Trump's Billionaire Backers, Icahn's Casino Stake, and Aramco's Bold Sale
Trump Support Surges, Icahn's Big Bet on Casinos, and Aramco's $13.1B Test
Billionaires Back Trump Despite Guilty Verdict in Hush Money Trial
Billionaires in the US are backing Donald Trump despite his guilty verdict in the hush-money trial. The wealthy Wall Streeters at the Pierre hotel concluded that he would still be their choice for the White House, even if the courtroom jury found him guilty as charged. This decision highlights the changing dynamics between Trump and some of the nation's financial leaders, particularly in monied Manhattan, where Trump first shot to fame and fortune. Trump's promises on taxes and regulation are winning over executives, even though he has now been convicted in the first criminal trial of a US president in the nation's history.
Trump's jury found him guilty of falsifying business records to conceal a hush-money payment to a porn star. The verdict capped an extraordinary seven-week-long trial, transforming election-year politics into a split-screen tableau of sex and scandal. Trump, the presumptive GOP nominee, enters the final stretch of a razor-thin race for the White House with a black mark that would end the career of virtually any other presidential hopeful. Trump is certain to appeal.
Carl Icahn Said to Build Sizable Stake in Casino Group Caesars
Carl Icahn has acquired a significant stake in Caesars Entertainment Inc., leading to a significant increase in Caesars shares in over 18 months. Icahn, who has a history of investing in the gambling sector, has a preference for Caesars management and has no plans for an activist campaign. Caesars reported disappointing first-quarter results in April due to poor weather conditions. Icahn's stake in Caesars was acquired in 2019 and he later pushed for the $8.6 billion merger with Eldorado Resorts Inc.
Saudi Arabia sets new test for international interest with $13.1 bln Aramco sale
Saudi Arabia and its bankers will begin taking orders for up to $13.1 billion worth of shares in its energy giant Aramco, marking a major test of international investor interest in its market. The kingdom and Aramco have detailed plans to sell up to a 0.7% stake in the state-controlled oil company, with 10% reserved for retail investors. The offering, codenamed Project Bond, has been trailed for months as a key step in drawing a broader range of investors after Aramco's record-breaking initial public offering (IPO) in 2019. The move will also further the kingdom's massive economic diversification programme. The sale comes as stock offerings globally have reached $247.4 billion in the year to date, the highest level since 2021. The sale coincides with a meeting of OPEC+ to decide its next production policies.
Trump says he will appeal historic conviction
Donald Trump has announced he will appeal the guilty verdict that made him the first US president convicted of a crime, falsifying business records. The verdict catapults the US into unexplored territory ahead of the Nov. 5 vote, when Trump will try to win back the White House from Democratic President Joe Biden. Trump's public criticism of jurors and witnesses during the trial could push the judge to impose a tougher penalty. Any sentence would likely be suspended until the appeals process plays out. House of Representatives Speaker Mike Johnson predicts the U.S. Supreme Court would eventually overturn the verdict. Trump's sentencing comes just days before the Republican Party is due to formally nominate him as its presidential candidate at its convention in Milwaukee.
Elon Musk Lobbies on X for His $46.5 Billion Tesla Pay Package
Tesla CEO Elon Musk is urging shareholders to vote for a proposed $46.5 billion pay package on June 13. Musk has shared a sizzle reel of Tesla's vehicles speeding through deserts at dusk on X, highlighting the importance of the package after a Delaware judge voided it in January. Tesla is now campaigning to get shareholders to reapprove the pay for Musk, who has helped build the company into the most valuable automaker in the world. Tesla has been posting on his behalf, and the company's board has publicly supported Musk's campaign, saying his performance merits the compensation. Musk's posts on X are part of his pattern of increasingly using X to benefit his other companies, such as SpaceX and SpaceX. Tesla's board chair, Robyn Denholm, has posted to a company-backed website advocating for his pay package. The outcome of the pay package is expected to be announced at the company's annual meeting on June 13.
U.S. Accuses Hyundai and Two Other Companies of Using Child Labor
The Labor Department has sued Hyundai over child labor in Alabama, holding the car manufacturer liable for the employment of children in its supply chain. The suit claims Hyundai was responsible for the employment of children at a Smart Alabama factory in Luverne, Alabama, which produces parts like body panels shipped to a Hyundai factory in Montgomery. The suit also claims that Best Practice Service recruited the children to work at the supplier's plant. Hyundai argues that child labor is not consistent with its standards and values and that the Labor Department used an unprecedented legal theory to unfairly hold Hyundai accountable for the actions of its suppliers. The suit comes after investigations by Reuters and The New York Times documented child labor by suppliers of car companies.
