Andrew here, in London. The anxiety around A.I. and the soaring stock market is hardly confined to the U.S. But from here, it feels even more acute. In meetings and conversations with business leaders across London, I\u2019ve been struck by a recurring question: How does this end?<\/p>\n
There is skepticism about the durability of the A.I. boom, concern about over-exuberant markets and growing unease about America\u2019s relationship with the rest of the world. Add in the turmoil in the Middle East, and the mood here feels noticeably less euphoric than headlines about markets suggest.<\/p>\n
Below, we look at the latest market shocks \u2014 and at Senator Elizabeth Warren\u2019s new attempt to delay the SpaceX I.P.O., which is still expected to go ahead Friday despite her efforts. <\/p>\n
Inflation jitters <\/p>\n
For weeks, investors have looked past a fragile cease-fire in the Middle East and pushed stocks to new highs. That confidence was jolted by Friday\u2019s red-hot jobs report, and could be tested again on Wednesday with the release of new inflation data<\/a>.<\/p>\n Economists expect Wednesday morning\u2019s Consumer Price Index report, due out at 8:30 a.m. Eastern, to show headline inflation hitting 4.2 percent, fueled by rising energy costs. That would be the highest reading in more than three years<\/a>. That prospect has chilled global markets, especially as the U.S. and Iran traded strikes<\/a> on Tuesday.<\/p>\n Just in: Trump expressed his frustration with deadlocked peace talks, writing on social media<\/a>, \u201cThey\u2019ve taken too long to negotiate a deal that would have been great for them, now they will have to pay the price!!!\u201d<\/p>\n The latest:<\/p>\n Tech stocks in Asia and Europe are in the red on Wednesday, and futures on the tech-heavy Nasdaq Composite are under pressure.<\/p>\n Bonds and cryptocurrencies are sliding, too.<\/p>\n A bright spot is Brent crude, the international benchmark for oil. It traded around $91 on Wednesday after briefly hitting a seven-week low<\/a> on Tuesday.<\/p>\n Investors are taking it out on mega-cap stocks tied to artificial intelligence, obscuring the outlook for SpaceX\u2019s anticipated trading debut on Friday. Bank of America advised investors this week to consider selling stocks amid \u201cbear-market signposts<\/a>\u201d in the markets.<\/p>\n Hot inflation readings could create volatility, even as stocks continue to rise. \u201cAn upside surprise\u201d on C.P.I. \u201ccould cause trouble given how febrile markets have been recently,\u201d Jim Reid, a strategist at Deutsche Bank, wrote to investors on Wednesday.<\/p>\n The Producer Price Index, which measures wholesale inflation, is scheduled for release on Thursday.<\/p>\n What would a surprise mean for the Fed? Rising inflation is likely to put pressure on the central bank to consider raising interest rates. That could put its new chair, Kevin Warsh, in a direct confrontation with President Trump, who pre-emptively criticized<\/a> such a move over the weekend.<\/p>\n Markets are antsy. Futures traders on Wednesday raised the odds of an interest-rate increase this fall, possibly by September<\/a> \u2014 a message echoed by bond traders<\/a>.<\/p>\n The prospect of higher borrowing costs could have widespread consequences, analysts warn, given the amount of debt-fueled spending that is propelling the A.I. buildout<\/a>, and how much investors are borrowing to buy stocks<\/a>.<\/p>\n Consumers are feeling it, too. Households are gloomy about their finances<\/a>, as they fret about the economic consequences of the war with Iran.<\/p>\n \u201cIf inflation were to be higher for longer, this sort of \u200btrend of wages keeping up with inflation could be at some risk,\u201d Marianne Lake, the C.E.O. \u200bof JPMorgan Chase\u2019s consumer and community banking division, said at a conference on Tuesday.<\/p>\n HERE\u2019S WHAT\u2019S HAPPENING <\/p>\n A key Social Security trust fund could run out of money in 2032. The outlook for the retiree benefit plan worsened this year, according to a report from its trustees. It would have to cut benefits<\/a> in roughly six years \u2014 three months earlier than expected \u2014 unless Congress intervenes with a funding plan. If it does not, incoming revenue is expected to only cover 78 percent of benefits. The Trump administration\u2019s crackdown on immigration could exacerbate the shortfall, experts say, as this group usually pays into the fund via payroll taxes.