Andrew here. The stock market is up, despite new signs of tariff-driven inflation and weakness in the jobs market. Why? We dive into the unique crosscurrents in the economy and why investors have become bullish. (And why maybe they shouldn’t be.) And David Solomon, the Goldman Sachs C.E.O. and a sometimes D.J., and an unnamed economist are now a target of President Trump.
A turning point?
S&P 500 futures point to record-beating gains amid a global market rally on renewed hopes the Fed will cut interest rates.
That’s despite growing evidence that President Trump’s trade war is accelerating inflation, with plenty in Tuesday’s Consumer Price Index report to appease and worry economists. But the data was probably good enough to persuade the Fed to lower borrowing costs in September. It was also enough for Trump to lash out anew at critics of his tariff moves.
The latest: Traders on Wednesday were penciling in a 94 percent chance of a Fed rate cut next month. After the C.P.I. report, economists at Nomura raised their forecast to two cuts this year, from one, starting in September.
Economists at Citigroup stuck to their forecast for the central bank to lower borrowing costs at each Fed meeting through March, which would bring the benchmark lending rate to 3 percent to 3.25 percent, from the current 4.25 to 4.5 percent rate.
Trump called out the naysayers on Wall Street. In a social media post after the inflation report was released, the president claimed that “Tariffs have not caused Inflation, or any other problems for America, other than massive amounts of CASH pouring into our Treasury’s coffers.” (More on one of his diatribes below.)
Trump also again took aim at Jay Powell, the Fed chair, writing in a separate post that he “must NOW lower the rate,” and threatened to allow a “major lawsuit” to proceed over the cost overruns for the renovation of the central bank’s headquarters. Treasury Secretary Scott Bessent told Fox Business that the numbers were so good that the Fed ought to be thinking about a half-point cut at next month’s rate-setting meeting.
Was the data really that rosy?
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The good: Overall C.P.I. held steady at 2.7 percent on an annualized rate, slightly better than analysts had expected, thanks in part to lower fuel prices. And price increases for tariff-sensitive categories, including apparel and new and used cars, were relatively subdued.
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The worrying: “Core” C.P.I., which excludes volatile food and fuel prices, rose 0.3 percent over the course of the month, and 3.1 percent on an annualized basis. It was the fastest annual pace in five months, and hotter than economists’ estimates.
Despite what Trump says, companies are in a bind. They face the tough choice of either raising prices to offset the costs of the levies, or pulling back on hiring and investment. With steep new tariffs going into effect this month, pressure to do so is growing.
Tuesday’s C.P.I. may have offered some relief, but “companies will eventually pass on price increases one way or another,” Bill Adams, chief economist for Comerica Bank, wrote in a research note on Tuesday.
HERE’S WHAT’S HAPPENING
Russia is suspected in the hack of the U.S. federal electronic case-filing system. Investigators have determined that evidence shows Moscow-affiliated hackers were at least partly responsible for breaching the system that includes highly sensitive court records, The Times reports. (Which entity was responsible wasn’t clear.) The revelation comes as President Trump prepares to meet with Vladimir Putin of Russia in Alaska; European leaders are set to join Trump on a call on Wednesday to implore him not to give into Putin’s demands for ending the war in Ukraine.
Elon Musk loses a court fight to OpenAI. A federal judge ruled that the Tesla chief can’t dismiss accusations by OpenAI that his attacks on the artificial intelligence start-up amounted to “a yearslong harassment campaign.” It opens the door to a court battle between OpenAI and Musk, who co-founded the company but has since accused it of hypocrisy — and has since created his own A.I. business, xAI.
The crypto entrepreneur Do Kwon pleads guilty to fraud. Do Kwon, who created the cryptocurrencies Luna and TerraUSD that collapsed in 2022, admitted to one count of conspiracy to commit commodities fraud, securities fraud and wire fraud, and one count of committing wire fraud. The failure of Luna and TerraUSD tanked the prices of cryptocurrencies, leading to the loss of some $300 billion in market value, and eventually contributed to the implosion of FTX.
Trump vs. Goldman
President Trump has repeatedly gone after anyone, including C.E.O.s, who cast his tariff moves in even a remotely negative light. Now his ire has extended to Goldman Sachs and its C.E.O., David Solomon.
The president’s broadside against the Wall Street giant is his latest wide-ranging attack on data crunchers who find weakness in the U.S. economy.
A recap: As investors were still parsing the Consumer Price Index data on Tuesday, Trump argued on social media that the figures showed nothing but “CASH pouring” in.
