Markets get bearish on the U.S.
The “sell America” trade is back in focus on Monday. Investors are bracing for a triple threat of an inflationary trade war, President Trump’s tax cut plan swelling the federal deficit, and fallout from Moody’s cutting America’s triple-A credit rating.
That adds pressure on the White House to make trade deals, and on House Speaker Mike Johnson to win over Republican fiscal hawks to make Trump’s big campaign vow — permanent tax cuts — a reality.
The latest: S&P 500 futures, oil, the dollar and Bitcoin are all down. More worryingly, investors are selling government bonds, with the yield on the 30-year Treasury climbing above 5 percent, surpassing the level it reached in April when Trump unveiled his reciprocal tariffs. The administration quickly paused the levies after turmoil in the bond market, with Trump acknowledging that investors “were getting a little bit yippy, a little bit afraid.”
Wall Street has been watching to see how bond vigilantes respond to Trump’s domestic policy campaign, especially if it stokes inflation and adds to the deficit.
The downgrade was hardly a surprise. Moody’s put the U.S. on its watch list in November 2023, and the other major ratings agencies, Standard & Poor’s and Fitch, made a similar move years ago.
Still, the decision shifts investor attention to deficits and America’s fiscal problems, especially as doubts grow that Trump’s tariffs will be the revenue-generator he’s long promised.
Could the bond sell-off complicate the House’s budget negotiations? Treasury Secretary Scott Bessent minimized the Moody’s downgrade on Sunday. But Representative Andy Harris, Republican of Maryland and a fiscal conservative, posted on X that it was “a signal that we can wait no longer to address the debt crisis.” He later added: “I’m still a HARD NO” on Trump’s “big, beautiful” spending bill.
Republicans can afford to lose no more than three votes in either the House or the Senate. Larger cuts, including to popular measures like Medicaid and paring Inflation Reduction Act clean-energy tax credits, may win them over — but at what political cost?
Johnson has said he wants the bill to head to the floor for a vote this week.
Investors are also watching inflation. Walmart spooked some in the market when it said last week that tariffs would probably force it to raise prices as soon as this month. Trump angrily responded this weekend that Walmart should “EAT THE TARIFFS,” presumably meaning not pass the added cost on to consumers.
Bessent told CNN on Sunday that he had spoken with Doug McMillon, Walmart’s C.E.O., acknowledging that some, but not all, price rises “may get passed on to consumers.” He added that he expected inflation to stay stable, however.
Consumers aren’t so sure. Friday’s University of Michigan survey showed that households see year-ahead inflation spiking.
Trump’s handling of the economy has already hurt his approval ratings. A potential credit crisis won’t help.
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HERE’S WHAT’S HAPPENING
Joe Biden is diagnosed with prostate cancer. The former president’s office said doctors had found an aggressive form of the cancer and that his family was discussing treatment options with them. President Trump and former Vice President Kamala Harris were among those that issued supportive statements; the news comes as Democrats are reckoning with their initially staunch support of Biden’s re-election campaign.
New Jersey’s statewide transit strike is over. NJ Transit and the union that represents the state’s passenger-train drivers called off the work stoppage on Sunday after reaching a compromise on pay and work rules. The strike was set to cost NJ Transit an estimated $40 million a day — but the trains aren’t running just yet: Safety checks will be conducted on Monday, and full service won’t resume until tomorrow.
Capital One closes its takeover of Discover Financial. The formal conclusion of the $35 billion deal creates a new credit card giant, coming after the companies persuaded federal authorities that the transaction would strengthen a rival to Visa and Mastercard. But Capital One suffered a blow a few days ago, agreeing to pay $425 million to settle litigation accusing it of cheating savings customers out of higher interest rates.
Exclusive: A $6 billion bet to get hospitals paid using A.I.
Hospitals and doctors are at war with health insurance firms for every last dollar.
With the explosion of electronic medical records — and hundreds or thousands of reimbursement codes — it’s almost impossible for hospital systems and their staff to keep up with the paperwork needed to get paid. Health insurers deny almost one out of every five claims.
