research. An activist investor plans a flurry of transactions. Elliott Investment Management has built a stake of over $1 billion in Lululemon Athletica and is lining up a potential C.E.O. candidate to run the struggling athletic apparel retailer, according to The Wall Street Journal. The activist investor is also eyeing a multibillion-dollar I.P.O. of Barnes & Noble and Waterstones, the bookstore chains it controls, on the market in London or the U.S., The Financial Times reports. And according to Bloomberg, it is wooing investors in Toyota Industries Corporation in a buyout fight. Warner Bros. Discovery has a tough message for Paramount. The Warner Bros. board yesterday urged its shareholders to reject Paramount’s hostile takeover bid, signaling its preference for Netflix’s offer. One of its misgivings: Warner Bros. would want Larry Ellison, the Oracle co-founder and the father of Paramount Skydance’s C.E.O., David Ellison, to personally guarantee the part of Paramount’s $77.9 billion bid that comes from his revocable family trust as a kind of insurance option. Despite yesterday’s setback, Paramount has refused to surrender in its fight for Warner Bros. Trump Media & Technology Group’s shares soar on a deal to merge with a nuclear energy company. The holding company for Truth Social will combine with TAE Technologies, a nuclear fusion company, in a deal valuing the combined entity at more than $6 billion. Trump Media & Technology shares rose 31 percent in premarket trading on the news. Oracle’s slump rekindles A.I. jittersIf investors needed a target for their rising angst about artificial intelligence spending, they appear to have found one in Oracle. Shares of the cloud computing giant tumbled more than 5 percent yesterday, stoking A.I. bubble concerns that contributed to a broader hit to tech stocks. Investors sold on news that Blue Owl Capital had pulled out of financing a $10 billion Oracle data center in Michigan. (That said, Blackstone and Bank of America could jump in with funding, according to Bloomberg.) Oracle’s plight contrasts with some other A.I. players. Shares in Micron jumped 8 percent in premarket trading today, after the company delivered an upbeat revenue forecast as demand for its memory chips remains especially robust with A.I. developers. And OpenAI has held discussions to raise more money at a valuation of around $750 billion, The Information reported, well above its $500 billion valuation in October.
Traders have grown nervous about the scale of Oracle’s debt-financed A.I. spending plans. Last week’s earnings report, in which revenue fell short of Wall Street expectations while costs exceeded them, further spooked the market. Oracle is borrowing huge amounts as it aims to compete with tech giants like Google, Microsoft, and Amazon to supply developers computing power to build their A.I. models. That includes its involvement in the Stargate Project, a joint venture that includes OpenAI and SoftBank and that plans to invest up to $500 billion in A.I. infrastructure. Oracle’s new investment-grade bonds have been trading like junk bonds. And one measure of its credit risk — Oracle’s credit default swaps — has ballooned to the most precarious level since the financial crisis in 2009. That threatens to make its A.I. buildout more expensive. Then there was the bombshell buried in Oracle’s 10-Q report: $248 billion of lease-payment commitments for data centers and cloud capacity arrangements, a splurge that far outpaces its peers. The company’s 10-K annual report detailed the risk: “If we overestimate customer demand or our data center capacity needs, we could be locked into multiyear commitments for excess data center space, resulting in lower profitability and cash flows.” The markets are overreacting, says Dave Novosel, a senior analyst at Gimme Credit, a ratings firm. Oracle’s business operation is profitable enough, he says, to cushion any blow from an A.I.-driven cash burn. “When you see negative free cash flow of $20 billion, that’s a cause for concern,” Novosel told DealBook. “That’s a red flag. And I saw the red flag, too. But as I analyzed it, I said, ‘They can still get away with this.’” The A.I. start-up Lovable secures a big raiseArtificial intelligence is rapidly disrupting software development. There’s perhaps no clearer example of that than Lovable, the A.I. start-up that allows users to quickly spin up websites and apps — no coding necessary. The company will announce this morning that it has raised $330 million in new financing. Lovable’s C.E.O., Anton Osika, detailed his plan to use that funding in an exclusive interview with DealBook’s Niko Gallogly. The new round values Lovable at $6.6 billion, more than triple its $1.8 billion valuation set by investors in July. The investment was led by CapitalG and Menlo Ventures, and also includes Khosla Ventures, Accel, EQT and others. Lovable, based in Stockholm, was founded in 2023 by Osika and Fabian Hedin. Osika — who has been building software since the age of 12 — came up with the idea after making a coding assistant for software engineers. “I realized, oh, you should not build this for engineers, you build it for the 99 percent” of people who don’t code, Osika told DealBook. Lovable’s growth has been dramatic since it introduced its latest product in November 2024. It now has $200 million in annual recurring revenue, up from $100 million in July, and about 320,000 paying customers. Lovable, which is not profitable, offers a free tier of its service as well as monthly subscriptions of $25 for individuals and $50 for businesses. The $330 million in new funding will be spent achieving two goals: integrating Lovable with other software providers and improving Lovable’s engineering abilities so that customers aren’t just making product demos or mock-ups but introducing products on Lovable-built software. To achieve that goal, the company expects to double its 120-person team in the next 12 months. Competition is fierce. Existing web design and prototyping developers like Figma and Replit are investing heavily in coding products similar to Lovable. And the bigger competitive threat may come from the larger A.I. companies, such as Google, OpenAI and Anthropic, that make the models that start-ups like Lovable use as the backbone of their technology. Competing with OpenAI or Google requires building a “beloved layer” of software that can sit on top of those companies’ models and that customers want to pay for, said Matt Murphy, a partner at Menlo Ventures. With Lovable, he added, “the numbers speak for themselves.” At least for now. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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