Bill Ackman plans Pershing Square IPO
Bill Ackman is planning an initial public offering of his hedge fund Pershing Square, potentially making it one of the few listed on public markets. Pershing Square is finalising the sale of a 10% stake in the firm, valued at $10.5bn, ahead of a potential float. This new valuation would increase Ackman's net worth by more than $4bn and make Pershing's chief investment officer Ryan Israel a billionaire. Ackman, known for his activist investment approach, owns a concentrated group of stocks including Alphabet, Hilton Worldwide Holdings, and Chipotle Mexican Grill. About half of the money raised through the stake sale will go towards the launch of a closed-end fund in the US, Pershing Square USA, later this year.
Saudi fund invests in China effort to create rival to OpenAI
Saudi Arabian fund Prosperity7 has backed China's leading generative artificial intelligence start-up, Zhipu AI, in a $400m investment round. The deal values the Chinese group at about $3bn. This investment demonstrates Saudi willingness to support an ecosystem that could guard against US dominance in AI. The US has been increasing pressure on countries to stop supporting China's tech sector through investments or exports of cutting-edge tech. Zhipu is the largest Chinese generative AI start-up by number of staff, with more than 800 employees in its headquarters in Beijing. The US has also tightened export controls on high-end chips used to train and run AI models.
With $14 Billion U.S. Steel Deal in Limbo, Nippon Steel Seeks Community Support
Nippon Steel has launched a charm offensive to win support for its planned acquisition of U.S. Steel, aiming to counter the deal's staunch critics. U.S. Steel shareholders approved the $14.1 billion takeover in April, but the deal remains bogged down by federal regulatory review and opposition. The United Steelworkers union, some members of Congress, and Cleveland-Cliffs, U.S. Steel's main rival, have panned the purchase. President Biden has expressed skepticism about the deal. Nippon Steel Vice Chairman Takahiro Mori met with business executives and government leaders in the Pittsburgh area, where the company plans to invest at least $1.4 billion to improve the performance of U.S. Steel's older mills. The company spends more than $500 million a year on research and development, compared to about $40 million by U.S. Steel. Nippon Steel is seeking to close its purchase by year's end, pushing back the deadline by a few months.
Apple Supplier STMicroelectronics to Build $5.4 Billion Chip Plant in Italy
STMicroelectronics is planning a new chip-manufacturing plant in Italy for around 5 billion euros ($5.42 billion), with state support. The facility in Catania, Sicily, will produce silicon-carbide semiconductor products for power devices and modules. Silicon-carbide chips are becoming more mainstream in electric vehicles and data centers, making them a key growth driver for semiconductor manufacturers. The company is seeking to expand production capacity as analysts expect a recovery in the semiconductor market. The investment includes about EUR2 billion in state support from Italy, after the European Commission approved the package in the form of a direct grant. The Biden administration is handing out billions of dollars to companies like Taiwan Semiconductor Manufacturing Co., Intel, and Samsung to invest in chip-making facilities in the U.S. The new plant in Sicily is the latest big-ticket investment in Europe.
When to sell your stocks
Professional poker players often fold when the game has barely begun, with amateurs more likely to proceed. This is because most hands are too likely to lose to be worth betting on, and the pros are better at judging when this is the case. Annie Duke, a former poker pro, argued that many factors stack the deck against people considering quitting, pushing them to act irrationally. Selling out of a position is harder to do well than buying into it, due to biases popularized by Daniel Kahneman and Amos Tversky. Pros are not better at making selling decisions analogously to buying ones, but they disproportionately select positions where relative performance has been very bad or good and exit those.
OPEC heavyweights are cheating on their targets
The Petroleum Exporting Countries (OPEC) and its allies, which produce 40% of the world's crude, are struggling to keep oil prices high and stable. The cartel is overproducing, and tensions will arise when members decide their strategy at OPEC's ministerial meeting on June 2nd. Factors contributing to the low oil prices include cooling tensions between Iran and Israel, falling inflation, and new supply from outside the cartel, especially America. The cartel has two types of cuts: compulsory reductions and voluntary cuts. However, individual producers have an incentive to cheat, selling above their quotas and free-riding on others' efforts to keep prices high. In 2025, extra supply from non-OPEC members is expected to hit the market, making it difficult for Saudi Arabia to maintain high levels of production without flooding the market. Mistrust among members is high, and the cartel is unlikely to reach a compromise that pleases everyone, increasing the temptation for members to misbehave.