Now a new venture aims to fix that. New Mountain Capital plans to announce a $6 billion deal to establish a company that will use artificial intelligence to help hospitals and other health care providers get paid more quickly, Maureen Farrell is first to report for DealBook.
The new business, Smarter Technologies, was created through an acquisition and merger of three separate businesses. One of them, Access Healthcare, already manages billing for hundreds of hospitals.
Smarter Technologies will combine Access Healthcare’s system with two artificial intelligence start-ups: SmarterDx and Thoughtful.ai. Jeremy Delinsky, formerly with the health care software company Athenahealth, will be C.E.O.
What’s the model? Smarter Technologies takes a percentage of the revenue they collect. By applying its A.I. to existing revenue collection systems, New Mountain Capital is betting its technology can find the proper codes demanded by insurance providers. These codes are notoriously difficult to decipher and navigate. The A.I. systems can speed up processing so the staff can get bills paid the first time around, or more quickly challenge denied claims.
Dr. Samara Llewellyn leads the clinical documentation practice at Novant Health, which operates more than 700 clinics and urgent care centers in North Carolina and South Carolina. Her teams struggle to find the right codes used for billing, she said, which makes it easy for insurance companies to deny claims. “There are 150,000 codes out there. And it’s basically impossible for providers to know all of that.”
Kathrynne Johns, the C.F.O. of Allegiance Mobile Health, the largest private provider of ambulances in Texas, has been using Thoughtful.ai’s system since last year. In the first month of use, Johns said, the number of claims paid within 30 days rose to 27 percent from roughly 10 percent to 15 percent.
Healthcare is an M.&A. hot spot. Deal making has mostly stalled under President Trump, as his tariff gambit continues to stoke economic uncertainty, but health care mergers and acquisitions have stayed active.
So far this year, deals for health care firms accounted for roughly 12 percent of all buyouts, according to Dealogic, the largest share in more than a decade.
New Mountain Capital, which manages about $55 billion in investor money, has targeted this sector. Matt Holt, managing director and president of New Mountain, said if Smarter Technologies could speed up payment timing, it could generate cost savings for hospitals and significant revenue for the company.
Caveat: Bob Kocher, a partner at the V.C. firm Venrock Capital and a former senior health care adviser to President Barack Obama, warned that A.I. automation is unlikely to reduce health care costs overall.
“No hospital will buy an A.I. widget that means their revenue goes down,” he said. “There’s no market for that.”
Buffett steps back from Berkshire’s annual meeting
When Warren Buffett announced that he planned to step down as C.E.O. of Berkshire Hathaway, he said that his successor, Gregory Abel, was ready to handle the job.
A small but prominent test of that will come next year, when Buffett sits out the signature Q&A session at Berkshire’s annual meeting in Omaha. The change could give a sense of whether the company, which Buffett built into a trillion-dollar conglomerate, will lose its luster as its longtime leader steps back.
“I’m going to leave it to Greg,” Buffett said of the decision, his daughter, Susie, told the Omaha World-Herald. The billionaire will attend the meeting, set for May 2, 2026 — but will sit with other directors on the floor of the CHI Health Arena.
Susie Buffett said that when it comes to questions about Berkshire and its operations, Abel, who already handles much of the day-to-day matters, is at least as capable of answering as her father was.
But the investors meeting has usually been about more than that. Shareholders have flocked to Omaha every year to ask Buffett about nearly anything, one of the many things that set Berkshire apart from other companies. Susie Buffett acknowledged that may no longer happen, though she expects a packed arena next year.
A drop-off in attendance could have a major economic effect. Berkshire shareholders give the Omaha economy a big boost: The city sold out 92 percent of its hotel rooms last year during the event, which generated more than $21 million in tourism revenue, according to Deborah Ward, the head of Visit Omaha.
And many Berkshire-owned companies set up shop at the annual meeting, selling Dairy Queen Dilly bars, Brooks running shoes and more to attendees.
