Andrew here. Explain this: The bond market is showing clear signs of worry about the economy. The effect, in the form of higher borrowing costs, could sting. And yet the stock market seems to think everything is fine \u2014 or better than fine. We delve into the disconnect.<\/p>\n
We\u2019re also looking at increasing worries about how artificial intelligence could meaningfully impact the jobs market. More below.<\/p>\n
A.I. backlash goes global<\/p>\n
Anxiety about artificial intelligence isn\u2019t just on display at college commencement speeches<\/a>. It\u2019s showing up across the globe (including at the Vatican<\/a>) and in response to yet more announcements about job cuts and other corporate initiatives, as well as in new polling.<\/p>\n The drumbeat of negative reactions to A.I. is providing a contrast to the full-steam-ahead approach by many companies.<\/p>\n Layoffs linked to A.I. are still happening, and they\u2019re often big. Meta\u2019s offices will be mostly empty on Wednesday as it cuts 8,000 workers<\/a> around the world, part of its effort to refocus on its A.I. operations. (Another 7,000 are being reassigned to new initiatives tied to the technology.) From The Times:<\/p>\n Ahead of the layoffs, hundreds of employees in New York planned to gather for drinks on Tuesday to \u201ccommiserate or celebrate, pick your poison,\u201d according to a copy of an invitation seen by The New York Times. The title of the event: \u201cNever a dull moment \ud83e\udee1.\u201d<\/p>\n That\u2019s adding to the more than 111,000 tech-sector employees<\/a> laid off so far this year, according to Layoffs.fyi.<\/p>\n Blunt talk by some business leaders about A.I.\u2019s impact is drawing backlash. Bill Winters, the C.E.O. of the London-based bank Standard Chartered, has sought to reassure employees<\/a> after the lender announced plans to eliminate 8,000 support jobs over the next four years as it relies more on A.I.<\/p>\n What drew condemnation was how he described the move<\/a> on Tuesday to reporters:<\/p>\n \u201cIt\u2019s not cost cutting; it\u2019s replacing in some cases lower-value human capital with the financial capital and the investment capital we\u2019re putting in.\u201d<\/p>\n Halimah Yacob, a former president of Singapore, a major hub for Standard Chartered, called the comments \u201cdemeaning<\/a>.\u201d<\/p>\n Antipathy to A.I. is reflected in recent polling. In a new survey<\/a> by The Times and Siena College, 35 percent of U.S. registered voters said that they believed the technology to be mostly bad, while 16 percent said it was mostly good. (About 45 percent said it was neither good nor bad.)<\/p>\n Democrats and younger voters are especially skeptical of A.I.<\/p>\n That doesn\u2019t seem to be stopping companies from pushing forward with A.I. That includes Google, which rolled out a slew<\/a> of new<\/a> models<\/a> at its developer conference on Tuesday and announced plans to embed A.I. more deeply into popular products like its all-important search box<\/a>.<\/p>\n (That said, some worry the tech giant is going too far<\/a>.)<\/p>\n Others think the A.I. doomerism around jobs is overblown. A major survey of employers<\/a> about their graduate hiring plans this year showed that nearly three times as many executives at companies using the technology plan to increase junior-level hiring, not cut back.<\/p>\n Still, some C.E.O.s acknowledge that there is cause for concern, particularly for longer-tenured employees. \u201cIf you spent 15 years learning to be a senior engineer, and now you\u2019ve got this upstart person in 12 months\u2019 time that can do more than you with A.I. agents, that\u2019s kind of threatening<\/a>,\u201d Bruce Buchanan, the co-founder and C.E.O. of Rokt, an e-commerce technology company, told The Wall Street Journal.<\/p>\n HERE\u2019S WHAT\u2019S HAPPENING <\/p>\n The I.R.S.\u2019s deal with President Trump blocks any audits of himself or his businesses. The provision<\/a>, part of the settlement of Trump\u2019s extraordinary lawsuit against the agency over the leaking of his and two of his sons\u2019 tax returns, will end any current proceedings against the president, his family or his companies. It drew criticism from Democrats, as Republicans appear increasingly nervous<\/a> about the formation of a $1.8 billion legal compensation fund for allies.<\/p>\n Appeals court judges appear skeptical of Anthropic\u2019s efforts to overturn a Pentagon threat. Two of the judges from the U.S. Court of Appeals for the Federal Circuit \u2014 both appointed by Trump \u2014 questioned whether the A.I. company could block Defense Secretary Pete Hegseth from designating it a supply-chain risk<\/a> to national security. Separately, some banking regulators are pausing cybersecurity examinations<\/a> for lenders to let them study the risks posed by Anthropic\u2019s Mythos model, according to Bloomberg.<\/p>\n The Trump administration sues Minnesota over a ban on prediction markets. The Commodity Futures Trading Commission said that the state\u2019s recently enacted law seeks to usurp federal authority<\/a> over platforms like Kalshi and Polymarket. At least 14 other states have introduced bills to regulate prediction markets, as lawmakers worry about their surge in popularity and about the prevalence of potential insider trading.