TheChek News Flow

Three weeks into 2025, Apple has now updated its CarPlay website with one small, but noteworthy change: CarPlay 2 is no longer promised to arrive in 2024, thus confirming the delay.

Apple, however, says its work on next generation CarPlay continues…

Updated CarPlay site removes promised launch date, but Apple confirms ongoing development

Apple’s plans to ship CarPlay 2 (‘next generation of CarPlay’) have hit an official delay.

Apple’s website has been updated to remove any reference to a 2024 deadline (first seen by MacRumors).

In a statement to 9to5Mac, however, Apple said that it is still working with “several automakers” to implement the next generation CarPlay experience:

All throughout 2024, Apple’s CarPlay site claimed that the first models with CarPlay 2 would arrive in 2024.

Even in December, the language remained unchanged, leading some (myself included) to believe a launch announcement would arrive just before the deadline passed.

The same thing had played out the prior year, for example, when Apple promised the first CarPlay 2-supporting automakers would be announced. They kept that promise, just barely, with a December news drop.

But in 2024, Apple’s new CarPlay deadline came and went with no change.

What’s next after CarPlay 2’s delay?

Plenty of signs exist that Apple’s still working on its new CarPlay system, beyond the statement shared above—but it’s just not ready yet.

Personally, I’d love to see Apple take CarPlay in a new direction by building CarPlay 2 tools into the existing system. That way, millions of existing CarPlay users can benefit from the upgrades.

For now though, all we know is that Apple and its automaker partners are continuing to develop the next generation of CarPlay—and all we can do is wait.

Are you interested in getting CarPlay 2, or would you prefer that the first CarPlay just got better? Let us know in the comments.

The president’s embrace of rival Sam Altman sends a not-so-subtle message to the Tesla CEO

President Trump and Elon Musk aren’t an exclusive item.

That point was clear this week when the president welcomed OpenAI Chief Executive Sam Altman to the White House on the second day of Trump 2.0—a visit that left “First Buddy” Musk publicly fuming.

Abraham Lincoln had his “team of rivals.” And, it appears, Trump is going to have dueling entrepreneurs with big dreams competing for his attention and adoration.

The long-running feud between Musk and Altman reached uncharted waters of the White House as the tech billionaires try to sell the president and America on their sci-fi dreams for the future: traveling to Mars and creating godlike AI.

Altman, locked in a legal battle with Musk over OpenAI, made a savvy move to ingratiate himself and his AI company with Trump. The step was an apparent end-run around Musk, who has been working closely with the president, including toiling this week from a West Wing office.

At a time when other Big Tech Bros have made a bet that kowtowing to Musk while currying favor with Trump was the safest play, Altman made a bolder move.

He offered Trump one thing that the president is known to love from business leaders: headline-grabbing announcements about big American investments.

Nothing was bigger, however squishy in detail, than what Altman had Trump announce on Tuesday at the White House: a $500 billion plan—dubbed Stargate—to build infrastructure needed to make Altman’s AI dreams real. Technology that, Altman said, holds the promise of someday helping cure diseases at unprecedented rates.

“We will be amazed at how quickly we’re curing this cancer and that one, and heart disease,” he said.

Altman was joined by partners in the project, SoftBank CEO Masayoshi Son and Oracle Chairman Larry Ellison, for what was called the beginning of a “golden age,” language that echoed from Trump’s own inauguration speech a day earlier.

Trump called Altman “by far the leading expert, based on everything I read,” in AI. In response, the CEO credited the president with the project—even though parts of it began long before this week.

“I think this will be the most important project of this era,” Altman said. “To create hundreds of thousands of jobs, to create a new industry centered here, we wouldn’t be able to do this without you, Mr. President.”

The public embrace of Altman comes with a risk of angering Musk, whose own response, in turn, threatened angering the White House. A real dance-with-dragons situation.

