Business

1. OpenAI stays nonprofit
2. Welcome back, 3G
3. Fed “bends with the wind”
4. Treasurys non-warfare
5. Trump’s Gulf stakes
6. Media activism picks up

Hi from Los Angeles, where the mood at the Milken conference is better than you’d expect. Finance’s heavyweights are gathered at the event named for Wall Street’s favorite pardoned felon, whose pivot to philanthropist-convener is a fitting backdrop for the reinvention of another celebrity of the 1980s junk bonds era.

Plenty of high-wattage attendees at Michael Milken’s conference have stories about lending to, negotiating with, or restructuring debt for Donald Trump. Most are unpleasant. The rest are now focused on navigating the world Trump has created over the past 12 weeks.

Attendees at this week’s gathering — theme: “Toward a Flourishing Future” — were, meeting by meeting in Beverly Hills hotels, talking themselves into supporting an agenda of tariffs, tax cuts, and deregulation that Treasury Secretary Scott Bessent called “interlocking parts of an engine.” The tariffs are here. The tax cuts and deregulation are political promises from a president who is losing political capital by the day. Kristalina Georgieva, head of the International Monetary Fund, gave voice to executives and investors everywhere when she said, of Bessent’s trust-us message, “The way from here to there — very uncertain.”

Bessent popped by a private dinner Sunday night at the Beverly Hills home of financier Steven A. Cohen, whose attendees included Blackstone’s Joe Baratta, Citigroup’s Jane Fraser, and Alphabet’s Ruth Porat. In something of a metaphor for what the capital class has hoped for and not gotten from Trump’s finance team, it was a pit stop: He was in and out, with no remarks for the group.

OpenAI sidesteps toward profit-seeking

OpenAI won’t become a for-profit company after all. Under pressure from both former employees and the world’s wealthiest man, the company’s commercial operations will instead reorganize as a public benefit corporation, a legal structure that allows executives to chase profits but not at the expense of a mission (here, ensuring that OpenAI benefits humanity).

The move comes after Elon Musk sued OpenAI last year to block its for-profit conversion. Sam Altman dismissed the suit as a bid to “slow down a competitor,” but pressure began to mount when a group of former employees asked attorneys general in California and Delaware to intercede. When SoftBank cut a $30 billion check to the AI company this year, it linked a third of that money to OpenAI successfully transitioning to a for-profit structure.

So OpenAI’s move is more a side-shuffle than a backtrack: “‘Hooray for humans,’ you might think,” writes Bloomberg’s Parmy Olson, but you would be wrong. The move lifts caps on the profits that its existing investors can expect to receive, which keeps the profit motive alive and well. And life as a B Corp, as they are known, isn’t always smooth. See: Ben & Jerry, which made the switch in 2012, but has been mired in mission-versus-profit headaches ever since.

3G buys tariff-whipped Skechers

Welcome back, 3G. The US-Brazilian private-equity firm — known for its buyouts of blue-chip household companies, with varying degrees of success over the years — is back this week with its first deal since 2021, a $9.4 billion takeout of Skechers.

3G was once a marquee M&A player feared and respected for its ruthless cost-cutting, a playbook described by Fortune as “buy, squeeze, repeat.” It worked on Anheuser-Busch and Burger King, less so on Kraft-Heinz. (3G’s founder, Jorge Paulo Lemann, is an investor in Semafor.)

The Skechers deal comes after the sneaker company’s trade group flagged President Donald Trump’s tariffs as an “existential threat” for the industry, which makes most of its products in China and other Asian countries at risk for levies. The deal’s 30% premium looks more like 4% when set against Skechers’ share price before “Liberation Day,” when talks with 3G were already ongoing, people familiar with the matter said.

We don’t often flag advisors, but a few worth noting here. Paul Weiss, 3G’s lawyers, picked up their first big M&A mandate since starting a cascade of law firms caving to the Trump administration; faded boutique investment bank Greenhill nabs its biggest sole assignment in a long while; and JPMorgan is providing $5 billion of financing — pushing back on the narrative that private credit funds are eating banks’ lunch.

The economist who saw Trump coming

“There’s no constitutional protection to the Fed — none, zero.” That was economist Ken Rogoff, who said in an interview with Semafor’s Ben Smith that the central bank could be brought under the White House’s thumb “in the blink of an eye,” with a little help from a pliant Congress.

To be clear, Rogoff, who was from 2001 to 2003 chief economist at the International Monetary Fund, thinks that would be a bad idea. But he says the Fed has stopped being the impartial monetary authority its defenders portray. “It bends with the wind,” he said. “Under Biden they produced all this research on inequality and the environment. And they’ll bend with the wind with Trump. So it’s already in some sense not independent.”

