Andrew here. There are two big stories dominating Wall Street right now. One is a report that President Trump may resurrect the idea of creating a shadow Fed chair by announcing Jay Powell’s replacement long before his term ends. We examine some of the potential names and scenarios.
And many corporate leaders remain preoccupied with trying to come up with a candidate to oppose Zohran Mamdani for New York mayor, an effort they’re willing to spend millions on. My colleagues and I go inside the conversations.
The return of the “shadow Fed chair”?
President Trump’s ire at Jay Powell, the Fed chair, may be reaching a breaking point. Markets are increasingly fretful about what he may do about it.
The dollar is down and U.S. Treasury bonds are up after The Wall Street Journal reported that Trump was weighing whether to announce his pick to replace Powell early, perhaps as soon as the summer.
Trump has openly attacked Powell for weeks, frustrated by the Fed chair’s cautious approach to cutting rates. “He goes out pretty soon, fortunately, because I think he’s terrible,” the president said on Wednesday.
Trump may be reviving the idea of a “shadow Fed chair,” in which the president names a replacement well before his term expires next year. That person would presumably represent Trump’s preferences, and as the central bank’s future leader would have more influence with the market than Powell.
That said, Trump declined to endorse the proposal when it was floated last year by Scott Bessent, who’s now his Treasury secretary.
Who’s on the list? Trump said on Wednesday that there are “three or four people” he’s considering. They probably include:
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Kevin Warsh, a former Fed governor whom Trump had considered appointing as Treasury secretary. He has Wall Street experience, including at Morgan Stanley and Stan Druckenmiller’s family office. But The Journal reports that some in the administration are worried about his historically hawkish inflation views.
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Kevin Hassett, the director of Trump’s National Economic Council. While Hassett lacks Warsh’s Wall Street credentials, he’s respected in economic circles — and has been a loyal Trump aide. That said, he has told people he doesn’t want the job, according to The Journal.
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Bessent, who as Treasury secretary has won plaudits on Wall Street for his ability to help businesses make sense of Trump’s trade policy. That said, DealBook hears that he’s not interested and that many in the Trump camp want him to remain at Treasury.
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Others in the mix, according to The Journal: Christopher Waller, a Fed governor, and David Malpass, whom Trump chose to run the World Bank in his first term.
But concerns about the shadow Fed chair idea haven’t gone away. Undercutting Powell could undermine perceptions of the Fed’s independence. In the fall, Druckenmiller called such a plan “a horrible idea and irresponsible.”
Though Trump has sometimes played down negative market reactions to his policies, like tariffs, they appear to have influenced him when it comes to the Fed, such as when stock futures and the dollar rallied after he backed off threats to fire Powell in April.
If the president proceeds, he’ll probably try to frame the move in a way that doesn’t roil investors. Whether they would buy it is another question.
HERE’S WHAT’S HAPPENING
Shell denies pursuing a takeover of BP. The oil giant said in a statement that it hadn’t bid for its embattled rival, nor was it actively considering doing so, dismissing a Wall Street Journal report. (Shares in BP, which spiked on The Journal’s report, quickly fell after Shell’s rejection.) Under British stock regulations, Shell now can’t make a takeover bid for BP for six months, unless another bidder emerges or BP invites an approach.
Senate Republicans continue to fight over a big domestic policy bill. While party leaders are pushing for voting on the legislation to begin soon, disputes have shed doubt on that schedule. Among the latest developments: Senator Thom Tillis of North Carolina reportedly told colleagues he won’t vote to proceed without clarity on Medicaid changes, and Senator Susan Collins of Maine proposed a tax on those earning more than $100 million a year to help defray the bill’s costs.
Jes Staley loses his bid to overturn a ban on British banking jobs. A British judge sided with the U.K.’s Financial Conduct Authority in barring the former Barclays chief from the country’s securities industry, ruling that he misled regulators about his relationship with the disgraced financier Jeffrey Epstein. Staley gave unexpectedly detailed testimony during his court fight.
The search for a mayoral plan B
Zohran Mamdani’s likely victory in New York’s Democratic mayoral primary is continuing to send shivers down the spines of much of the city’s business elite.
In urgent meetings with one another, DealBook hears, corporate leaders are discussing whether there’s any way to stop a democratic socialist with ambitious tax and borrowing plans from winning in November.
Here are some of the names being floated:
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Jessica Tisch, a Democrat, the New York City police commissioner and a scion of the Tisch family that’s well known in the city’s philanthropic and business circles. Her résumé ticks a lot of boxes for corporate leaders: triple Harvard graduate (bachelor’s, law and M.B.A. degrees) and a career spent in public service, including work in counterterrorism, information technology and sanitation.
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Representative Ritchie Torres, a young and charismatic Democratic lawmaker representing most of the South Bronx. He’s seen as a moderate who has been openly critical of perceived excesses on the left, and has sometimes called for increased policing and strongly condemned antisemitism.
There’s also the Eric Adams factor. As we noted on Wednesday, some executives who backed Andrew Cuomo are now weighing whether to back the incumbent mayor, including the real estate mogul Scott Rechler and the financier Dan Loeb.
But there are also hurdles. While Cuomo could appear on the November ballot on an independent party line, legal experts say that handing that position to anyone else would be complex and probably unlikely to happen. The hedge fund billionaire Bill Ackman, in an X post, suggested a write-in candidate.
And despite some efforts to rally support for Adams, the mayor remains deeply unpopular with the public. (A Quinnipiac University poll in March put his job approval rating at 20 percent.) Many also worry that he and others — including whomever the business community coalesces around — could split the centrist vote.