<\/p>\n LIV Golf is reportedly drawing up contingency bankruptcy plans. The upstart golf competition is laying the groundwork for an insolvency filing<\/a> at the end of its current season if it can\u2019t find new investors to replace Saudi Arabia\u2019s sovereign wealth fund, Bloomberg reports. That may include moving its headquarters to the U.S. to benefit from favorable American bankruptcy law.<\/p>\n Bond trembles <\/p>\n Debt, demographics, inflation, war: Bondholders are watching it all<\/a>, and they don\u2019t like what they see.<\/p>\n The global bond sell-off<\/a> has paused on Wednesday. But analysts see the slump continuing, leading to higher borrowing costs that risk deeper political, economic and market ramifications, Bernhard Warner reports.<\/p>\n The latest:<\/p>\n The yield on the 10-year Treasury note, a rate that underpins many home mortgages and commercial loans, hit 4.64 percent on Wednesday.<\/p>\n It has now climbed roughly 70 basis points since the war with Iran began on Feb. 28. That surge is being felt in the real estate market<\/a> and global stock markets<\/a>.<\/p>\n Watch Britain, where turmoil in the sovereign debt market<\/a> reflects investor worries about fiscal deficits, inflation and the precariousness of the current Labour-led government.<\/p>\n The U.S. 30-year Treasury bond has slumped to levels unseen since 2007.<\/p>\n Last week\u2019s bond swoon spooked many on Wall Street. Until then, investors were buzzing about a rally in chips and artificial intelligence stocks, said Lisa Shalett, the chief investment officer at Morgan Stanley Wealth Management. (Speaking of which, Nvidia reports quarterly earnings after market close on Wednesday.)<\/p>\n But lousy inflation<\/a> reports<\/a> and a U.S.-China summit light on results<\/a> changed the narrative. Investors refocused on surging oil prices and persistently higher prices that would tie the hands of the Fed<\/a>. The futures market on Wednesday forecasts a rate increase this year.<\/p>\n Investors have taken it out on \u201cthe highest-valued parts of the market that had gotten really frothy,\u201d Shalett told DealBook.<\/p>\n The potential fallout: Climbing bond yields often bring higher borrowing costs, which could weigh on corporate profits and tech giants\u2019 debt-financed A.I. spending spree.<\/p>\n It\u2019s also worrisome for investors who borrowed at record levels<\/a> to bet on stocks and crypto<\/a>.<\/p>\n What\u2019s next? Some analysts see bond yields continuing to climb in tandem with oil prices. Shalett is watching the price of December contracts for Brent crude, the international oil benchmark.<\/p>\n She also warned that the market for I.P.O.s, which is sensitive to investor enthusiasm about the economy, may be hit. (Blockbuster deals like the pending offering for SpaceX are likely to be fine.) \u201cI do think higher interest rates close the door\u201d for smaller start-ups seeking to go public, she said.<\/p>\n \u201cI also sound like I have a stick up my butt, according to ChatGPT.\u201d <\/p>\n \u2014 Kara Swisher, the tech journalist, on a quote attributed to her by the author Steven Rosenbaum in \u201cThe Future of Truth,\u201d his new book about the effects of artificial intelligence on, well, the truth. After being contacted by The Times, Rosenbaum said he\u2019s investigating several instances of quotes that are either misattributed or seemingly invented by chatbots<\/a>.<\/p>\n The quote attributed to Swisher, by the way: \u201cIt reflects our own morality back at us, polished and articulate, but ultimately empty behind the surface. It\u2019s not bound by Asimov\u2019s laws or any ethical framework \u2014 it\u2019s bound by the patterns in its training data and the objectives set by its creators.\u201d<\/p>\n DealBook Quiz<\/p>\n A new fee for American E.V. owners <\/p>\n This question comes from a recent Times article. Click an answer to see if you\u2019re right. (The link will be free.)<\/p>\n The global market for electric vehicles is booming. Sales surpassed 20 million last year<\/a>, a roughly sevenfold increase from 2020, according to a report by the International Energy Agency published on Wednesday. Surging gasoline prices are expected to turbocharge sales again this year.<\/p>\n Yet Congress isn\u2019t making it cheaper for Americans to own E.V.s. Last year, lawmakers ditched subsidies worth up to $7,500 for E.V. purchases and leases. And a bill introduced this week that has bipartisan support would impose an annual, federal fee on E.V. owners.<\/p>\n The bill\u2019s sponsors say that the fee would help fund highway maintenance, which is partly paid for by gasoline taxes. But opponents of the bill say the new E.V. fee is significantly higher than what most Americans pay in federal fuel taxes.<\/p>\n What is the annual fee that E.V. owners would have to pay, according to the bill introduced this week?<\/p>\n THE SPEED READ <\/p>\n Deals<\/p>\n Politics, policy and regulation<\/p>\n The billionaires Miriam Adelson, John Paulson and Paul Singer were among those who donated to super PACs<\/a> backing Ed Gallrein, the Trump-endorsed Republican who defeated Representative Thomas Massie<\/a> of Kentucky, in the most expensive House primary race ever. (FT, NYT)<\/p>\n A Republican New York congressman who helped negotiate a cap on state and local tax deductions cast doubt<\/a> on an extension of the measure. (Bloomberg)<\/p>\n Best of the rest<\/p>\n Spanish police arrested the son of Isak Andic, the founder of the Mango fashion chain, as a homicide suspect<\/a> in his billionaire father\u2019s death in 2024. (NYT)<\/p>\n \u201cEmails Show How Lululemon\u2019s Peace Treaty With Its Founder Fell Apart<\/a>\u201d (WSJ)<\/p>\n