The Tesla and SpaceX chief executive hasn’t been shy in saying he turned, in part, to supporting Republicans after feeling slighted by former President Joe Biden’s White House embracing rival automakers and their suggestion that General Motors was a leader in making electric vehicles. For years, Musk, who appointed himself Technoking, has also fashioned himself as a leader in artificial intelligence, warning governments around the world about the dangers of AI.

So maybe it wasn’t surprising that Musk was unhappy to see his nemesis at the White House.

His public reaction, however, roiled the chattering class in Washington, who clearly hadn’t been closely following the public feud between Musk and Altman. The two have had a war of words that’s gripped Silicon Valley as OpenAI’s breakthroughs have garnered attention and Musk has fought back with his own competing AI startup, xAI.

In a string of X postings, Musk undermined the White House announcement with just about every accusation possible—from calling Altman a swindler to questioning his loyalty to the president and claiming the group lacked funding for Stargate.

“This is great for the country,” Altman wrote at one point. “i realize what is great for the country isn’t always what’s optimal for your companies, but in your new role i hope you’ll mostly put [America] first.”

Trump’s second administration has, so far, been fueled in large part by dreams—the implicit promise that comes with the slogan “Make America Great Again.” He rode into office with an atypical mixture of populists and elites who’ve already shown fraying relations after November’s victory as they publicly bicker about the direction of Trump 2.0 from government spending to immigration policy.

Amid some of the biggest internal flare-ups has been Musk using his powerful bully pulpit to help shape public debate and media coverage.

This week, Trump gave supporters plenty to snack on during his inauguration celebration: His talk of planting the U.S. flag on Mars had Musk cheering. Then there were executive orders to appeal to those dreaming of cryptocurrency, cracking down on illegal immigrants, freeing J6 “hostages,” even those who pine for a “Gulf of America.”

“If we work together, there is nothing we cannot do and no dream we cannot achieve,” Trump said after being sworn-in as Musk sat behind him on stage at the U.S. Capitol.

The challenge comes when those dreamers run into each other, as they did with Musk and Altman.

Musk has built his fortune and reputation on selling his vision for the future to investors, customers and, this past fall, voters. At the core of Musk’s vision is traveling to Mars.

He celebrated Trump’s new term as a big step toward achieving that goal. “Can you imagine how awesome it will be to have American astronauts plant the flag on another planet for the first time?” Musk said at a post-inauguration rally.

The latest episode of Musk stepping on a Trump move renewed a question among insiders from Sand Hill Road in Silicon Valley to K Street in Washington, D.C.: Is this finally the time his public antics cracked their nascent bond?

The Trump-Musk relationship, after all, is still fairly new. After a publicly contentious relationship, Musk only publicly endorsed Trump in July, pouring more than $250 million into helping get him elected as well as wielding his social-media influence for the cause.

For now, it would seem, Trump understands Musk, big egos and personal grudges.

After almost two days of tension, Trump weighed in Thursday when asked if he was bothered by Musk’s actions. The president shrugged it off, saying he continues to talk to each man.

“He hates one of the people in the deal,” Trump told reporters of Musk, adding, “I have certain hatreds of people, too.”

Wall Street Banks Prepare to Sell Billions of Dollars of X Loans

Banks are hoping to sell the X debt at around 90 to 95 cents on the dollar

Banks are getting ready to sell billions of dollars in debt borrowed by Elon Musk’s X, bringing Wall Street a step closer to exiting the nerve-racking deal that financed the social-media company’s buyout.

Morgan Stanley bankers have reached out to investors ahead of a planned sale next week of up to $3 billion of debt the bank and others such as Bank of America and Barclays lent to complete Musk’s 2022 buyout of the company then known as Twitter, people familiar with the matter said.

The banks hope to sell senior debt at 90-95 cents on the dollar, while retaining more-junior holdings, the people said. The banks just sold approximately $1 billion of debt in a private transaction to several investors, some of the people said.