Some in the business community are already looking beyond City Hall. Several executives have discussed giving significant financial support to Representative Elise Stefanik, the Republican congresswoman, to potentially challenge Gov. Kathy Hochul. The hope is that Stefanik, who’s well-known and close to Trump, could check any perceived overreach by a Mamdani administration.
Others are also looking into New York State Assembly races.
But some executives are moving on. “Sometimes the only way to learn the value of what you have is to lose it,” Tyler Winklevoss, the crypto entrepreneur, posted on X. “If that’s the case, Marxism and socialism might just be what the doctor ordered.”
Taking Big Tech’s climate pledges to task
With Wall Street’s help, Big Tech successfully pitched itself to the markets as high-growth and eco-friendly.
But those green credentials have since come under heavy criticism, especially as the huge needs of companies’ artificial intelligence bets become clearer. A report set to publish on Thursday further sharpens those attacks, Vivienne Walt writes.
The latest: NewClimate Institute, a prominent European climate research organization, accuses Amazon, Apple, Google, Meta and Microsoft of potentially misleading investors, regulators and the public through imprecise climate accounting.
“The sector has lost control,” Thomas Day, a climate policy analyst for the institute, told DealBook, “and electricity consumption is flying through the roof.”
The report urged regulators to require companies to disclose more specific details about the amount of renewable energy they consume and the precise locations where it’s consumed, rather than using measurements across broad regions and annual averages, as they do now. It also said companies weren’t disclosing the full pollution from their contractors, and proposed that they make tech devices last longer and easier to recycle.
Companies told DealBook what they thought:
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Amazon said that the report made “inaccurate assumptions,” and that A.I. will help make its operations more sustainable.
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Meta said it was one of the world’s biggest purchasers of renewables, was investing heavily in nuclear power and still aimed to zero out carbon emissions by 2030.
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Microsoft said it was adapting its strategies to meet increased power demands, using long-term innovation.
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Google and Apple did not respond to DealBook’s requests for comment.
The energy needs of A.I. are clear, and growing. A huge data center that Amazon is building in Indiana, for instance, is expected to consume 2.2 gigawatts, enough to power one million homes.
U.S. data centers have nearly tripled their electricity consumption over the past decade. Those power needs could possibly triple again by 2028, according to the Lawrence Berkeley National Laboratory.
Melanie Nakagawa, Microsoft’s chief sustainability officer, wrote recently that the company’s goal of being “carbon negative” by 2030 has “gotten further away.” But she added that A.I. could eventually help the company hit its green targets.
The investor perspective: So far, shareholders have appeared more concerned about A.I. ethics and safety than the technology’s climate issues, according to a recent study by Morningstar. More broadly, they have been pulling back from environmentally focused investing, with Morningstar last month reporting a record $8.6 billion in global outflows from E.S.G.-focused funds.
And many companies have abandoned climate pledges altogether.
That said, Amazon last month faced a proxy vote calling on the company to elaborate on how its A.I. ambitions may derail its climate goals. The company told investors that it was going all in on renewables and remained “focused on meeting our climate goals.”
The economy in the hot seat
Some cooling may be on the way for parts of the Eastern U.S. after days of record-breaking temperatures that strained at least one power grid and prompted a blackout in parts of New York City. Global warming is expected to increase the frequency and intensity of heat waves, which could have a huge effect not only on health, but also on the economy.
Consider:
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A 2018 paper published in The Journal of Money, Credit and Banking estimated that a one-degree increase in the average summer temperature is associated with a reduction in the annual growth rate of U.S. state-level gross domestic product of 0.15 to 0.25 percentage points.
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Economists at the Organization for Economic Cooperation and Development, drawing on data from over 2.7 million companies across 23 advanced economies from 2000 to 2021, found that 10 extra days above a temperature of 95 degrees Fahrenheit in a year results in a 0.3 percent reduction in firms’ annual labor productivity.
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A Center for American Progress report used insurance claims data in Virginia from 2016 to 2020 to deliver a preliminary estimate that heat-related health care costs in the U.S. amount to as much as $1 billion in excess costs each summer.
THE SPEED READ
Deals
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The prediction market operator Kalshi raised $185 million in new funding at a $2 billion valuation. (WSJ)
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“The Waning Ambitions of China’s $1.3 Trillion Fund Giant” (Bloomberg)
Tech and artificial intelligence
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Microsoft is said to be pushing to remove a clause from its contract with OpenAI that could limit the tech giant’s access to the ChatGPT maker’s technology once the start-up achieves so-called artificial general intelligence. (WSJ)
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“A.I. Is Starting to Wear Down Democracy”
Best of the rest
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Shares in Bumble soared on Wednesday after the dating app operator said it would cut 30 percent of its workers. (WSJ)
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Yes, there will be a sequel to “The Social Network” — and Aaron Sorkin is set to direct it. (Variety)
We’d like your feedback! Please email thoughts and suggestions to [email protected].
Andrew Ross Sorkin is a columnist and the founder of DealBook, the flagship business and policy newsletter at The Times and an annual conference.
Bernhard Warner is a senior editor for DealBook, a newsletter from The Times, covering business trends, the economy and the markets.
Sarah Kessler is the weekend edition editor of the DealBook newsletter and writes features on business.
Michael J. de la Merced has covered global business and finance news for The Times since 2006.
Danielle Kaye is a Times business reporter and a 2024 David Carr Fellow, a program for journalists early in their careers.
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