Rogoff’s new book, a lively but ultimately gloomy read called Our Dollar, Your Problem, is out this week.

Foreign powers refrain from Treasury tit-for-tat

“Nice bond market you have, would be a shame if anything happened to it,” go the conspiratorial whispers these days that foreign governments are dumping Treasury bonds in retaliation for Trump’s tariffs.

Japan’s financial minister said this week that the country’s central bank, the largest foreign holder of US government debt, had no plans to sell, clarifying earlier comments that its $1 trillion-plus holdings could be “among such cards… on the table” in trade talks. Washington’s second-largest creditor, China, can also ill-afford to use its Treasury bonds as a bargaining chip: Dumping a portion of its holdings would tank the value of the rest and hamstring Beijing’s ability to manage its currency, WSJ’s Lingling Wei writes. China would also need to find somewhere else to park that cash, and its own government bonds and those of other safe havens like Europe are yielding far less than US Treasury debt.

Canada’s new prime minister, Mark Carney, fed the rumors in delightful, Francis Urquhart-esque fashion, telling Canadian TV’s version of John Oliver that he “couldn’t possibly comment” on whether he threatened in a phone call with Trump to sell Canada’s Treasury bonds. As a two-time central banker — he ran both the Bank of Canada and Bank of England — he knows the pain points, and the entire interview is worth a watch, if only to see the buttoned-up financier respond to news that he has “Big Daddy Energy.”

Trump’s sons prime the pad for Middle East tour

Trump arrives next week for a trip around the Gulf that will be all about business, Semafor’s Mohammed Sergie writes. The hottest ticket will be the Saudi-US Investment Forum, an invitation-only gathering on May 13 where officials and executives will discuss trillions of dollars in deals. The president’s sons Eric and Don Jr. have also been jet-setting around the world, including the Gulf, to strike billions in real-estate and crypto deals that directly benefit their father, The New York Times reports.

The Trump family businesses are held at arms-length from the president, the White House says, but the patriarch still manages to direct his children in plain sight. Harvard and the Trump Organization shared a lawyer — Quinn Emanuel’s Bill Burck — until the president suggested via his Truth Social account that his sons fire him.

Activists come for the media moguls

Barry Diller’s IAC this morning bemoaned the “substantial discount” investors have accorded his media conglomerate. The company is worth less than the sum of its parts and is facing pressure from an activist investor.

CEOs complaining that their shares are undervalued is old fare, and media companies’ gripes go back to the 1980s, when ABC’s finance chief moaned that his company was “worth more dead than alive.” But there is a renewed sense of urgency as legacy media companies find themselves facing restive investors.

Activist hedge funds have typically stayed away from the sector, in part because its companies tend to be controlled by their moguls (Diller controls more than 40% of the vote at IAC). These companies have also been running activist playbooks on themselves, splitting up and recombining in an effort to get their stock prices up and compete with tech giants homing in on the content business.

With the stock market on sale and aging media companies on their heels, investors see a chance to extract value from the sector’s managed decline. IAC is contending with hedge fund Arkhouse, which has privately pushed the company to buy back more stock but is a believer in Diller’s “anti-conglomerate” model of incubating companies and then spinning them off, according to people familiar with the matter. (Diller’s company has $900 million in cash on its balance sheet and has now committed to retiring roughly 13% of its shares.)

Warner Bros. Discovery, meanwhile, added a new independent director under pressure from hedge fund Sessa Capital earlier this year. Warner isn’t a controlled company — its 2022 spin-off from AT&T came in the form of a single class of stock — and there has been some delightful discourse lately about whether CEO David Zaslav qualifies for mogul status. But there are few easy fixes for the company beyond merging with a larger player as the need for scale in streaming becomes painfully clear.

— Rohan Goswami

Correcting the Record

We got a small glimpse of the absolute boardroom panic over today’s political climate after I wrote a story last week on how proxy advisory firm Glass Lewis plans to largely exit the business of weighing in on corporate elections, which had invited criticism from conservatives and congressional investigations. Company executives declined to comment for the article — but later sent a memo to clients to “set the record straight,” saying that Glass Lewis will continue to offer its “house view” and is merely “transition[ing] to a business model that accommodates … diverse perspectives.” About 80% of its clients already use a custom voting policy rather than simply relying on Glass Lewis’ voting recommendations, a number that has grown as US investors move away from ESG policies and European investors stick with it.