The debt has been an albatross on the banks since they backed Musk’s $44 billion deal with around $13 billion in financing. The price Musk paid for Twitter was high, even at the time of his purchase, and the company’s rocky performance had knocked down the value. The deal is considered one of the worst that banks agreed to finance since the 2008 financial crisis.

To sell the debt, bankers will have to convince investors that the company’s financials have stabilized. Musk’s recent rise in power and alliance with President Trump have seemed to help change the narrative around X’s fortunes.

Investors have been reaching out to the banks and have indicated interest in buying the company’s debt because they believe that the company’s financials are on an upward trajectory, one of the people familiar said.

In a January email to staff, Musk pointed to the company’s growing influence and power, but said the finances remain problematic.

“Our user growth is stagnant, revenue is unimpressive, and we’re barely breaking even,” he said in the email, which was reviewed by The Wall Street Journal.

Hours after the Journal’s article was published online, Musk posted on X saying that he didn’t send any such email.

The banks never disclosed how they value the loans on their books. Some of X’s equity investors had written down their stakes in the company by as much as 75%.

Banks don’t finance acquisitions intending to hold the buyout debt for long; usually, they will arrange a sale to outside debt investors within months of their commitment to finance the deal. But in volatile periods, when fewer investors are lining up as buyers, banks will opt to hold on to the loans for longer stretches to avoid selling it at a discount, locking in losses.

With the X debt, the banks have waited—and waited—for a moment when both the markets and the company’s financial health would open the window to sell without huge losses.

Meantime, X’s lenders, which also include Mitsubishi UFJ Financial Group, BNP Paribas, Mizuho and Société Générale, have been collecting hefty interest payments. Loans to companies like X typically pay out several percentage points more in interest than the benchmark rate for investment-grade credit.

After Musk bought the social-media company, major advertisers fled and the company’s revenue plunged. However, the company’s financials have been steadily improving as some brands have started spending again on the platform, people familiar with the company said.

Musk in his staff email tipped his hat to the current rising fortunes of the company.

“Over the last few months, we’ve witnessed the power of X in shaping national conversations and outcomes,” Musk wrote. “We are also seeing other platforms begin to adopt our commitment to free speech and unbiased truth,” he added, in a seeming reference to Meta Platforms’ recent decision to roll back fact-checking and adopt a user-driven Community Notes system similar to the one on X.

The stakes couldn’t be higher as President Trump’s nominees and advisers signal the new administration’s intent to roll back financial regulations. If done correctly, financial deregulation can spur entrepreneurship, boost economic growth, and increase wages. But if mishandled, it risks destabilizing the financial system and triggering a crisis on a scale that could dwarf 2008.

To understand the challenge, imagine a tug of war over a bank’s risk-taking. On one side, some executives and board members pull for high-risk, high-return strategies, enticed by the large payouts if those investments succeed. On the other side, investors with significant exposure to losses pull for prudence. But what happens when those advocating for caution let go of the rope? The result is excessive risk-taking, with dire consequences for financial stability.

Why would influential investors with significant exposures stop advocating for caution? The reason stems from a concept economists call “moral hazard.” When decision makers share the upside of risky bets but are shielded from the downside, they have little incentive to act prudently. In a healthy financial system, investors who stand to lose from a bank’s failures constrain excessive risk-taking. However, when these investors believe government bailouts will rescue them when things go wrong, they stop pulling for caution and join the side advocating for more risk.

Unfortunately, moral hazard has become entrenched in the U.S. financial system. Over the years, federal regulators, including the Federal Reserve, have repeatedly bailed out investors—sometimes even uninsured or nondeposit investors in large financial institutions. The Dodd-Frank Act was passed after 2008 to prevent another similar financial crisis. Instead, the law has unintentionally worsened the risk-taking dynamics in the financial sector. By codifying the Federal Reserve’s responsibility for all “systemically important” financial institutions, the act has effectively extended the protective bailout net, encouraging ever-riskier behavior.

