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   DealBook: DeSantis and Twitter’s rightward march
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   Also, Wall Street is beginning to price in a debt default.
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             May 24, 2023
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              Good morning. In today’s DealBook: what Gov. Ron DeSantis’s campaign announcement on Twitter means for Twitter; Wall Street is increasingly fearful of a U.S. default; why the S.E.C.’s climate-disclosure rules are still in limbo; and the U.S.-China chip war heats up. (Was this newsletter forwarded to you?
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                  Gov. Ron DeSantis of Florida is expected to announce on Twitter that he’s running for president.
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             What DeSantis means for Twitter
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             Gov. Ron DeSantis of Florida is expected to finally announce his presidential campaign tonight — but not on a stalwart of conservative media, like Fox News. Instead, the Republican star will
             <a class="css-5nb5nb" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              do so live on Twitter
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             , in a conversation with Elon Musk.
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             The move underscores both that Twitter, under its billionaire owner, has moved to embrace the political right and that DeSantis’s top business supporters so far are tech-industry libertarians, rather than traditional Republican moguls.
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              Twitter is becoming a conservative media hot spot in the Musk era.
             </span>
             That started last year, when the company
             <a class="css-5nb5nb" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              lifted bans
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             on thousands of accounts, including ones that had spread misinformation about the pandemic and the 2020 elections.
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             Since then, Tucker Carlson has said he would revive his show on the social network after losing his Fox News slot, though Musk has said that Twitter
             <a class="css-5nb5nb" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              hasn’t signed a deal
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             with him. And The Daily Wire, a conservative media outlet, will reportedly make Twitter the home for
             <a class="css-5nb5nb" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              all its podcasts
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             .
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             In some ways, as Axios notes, Twitter is benefiting from
             <a class="css-5nb5nb" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              conservative dissatisfaction with Fox News
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             , and can claim to be outside the mainstream media world that Rupert Murdoch’s network inhabits.
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              Musk himself has more openly embraced the right.
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             Though the billionaire said he voted for President Biden in 2020, the two have since clashed over issues including the White House’s embrace of unions.
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             While Musk has expressed support for DeSantis before, the Twitter owner said yesterday that he
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              wasn’t formally backing
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             any Republican candidate. Indeed, earlier this week Musk retweeted a campaign kickoff video for Senator Tim Scott of South Carolina.
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              The business consequences for Twitter remain unclear.
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             <a class="css-5nb5nb" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              Musk’s approach
             </a>
             is markedly different from the more politically neutral stance that other social media companies have tried to strike. Twitter has already seen a number of left-leaning users defect to other platforms.
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             It’s unclear how Musk’s approach will affect efforts by Twitter’s incoming C.E.O., Linda Yaccarino, to woo mainstream advertisers. While some progress has already been made, skittish brands may be tempted to flee again if the platform grows more overtly political.
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              DeSantis’s move highlights his mixed relationship with business.
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             The Florida governor has supported legislation to rein in “Silicon Valley elites.” But he has also won
             <a class="css-5nb5nb" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              support from tech libertarians
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             including the venture capitalists David Sacks (who is participating in today’s Twitter event) and Joe Lonsdale.
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             Outside tech, DeSantis’s publicly known business supporters include David Horowitz, a real-estate magnate, and the financier Hal Lambert,
             <a class="css-5nb5nb" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              according to CNBC
             </a>
             . But so far they
             <span style="font-style:italic;font-size:inherit">
              don’t
             </span>
             include stalwart Republican donors like Ken Griffin and Steve Schwarzman, some of whom have taken issue with DeSantis’s social policies.
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             HERE’S WHAT’S HAPPENING
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
              Target pulls some Pride Month merchandise after threats from customers.
             </span>
             The retailer said it had “
             <a class="css-5nb5nb" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              experienced threats
             </a>
             impacting our team members’ sense of safety and well-being while at work,” many tied to swimwear meant for transgender women. That echoes conservative objections to other attempts at catering for transgender customers, including against Bud Light.
