Andrew here, heading back to New York. Did the capital of capitalism just undergo a major political realignment? That’s the big question on Wall Street after a slate of progressive candidates backed by Mayor Zohran Mamdani swept New York City’s congressional primaries, unseating prominent moderate incumbents in a stunning show of influence.
For decades, New York operated on a tacit agreement: Elect social liberals, but protect corporate capital. What will happen now that a political faction openly skeptical of big business is poised to represent the city in Congress?
The most immediate friction point will be the tax code. Will an emboldened progressive bloc demand wealth taxes, or will the fear that the wealthy will flee en masse to low-tax states keep such proposals at bay? And what does this mean for the national political picture? Let me know what you think.
High interest
The S&P 500 is having a rough month, with more choppy trading expected around Thursday’s big inflation report.
The volatility reveals growing tension on Wall Street over interest rates — which traders now expect the Fed will raise — that could jolt Washington politics, too.
Market watchers increasingly see that move coming before the midterm elections. That would probably infuriate President Trump, who has publicly demanded rate cuts for months, and whose approval rating has slipped over his handling of the economy.
What to watch: The Personal Consumption Expenditures price index, a measure that is closely watched by the Fed, is set for release on Thursday at 8:30 a.m. Eastern.
Most economists think it will be another bruiser, with inflation hitting a three-year high.
The good news: The P.C.E. report could show that inflation has peaked, with oil prices retreating significantly amid negotiations to end the war in Iran. Brent crude, the international benchmark for oil, traded around $75.50 a barrel on Wednesday, a few dollars above prewar levels.
The bad news: Oil prices may have fallen, but borrowing costs have not. The yield on the 10-year Treasury note, a rate that underpins mortgages and commercial loans, traded at 4.48 percent on Wednesday. And U.S. government bonds have slumped since the start of the war.
First, investors grew wary of wartime inflation. Now, they’re fretting about the growing prospect of a Fed rate increase.
A hot P.C.E. number could roil the bond market further, adding to calls to raise rates.
Economists at BNP Paribas, Deutsche Bank and Bank of America are in the hiking camp. Aditya Bhave, an economist for Bank of America, told investors on Monday that the Fed would raise rates three times this year, starting in September.
Why? “The Fed’s inflation problem has gotten unambiguously worse,” he wrote in a research note.
Would the Fed move before the midterms? The politically independent institution surprised some watchers when it cut rates in September, 2024. That drew criticism from Kevin Warsh, who’s now the central bank’s leader, and Trump, who accused the Fed of “playing politics.”
Some on Wall Street think calls for increases are premature. In a research note published on Tuesday, UBS said it sees the Fed on hold for a while, and called the market’s current expectations of Fed rate hikes “aggressive.”
Either way, Thursday’s P.C.E. reading will be closely watched.
HERE’S WHAT’S HAPPENING
Zohran Mamdani and artificial intelligence stand out in New York’s primaries. Candidates backed by the New York City mayor swept a series of tight races, establishing the democratic socialist as a political kingmaker. Super PACs spent over $50 million on the New York primaries, as fights over A.I. regulation intensify. Alex Bores, a state legislator who helped pass one of the country’s first A.I. safety bills, lost after being targeted with an $8 million campaign by a pro-A.I. super PAC backed by Trump donors.
Democratic lawmakers target a deal between the Trump family and an Emirati royal. Leading Senate Democrats called for hearings over a $500 million investment into the family’s cryptocurrency company made by a group led by Sheikh Tahnoon bin Zayed Al Nahyan, who heads the United Arab Emirates’ spy services. The president’s relationship to the U.A.E. has come under scrutiny after the Trump administration gave the country access to advanced A.I. chips.
Alibaba sues the Pentagon over a blacklist designation. The e-commerce giant asked a California district court to force the Defense Department to remove it from the so-called 1260H list of companies with suspected links to China’s military, saying it has no such ties. The matter, which involves several other well-known Chinese brands, including BYD, has created further trade tensions between Beijing and Washington.
A prominent Wall Street P.R. firm is reportedly pulled into an insider trading case. The S.E.C. charged a former pro soccer player with using confidential information to make about $2.7 million in illegal trades involving companies like Apollo Global Management. The information was stolen from the laptop of his then-girlfriend, who worked at Joele Frank, a leading financial communications firm, Bloomberg reports. The charges track similar cases at other firms where information was purloined from romantic partners, and involved corporate giants like Merck and BP.
Meta makes a play for prediction markets
In 2016, back when Facebook was still called Facebook, its C.E.O., Mark Zuckerberg, held an all-hands meeting with employees where he spoke about how to deal with the company’s competitors. He relayed what would eventually become an informal slogan: “Don’t be too proud to copy.” Weeks later, Zuckerberg would clone Stories, a feature pioneered by Snapchat, and place it inside Instagram.
