Convicted
Guilty on all counts. Donald Trump is the first sitting or former president to be convicted of a felony in U.S. history, after a jury ruled that he falsified business records to cover up a sex scandal with a porn star that could have sunk his 2016 campaign.
In normal times, that might mean the end of his political ambitions. Instead, Wall Street and Silicon Valley money is flowing into his re-election campaign following the ruling.
Republican mega donors are energized. “This verdict will have less than zero impact on my support,” Omeed Malik, the president of 1789 Capital and a co-host of a Trump fund-raiser last night at the Pierre hotel, told Bloomberg. Andy Sabin, the metals magnate, was more direct. “I haven’t heard anybody who gives a …,” he told CNBC of the conviction, using an expletive.
The hedge fund billionaire (and Biden critic) Bill Ackman is set to back Trump, too.
Some big Silicon Valley names are doubling down. David Sacks, the venture capitalist who will co-host a San Francisco fund-raiser for Trump next week, called it a “sham trial” and said that the former president had lots of supporters in the tech world who were afraid to admit it. One who did is Shaun Maguire, a partner at Sequoia Capital, who gave $300,000 to the Trump campaign after the ruling, even though he acknowledged the decision could cost him friends and hurt business.
With the election likely to be decided by a handful of counties in swing states, the question is how much that big money heading to Trump will even matter.
Unhappiness with President Biden is one reason business moguls are backing Trump despite the multiple controversies. Trump’s tough-on-immigration, low-tax, regulation-shredding stance has been a big draw for billionaires who may be calculating that an endorsement or donation now will reap a bigger return if he wins in November. Another possible calculation: backing Trump at a low point could amplify that return even more.
Trump has also mustered support among voters. The Republican still leads in many polls even though yesterday’s ruling is his third straight court defeat (following the E. Jean Caroll defamation cases). Some supporters, like Steve Schwarzman, the Blackstone C.E.O., who distanced themselves from Trump over attempts to overturn the 2020 election and the Republicans’ poor showing in the 2022 midterms, and have U-turned to back him again.
Trump allies, such as Gov. Ron DeSantis of Florida, and die-hard critics of Biden like Elon Musk slammed the trial, with the tech entrepreneur saying the ruling damaged the “public’s faith in the American legal system.”
Trump’s campaign is also seeking to capitalize on the conviction. A “breaking news” banner was plastered on his campaign website with an urgent petition for cash, including “$100 if you think President Trump did nothing wrong!”
The Biden campaign hopes to exploit it. The White House sees an opportunity to cast the choice for voters in stark terms even if the ruling may do little to change the result of the election. “There’s only one way to keep Donald Trump out of the Oval Office: At the ballot box,” Biden posted on X after the verdict in a call for donations.
What’s next? X, Musk’s social media platform, will host live video town halls with Trump ahead of the election (It’s a sign of how their warming relationship could be good for Musk’s business empire.) Trump will hold a press conference today and is due to be sentenced on July 11, four days before the start of the Republican National Convention. Will he face prison? Could he pardon himself? That’s unclear. More certain is that he will probably appeal, dragging the case deeper into the campaign season.
HERE’S WHAT’S HAPPENING
Bill Ackman is said to be weighing an I.P.O. for Pershing Square. The billionaire investor is planning to take his firm public as soon as next year, The Wall Street Journal reports. He will sell a stake in Pershing Square before the I.P.O. that could value the firm at about $10.5 billion, as Ackman looks to capitalize on his growing public profile through his prolific use of social media.
Skydance has sweetened its offer for Paramount. The studio run by David Ellison has submitted an improved bid for the entertainment giant, DealBook has confirmed following a report in The Wall Street Journal. Skydance is now viewed as the front-runner in the race to merge with Paramount, which owns MTV, CBS and the movie studio behind “Top Gun,” after Sony and Apollo backed away from a rival $26 billion bid.
Eurozone inflation ticks up. Consumer prices rose by 2.6 percent on an annualized basis in May, higher than economists’ expectations. Still, the markets are pricing in that the European Central Bank will cut interest rates at next week’s meeting. Investors will now shift focus to U.S. inflation data, due at 8:30 a.m. Eastern.
TikTok is reportedly working on a clone of its algorithm. The company is hopeful that making a duplicate of TikTok’s source code would lay the groundwork for separating out its U.S. assets, according to Reuters. The clock is ticking for the popular video app to divest from its Chinese parent, ByteDance, or be outlawed in the U.S.
Crypto bulls target D.C.