<\/p>\n Anthropic releases a \u201csafe\u201d version of its powerful Mythos model. The new artificial intelligence system, called Claude Fable 5<\/a>, is designed to prevent hackers from using it to exploit cybersecurity weaknesses. (A reminder: Anthropic initially limited access of Mythos over security fears.) But questions remain about whether it\u2019s effective to build in guardrails<\/a>, an issue that Anthropic researchers told The Times they are working on.<\/p>\n Kalshi plans to make some users identify their employers. Bettors in markets where material nonpublic information is available will be required to disclose where they work<\/a>, Kalshi told The Wall Street Journal, an effort to prevent insider trading and market manipulation. Wagers involving company performance or military campaigns are expected to be included. Also, the sector\u2019s federal regulator, the Commodity Futures Trading Commission, is reportedly set to unveil new proposals on Wednesday<\/a> aimed at cracking down on such abuses, according to The Journal.<\/p>\n Warren vs. Musk<\/p>\n Markets are bracing for SpaceX to begin trading publicly on Friday, as Wall Street expects Elon Musk\u2019s rocket-and-artificial-intelligence giant to raise more than $74 billion from eager stock investors<\/a>.<\/p>\n But Senator Elizabeth Warren of Massachusetts, a Democrat, is the latest skeptic of the I.P.O., citing its potential dangers to retail investors, Lauren Hirsch is first to report.<\/p>\n Warren wants the S.E.C. to delay SpaceX\u2019s offering, she wrote in a letter on Tuesday to Paul Atkins, the regulator\u2019s chair. The I.P.O. \u201cappears to present significant risks to ordinary investors and their retirement savings,\u201d she wrote.<\/p>\n A spokesperson for the S.E.C. declined to comment.<\/p>\n The senator is worried about Wall Street\u2019s enthusiastic embrace of the offering, which includes moves by Nasdaq and FTSE Russell to accelerate SpaceX\u2019s entry into their indexes. That would force index funds to buy SpaceX shares<\/a>, thrusting the company into millions of Americans\u2019 investment portfolios at a stroke.<\/p>\n The letter is unlikely to achieve her goal, but it raises several concerns. Among them:<\/p>\n SpaceX\u2019s multiple classes of stock, which give Musk\u2019s shares 10 times the voting power of shares available to the public;<\/p>\n The company\u2019s potential $1.77 trillion valuation, even though some analysts appraised it at a far lower level;<\/p>\n How the S.E.C. could accurately assess SpaceX\u2019s lofty goals, \u201cincluding space travel and interplanetary habitation.\u201d<\/p>\n Warren was especially skeptical about SpaceX\u2019s valuation, which was based on the company\u2019s acquisition of xAI, Musk\u2019s A.I. lab \u2014 putting the billionaire on both sides of the transaction.<\/p>\n \u201cIn normal circumstances, an S.E.C. would demand far more rigorous proof of those numbers, where they came from and how they are validated by outside evidence,\u201d Warren told DealBook. \u201cThe idea of having Elon negotiate with Elon and decide that the value of this company is some astronomical number makes market analysts laugh \u2014 or maybe cry.\u201d<\/p>\n Others who share Warren\u2019s concerns include Randi Weingarten, the president of the American Federation of Teachers<\/a>, and Mark Levine, the New York City comptroller who oversees $300 billion<\/a> in pension fund assets.<\/p>\n Number of the day<\/p>\n $216 million <\/p>\n Tom Steyer has been officially knocked out of the race for governor of California. The billionaire Democrat sunk roughly $216 million of his own money into the campaign, including more than $201 million on advertisements<\/a>.<\/p>\n That spending spree helped him to a third-place finish<\/a> with 22.5 percent of the vote<\/a>, behind Xavier Becerra, a former Biden administration official, and Steve Hilton, a former Fox News commentator who ran as a Republican.