The money men aiding Robert Kennedy Jr.’s political surge

As the 2024 race heats up, President Biden faces a persistent thorn in his side: Robert Kennedy Jr., the scion of the Democratic dynasty, who both touts an array of fringe theories and boasts surprisingly durable poll numbers.

The Times notes that Mr. Kennedy is drawing support from an array of political outsiders. But perhaps his most powerful base is a group of financial and tech moguls, including the Twitter co-founder Jack Dorsey, who have given him money and something arguably more important: exposure.

Kennedy speaks to many of their interests. That includes things like cryptocurrency — he has spoken at industry conferences and accepts campaign donations in Bitcoin. Mr. Kennedy has also embraced some of their favored podcasts, speaking with popular hosts like Joe Rogan and the venture capitalists behind the show “All-In.”

And in endorsing Mr. Kennedy, Mr. Dorsey (who’s also a major Bitcoin booster) cited the candidate’s criticism of government censorship.

But Mr. Kennedy’s most powerful draw may be his iconoclasm, particularly his willingness to buck institutional thinking on matters like the benefits of vaccines. (That has led to YouTube removing a Kennedy interview because it promoted vaccine misinformation.)

“I think he is a lower-intellect, Democratic version of Donald Trump, so he attracts libertarian-leaning, anti-‘woke,’ socially liberal folks as a protest vote,” Robert Nelsen, an investor at Arch Venture Partners, told KFF Health News.

Well-heeled supporters have given him money and airtime. Figures including Elon Musk and the investor David Sacks have pushed for a public debate between Mr. Kennedy and Peter Hotez, a vaccine researcher who criticized Mr. Rogan’s decision to let the candidate spout unfounded conspiracy theories on his show.

Mr. Sacks and his fellow “All-In” co-hosts Jason Calacanis and Chamath Palihapitiya have had Kennedy on their podcast as well, praising him for being “willing to engage in vibrant debates” and “tearing down all these institutions of power.” Mr. Sacks, who with Mr. Musk also interviewed Kennedy in a Twitter Spaces event, and Mr. Palihapitiya held a fund-raiser for him this month that, according to CNBC, raised $500,000.

Meanwhile, the entrepreneur Mark Gorton helped create a Kennedy-focused PAC that, its leaders say, has raised at least $5.7 million. And CNBC reported that the investor Omeed Malik plans to host a $6,600-a-head fund-raiser in the Hamptons for Kennedy next month.

HERE’S WHAT’S HAPPENING

Smoke from Canadian wildfires again threatens U.S. cities. New York City and other places in the Northeast are facing the return of hazardous air quality, after whitish smoke enveloped Midwestern cities like Chicago. Mayors warned residents to take precautions, raising the prospect of further disruptions to outdoor activities and businesses.

The Kremlin moves to seize the Wagner Group’s empire. Russian officials told leaders in countries like Syria and the Central African Republic, where the mercenary group operated, that Moscow was assuming its operations there. Meanwhile, a top Russian general who had prior knowledge about the Wagner Group’s short-lived rebellion has reportedly been detained.

Nvidia warns against further U.S. curbs on A.I. chip exports. The semiconductor giant’s C.F.O. said that additional steps to limit sales to China of chips meant for artificial intelligence systems could “result in a permanent loss of opportunities” for U.S. companies in a major market. Shares of Nvidia fell yesterday after The Wall Street Journal reported on White House deliberations about new export rules.

Aspartame reportedly will be declared “possibly carcinogenic.” The World Health Organization will say next month that one of the world’s most popular artificial sweeteners could cause cancer, according to Reuters. Aspartame is used in countless products, including diet sodas, chewing gum and candy.

The fate of Microsoft’s big deal may be decided soon

Yesterday was a big day in proceedings over the F.T.C.’s effort to block Microsoft’s $70 billion takeover of the video game titan Activision Blizzard, with three key players testifying: Satya Nadella, Microsoft’s C.E.O.; Bobby Kotick, Activision’s leader; and Jim Ryan, who heads Sony’s PlayStation division (and gave evidence by video).

If the presiding judge agrees to delay the transaction, as the F.T.C. is asking, Microsoft’s deal will probably die. But if she doesn’t, the agency may drop its opposition.

Mr. Nadella and Mr. Kotick said the takeover wouldn’t hurt consumers. The Microsoft chief reiterated that top titles like Call of Duty wouldn’t be restricted to its Xbox platform. “If it was up to me, I would love to get rid of the entire ‘exclusives on consoles,’” Mr. Nadella said — and blamed Sony for maintaining that business model.

Mr. Kotick agreed: “You would have a revolt if you were to remove the game from one platform.” (That said, Mr. Ryan testified that he was worried about PlayStation receiving “degraded” versions of Call of Duty if the deal went through.)