The crypto industry has had a good few months, and it is using that momentum to widen its reach in Washington ahead of the election. Andreessen Horowitz, the Silicon Valley venture capital firm, is the latest to ramp up donations, saying it would give $25 million to promote pro-crypto candidates on both sides of the aisle.
Recent victories have inspired crypto donors to double down. Chris Dixon, who leads Andreesen’s crypto efforts, said yesterday that the firm’s donation to the Fairshake super PAC and others — bringing its total giving this election cycle to $47 million — followed “a big week in DC and a series of election wins for pro crypto candidates.” Last week alone, the House passed a crypto bill that could create more regulatory clarity for the sector and the S.E.C. said it would allow the creation of exchange-traded funds tied to Ether, the second-biggest crypto token approved.
Crypto money is flowing into super PACs. Fairshake told Axios that its war chest was at more than $110 million, and crypto-backed super PACs had raised more than $100 million before the latest donations flowed in. The money has already been used to help defeat candidates seen as unfriendly to the industry, like Representative Katie Porter, the California Democrat who was angling for a Senate seat.
Supporters say sentiment on crypto is shifting in their direction. Ripple donated $25 million to Fairshake this week — its second gift of this size this election cycle — and said more would come as it faces off with the S.E.C. over XRP, its cryptocurrency. Brad Garlinghouse, Ripple’s C.E.O., said the donation sent “a message to backward looking politicians that their failed policies will not be tolerated!”
Crypto is winning new fans. Donald Trump, once a crypto antagonist, is now taking digital asset donations. And this month, Democrats and Republicans in both houses voted to nullify S.E.C. guidance on crypto accounting rules that the industry opposed. President Biden has signaled that he would veto the congressional resolution but has also indicated he is willing to work with lawmakers on crypto legislation. For the industry, these are all signals that their strategy is working.
A new front opens in the chip wars
The Middle East could become a new battleground in the fight between Washington and Beijing over chips, and that’s spooking tech investors as Chinese leader Xi Jinping holds talks with Arab leaders to bolster trade ties.
Shares in chipmakers Nvidia and AMD fell in premarket trading following a Bloomberg report that the Biden administration was slowing the licensing of high-end chips to the region for fears they could fall into the hands of Chinese companies. The companies’ semiconductors are seen as a crucial component in the development of artificial intelligence. The White House argues that keeping such technology away from Chinese companies is a matter of national security.
The Biden administration is reviewing how A.I. is being developed in the Middle East, especially in Saudi Arabia and the United Arab Emirates, according to Bloomberg. It’s uncertain how long the investigation will last, and what it may ultimately mean for chip shipments at a time when the Gulf region is tapping its oil riches to expand its A.I. capabilities.
The White House is in a tough spot with the Middle East. A string of U.S. tech giants, including Amazon, Google and IBM, have expanded their presence there and tap into the billions that oil-rich governments are spending to diversify their economies. Saudi Arabia has created a roughly $40 billion A.I. development fund, attracting the likes of heavyweight Silicon Valley investors like Andreessen Horowitz. And Washington has already flexed its muscles: Last month, it orchestrated a deal to force Microsoft to invest in G42, an Emirati A.I. start-up, to box out China.
Trade barriers have slowed Chinese companies’ access to advanced tech, but haven’t cut them off entirely. The CHIPS and Science Act in 2022 was supposed to restrict U.S. exports of high-end semiconductors to China. But Chinese companies have found workarounds, often relying on a network of global business partners to secure the banned components. The new review by administration officials could be seen as a way to plug some of those holes.
China sees commercial and diplomatic opportunities in the Middle East. Xi is holding a summit with Arab leaders in Beijing this week in an effort to deepen ties. Earlier this week, Lenovo, the Chinese tech company, said it would sell $2 billion worth of bonds to Saudi Arabia’s sovereign wealth fund and build a research and development hub in Riyadh.
THE SPEED READ
Deals
Citadel Securities named Jim Esposito, a top former Goldman Sachs executive, as president as it goes head to head with Wall Street in the lucrative market-making business. (Bloomberg)
Brookfield, the infrastructure investment giant, is said to be teaming with Singapore’s investment fund Temasek to buy a French wind power developer, Neoen, for $6.6 billion. (FT)
Policy
Elon Musk agreed to testify in an S.E.C. investigation into his 2022 purchase of Twitter. (Reuters)
The U.S. Labor Department accused Hyundai and three other companies in a lawsuit of using child labor on an assembly line in Alabama. (NYT)
Best of the rest
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