Berkshire is hoping that will continue. Abel told the World-Herald that the company announced the change now “so people come with the right expectation,” but added that all the usual events that accompany the annual meeting — the shareholder-only shopping event, the Brooks 5K race the day after — will go on as usual.
“Tariffs are Boeing’s problem, not ours.”
— Michael O’Leary, the C.E.O. of the airline Ryanair and a major customer of the plane maker, on who’s really getting hit by President Trump’s trade fight.
The market lessons of papal betting
Throngs of worshipers and world leaders descended on Rome on Sunday for Pope Leo XIV’s inaugural Mass. At one point, the first American pontiff reflected on his unlikely election, an outcome that stunned the faithful and Vatican experts.
It has also led to questions about the wisdom of prediction markets, as bettors took to Polymarket and Kalshi to wager on the Vatican’s ancient selection process. Some market watchers gleaned lessons from how those gamblers got it wrong, and what it says about wider market trends like meme stocks.
A recap: White smoke billowed from a chimney atop the Sistine Chapel around 6 p.m. Rome time on May 8, signaling that cardinal electors had chosen a new pope. Bettors piled into prediction markets, wagering that the longtime front-runner, Cardinal Pietro Parolin, had won.
Here’s how Rajiv Sethi, an economics professor at Barnard College, described what happened next:
The price of the Parolin contract doubled within minutes, as the other prices slid. It remained above sixty percent for the rest of the hour, before collapsing to zero once the identity of the new pope was publicly revealed:
Bettors could see the Parolin rally happening in real time, but didn’t know why. Without inside information, bettors probably suspected that others must know something about the next pope’s identity, setting off a stampede, Sethi concluded.
This kind of feedback loop is a common — and sometimes destabilizing — feature of markets, said Jean-Philippe Bouchaud, a physicist who co-founded the French hedge fund Capital Fund Management. “When a price moves, it affects what people think,” Bouchaud, who has studied how bubbles and manias form, told DealBook. In extreme cases, he added, “this induces bubbles and crashes and trends.”
He saw a similar phenomenon in January 2021, when retail investors, armed with little news, sent the shares in the loss-making retailer GameStop to extraordinary heights.
The takeaway: The conclave may have revealed prediction markets’ limits, but Sethi and Bouchaud said the result offers a timely lesson in how volatility can swing markets absent clear information.
THE SPEED READ
Deals
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Potential successors to Jamie Dimon as JPMorgan Chase’s C.E.O. will get a prominent audition on Monday at the bank’s annual investor meeting. (WSJ)
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The latest surge of blank-check company listings is being led by a new crop of boutique banks, not traditional Wall Street players. (FT)
Politics, policy and regulation
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“Sam Altman says critics of Trump’s AI deals with Gulf nations are ‘naive’” (Business Insider)
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How G.M. is seeking to overturn California’s planned ban on the sale of new gas-powered cars and trucks by 2035. (WSJ)
Best of the rest
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Investigators are still trying to figure out why a Mexican sailing vessel hit the Brooklyn Bridge on Saturday, despite never intending to head that way. (NYT)
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Crypto millionaires are turning to bodyguards and more to protect themselves from a seeming rise in real-world violence and kidnapping attempts. (Bloomberg, WSJ)
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Andrew Ross Sorkin is a columnist and the founder of DealBook, the flagship business and policy newsletter at The Times and an annual conference.
Edmund Lee covers the media industry as it grapples with changes from Silicon Valley. Before joining The Times he was the managing editor at Vox Media’s Recode.
Bernhard Warner is a senior editor for DealBook, a newsletter from The Times, covering business trends, the economy and the markets.
Sarah Kessler is an editor for the DealBook newsletter and writes features on business and how workplaces are changing.
Michael J. de la Merced has covered global business and finance news for The Times since 2006.
Lauren Hirsch covers Wall Street for The Times, including M&A, executive changes, board strife and policy moves affecting business.
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