Good morning. Andrew here. We’ve got the back story on President Trump’s new executive order on artificial intelligence. We’re also looking at the plunge in crypto prices — and where they may go from here. And there’s a fascinating development behind the scenes of the SpaceX I.P.O. Employees are trying to negotiate collectively with Wall Street banks and wealth advisers to manage their expected riches from the offering. More below. (Was this newsletter forwarded to you? Sign up here.)
Who controls A.I.?Artificial intelligence has driven huge stock market rallies and is bolstering economic growth. But it’s also becoming politically unpopular, presenting governments around the world with a dilemma: Do you let this engine run its own course, or rein it in some? Now, even the regulation-averse Trump administration seems to be choosing the latter option. That has already rankled some in the U.S. technology world, and it risks straining the administration’s relationship with Silicon Valley. The latest: Yesterday, President Trump signed an executive order setting up a voluntary system whereby A.I. labs would give the government access to new models up to 30 days before releasing them to the public. It’s a shift in his laissez-faire approach to A.I. Two weeks ago, Trump ditched an earlier version of the order that would have required a 90-day review period after David Sacks, the administration’s former A.I. czar, objected. At a confidential meeting on Monday, Sacks blessed the revised version after the timeline was cut to 30 days, The Times reports. Even the watered-down order caused waves. Sacks addressed concerns that the order would morph into an “F.D.A. for A.I.” or slow the United States in the A.I. race, writing on social media that the order “expressly forbids the creation of a new licensing, preclearance, or permitting regime.” (Incidentally, China regulates A.I. too, but in a different way.) The White House has reasons to take a light touch. Spending on A.I. infrastructure is a significant contributor to G.D.P. growth (even without considering A.I.’s contribution to labor productivity), and A.I. fervor has fueled the S&P 500’s recent boom. The push to create regulations resulted from new, powerful models. Anthropic’s latest model, Mythos, can quickly uncover weaknesses in the security systems of banks, governments and other entities. It set off a chain reaction of worries from board rooms to the White House. That danger is underscored by a paper published last night by a team of computer scientists at the University of Toronto. The researchers said they had used A.I. to create a computer “worm” capable of targeting any known flaw in the world’s computers, Cade Metz reports for The Times.
Several California elections are undecided. In the governor contest, Xavier Becerra, a former Biden administration official, and Steve Hilton, a former Fox News host, had the top votes so far, but it was too early to know which candidates would head to a November runoff. The next governor will face a host of issues being watched nationally, including a proposed tax on billionaires and artificial intelligence regulation. Elsewhere, the current Los Angeles mayor, Karen Bass, and the reality TV star Spencer Pratt appear set to face off in the next round. The Trump administration proposes new tariffs on 60 trading partners. Alleging failures to stop the imports of products made with forced labor, the White House announced it would hit Mexico, Canada and the E.U., among other places, with a 10 percent import tax. A group including China, India and Japan would face 12.5 percent levies. Separate trade investigations that led to a 25 percent levy on Brazilian imports are expected to affect other trade partners soon, as the president revives his trade war. George Santos is reportedly under investigation for insider trading. The C.F.T.C. began looking into the former congressman’s actions on the prediction market Kalshi after the company reported that Santos had bet against his own attendance at President Trump’s State of the Union address in February, after announcing on social media that he planned to attend. (He missed the speech.) The inquiry underscores growing concern that the markets are becoming profit centers for people with insider knowledge. Crypto collapseBitcoin and other cryptocurrency assets are under pressure again this morning, furthering a recent rocky run that has wiped out all of Bitcoin’s gains since President Trump’s re-election in 2024. The slump isn’t just being watched on Wall Street, where crypto-focused exchange-traded funds have far underperformed the S&P 500 this year. The crypto industry has become a lobbying powerhouse in Washington. Could a prolonged drop slow that momentum? The latest: Bitcoin was trading around $67,000 this morning, down more than 45 percent from its October high.
Analysts point to a myriad of potential catalysts:
Crypto trading volumes have not recovered since an autumn rout. “It’s really struggled to gain any traction since,” Adam Turnquist, the chief technical strategist for LPL Financial, told DealBook. Now analysts are watching to see if A.I. mega-listings will accelerate the downward trend. The buzz on investor message boards is centered on I.P.O.s from SpaceX and Anthropic, with OpenAI expected to follow. Crypto is no longer the “shiny object,” said Ivan Cosovic, the managing director of Breakout Point, a market data firm that tracks investor sentiment. (Investors have also grown enamored of quantum-computing stocks since the Trump administration took equity stakes in some companies specializing in the technology last month, he added. That interest surged again this morning after Microsoft’s latest quantum-chip breakthrough.) What could improve crypto’s fortunes? The sector rallied earlier this year after the Clarity Act, a crypto-regulation bill the industry put significant lobbying muscle behind, appeared to have cleared a major roadblock in the Senate. But enthusiasm among investors has faded as the bill’s fate remains uncertain. “The crypto story has become rather boring,” Cosovic told DealBook. Crypto investors have grown more impatient as the wait in Washington grows, he added. It will also be worth watching whether crypto’s market slump will influence the industry’s lobbying and campaign-funding efforts during the midterm elections.
SpaceX workers are organizing (sort of)Elon Musk is known for being anti-union, with Tesla having repeatedly sought to block labor organizing among its workers. “I disagree with the idea of unions,” he said at the DealBook Summit in 2023. But several employees at SpaceX, the rocket company Musk founded, are banding together, according to Bloomberg. They want to negotiate with wealth-management firms for better terms on the windfalls expected from the company’s I.P.O. (The company is said to be planning to raise $75 billion, selling about 555.6 million shares for $135, according to Reuters.) More from Bloomberg: The group has considered over 20 financial advisers and private banks, according to a May document summarizing the effort that was viewed by Bloomberg. The document said they were “leveraging collective power” in order to get “significantly lower fees” for financial advice — with a goal of paying less than 0.5 percent on all assets under management, rather than the traditional 1 percent fee. The group, organized on a company Slack channel, at one point had over 200 people and now has even more, with holdings now estimated to be worth as much as $20 billion, Bloomberg adds. They’re interested in complex financial tools including loans against their stock and direct indexing.
Trump’s say on regulationPresident Trump has chipped away at Washington’s regulatory regime throughout his second term by seeking to exert greater control over independent agencies and by firing Democratic appointees at agencies like the F.T.C. That’s already had a profound effect on how deals — and the lobbying efforts around them — are done. Dealmakers are finding they increasingly need to bring their case to Trump directly. Scott Kirby, United’s C.E.O., reportedly sought the president’s ear as he weighed a since-abandoned takeover bid for American Airlines, according to Reuters, which cited unnamed sources. The new rules have scrambled Washington’s regulatory apparatus and K Street economics, The Wall Street Journal reports: Instead of hiring lobbyists familiar with agency commissioners and staff, companies and advocates are now seeking out the president himself. On drug and tobacco issues, for example, Trump heard from associates eager for F.D.A. actions. Podcaster Joe Rogan pitched Trump on a psychedelic drug recently in a text. In response, Trump said: “Sounds great. Do you want F.D.A. approval? Let’s do it,” according to Rogan. The administration defends its greater control over independent agencies, while former agency chiefs note that Trump’s hands-on approach is a major deviation from previous administrations. It has also caused a surge in lobbying dollars flowing directly to those who have access to the White House, The Journal reports. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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