Awkwardly — for them! — I also have a copy of the draft announcement that informed our reporting, which suggests they’re now beating a hasty retreat from their hasty retreat. Here’s what it says:

• “Stated clearly and emphatically, Glass Lewis does not want to be the decision-maker.”
• “The end result of [these changes] … will be a significant shift away from use of the Glass Lewis house policy and to the vast majority of our clients using third party or custom policy guidelines that more clearly express their specific voting preferences and stewardship goals.”
• “Our role in the process will continue to be one of support, providing data, informed analytical insights, vote execution and excellent client service.”

You can read the full memo here.

— Liz

Want to get the latest investing news as soon as markets close? Brew Markets is a daily newsletter breaking down everything from AI revolutions to tariff turmoil, all with a dash of Morning Brew’s signature humor. Subscribe for free today.

➚ BUY: Buying in. Minutes before Melania Trump launched her own meme coin (and outraged some parts of the cryptoverse), a small band of traders made nearly $100 million in the gap between the launch of the token and the First Lady’s social media message announcing the coin, the Financial Times reports.

➘ SELL: Buying out. Private equity is no longer in its heyday, as firms are struggling to sell off trillions of dollars of assets, Egyptian billionaire investor Nassef Sawiris told the Financial Times. Stalled exits, poor returns, and the overuse of “continuation funds” to recycle capital — which he called “the biggest scam ever” — are to blame, he said.

Companies & Deals

• Jet-streamlined: JetBlue sold its venture arm as part of an effort to cut costs and refocus on its core airline business, Pitchbook reported Monday. It’s been a rough few years for corporate VCs, which were launched to seed potential acquisition targets and ride the startup boom. Those deals never materialized — PitchBook data shows that, since 2000, fewer than 4% of startups backed by corporate VC arms were acquired by that company — and public shareholders gave little credit for paper profits. Verizon, French energy giant Total, and SAP are among companies that have shut or downsized their venture arms.
• DealDash: US delivery company DoorDash bought its UK counterpart, Deliveroo, in a deal worth $3.9 billion. It also struck a $1.2 billion deal for Sevenrooms, a front-of-house software maker. Both deals were all-cash and represent a rare dealmaking bright spot, even as some investors fret about an economic slowdown. (Notable: Deliveroo, the leader in its sector in the UK, is one of a slew of European tech unicorns who left or are considering leaving the continent.)
• Incognito mode: The Trump administration’s attacks on DEI have pushed professionals in the field to rebrand, Bloomberg reports. Some are pivoting to broader HR roles and touting their leadership credentials over accomplishments, nudging their companies toward better racial and gender balance.

Watchdogs

• Trump fought the law and the law … won? Several law firms that struck deals with the White House to provide pro bono work said this week in letters to congressional Democrats that they won’t take up Trump’s pet political causes, The Bulwark reports. “We have not and will not restrict our pro bono activities or the positions we take on behalf of those clients,” read a typical letter from Cadwalader Wickersham & Taft.
• Stomp the yard: Harvard’s battle with the Trump administration continues, with the government blocking the university’s grant funding. The university’s president, Alan Garber, told the Wall Street Journal the fight “came to me,” and that he doesn’t disagree with the idea of “increasing ideological diversity on campus … It’s the means of achieving it” that bothers him. Experts are split on whether Trump’s freezing of Harvard’s federal funds is constitutional, and the last word may ultimately rest with the courts, Semafor’s Morgan Chalfant and Burgess Everett write.
• Another round: The US could collect more than $100 billion from new tariffs on European goods like pharmaceuticals, semiconductors, and copper, the EU’s top trade negotiator said Tuesday, as the bloc’s delegation headed to Washington. If talks fail, the EU could hit €100 billion worth of American goods with additional retaliatory levies, Bloomberg reported.

Markets

• Going long: The US dollar’s slump has many questioning whether it’s reached a turning point, allowing other global currencies like the euro to take the lead. The dollar has slipped roughly 9% against major currencies since Trump took office, accelerating as his turnabout tariff policies shakes economic confidence. A new survey of FX strategists by Reuters predict the global reserve currency will decline further in the coming year.

Clean energy companies in Europe and the UK are about to get a much-needed boost in the form of cheaper borrowing, as central bank officials push interest rate cuts as an antidote to US President Donald Trump’s tariff campaign, Semafor’s Tim McDonnell writes.

Cheaper financing in Europe could help turn the tide for renewable energy companies that are facing an increasingly hostile political climate in the US and finding new projects increasingly constrained by a shortage of transmission capacity on Europe’s electric grid.