Andrew here. Would you pay as much as $100,000 a month to read President Trump’s posts a few milliseconds ahead of everyone else? Niko Gallogly did some digging to uncover how many trading firms have actually signed up for this data feed.
Beyond the steep price tag lies a glaring question: Should a political figure be able to profit off market-moving announcements? More below.
Google’s A.I. future
Investors in Google panicked on Wednesday after the tech giant announced a major shake-up in the leadership of its artificial intelligence division, Google DeepMind, and the departure of a hugely influential scientist.
The impact of the changes may be less than it initially appeared. But Wall Street’s reaction reflects anxiety about whether Google can catch up to its A.I. rivals.
What’s happened:
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Demis Hassabis, the C.E.O. of Google DeepMind, will become chair of the unit and chief scientist of Google’s parent company, Alphabet.
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Koray Kavukcuoglu, a top lieutenant to Hassabis, will take over day-to-day management of Google DeepMind.
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Jeff Dean, Google’s chief scientist, and three other colleagues are leaving to found an A.I. start-up.
The background:
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Hassabis had already been delegating day-to-day management of Google DeepMind to Kavukcuoglu, according to Semafor.
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Dean, though revered by many Google engineers and one of the company’s earliest hires, hadn’t been at the forefront of the company’s A.I. efforts. (Sergey Brin, a Google founder, has been increasingly hands-on.) In a sign of apparent comity, Google will invest in Dean’s new start-up.
Hassabis has become one of the company’s statesmen on A.I. — he was Google’s representative at the A.I.-focused Group of 7 meeting this summer — and is increasingly focused on issues like the technology’s social impact. (He also runs Isomorphic Labs, an A.I.-focused drug discovery start-up spun out of Google.)
The bigger issue: Google is an A.I. also-ran. Yes, it has successfully inserted its Gemini technology into its vast suite of products. It also won plaudits when its Gemini 3 model was released in November.
But its models are now considered several steps behind cutting-edge rivals from Anthropic and OpenAI. (It still hasn’t released its high-end Gemini 3.5 Pro model.)
Meanwhile, Google has continued to bleed research talent, including Noam Shazeer (to OpenAI), John Jumper (to Anthropic) and David Silver (who founded Ineffable Intelligence).
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Google has revamped its research division and formed an internal team focused on improving its models’ coding abilities, according to The Financial Times.
Google’s lagging position raises questions about its huge A.I. investment. The company estimates it will spend around $195 billion to $205 billion on capital expenditures (mostly A.I.-focused) this year, more than double what it did last year, and reported negative free cash flow for the first time since its I.P.O. in 2004.
HERE’S WHAT’S HAPPENING
Oil prices ease on hopes for a deal. Iran said on Wednesday it was close to an agreement with Oman to restore safe transit of ships through the Strait of Hormuz; the pact would last up to four months, Kazem Gharibabadi, Iran’s deputy foreign minister, told Iranian state media. (There’s been no mention of tolls so far.) Traders cheered, pushing S&P 500 futures higher; Brent crude, the international benchmark for oil, traded at $80.40, below Wednesday’s highs.
Gianni Infantino apologizes. After an emergency meeting, Infantino, FIFA’s embattled president, wrote in a letter that “mistakes” were made in a now-shelved plan to attract private investors.
The political fallout begins after the Michigan Democratic Senate primary. Despite being widely outspent and shunned by party leadership, Dr. Abdul El-Sayed, a progressive, won Tuesday’s primary. He will face former Representative Mike Rogers, a Republican, in November in a race that’s key to Democratic hopes of regaining control of the Senate. The American Israel Public Affairs Committee, which piled money into El-Sayed’s primary opponent, told allies it would back Rogers, The Times reports.
The numbers behind Truth API
A new service selling early access to President Trump’s Truth Social posts has drawn plenty of controversy — and speculation about whether Wall Street firms will pay for it, Niko Gallogly reports.
Called Truth API, the product was created by Trump Media and Technology Group, Truth Social’s parent company.
Ten customers have signed up for Truth API so far, according to a person who is close to the company but not authorized to speak publicly about confidential information. They’re primarily trading firms whose algorithms can execute trades in fractions of a second.
For a monthly subscription fee between $60,000 and $100,000, the service alerts customers to Truth Social posts from influential accounts, including the president’s, milliseconds after the posts go up on Truth Social.
The catch: Critics say it is insider trading. On Monday, Senator Mark Warner, Democrat of Virginia, proposed legislation to ban it.
The president frequently makes market-moving posts on Truth Social, whether they are related to his trade war or the Iran war. In April last year, his post declaring a 90-day pause on global tariffs helped send the Nasdaq up more than 12 percent in one session.
The new service could be a key revenue stream. The company lost $712 million last year and reported $871,200 in first-quarter sales.
As Trump Media’s largest shareholder, the president stands to gain if Truth API takes off.
Hedge funds can “make a crazy amount of money” with a small head start on Trump’s posts, Jordan Hauer, a founder of Amass Insights, which sources data for hedge funds, told DealBook.
