Did Biden Do Enough?

Biden’s big test

Anticipation was exceptionally high ahead of President Biden’s news conference at the NATO summit, as donors and lawmakers declared the event the biggest test yet for his flagging re-election campaign.

The takeaway was a split decision: Biden rambled and misspoke several times, but also displayed the confidence and depth of knowledge that his supporters had hoped to hear. Yet for many donors and Democratic officials, the performance wasn’t enough to settle the debate over whether he should stay in the race.

Biden demonstrated his command of foreign policy at the news conference. In one instance on Thursday, he gave a long, nuanced answer about being prepared to interrupt the relationship between Russia and China. He also spoke in depth about the wars in Ukraine and Gaza.

But it wasn’t a flawless performance. Biden made two headline-making flubs: calling Vice President Kamala Harris “Vice President Trump,” and saying he followed the advice of his “commander in chief” — his own title — about military aid to Ukraine. (Earlier in the day, he introduced President Volodymyr Zelensky of Ukraine as “President Putin” before quickly correcting himself.)

Soon after the news conference, several more Democratic lawmakers, including the representatives Jim Himes of Connecticut and Eric Sorensen of Illinois, called on Biden to step aside. Others signaled their continued support. “No one is more prepared to lead our nation forward than Joe Biden,” Senator Chris Coons of Delaware posted on X.

Many donors are putting pressure on lawmakers, DealBook has heard. A number of Democratic supporters, including the financier Mike Novogratz, have committed at least $2 million to help politicians who have publicly called on Biden to drop his re-election bid, The Times reports.

Some donors saw an improvement. One told DealBook that Biden appeared to do as well as he could, but that it was unclear how much that mattered. Another described Biden’s performance as slightly positive.

Whether it was enough to bring disaffected donors back into the fold is unclear. More in Hollywood (aside from George Clooney) and in tech came out against Biden before the news conference. “I do think they’re going to have a challenge raising more money,” Billy Ray, the screenwriter of “The Hunger Games” who has worked with Democratic candidates on messaging, told The Times before the news conference.

Time is running out to change candidates. Biden, who again vowed to stay in the race, has argued that it would be “awful hard to start from scratch,” given the challenges of transferring his campaign infrastructure to others.

Any change would likely have to take place before Democratic delegates formally nominated Biden, because doing so afterward would make the process subject to individual states’ laws and their deadlines for submitting candidate names.

“If you try to substitute after the deadline, but before ballots are printed, that’s where it opens a universe of litigation that Democrats do not want to get into,” Derek Muller, a specialist in election law at the University of Notre Dame, told DealBook.

That said … the Biden campaign is quietly surveying voters about how the vice president would perform against Trump, The Times reported. But it isn’t clear whether the exercise was meant to gather data for a case that Biden’s path forward was slim or to make a case that he remained the best person to take on Trump.

HERE’S WHAT’S HAPPENING

European regulators accuse Elon Musk’s X of violating content rules. The European Commission said on Friday that the social network ran afoul of the bloc’s Digital Services Act, which regulates platforms over illegal content, disinformation and advertising. The accusations mention X’s handling of verified accounts, ad transparency and data access for researchers. Other social networking companies, including TikTok and Meta, are also under investigation.

The U.S. and Germany foil a Russian plot to kill the C.E.O. of a German arms maker. American intelligence uncovered a plan to assassinate Armin Papperger, whose Rheinmetall makes tanks and shells for Ukraine. The plot represents a more concerted covert effort by Moscow to deter Western companies from producing supplies for Ukraine.

President Biden’s nominee for F.D.I.C. chair clears a big test. Democrats and even some Republicans on the Senate Banking Committee praised Christy Goldsmith Romero, a lawyer who investigated fraud related to the 2008 bank bailout, in a hearing on Thursday. That suggests she’s in a strong position to win confirmation.

The German media giant Axel Springer is said to be weighing a breakup. The company is in talks with KKR, the private equity firm and one of its biggest investors, to split into two businesses: one that owns publications like Politico, Business Insider and the German newspaper Bild, and another that oversees its classifieds business, according to The Financial Times. Such a move would transform an ambitious global investor in news media.

A surprising turn on inflation

Investors have waited months for good news on inflation. They finally got it on Thursday with the latest Consumer Price Index report — but the markets didn’t move as expected.

That’s because new economic doubts emerged, with earnings season looming large.

A recap: The S&P 500 snapped its seven-day winning streak, although the slide came with an asterisk. Nearly 80 percent of S&P-listed stocks rose; the damage came from investors bailing on high-flying tech companies.

Many instead turned to overlooked small-cap companies, betting that those would perform better in a lower-inflation world. That lifted the Russell 2000, a much broader index of companies, to its best day of the year.

