Good morning. Andrew here. Saudi Arabia’s money pot, long considered bottomless, is finally showing its limits. LIV Golf is on the chopping block after losing huge sums, and Saudi funding for a flag football event led by Tom Brady and Michael Rubin is also in doubt. It’s a stark sign that Riyadh is becoming more disciplined about its spending — a shift that could upend the plans of the Western fund managers plotting pilgrimages to the kingdom in hopes of a share of its largess. We have more below. (Was this newsletter forwarded to you? Sign up here.)
Behind the impending demise of a Saudi golf dreamSaudi Arabia’s sovereign wealth fund is ready to pull the plug on LIV Golf, the upstart golf circuit it created to compete with the PGA Tour, The Times reports. An announcement would cap a four-year journey in which Saudi Arabia had sought — mostly with loads of cash — to remake the sleepy world of golf. But it also highlights how the kingdom’s vision of spending its way into global dominance has collided with reality. The likely move by the fund comes as it pursues a new strategy; the governor of the fund, called the Public Investment Fund, said it would slow down some of its biggest projects. Those include endeavors like Neom, an initiative to build a futuristic region in the desert, the World Expo in 2030 and the men’s soccer World Cup in 2034. And then there was LIV, which was established in 2022 as a flashier counterpart to the genteel PGA Tour, featuring star players earning way more money than they had made before. It was among the PIF projects that appeared to be closest to the heart of Yasir al-Rumayyan, the fund’s governor and a keen golfer who steeped himself in the circuit’s details. But LIV didn’t live up to PIF’s expectations. Despite poaching top-name players like Sergio Garcia and Phil Mickelson, the circuit never scored lucrative television rights deals. (LIV’s non-U.S. operations reported losing nearly $600 million in 2024 alone.) And LIV never finalized an audacious plan to join forces with the PGA Tour, despite some support from President Trump. The Saudis had balked at any offer in which LIV would be absorbed by its older rival, DealBook previously reported. LIV underscores how Saudi Arabia can’t escape financial gravity. The country has been facing a multibillion-dollar budget deficit and has borrowed money instead of lending it. And while PIF has grown to over $900 billion in assets under management, much of that isn’t in liquid investments. Though oil prices have risen amid the war in the Middle East, Saudi Arabia has reportedly pressed the U.S. to end its blockade of Iranian ports, fearful of attacks by Iran-linked Houthi militants on its oil infrastructure. (Other Persian Gulf countries are said to have raised billions in bond sales as their economies took a hit from the fighting.) The big question: Saudi Arabia had dreamed of using its deep pockets to remake itself as a global force in finance, technology and sports. What’s its Plan B?
A suspect in the attack on Sam Altman’s home reportedly called for “Luigi-ing” tech C.E.O.s. Daniel Moreno-Gama, who was charged this week with attempted murder and arson, made the comment — referring to Luigi Mangione, who is accused of killing the head of UnitedHealthcare in 2024 — in an interview with producers of a podcast, according to The Wall Street Journal. Moreno-Gama said his comments shouldn’t be taken literally, according to the report, but they represent how Mangione may still be inspiring some anti-corporate activists. A federal jury finds that Live Nation acted as an unlawful monopoly. The verdict could have far-reaching consequences for the music industry and for Live Nation, the concert giant that owns Ticketmaster, including divestments and financial damages. (Live Nation said it would appeal.) It’s a notable win for state attorneys general, who persisted with the case even after the Justice Department unexpectedly settled with Live Nation last month. The European Union is said to plan a loosening of merger rules. The European Commission, the bloc’s executive arm, is expected to prioritize “innovation, investment and resilience of the internal market” when weighing proposed transactions, The Financial Times reports, citing draft guidelines. If adopted, the new framework could let more European companies combine to create continental champions that could better compete with U.S. and Chinese rivals. The Iran split screenInvestors the world over today are adding to a record-setting rally. But that enthusiasm is clashing with questions of whether a fragile cease-fire in the war in the Middle East would be extended, and with warnings from central bankers and the I.M.F. over its economic fallout. The latest:
Talks continue amid mixed signals. Pakistani mediators traveled to Tehran for potential talks aimed at shoring up the cease-fire between Iran and the U.S. before it is set to expire next week. But Washington is set to send additional troops to the region as the White House dismissed reports that President Trump wanted to extend the cease-fire. The latest on the Strait of Hormuz: Ship traffic on the waterway, through which roughly 20 percent of the world’s oil exports flow, continues to be well below prewar levels. Iran threatened yesterday to halt all trade in the region if the U.S. blockade of its ports continued. Consumers could feel it. Treasury Secretary Scott Bessent said he was “optimistic” that drivers would see gas prices falling well below $4 during the summer, a later date than the Trump administration’s previous forecast. (The average national price today is about $4.09 a gallon, according to the AAA.) Enlisting corporate America: U.S. defense officials have held talks with the heads of G.M. and Ford and other American manufacturers about producing weapons and other military supplies as war depletes the Pentagon’s stocks, The Wall Street Journal reports. And the White House is set to hold a call today with leaders of U.S. oil and gas companies to urge them to increase drilling in the hopes of lowering fuel prices, according to Politico.