The collapse of Silicon Valley Bank in March 2023 underscores this problem. Although many of the banks’ deposits exceeded the threshold for government guarantees, the authorities opted to make all depositors whole. That decision again signaled that even uninsured investors can expect to be bailed out the next time a bank fails. This only deepens the moral hazard problem, incentivizing banks to take greater risks, knowing that others will shoulder the losses.

The current regulatory approach attempts to counteract the powerful risk-taking incentives unleashed by government bailouts by constructing a vast regulatory and supervisory apparatus. But this comes with enormous costs. The apparatus burdens financial institutions with significant compliance costs that are ultimately passed to the public, and it impedes the efficient allocation of credit, slowing economic growth.

While deregulation seeks to alleviate these adverse effects, it must be approached cautiously. Rolling back regulatory constraints on risk-taking without addressing the root cause of moral hazard—bailout expectations—would only exacerbate the problem. It would loosen the grip of regulators pulling for prudence without replacing it with the steady hands of private investors duly incentivized by having their wealth on the line. A similar mismanagement of the timing of financial deregulation contributed to the 2008 crisis and numerous other financial crises worldwide.

What’s needed is a credible strategy to ensure that decision makers within financial institutions have genuine “skin in the game.” This means reforming policies that shield influential investors and executives from the consequences of their actions, exposing them to potential losses. Such reforms would realign incentives, restoring the natural tension that constrains excessive risk-taking.

Credibility is key. Regulators and policymakers can’t simply promise not to bail out uninsured investors. Investors won’t believe them because officials have repeatedly shown that they will bail out just about everyone when things go awry. If investors don’t believe they are exposed to potential losses, they won’t pull for prudence. They will continue to advocate excessively high-risk strategies, expecting the government to bail them out if those gambles fail. Without credibility, the tug of war over risk will remain dangerously imbalanced.

By aligning incentives before loosening restrictions, the administration can create a robust and dynamic financial system. Research consistently shows that well-executed deregulation can boost entrepreneurship, drive job creation, and improve living standards—especially for the middle class. But the sequencing matters. If deregulation is rushed without addressing moral hazard, the consequences could be catastrophic.

The choices made in the coming months regarding the sequencing of financial deregulation will shape the U.S. economy for decades. Getting it right could encourage growth and prosperity. Getting it wrong risks repeating a key mistake that underpinned the 2008 crisis, with devastating consequences for economic and social stability.

Tech leaders gathered at the White House this week to announce an ambitious new joint venture named the Stargate Project, aimed at building new artificial-intelligence data centers in the U.S. The effort promises investments of $100 billion in the first year, and $500 billion over four years.

But details remain sparse.

SoftBank CEO Masayoshi Son will handle the financing, CEO Sam Altman of OpenAI will contribute his overall AI expertise, and Oracle executive chairman Larry Ellison will oversee the buildout. All three joined President Trump on Tuesday for the Stargate announcement.

MGX, a new AI investment firm in the United Arab Emirates with ties to the government there, will be a financing partner. Microsoft, Nvidia, and Softbank-owned Arm Holdings were named as technology partners.

There are several unanswered questions about the project, the most important being where the money is going to come from. SoftBank has about $38 billion in cash and short-term investments on its books, and $80 billion in long-term debt. The firm raised $100 billion for its Vision Fund venture capital fund, but struggled with a follow-up Vision Fund 2. Softbank’s stake in Arm was worth over $140 billion as of Wednesday, and it could choose to sell shares to help finance Stargate.

Oracle has about $11 billion cash, to go with $80 billion in debt. OpenAI is a start-up, still dependent on investor cash. It last raised $6.6 billion in October.

MGX may shoulder much of the financial burden, but it isn’t clear what resources it can muster. MGX has three current investments, according to FactSet: OpenAI; Elon Musk’s xAI; and another richly valued start-up, Databricks.

Mubadala, the U.A.E. sovereign-wealth fund, is an MGX investor. According to its website, Mubadala has about $300 billion of assets under management, suggesting Stargate would be a big lift, even for a large sovereign-wealth fund.