            </p>
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             <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
              Binance reportedly mixed customer money with corporate funds.
             </span>
             The world’s largest crypto exchange
             <a class="css-5nb5nb" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              commingled cash
             </a>
             from each in 2020 and 2021, according to Reuters, which cited unnamed sources and bank records. If true, that could violate U.S. financial regulations; Binance denied the report, and Reuters said it had found no evidence that customers lost money.
            </p>
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             Continue reading the main story
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              Meta prepares for more job cuts.
             </span>
             The social media giant reportedly plans to
             <a class="css-5nb5nb" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              lay off thousands more workers
             </a>
             today. Meta, the parent of Facebook and Instagram, already announced in March that it was laying off 10,000 employees amid a slumping digital advertising market.
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
              Bernard Arnault’s crown as the world’s wealthiest person gets wobblier.
             </span>
             The LVMH chief’s net worth
             <a class="css-5nb5nb" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              fell by $11 billion
             </a>
             yesterday, amid investor concerns that a slowing U.S. economy will dampen a booming market for luxury goods. Arnault’s fortune is about $191.6 billion on paper, according to Bloomberg — just $11 billion ahead of Elon Musk.
            </p>
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
              Netflix finally moves to crack down on password-sharing in the U.S.
             </span>
             The streaming giant announced that American subscribers would need to start
             <a class="css-5nb5nb" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              paying $8 a month
             </a>
             to add users to their accounts. It’s a push for more revenue, reversing Netflix’s yearslong indifference to shared accounts.
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            <h2 class="css-12n1aic" style="color:#000;font:700 25px/32px arial,sans-serif;margin:0 0 10px">
             Wall Street is preparing for the worst
            </h2>
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             With debt-ceiling negotiations bearing no fruit and the “X-date” — the point at which the government will run out of cash to pay its bills — arriving as soon as June 1, the market is starting to price in a worst-case scenario.
            </p>
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             <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
              Stocks suffered their biggest sell-off in three weeks yesterday
             </span>
             , and S&amp;P 500 futures this morning point to further losses. Citing the deadlocked talks, analysts at JPMorgan Chase suggested that investors
             <a class="css-5nb5nb" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              dump stocks for cash
             </a>
             .
            </p>
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             In a further sign of uncertainty, investors are
             <a class="css-5nb5nb" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              offering more
             </a>
             for Microsoft corporate bonds that come due in August than they are for Treasury bills that mature in the same period, a sign they see the government debt as more risky.
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             <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
              Markets are increasingly worried a timely deal might be out of reach.
             </span>
             Beyond the current impasse, investors have been worried that Speaker Kevin McCarthy may not be able to win over significant portions of his fellow House Republicans, and he has only a slim majority.
            </p>
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             Meanwhile, the three major credit rating agencies would be
             <a class="css-5nb5nb" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              compelled to downgrade America’s debt
             </a>
             if the government missed even a single repayment, The Times’s Joe Rennison reports. Even the prospect of reaching the X-date with no deal could be enough for Moody’s to review its outlook, said William Foster, the agency’s lead U.S. analyst.
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             Any downgrade would kick the U.S. out of an exclusive club of 12 nations with the highest credit rating, which includes Canada, Germany and Singapore.
            </p>
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
              Some commentators fear the U.S.’s fiscal reputation has already taken a hit.
             </span>
             “We are sending a very negative signal about our ability to run our economy, let alone be an anchor for the rest of the world,”
             <a class="css-5nb5nb" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              Mohamed El-Erian
             </a>
             , an economist and an adviser at Allianz, told CNBC yesterday.
            </p>
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       </div>
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            <h2 class="css-12n1aic" style="color:#000;font:700 25px/32px arial,sans-serif;margin:0 0 10px">
             What happened to the S.E.C.’s climate disclosure rules?
            </h2>
           </td>
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         </tbody>
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       </div>
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             More than a year has passed since the S.E.C. proposed rules to make companies disclose emissions data and other climate-related risks — and DealBook hears the agency is
             <a class="css-5nb5nb" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              nowhere close
             </a>
             to finalizing them.