Experts warn of legal and ethical concerns. “If I were the general counsel of a hedge fund, I’d still be very worried about exposure” to legal challenges, William Birdthistle, a law professor at the University of Chicago and a former director of the Division of Investment Management at the S.E.C., told DealBook.
A future administration could accuse customers of paying a government official for nonpublic access to market-moving information, a criminal violation, Birdthisle said. Users could also be accused of breaking securities law by obtaining material nonpublic information.
Trump Media argues the opposite. “Truth API closes the latency gap for organizations that seek prompt access to publicly available Truth Social posts, and any suggestion that Truth API provides access to nonpublic information is factually inaccurate,” a spokesperson said in a statement.
An X factor for SpaceX shares
Shares in SpaceX are rebounding in premarket trading after a weekslong slump. But investors are bracing for a deluge of up to 912 million new shares to hit the market on Thursday as an initial “lockup” on employees’ and investors’ shares expires.
Some early hires and investors could see a windfall if they cash out now. But it is more complicated for newly unlocked stock held in special purpose vehicles, which add another level of unpredictability, Sri Muppidi reports.
S.P.V.s are more lightly regulated. They’re investment funds that hold stakes in private companies, either directly or indirectly, and they have become a popular way for high-net-worth investors to invest in private companies.
Take Sydecar, a platform that automates the creation of S.P.V.s. Some $1.79 billion has been invested across 1,424 S.P.V.s on its platform, up from $100 billion across 288 S.P.V.s in 2022.
Bankers estimate that there may be over a thousand S.P.V.s that hold SpaceX stock, according to The Wall Street Journal.
Huge demand for privately held start-ups has led to risky S.P.V.s. Some investors have resorted to holding stakes in S.P.V.s that are invested into other ones, known as layered S.P.V.s.
Two or three layers have become popular (with up to five layers in some cases). More layers add complexity:
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The layering can obscure how much in fees investors will have to pay to fund managers, what their returns will be and whether they will be paid out via cash or shares.
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The more layers, the more downstream investors could be at the mercy of those upstream.
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Some companies, like Anthropic, may not honor stakes held through S.P.V.s.
S.P.V.s still have big fans. Kendrick Kho, a founder and general partner at the venture capital firm Fourth Realm, manages more than 10 S.P.V.s that have invested in SpaceX. He expects a roughly tenfold return from an S.P.V. he organized in 2021.
Not all early investors are ready to sell. Christine Healey, the founder of the brokerage Healey Pre-IPO, said some of her clients viewed SpaceX as a “generational investment that they want to hold on to for decades.”
Quote of the day
“Many of the loser children of my wealthy friends who see no way to emulate the success of their parents, have gravitated toward Mamdani-ism and found community and a sense of purpose by rejecting capitalism as a way to cope with their own failure.”
Dan Loeb, the billionaire investor and a vocal critic of Mayor Zohran Mamdani of New York, on X on Wednesday. The rise of democratic socialist politicians, and their movement’s widespread appeal to young adults, is dismaying many corporate leaders.
The ‘double Malta’
Crocs sells shoes in 100 countries, but it claims that all of its profits are earned by a two-person office in Malta.
The country is the world’s new hot tax haven, and the accounting firms KPMG, PwC, Deloitte and EY are aggressively marketing strategies that Crocs and other companies are using, Jesse Drucker and Dylan Freedman report for The Times:
Malta has refined its appeal as a tax haven over decades. In an interview in his office at the Portomaso Marina, overlooking a harbor filled with yachts, John Dalli, a former finance minister for Malta, recalled hiring KPMG to draft legislation to help the country compete with offshore hubs like Bermuda and Grand Cayman. In the center of Valletta, building after building bears plaques for the law and financial firms that open the nearly endless shell companies claiming the island as their headquarters.
PwC promoted a strategy called a “double Malta” as far back as 2006, promising tax rates in the single digits, compared with typical corporate income tax rates near 30 percent. After Ireland tightened rules on so-called double Irish tax shelters that made it easy to push profits into zero-tax locales, companies like LinkedIn and Abbott Laboratories discovered they could replicate the benefits by shifting part of those structures to Malta. The strategy became known as the single malt.
The number of Maltese subsidiaries established by U.S. companies is booming, and it includes offices for Victoria’s Secret, Kraft Heinz and PepsiCo. While Malta officially has a 35 percent corporate tax, firms can reduce that rate to nearly zero through various schemes.
Could others follow? Switzerland and Singapore have recently made moves to shield companies from the global minimum tax.
THE SPEED READ
Deals
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SoftBank reported impressive quarterly results on Thursday, helped by a huge gain from its shares in Intel. The value of its Vision Funds unit rose by $1.7 billion, bolstered by a stake in ByteDance. (CNBC)
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Days after nearly imploding, Leopold Aschenbrenner’s hedge fund has reportedly invested $400 million in a private company. (Bloomberg)
Politics, policy and regulation
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