Nearly a decade later, Zuckerberg continues to abide by that ethos. The latest example? His company, now called Meta, is developing a prediction market app that could compete with platforms like Polymarket and Kalshi, according to Mike Isaac and David Yaffe-Bellany, who were first to report it for The Times.
But the move may draw more regulatory scrutiny on a tech giant frequently in Washington’s cross hairs.
The details: Internally, the stand-alone app is referred to as “Arena.” Users would probably wager with points rather than cash, though the company has not ruled out adding real-money bets eventually.
Fast-follow: Prediction markets have surged in popularity over the past few years, allowing users to wager money on outcomes as varied as the Super Bowl and the length of the State of the Union address.
The amount of money bet on Kalshi and Polymarket combined this year has already more than doubled over last year, to $130 billion from $50 billion. Jumping on the prediction markets trend, company insiders say, is “classic Mark.”
When it comes to “buy versus build,” Zuckerberg has preferred to whip out his checkbook. His $1 billion acquisition of Instagram in 2012 is the most prominent example of that approach. He forked out billions more in 2014 to purchase WhatsApp, which has since grown to more than three billion monthly users.
With a market cap of more than $1.4 trillion, Meta could presumably afford to buy one of the privately held prediction markets. Polymarket was recently valued at $14 billion by its investors, and Kalshi was given a $22 billion valuation in May.
But Meta has backed off buying competitors lately, after facing numerous regulatory challenges from both the Trump and Biden administrations. Executives at the company have urged their teams to start building instead.
The move could draw new regulatory attention to Meta. Patterns of suspicious betting on the existing markets have already caused concern in Washington. And shortly after The Times’s story on Arena was published, Senator Richard Blumenthal, Democrat of Connecticut, urged his followers to help stop the app in a post on social media.
Meta employees describe Arena as experimental and caution that it may not be released. But as prediction markets continue to grow in popularity, don’t expect Zuckerberg to drop the idea anytime soon.
Number of the day:
556,850
The number of “ultrawealthy” people globally — those with a net worth above $30 million — at the end of 2025. That’s according to the latest annual ranking by the wealth-intelligence firm Altrata. The ranks of the superaffluent grew 14 percent year on year, according to Altrata, coinciding with the A.I. boom.
“Everyone knows who Larry is”
Larry Ellison is worth an estimated $219 billion. He hasn’t been shy about throwing some of it toward the Trump administration.
The Wall Street Journal has taken a close look at the relationship between Ellison and President Trump, and how much the Oracle co-founder, already a prolific political donor, has given.
Following the money:
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Ellison gave about $45 million to a political nonprofit group supporting Trump’s 2024 presidential campaign, The Journal reports, citing unnamed sources.
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He has donated millions to pro-Trump groups since then, The Journal adds. Oracle is listed as a corporate sponsor of Freedom 250, an initiative aligned with the president to celebrate the country’s 250th anniversary.
Ellison companies have benefited in Trump’s second term. The administration chose Oracle as a key partner for its $500 billion plan to build data centers in the U.S., and Oracle was a member of the investor group that bought control of TikTok’s U.S. operations in a deal brokered by the government.
David Ellison, a son of Larry, has also been able to rapidly expand his media empire under the Trump administration, buying Paramount and striking a deal for Warner Bros. Discovery, transactions that the Justice Department has blessed.
How close are Ellison and Trump? Ellison now officially resides in Florida, near Mar-a-Lago, instead of in his longtime home base in Hawaii. Another example, from The Journal:
Trump was inaugurated for his second term on Jan. 20, 2025. A day later, Ellison arrived at the White House for the unveiling of the Stargate project, a $500 billion, privately funded initiative anchored by Oracle’s cloud infrastructure.
There was just one issue: Ellison didn’t have his passport or a government-issued ID with him. White House protocol requires all visitors, regardless of status, to present government ID to the Secret Service for entry.
When the issue reached the president, Trump personally intervened to get Ellison through, telling security “everyone knows who Larry is.” Ellison was ultimately escorted into the Roosevelt Room.
THE SPEED READ
Deals
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SK Hynix, the South Korean chip giant, plans to raise $29.4 billion via a stock listing in the U.S., taking advantage of huge investor interest in memory chips. (Bloomberg)
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Equities traders at Goldman Sachs are said to be on track to generate more than $5 billion of revenue in the second quarter, and could beat the group’s recent record of $5.3 billion. (Bloomberg)
Politics, policy and regulation
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The Trump administration plans to provide $17.5 billion in loans to build 10 large nuclear reactors to power data centers. (AP)
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Venezuela is reportedly set to disclose that it has $240 billion in debt, as the country prepares for the world’s biggest-ever sovereign financial restructuring effort. (FT)
Best of the rest
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Masayoshi Son of SoftBank is 68 years old. He just promised to run the tech giant for another 10 to 15 years. (Bloomberg)
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DJs at World Cup games have a secret weapon to fight loud boos from fans who hate mid-game “hydration” breaks: Willie Nelson singalongs. (CNN)
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