Good morning. Andrew here. Twenty-five years ago, on this day, I pressed “send” on the very first DealBook newsletter. My laptop was tethered to a physical phone line in my tiny apartment on East 17th Street in Manhattan. The grand theory behind DealBook — written on a napkin that served as our business plan — was simple. We wanted to show you everything you needed to know before your 9 a.m. meeting: the stories everyone would talk about, and the ones that you may have missed and that might make you sound a little smarter when you brought them up. Today, as newsletters fill every corner of our inboxes, it’s hard to remember just how unconventional that idea once seemed. At the time, the world of business felt somewhat more contained, but not more certain. The Sept. 11, 2001, attacks had happened weeks earlier. The hierarchy of power was different: Wall Street bankers were still considered “masters of the universe,” while Silicon Valley was reeling from the dot-com bust. Washington and corporate America intersected, but not as much as they do today. Social media basically didn’t exist. Bitcoin didn’t exist. A.I. was largely science fiction. I’ll never forget that about a week after we went live, an assistant to the C.E.O. of one of America’s largest companies — who referred to herself as a secretary — called and asked: Could we fax DealBook to him every morning? A lot has happened since. When we started, DealBook may have looked like a newsletter about deals. Yet it was always a way of telling a much bigger story — about money, but really about power and the people behind that power. That was especially true after the financial crisis, when suddenly every C.E.O. sought to think like a politician, and every politician raced to understand business. Our readership expanded to Congress, the White House and regulators. Through all of it, we have tried to earn your trust: to tell it like it is, without taking sides, and to do it with empathy. When we write something critical, cover a failure or hold someone accountable, the goal isn’t simply to assign blame. It is to understand what happened so that we can learn from it and, hopefully, make things better. Many people reading this today have been with us almost from the beginning. Your loyalty — through 25 years of very early mornings and more than a few extraordinary moments — means more to me, and to our extraordinary team (past and present), than I can say. Thank you. Here’s to the next 25 years. (Was this newsletter forwarded to you? Sign up here.)
The little-noticed exception in Trump accountsThe White House officially introduced automatic enrollment for Trump accounts yesterday at an Oval Office news conference, where President Trump said that some 70 million American children would receive a one-time $1,000 federal seed deposit. While the news coverage largely focused on automatic enrollment, a far more divisive detail about the program received less notice: a Treasury Department rule letting wealthy donors and corporations donate shares in individual companies to children’s portfolios. As DealBook scooped this spring, there was already a concerted effort quietly underway to allow these direct stock donations. Treasury officials initially pushed back, worried that the statute authorizing the accounts — which explicitly restricted investments to broad, low-cost index funds to avoid concentrated financial risk — did not permit it. The Treasury Department now argues that it has wide authority to accept gifts — and that those gifts do not have to be converted into index funds. The department also says that donors can stipulate that children must hold the shares for up to five years. The move may invite legal challenges that could hamstring the initiative. One criticism is that donors could exploit the program in ways the law didn’t intend. Moreover, a significant drop in a single stock’s price could cast a pall over the project, undermining its goals of promoting markets and financial literacy. The most glaring concern is the potential for political maneuvering: distributing stock to children in specific municipalities could allow business leaders to curry favor with local policymakers. Since the shares are locked up for five years, parents might be financially incentivized to support those companies. A thought experiment: If the Trump administration wants to encourage corporate philanthropy, there are ways to achieve that goal without introducing legal risk. Here’s one possibility:
Under this system, donors get the long-term holding period they desire, while children can track the companies in the pooled escrow vehicle to learn about the markets. If enough executives and corporations donate shares to a central escrow over time, the pooled portfolio might become diversified enough that Congress could authorize the pool itself as an approved investment vehicle. The big picture: Trump accounts have the potential to build widespread financial literacy and long-term prosperity for millions of children. Introducing unnecessary legal questions risks undermining what could be an important program.