Among other partners listed by MGX are BlackRock, Silver Lake, Bain Capital, and Vista Equity Partners.

Those are rich pockets, but $500 billion rich? We don’t really know, and the Stargate partners aren’t providing information.

SoftBank wouldn’t comment to Barron’s on the sources of Stargate funding. Nvidia and Arm offered general support for the initiative in their replies, but didn’t clarify their roles in the partnership. OpenAI’s own press release announcing the project didn’t offer financing details.

Elon Musk quickly cast doubt on the whole initiative. “They don’t actually have the money,” Musk, a key Donald Trump ally, wrote on X. “SoftBank has well under $10B secured. I have that on good authority.”

OpenAI CEO Sam Altman defended Stargate’s funding in a social media post: “Wrong, as you surely know,” he said in a reply to Musk on X. “This is great for the country. I realize what is great for the country isn’t always what’s optimal for your companies.”

On Wednesday, Arm CEO Rene Haas didn’t provide details on financing, but told CNBC: “I would say, rest assured, that you would not have the individuals you saw yesterday and the president all together with such an announcement if there wasn’t a lot of backing from a financial standpoint.”

The debate and questions about funding highlight the significance of the expenditures and the complex nature of AI model building and deployment, and the infrastructure needed to support it.

For a sense of Stargate’s proposed scale, Microsoft offers a good comparison. Microsoft is projecting $80 billion in capital expenditures in fiscal 2025, ending June—an 80% increase from 2024, which was a 58% rise from the year before that. Stargate wants to ramp from nothing to $100 billion, 25% larger than Microsoft’s planned outlay, all in one year. It’s a big ask, considering that Microsoft had $73 billion in annual free cash flow and Stargate currently has none.

Microsoft, Nvidia, and Arm were left out of the equity discussion, suggesting their balance sheets won’t contribute to the effort.

Microsoft has been OpenAI’s biggest investor. Its Azure cloud is the home to OpenAI’s signature ChatGPT service.

The new dynamic suggests bigger AI ambitions for both Microsoft and OpenAI.

“It is entirely plausible that the Stargate news was not forced on Microsoft, but that Microsoft viewed exclusively financing OpenAI no longer made sense from a risk and capital allocation standpoint,” said UBS analyst Karl Keirstead in a note to clients. “Put another way, OpenAI’s massive scale ambitions…may have been running up against Microsoft’s desire to exclusively serve them.”

Microsoft referred Barron’s to a Tuesday blog post that briefly alluded to Stargate, but went on to redefine its close relationship with OpenAI. Most of their agreement through 2030 remains, the blog post said, but Microsoft’s Azure cloud platform will no longer have exclusivity on new OpenAI computing demand, though it retains the right of first refusal on new cloud business.

While the partnership remains, there are cracks forming. They’re likely to reverberate across the tech landscape.

High Interest Rates Are Hammering Investors. What Lies Ahead Could Be Worse.

Rising rates would be bad news for bondholders and borrowers of all stripes, particularly the U.S. government. They cast a shadow over stocks, too.

For both bondholders and borrowers, the pain of higher interest rates may have only begun.

President Donald Trump will have to decide if he wants to be part of the problem—or part of the solution. Many of the political promises that got him elected, including tariffs, tax cuts, and heavy government spending, could push interest rates higher.

The bond market has gone through one of its most wrenching periods in history, capped by plummeting prices late last year and in early January. For investors, the rise in yields from an unprecedented zero percent to near 5% has meant the worst fixed-income returns in almost 90 years.

Housing has suffered a double whammy as new homes have become unaffordable for many buyers facing 7% interest rates on mortgages, which take their cue from bonds. And prospective sellers are frozen in place rather than trading their old 3% loans for much costlier ones.

