Crypto News: Fear of bubbles

Microsoft reported Wednesday that its spending surged to a record high as cloud sales growth slowed, a one-two punch that sent the company's shares down 5% amid broader investor concerns that—and stop us if this sounds familiar—it might take too long for tech giants to see massive AI investments pay off.

Microsoft has been rushing to bake artificial intelligence tools, including those powered by OpenAI, into its products, betting that chatbots and automation technology will boost sales of the company's productivity software and cloud services. Capital expenditures for the fiscal second quarter hit $37.5 billion, up 66% from a year earlier and exceeding analyst estimates for $36.2 billion.

Still, others among the bubble set didn't get slapped around as badly. Meta got a more positive investor reception after conceding that it has been spending more than anticipated to build out its AI business. —Natasha Solo-Lyons and David E. Rovella

What You Need to Know Today

Wall Street's wisest have something other than AI to worry about. Kalshi, the booming platform that churns out predictions on everything from the Super Bowl to US elections, is showing early promise as an accurate forecaster of Federal Reserve policy and economic data. When it comes to predicting interest-rate decisions, Kalshi is "roughly consistent" with the pros, such as those surveyed by the Federal Reserve Bank of New York. In a notable case, the prediction market even outperformed humans when the central bank delivered a surprise, jumbo-sized cut.

Artificial Intelligence

The Bubble Is Getting Closer to Popping

CEOs at a few tech giants are now celebrities, with markets hanging on every word. But what may burst the AI bubble, Shannon O'Neil writes, isn't circular financing; it's Trump's trade and immigration policies.

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Central Banks

Fed Holds Rates Steady With a Nod to Stabilization in Unemployment Rate

Fed Chair Jerome Powell, who faces an unprecedented criminal probe by the Trump administration, says there is "clear improvement" in what's expected for the economy in the year ahead.

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Stephen Miller, the 40-year-old former Capitol Hill aide at the center of the Trump administration's immigration dragnet, sought to backpedal from his initial attacks on the victim in one of two killings by federal agents this month. The rare admission may be part of an internal blame-game between Trump's adjutants as a few members of their own party appeared to balk after Alex Pretti was shot dead.

A new internal government report buttressed multiple video analyses showing Homeland Security Secretary Kristi Noem falsely accused Pretti of brandishing a gun when she vilified the 37-year-old after he was killed by members of her department. Talk of impeachment is growing around the 54-year-old former South Dakota governor, who Axios reported has said she was following orders from Miller. Meanwhile, widening protests over the killings of Pretti and Renee Good, and against Trump's immigration policies in general, are scheduled to go nationwide on Friday.

Stephen Miller Photographer: Yuri Gripas/Abaca

US Representative Ilhan Omar of Minnesota, at a town hall meeting last night, was rushed by a man the Associated Press reported has made pro-Trump social media posts. Addressing the attack today, Trump—who has regularly made racially-tinged remarks about Omar to his followers—derided her further.

Omar, however, was the second Democratic member of Congress to be attacked in less than a week. The AP reported that Representative Maxwell Frost of Florida was punched in the face Friday night by a man spouting racial epithets and claiming Trump would deport him.

During her town hall, Omar urged the removal of federal agents from Minnesota, a possibility US Attorney General Pam Bondi reportedly alluded to in a letter demanding access to the blue state's voter roles. Democrats assailed what they said was Bondi's "ransom note" and how Trump is allegedly seeking to use state voter information to muddy the upcoming midterm elections.

On Wednesday, the Federal Bureau of Investigation, directed by Trump loyalist Kash Patel, launched a search of the main election office in Fulton County, Georgia, a raid reportedly tied to Trump's false claims about the 2020 elections. CNN also reported that the FBI planned to seize some of the office's election records.

Bloomberg Opinion

Pam Bondi's Offer to Minnesota Is Really a 'Shakedown'

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The Trump administration on Wednesday threatened to attack two different countries for a second time. President Donald Trump issued a warning to Iran as US naval ships arrive in the Middle East. The Iranian government has killed thousands of protestors in demonstrations over the past several weeks. Trump ordered a surprise attack on Iran last year aimed at its nuclear research facilities.

As for Venezuela, Trump's secretary of state, Marco Rubio, told Congress that Trump is prepared to attack the South American country again. US forces reportedly killed 100 people earlier this month as part of its renditioning of President Nicolas Maduro from Caracas. Trump, who originally sought to justify his targeting of Venezuela and civilian boats in the Caribbean over drugs, has since focused largely on controlling the country's oil reserves.

Starbucks Chief Executive Officer Brian Niccol delivered the best evidence yet that his turnaround plan is taking hold, with the coffee chain posting unexpectedly strong growth and a solid outlook for the rest of the year.

Global sales at established locations rose 4% in the most recent quarter, the company said in a statement. That topped even the most optimistic analyst expectations and built on positive results from the previous period after a lengthy slump.

Brian Niccol Photographer: Eugene Gologursky/Getty Images

New York City Mayor Zohran Mamdani is amping up pressure on Governor Kathy Hochul to hike taxes for the richest residents and corporations, asking the state to send billions of dollars more in aid to the Big Apple as he faces mounting budget holes left behind by ex-mayor Eric Adams.

Mamdani is arguing additional money from the state is necessary because the city faces a fiscal "crisis" created by budget decisions under the previous administration, and by a push from former Governor Andrew Cuomo to shift costs from the state onto the city.