<\/p>\n Steyer, a hedge fund mogul with a fortune of about $5.1 billion<\/a>, according to Bloomberg, has been here before. He dropped out<\/a> of the 2020 race for president after financing his campaign with $342 million in contributions and loans<\/a>.<\/p>\n An A.I. cybersecurity start-up hits a $12 billion valuation<\/p>\n The artificial intelligence race is quickly reshaping cybersecurity \u2014 and driving big money into the sector.<\/p>\n The latest example is Cyera, a start-up focused on protecting companies\u2019 data from A.I.-based threats using A.I. It\u2019s expected to announce on Wednesday that it has raised $600 million<\/a> at a $12 billion valuation, Niko Gallogly is the first to report.<\/p>\n It\u2019s now among the most valuable cybersecurity start-ups. And its valuation has climbed quickly: Just six months ago, investors appraised it at $9 billion in a $400 million fund-raising round<\/a>.<\/p>\n How Cyera works: The company identifies a company\u2019s \u201ccrown-jewel\u201d data, such as customer information, and makes sure it is safely stored, Yotam Segev, a founder and the C.E.O. of the start-up, told DealBook.<\/p>\n If an employee or an A.I. agent shares that data, Cyera will autonomously restrict access to it or delete it.<\/p>\n Cyera\u2019s fortunes have skyrocketed amid worries about A.I.-based threats. The company was founded in 2021 by Segev, Tamar Bar-Ilan and Yonatan Itai, who met in the Israeli Defense Forces\u2019 Talpiot program for academically promising recruits.<\/p>\n The following year, OpenAI released ChatGPT, and \u201cdata security went from being very important to existential,\u201d said Lior Simon, a partner at Cyberstarts, an Israeli venture capital firm that participated in the new fund-raising round.<\/p>\n How fast Cyera has grown:<\/p>\n About 1,000 of Cyera\u2019s 1,500 employees were hired in the last 18 months.<\/p>\n While Cyera declined to share its revenue numbers, it said its annual revenue rate has more than tripled for the last three years in a row.<\/p>\n Its customers include AT&T, Bose, Chipotle and Paramount.<\/p>\n About the round: It was led by Evolution Equity Partners, and included Cyberstarts and Temasek, the Singaporean investment giant.<\/p>\n The new funding will be used to accelerate Cyera\u2019s A.I. offerings, Segev told DealBook, including through internal research and development, and potentially through acquisitions. Earlier this year, the company acquired two cybersecurity start-ups, Ryft and Genie Security.<\/p>\n But the company faces plenty of competition. That includes start-ups like Sentra and Symmetry Systems that also rely on A.I. to autonomously manage data risks; incumbents including Palo Alto Networks and CrowdStrike; and Anthropic and OpenAI, which are developing cybersecurity capabilities for their models.<\/p>\n Worries about cybersecurity aren\u2019t going away, as government and corporate hand-wringing over Anthropic\u2019s powerful Mythos model has shown.<\/p>\n \u201cOnly machines will be able to protect machines,\u201d Segev said.<\/p>\n THE SPEED READ <\/p>\n Deals<\/p>\n Todd Boehly, the billionaire investor, is reportedly weighing a bid to buy the Seattle Seahawks<\/a> from the estate of the Microsoft co-founder Paul Allen, in a deal that could put the value of the N.F.L. team at up to $9 billion. (Semafor)<\/p>\n SoftBank shares sank on Wednesday after its talks with potential lenders reportedly stalled for a margin loan of at least $6 billion<\/a> that would be backed by the tech investor\u2019s OpenAI stake. (Bloomberg)<\/p>\n Robinhood has been approved to underwrite I.P.O.s<\/a>, according to the online brokerage\u2019s C.E.O., Vlad Tenev. (Barron\u2019s)<\/p>\n Politics, policy and regulation<\/p>\n President Trump and his sons have reportedly made $2.3 billion from crypto<\/a> since he returned to the White House. Investors in many of those same ventures have lost a similar amount. (Reuters)<\/p>\n U.S. Customs and Border Protection barred a World Cup referee<\/a> from Somalia \u2014 who was voted Africa\u2019s best last year \u2014 from entering the country, as officials have detained various other tournament participants over visa issues. (NYT)<\/p>\n Best of the rest<\/p>\n