The U.S. Treasury, the world’s biggest borrower, has felt the pressure of higher bond yields most acutely. After running budget deficits previously only seen during wars or recessions, the U.S. government’s total debt has grown larger than the U.S. economy. When it could borrow at rates under 1%, this debt appeared manageable. At current borrowing costs, the government’s interest tab is the fastest-growing part of its budget, surpassing defense expenditures in 2024.

To bond investors, who are Uncle Sam’s lenders, this burgeoning debt points to still higher interest yields and lower bond prices in the years ahead. That growth is driven by ongoing deficits totaling 6% of gross domestic product, which in turn are boosted by surging interest expense on existing and new debt.

High rates are hammering borrowers. Lower-quality companies, especially those that rely on bank loans and private credit, are seeing increased credit stress. Commercial real estate is in a tightening vise as old, low-cost loans have to be refinanced at higher rates while sectors such as office buildings remain depressed.

Then there’s the stock market. Equities will suffer if bond yields keep heading higher. Late last year and into early January, stocks stumbled as the yield on the benchmark 10-year Treasury note shot up from 3.6% to 4.8%. Then equities rallied as the Treasury yield fell back by a quarter of a point on better-than-expected inflation news. The S&P 500 index hit another record this past week.

Interest rates are also front and center for President Trump. In a Thursday video address to the World Economic Forum in Davos, Switzerland, Trump said he would “demand that interest rates drop immediately,” in a public signal to the Federal Reserve.

The problem is that the bond market may not follow the central bank’s lead this time. When the Fed cut its federal-funds target by 100 basis points late last year, the 10-year Treasury yield did the exact opposite, rising to its recent peak.

Regardless of Trump’s dictates to the Fed, the bond market “is likely to price in more uncertainty because of the inherent contradictions among many of Trump’s policies, the volatility around their application (for example tariffs), and still-too-large budget deficits,” writes Steven Blitz, chief U.S. economist of TS Lombard.

Blitz thinks 10-year Treasury yields could climb to 6%, a level not seen since mid-2000. That is especially true if the Fed ends its rate cuts and lifts the fed-funds rate to 5% to 5.25% in two years, from the current target range of 4.25% to 4.5%.

A 6% Treasury yield could translate into a 7% yield on corporate bonds. “This yield level can be problematic for the equity market,” Blitz concludes. “Institutional equity market investors will likely reassess allocations, and 7% yields could accelerate the natural bias for a net outflow from the equity market among aging baby boomers.”

The current near-5% Treasury yields only look high compared with the 1.5% to 2.5% yields levels that prevailed in the decade following the financial crisis of 2008-09, notes Richard Sylla, who literally wrote the book on the subject, A History of Interest Rates.

One of the lessons of this history is that long-term interest-rate cycles typically run for 20 to 40 years, Sylla tells Barron’s. Yields bottomed around 0.3% during the Covid-19 market panic of March 2020, says Michael Hartnett, chief investment strategist at BofA Global Research. Although Hartnett predicts that bond and stock markets will rally later this year as the 10-year yield dips under 4%, he sees rising bond yields as the No. 1 long-term risk faced by investors.

Until the post-Covid updraft, yields had been tumbling. Interest rates fell over four decades, starting in 1980, with staunchly anti-inflationary monetary policies, smaller government and deregulation, and broad globalization that saw the fall of the Soviet Union, China’s emergence in the world economy, and the North American Free Trade Agreement, or Nafta, Hartnett says.

After the financial crisis, that free-market orthodoxy was flipped, with interventionist fiscal and monetary policies. Central banks drove policy rates to zero (or below, in Europe and Japan), which was augmented by massive purchases of bonds to inject liquidity, known as quantitative easing. That bond buying accommodated deficit spending by governments while lifting asset prices.

At the same time, Hartnett says, populism took hold internationally, culminating with Donald Trump’s first presidential victory in 2016 and his reelection last year. Fiscal policies turned to “extreme excess,” with the U.S. budget deficit exceeding 6% of GDP in fiscal 2024. At $36 trillion, the national debt exceeds the size of the U.S. economy.