But testimony showed that Microsoft isn’t averse to exclusives. The company’s gaming chief, Phil Spencer, has acknowledged that the company held discussions about excluding other Activision games from PlayStation.

The F.T.C. sought to highlight contradictions in Microsoft’s case, including Mr. Nadella’s recent boasts about sales figures for the latest Xbox console despite Mr. Spencer saying the platform was “not a robust business.” And the agency’s lawyers noted that Mr. Nadella had told investors the new business of cloud gaming was “one of the big bets that’s paying off,” despite downplaying the importance of that market in court.

A decision is expected as soon as Monday. At points, Judge Jacqueline Scott Corley seemed skeptical of the F.T.C.’s questions. Historically, the F.T.C. drops its opposition to a deal if it loses an injunction request.

If that happens, the last hurdle for Microsoft would be an appeal of a British regulator’s decision to block the transaction — a potentially even more uphill battle.

Central bankers issue a warning on inflation

Two big themes emerged from this week’s central bankers’ meeting in Portugal: Policymakers are far from finished raising interest rates as inflation remains stubbornly high, and it is not yet clear how high they will go.

A significant data dump on inflation comes tomorrow. The Commerce Department will publish its report on personal consumption expenditures (P.C.E.) at 8:30 a.m. Eastern, a few hours after the eurozone’s preliminary report on consumer prices is released.

Both reports are expected to show that headline inflation is cooling, but that prices are still well above policymakers’ 2 percent target. Jay Powell, the Fed chair, said yesterday that “core” inflation — which excludes energy and food prices — will probably not reach that level until 2025.

That is forcing the Fed’s hand on interest rates. Mr. Powell added that the Fed could raise rates at consecutive meetings — and keep them at a “restrictive” level for some time. On the subject of cuts, he said “we’re a long way from that,” adding, “That’s not something we’re thinking about now.”

The futures market this morning seems to be getting that message, betting on further rate increases this year and pushing out the forecast for cuts well into 2024.

The good news: Powell and his counterparts, including Andrew Bailey, the Bank of England governor, said that a strong labor market was keeping their countries out of recession — for now.

What to watch tomorrow: Economists forecast that “headline” P.C.E. came in at 3.8 percent in May, its lowest reading in two years. But “core” P.C.E. is expected to tell a different story, hitting 4.7 percent. A possible bright spot: Some economists expect that used car prices and rents will begin to recede this summer.

In Europe, inflation is running hotter. Its C.P.I. data is expected to show that prices rose by 5.7 percent from a year ago. Christine Lagarde, the E.C.B. president, has warned that inflation is beginning to become entrenched in all layers of the economy. Her antidote to that: More interest-rate increases are in the cards.

$1 trillion

— The drop in the value of deals announced in the first half of 2023, compared with the same period last year, according to Bloomberg. The fall in mergers, acquisitions and I.P.O.s makes this one of the worst periods for deal making in a decade, as high inflation, financing pressures and geopolitical tension have sapped activity.

How strong are the nation’s banks, really?

Months after Silicon Valley Bank’s collapse set off a panic over America’s smaller lenders, the Fed yesterday gave the country’s biggest banks a clean bill of health. But regulators warned that their recently concluded stress tests were just one way of evaluating stability — and that other risks could still pose a threat.

What the tests found: The country’s 23 biggest banks could withstand a 40 percent drop in commercial real estate prices — a major concern for lenders now — and $541 billion in losses without failing. They could also handle steep unemployment and sharp drops in home prices.

Though the examinations began well before SVB’s troubles in March, regulators did explore whether eight banks heavily involved in trading could withstand sudden panics in the markets for stocks, bonds and other financial instruments.

Bank investors were keenly watching the tests, since strong results mean that lenders are likely to have their capital requirements lowered, allowing them to buy back more stock or pay increased dividends.

Banks are expected to unveil their new capital requirements tomorrow, along with any changes in investor payouts.

But regulators warned that the stress tests aren’t the final word on banks’ health. “This stress test is only one way to measure that strength,” said Michael Barr, the Fed’s top banking supervisor.

Regulators are still overhauling the rules. Beyond ramping up supervision, authorities are expected to tighten capital requirements, including for smaller lenders. That said, even if SVB had been subject to this year’s tests, The Financial Times notes, it might still have passed.

• In other banking news: Bank of America is sitting on more than $100 billion in paper losses tied to bad bond trades, far more than its rivals.

THE SPEED READ

Deals

Artificial intelligence

• Top news publishers, including The New York Times Company, are reportedly discussing the creation of a coalition to address the effects of artificial intelligence on their industry. (WSJ)

• “How Easy Is It to Fool A.I.-Detection Tools?” (NYT)

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