Russia releases new information about a lab death. Russia’s health regulator said it found no “emergency” related to an episode about a lab worker at a plague research center in Siberia. But health experts continued to question why a quarantine was imposed, and the lack of information released about the cause of the infection. The Trump administration pushes back against race-based lending. The Department of Housing and Urban Development accused Wells Fargo of engaging in discriminatory practices by creating programs pitched to Black applicants for home loans. It is one of many business and university programs intended to help marginalized groups that have faced increasing scrutiny from the Trump administration. The S.E.C. warns funds against coordinated shareholder activism. The S.E.C. said it had “serious concerns” about fund managers who participated in the Climate Action 100+ coalition, after an investigation into their role in the ouster of Exxon Mobil directors in 2021. In the second Trump administration, the commission has moved to dilute shareholder influence over public companies by weakening the power of proxy advisers and index funds. States ask the Supreme Court to let them regulate prediction markets. Attorneys general for 38 states and the District of Columbia general filed a brief backing New Jersey’s bid to have the court recognize the supremacy of state gambling laws over federal commodity rules when it comes to these markets. The case sets up a clash between states and the Commodity Futures Trading Commission, which claims primary oversight over the industry. The increasingly risky rush to finance A.I.A tsunami of debt deals is hitting the market as tech giants race to pay for hugely expensive chips to power artificial intelligence. Consider the latest moves: SpaceX is reportedly seeking to raise $40 billion in debt to purchase Nvidia chips, according to The Financial Times. Broadcom is said to be arranging more than $50 billion in financing for chips that it’s developing with OpenAI, while Oracle is in talks to arrange a large purchase of chips, The Wall Street Journal reports. All of this underscores how the A.I. buildout is entering a more expensive and financially complex phase, Niko Gallogly reports. The context: Roughly 60 percent of the A.I. buildout will go toward A.I. chips, like graphics processing units, and other hardware, according to a report by Ares Management, the big investment firm. While building a data center and securing power for it can take years to complete, installing chips can be relatively quick. But semiconductors depreciate rapidly in value over a handful of years, meaning that buyers don’t want to procure them until they have a data center to place them in.
Flooding the credit market: Hyperscalers are increasingly borrowing to pay for their A.I. buildout. Much of that debt issuance, including the bonds SpaceX is reportedly aiming to sell, is investment grade, meaning that insurance companies and pension funds can buy it. (That said, investors are getting worried about SpaceX’s creditworthiness.) Tech bonds and hyperscalers now account for about 20 percent of the long-term investment-grade bond index — close to the size of the banking sector, according to Guggenheim Partners. Assessing the risks of financing A.I. chips right now is like “building the plane while trying to fly it,” Michael Haber, a high-yield strategist at Jefferies, told DealBook. That’s especially true for some new neocloud companies that do not have experience hosting and managing GPUs, he said. Another risk: If future chips are far faster, and therefore far more profitable, they could quickly replace the last generation of chips, Haber said. That would further accelerate hardware obsolescence and change the math again. CHARTS OF THE DAY 25 years of busts, booms and growthLet’s rewind to the day the first DealBook newsletter hit inboxes. The S&P 500 index opened at 1,071 on Oct. 8, 2001 — some 30 percent below its dot-com bubble peak in March 2000. The U.S. economy was mired in a painful recession. And the technology boom had gone bust. The next 25 years produced remarkable returns for investors despite some scary moments, including the 2008 global financial crisis and the coronavirus pandemic. On Tuesday, the S&P 500 hit a record high of 7,819 — up more than sevenfold from fall 2001.
During that span, the U.S. economy has tripled in size. The tech sector now accounts for a greater portion of the S&P 500’s total market value than it did during the peak of the dot-com era.
Which college majors are the most lucrative?For prospective college students, picking a school and a major may feel like a daunting endeavor in the age of artificial intelligence disruptions to the job market. Here’s a juicy new piece of information to factor in: Math majors at Duke University earned a median of nearly $300,000 per year, just four years after graduation. That is the single highest-paying combination of college and major in the country, Arfa Momin and Ron Lieber report for The Times. (To let readers comparison shop, they built a search tool.)
Computer science dominates the top of the list. The top 10 includes graduates with computer science majors from Carnegie Mellon, M.I.T., Cornell, Princeton and Pomona College. The caveat: The college students in the study graduated some years ago. Recent grads are entering a job market with a shrinking number of entry-level positions in A.I.-exposed industries. That could limit opportunities for computer science majors in fields like coding, in which A.I. is quickly taking hold. Mathematics is no sure bet for a big salary, either. The data set had just 17 math majors from Duke, since it only tracked a two-year period and those who received federal financial aid. A vast majority of math majors from other colleges made less than $100,000 four years after graduation. A.I. has come for math, too: OpenAI presented findings for hundreds of major math problems, which has mathematicians freaking out that their field could be made obsolete by A.I. (A top executive at a major lab said as much to DealBook recently.)
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