More Fed falloutPresident Trump’s latest clash with the Fed, including his threat to fire Jay Powell, its chair, carries huge risks. It could derail succession at the central bank and become a political headache for the president. But investors this morning are largely ignoring the drama. The rally in stocks and bonds suggests that they see little danger to Fed independence, a bedrock of market stability. A recap: In an interview with Fox Business that aired yesterday, Trump said he would seek to fire Powell if he doesn’t leave his Fed seat next month when his term as chair expires. The president also renewed his support for a criminal investigation into Powell, spearheaded by Jeanine Pirro, the U.S. attorney for the District of Columbia, over the $2.5 billion renovation of the Fed’s headquarters. Trump said in the interview that cost overruns pointed to Powell’s “incompetence.” All this is despite a federal judge last month throwing that investigation into limbo. Watch Thom Tillis of North Carolina. The Republican senator is on the Senate Banking Committee, and has vowed to block confirmation of any of Trump’s Fed picks — including that of Kevin Warsh, Trump’s choice to succeed Powell — until the investigation ends. In a post on social media yesterday, Tillis seemed to liken the criminal investigation to a “Three Stooges” operation. “What all of this escalation does,” Tillis said separately yesterday, is to put the president “further away from somebody I’d like to have as his chair.” In an interview with NBC News that aired yesterday, Tillis, who plans to retire, also took Trump to task for his broadsides against Pope Leo XIV, and suggested his support for the war in the Middle East is flagging. The standoff is beginning to frustrate Republicans who see little value in Trump antagonizing Tillis. “I think it’s in everybody’s best interest to wrap up the investigation,” Senator John Thune, the majority leader, told reporters yesterday. Several Fed watchers also noted that Trump’s pressure campaign against Powell and the Fed could force Powell to stick around for longer. (His term as a governor runs through early 2028.)
Allbirds pivots to A.I. hardware from footwearA well-worn Silicon Valley mantra is that when things aren’t working, it’s time to pivot. But rarely has a company made a strategy swivel as brazen as the one Allbirds announced yesterday, Niko Gallogly reports. Once a favorite sneaker of Bay Area power players, Allbirds plans to become … an artificial intelligence compute company? Meme-stock fans were buying it. Literally. The link between shoes made from merino wool and A.I. might be fuzzy. But the news that the company planned to use a $50 million cash infusion to rebrand itself as a “GPU-as-a-service” provider called Newbird AI sent its shares soaring by as much as 876 percent yesterday. Pundits seized on the cartoonishly big rally, which came on the same day the S&P hit a record high, as an example of the market’s unyielding exuberance for anything A.I. (Its shares are sinking in premarket trading today.)
Bouncing back: A few weeks ago, the struggling, eco-friendly shoemaker said it would sell its assets to American Exchange Group for just $39 million — a humbling fall for a company that was valued at roughly $4 billion at its peak in 2021. Could the transition actually work? “At first it read like a really well-executed April Fools’ joke,” Bill Kleyman, the C.E.O. of Apolo.us, which builds tools to develop A.I., told The Times. But, he added, “given the craziness of this industry right now, maybe we shouldn’t be surprised.” This is not the first time a struggling consumer brand has tried to turn things around by attaching itself to a buzzy tech trend. In 2017, Long Island Iced Tea Corp. became Long Blockchain Corp., causing its stock to surge as much as 432 percent. (The S.E.C. revoked the company’s stock registration four years later.) Allbirds was once a fashion staple for the Silicon Valley elite. Excitement for direct-to-consumer start-ups unlocked a wave of venture capital funding for companies like Allbirds, the eyeglasses maker Warby Parker and the mattress start-up Casper. Flush with cash, Allbirds went on a spending spree. By the end of 2023, it operated 60 stores worldwide and had made a foray into clothes. But it never turned a profit. Allbirds shoes still have some prominent fans. One of them is David Einhorn, the head of the hedge fund Greenlight Capital. Einhorn, spotted wearing a pair of the sneakers at an event in New York last night, said: “I wear Allbirds almost every day.” We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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