Then he turned to Goldman and its chief. “David Solomon and Goldman Sachs refuse to give credit where credit is due,” Trump wrote, saying that the bank made “a bad prediction” that tariffs would harm investors and others.
The kicker: “I think that David should go out and get himself a new Economist or, maybe, he ought to just focus on being a DJ, and not bother running a major Financial Institution,” Trump concluded. (The D.J. dig is well known by this point, though Solomon dialed back his hobby some time ago.)
Trump didn’t name the economist, but Goldman’s longtime chief economist is Jan Hatzius, who on Sunday co-wrote a research note forecasting that the consumer would pay the brunt of the new tariffs. Goldman is hardly the only Wall Street firm to have made that call, The Wall Street Journal reports.
Goldman Sachs declined to comment to DealBook on the social media post.
Remember the others who came under fire from Trump over tariffs: Jeff Bezos, Amazon’s founder, was blasted over a news reports about potentially spelling out how the levies would affect prices. And Trump rebuked Walmart after it suggested it would raise prices outright. (The initial report about Amazon appeared to be incorrect.)
Those spats appear to be short-lived, in any case.
Trump’s anger could potentially cost Goldman. Could U.S. antitrust regulators be especially tough on M.&A. deals on which the firm advised? Could Goldman be shut out of the potential I.P.O. of the mortgage giants Fannie Mae and Freddie Mac, which could be blockbuster offerings?
So far, investors don’t appear too worried: Goldman’s shares are trading at a record high.
“It is definitely going to happen.”
— Dana White, the C.E.O. of Ultimate Fighting Championship, on whether the White House will host a U.F.C. match next July 4, the 250th anniversary of the signing of the Declaration of Independence. White supports President Trump, who has been seen at U.F.C. events — and others in the Trump orbit have started going to them, too.
Perplexity and a bottomless well of A.I. money
When news emerged that Perplexity, a search engine built on artificial intelligence, had bid $34.5 billion to buy Google’s Chrome web browser, industry executives scoffed. After all, the offer is nearly double Perplexity’s valuation.
But the offer is still not completely implausible, underscoring one truth about this era: Investor fervor for all things A.I. is leading to audacious efforts.
Let’s talk about how unlikely the bid is. Perplexity was valued at about $18 billion last month.
And then there’s the presumption that Google itself doesn’t want to sell Chrome, which has about 3.5 billion users and accounts for nearly two-thirds of the global browser market. Chrome is one of the most valuable vehicles for getting people to use Google search — and therefore exposing them to the ads that power the tech giant’s money machine. (One expert testified at Google’s search antitrust trial that Chrome could be worth about $50 billion if sold.)
Perplexity appears to be hoping to convince the judge overseeing the case that there would be buyers if he forced a sale of Chrome. Legal experts say he probably won’t demand that.
But Perplexity seems undeterred. The company said it could get the money for a bid from outside investors. It didn’t name any, but consider that the start-up’s existing backers include wealthy investors like the Qatar Investment Authority and SoftBank that have been known to open up their wallets for big deals.
Coupled with how badly investment banks want to do business with promising A.I. companies, there’s a world in which Perplexity could amass the necessary funds.
The broader context: Investors are eager to throw money at A.I. There are now 498 A.I. unicorns, privately held start-ups valued at $1 billion or more, with a combined valuation of $2.7 trillion, according to CB Insights. About 100 of them were founded since 2023.
And start-ups like OpenAI, Anthropic and Thinking Machines Lab are raising multibillion-dollar rounds with stunning frequency.
“Going back over 100 years of data, we have never seen wealth created at this size and speed,” Andrew McAfee, principal research scientist at M.I.T.’s Sloan School of Management, told CNBC.
A disclaimer: The Times sent Perplexity a cease-and-desist letter last year demanding that the company stop using its content to help power its A.I. technologies.
THE SPEED READ
Deals
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The crypto exchange Bullish priced its I.P.O. above already raised expectations, raising $1.1 billion at a $5.4 billion valuation. (Reuters)
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“Can Dubai keep its crown as the Middle East’s finance capital?” (FT)
Tech and artificial intelligence
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Why is SoftBank’s stock soaring despite poor performance by its Vision Fund 2? The answer: its investment in OpenAI. (The Information)
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“China’s Lead in Open-Source A.I. Jolts Washington and Silicon Valley” (WSJ)
Best of the rest
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Here’s a look at the legal issues surrounding putting a nuclear reactor on the moon. (WaPo)
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What Taylor Swift’s appearance on “New Heights,” the podcast her boyfriend, Travis Kelce, co-hosts, says about the state of media. (WSJ)
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 reporter, covering business and policy for the DealBook newsletter.
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