Thursday’s C.P.I. report provided more support for that strategy. The data came in below analysts’ forecasts, showing the biggest monthly decline in inflation since May 2020, when much of the world was under government-imposed lockdowns.

Our takeaways include:

• Broad declines in the prices of gasoline, airfare, electricity and new or used cars helped push the headline C.P.I. reading for June to a 3 percent increase on an annualized basis, down from 3.3 percent a year ago. On a monthly basis, consumer prices fell compared to May.

• Core inflation, which strips out food and fuel prices, ticked up slightly, but at a slower pace than economists had forecast. According to Deutsche Bank, core C.P.I. over the past three months has declined to 2.1 percent on an annualized basis, tantalizingly close to the Fed’s inflation target of 2 percent.

• Shelter inflation, which holds an outsize weighting in the C.P.I. report, remains a wild card, rising by 0.2 percent on a month-by-month basis.

The White House cheered the results, citing them as proof that its economic agenda was succeeding. President Biden also took a jab at corporate America: “Prices are still too high. Big corporations making record profits need to do more to lower prices,” he said in a statement.

Meanwhile, economists surveyed by The Wall Street Journal predicted that a second Trump administration would lead to higher inflation than if Biden were re-elected.

Market odds for the Fed cutting rates in September shot up to roughly 95 percent, with a second reduction most likely before the end of the year. Another data point to watch will be Friday’s Producer Price Index report.

But also keep an eye on corporate earnings. Analysts will probably ask executives at Citigroup, JPMorgan Chase and Wells Fargo about the strength of the economy and consumers’ wallets.

The markets are also on alert after the leaders of PepsiCo and Conagra Brands reported that some customers were pulling back.

“Will investors cheer rate reductions in light of deteriorating earnings prospects? I don’t think so,” José Torres, an economist at Interactive Brokers, wrote in a client note on Thursday.

A matrimonial display of Indian power

After months of buildup, the youngest son of Mukesh Ambani, Asia’s richest man, is to be married on Friday in Mumbai. A parade of business leaders, politicians and celebrities is expected to attend a wedding gala that’s as much a display of the global clout of India’s most powerful tycoon as it is a family celebration.

The festivities started months ago. In March, Meta’s Mark Zuckerberg, Bill Gates, the Alphabet C.E.O. Sundar Pichai, and BlackRock’s Larry Fink attended the first pre-wedding event. The guest list this weekend reportedly will include the heads of Samsung, the energy giants Saudi Aramco and BP, as well as the chairman of HSBC.

That so many are willing to show up is a sign of India’s growing importance for global business. Tensions between Washington and its allies and Beijing have forced companies to look to alternative markets. India is the world’s fastest growing major economy and the country is seen in Western capitals as a regional bulwark to an assertive China. Businesses that are looking for new consumers or manufacturing hubs are investing heavily.

Dealing with Ambani is often part of the process. The tycoon has turned Reliance Industries, the petrochemicals company founded by his father, into a vast conglomerate with tentacles in almost every area of Indian life, from oil to retail and mobile telecoms. Ambani has amassed an estimated fortune of about $124 billion, making him the world’s 11th-richest person.

Many big corporations have chosen to ally with Ambani rather than take him on, says James Crabtree, author of “The Billionaire Raj.” This year, Disney folded its ailing Indian operations into an $8.5 billion joint venture with Reliance. And in 2020, Meta’s Facebook bought a 10 percent stake in Reliance Jio, Ambani’s telecoms business, after Zuckerberg realized that expanding in India would bring him into an inevitable conflict with Ambani.

“The wedding is more than a mere celebration,” Crabtree told DealBook. “It is a display of commercial power, in a country where the fortunes of billionaires continues to rise and in which the Ambani family’s fortunes and influence rise with it.”

THE SPEED READ

Deals

• In A.I. deals: Helsing, a European defense tech start-up, raised new capital at a €5 billion ($5.4 billion) valuation; and Fireworks AI, a generative A.I. service provider, was valued at $552 million after a funding round led by Sequoia Capital. (Bloomberg)

• A group of investors, including Bain Capital and BlackRock, agreed to buy Envestnet, a maker of wealth management software, for $4.5 billion. (Reuters)

• The French conglomerate Vivendi is said to be weighing a London I.P.O. for its Canal+ broadcast business. (Bloomberg)

Elections, politics and policy

• Scott Gottlieb, a former commissioner of the Food and Drug Administration, called on Congress to improve oversight of medical devices that use artificial intelligence. (JAMA Network)

• Republican lawmakers called for an investigation into Microsoft’s $1.5 billion investment in G42, an Emirati A.I. company, citing national security concerns. (WSJ)

Best of the rest

• Here’s an in-depth look at the entrepreneur behind the much-criticized A.I.-generated content in Sports Illustrated and USA Today. (The Verge)

• Even the Hallmark Channel is joining the streaming wars. (NYT)

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