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             Why? The complexity of designing such rules is one reason. But the legal landscape has also changed since last year, making it more difficult to write regulations that could withstand court challenges.
            </p>
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
              The Supreme Court is inclined to limit agencies’ power.
             </span>
             Several justices have embraced what’s known as the “major questions doctrine,” which holds that Congress, not executive-branch regulators, must decide issues of economic and political significance.
            </p>
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             It shot to new prominence last June, when the court struck down an E.P.A. rule on power plant emissions.
            </p>
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
              There’s no clear path to overcoming that doctrine.
             </span>
             Gary Gensler, the S.E.C.’s chair, told DealBook last year that the E.P.A. case set a “significant” precedent that would affect the agency’s drafting of climate rules.
            </p>
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             The S.E.C. will need to make the case that it has a history of requiring environmental disclosures from companies and the congressional authority to do so. (The agency didn’t respond to a request for comment.)
            </p>
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
              The S.E.C. is also worried about a challenge on First Amendment grounds.
             </span>
             Regulators expect to face lawsuits claiming that the required disclosures are unconstitutional. While the S.E.C. has fought cases like that before,
             <a class="css-5nb5nb" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              not always successfully
             </a>
             , it now faces a conservative supermajority on the Supreme Court that looks dimly at any expansion of executive power.
            </p>
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             That said, companies operating globally will still need to prepare for climate disclosures: The European Union and other regions are moving ahead with their own mandates.
            </p>
           </td>
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            <h2 class="css-12n1aic" style="color:#000;font:700 25px/32px arial,sans-serif;margin:0 0 10px">
             “Even if you were, like, an evil C.E.O. trying to replace all journalists with A.I., you would be very unsuccessful.”
            </h2>
           </td>
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             <span style="font-style:italic;font-size:inherit">
              —
             </span>
             <span style="font-style:italic;font-size:inherit">
              <a class="css-5nb5nb" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
               Jonah Peretti
              </a>
             </span>
             <span style="font-style:italic;font-size:inherit">
              , the C.E.O. of Buzzfeed. The digital media publisher, which shut down Buzzfeed News last month, has embraced artificial intelligence in an effort to boost revenues and revive its battered stock price.
             </span>
            </p>
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            <h2 class="css-12n1aic" style="color:#000;font:700 25px/32px arial,sans-serif;margin:0 0 10px">
             The heat is on in the chip war
            </h2>
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        </table>
       </div>
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             After Beijing fired back in its trade war with Washington by partially banning some chips from Micron, the Biden administration and its allies are considering investment restrictions that would reduce the extent of Western companies’ business in China.
            </p>
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             <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
              U.S. and European trade envoys are expected to discuss the matter next week.
             </span>
             At the gathering of the Trade and Technology Council, officials are expected to discuss subjects like
             <a class="css-5nb5nb" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              restricting the flow
             </a>
             of investment and intellectual property to China, according to Bloomberg. The wording is still being negotiated, but limits on semiconductor exports are seen as a key part of any framework agreement.
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             The escalation of tensions follows last weekend’s Group of 7 summit, at which Western leaders pressed China on issues including trade and Taiwan. Seemingly in response, Beijing announced its clampdown on Micron and promised to
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                is scheduled to meet today
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               with her Chinese counterpart, Wang Wentao, in an effort to “thaw” relations. It would be the first meeting of this kind at cabinet level under the Biden administration.
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                introduce trade curbs
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               on a Chinese chip maker, ChangXin Memory Technologies, in retaliation for Beijing’s move against Micron.
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                Anthropic
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                derailing his plans
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               for bullet trains. (Politico)
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               on how to regulate A.I.” (Semafor)
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               Tech executives are looking to the government to address the prospect of artificial intelligence
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                wiping out millions of jobs
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               . (NYT)
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               Are Japanese families’ Netflix and Disney+ subscriptions
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               ? (Insider)
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                proud to own the failure
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               .” (Variety)
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