All this makes one wonder whatever happened to the “bond vigilantes” of a previous era, says Martin Barnes, a former chief economist at BCA Research. In the 1980s and 1990s, these bond investors would rebel when fiscal and monetary policies diverged from practices that had brought interest rates down from the stagflationary 1970s. They would drive bond prices down and yields up.

Some hint of the vigilantes came with the abnormal rise in bond yields after the Fed cut last year. Sylla sees that as reaction to easing monetary policy while inflation still ran close to 3%, above the central bank’s 2% target.

Eventually, Barnes expects bond vigilantes to return, forcing the government to pay a fiscal risk premium. It’s unknown when they will exact that price. He notes that economists Carmen Reinhart and Kenneth Rogoff posited after the financial crisis that a debt-to-GDP ratio of 90% would cause economic problems. Yet U.S. total government debt exceeds 120% of GDP and hasn’t set off alarm bells.

Hartnett thinks the new administration could surprise with its spending curbs. He sees both a “devilish Trump and an angelic Trump,” with the latter slowing the deficit’s path.

Treasury Secretary-designate Scott Bessent has set an ambitious “3-3-3” plan, consisting of halving the deficit to 3% of GDP, real economic growth of 3% annually, and boosting U.S. domestic oil production by three million barrels a day. But BTIG Washington analyst Isaac Boltansky is skeptical, saying “deficit hawks are the most endangered species in Washington.”

The Department of Government Efficiency, or DOGE, led by Elon Musk is unlikely to make a dent in the deficit. Consider that in 2024 almost 60% of the $6.75 trillion in federal spending went for Medicare, Medicaid, and Social Security; while 13% went for interest on the national debt, and about the same amount for defense expenditures. Discretionary nondefense spending, the likely target for cuts, accounted for only 13% of expenditures.

The Congressional Budget Office projects the deficit to total 6.2% of GDP in 2025, shrink to 5.2% by 2027, then climb again to 6.1% by 2033. “Since the Great Depression, deficits have exceeded that level only during and shortly after World War II, the 2007-09 financial crisis, and the coronavirus pandemic,” the CBO said.

The CBO’s outlook embodies optimistic assumptions. It assumes no recessions in the coming decade. It is based on current law, notably the expiration of the Tax Cuts and Jobs Act of 2017, the signature tax measure of the first Trump administration. Renewal of the tax law, a major objective of Trump’s, would add about another $4 trillion to the debt over the next decade. And that is before adding goodies like exempting tips and taxes from overtime pay, as he promised on the campaign trail. No one knows how much tariffs will offset the shortfall at this point.

The CBO also assumes bond yields will be lower over the course of the next decade. It forecasts a 4% average 10-year Treasury yield for 2025, falling to 3.9% in 2026-29, then 3.8% for 2030-35.

Some form of fiscal discipline may be the path to fiscal sustainability. The key is for interest rates to be lower than the growth of nominal GDP. The federal debt was pared from a peak of 106% of GDP in 1946 after World War II to just 23% by 1974, in large part because of the strong growth in postwar America but also because rates were suppressed artificially.

More likely, interest rates will stay high. Bond investors are apt to demand a higher yield premium to compensate for the risk of persistent deficits, and the resulting inflation they could produce. The big warning flag for BofA’s Hartnett would be investors fleeing both Treasuries and the U.S. dollar in a global vote of no-confidence in America.

Nobody knows if, or when, that so-called riot point comes. But it is the major long-term risk facing investors in both bonds and stocks, with major consequences for anybody needing to borrow money.

Blackstone’s Schwarzman stirs London art market with record purchases

Private equity chief spends millions on 18th century society portraits by Joshua Reynolds and Thomas Gainsborough

US private equity executive Steve Schwarzman is shaking the London art market by paying record prices to acquire paintings by Joshua Reynolds and Thomas Gainsborough, the leading 18th century society portrait artists.

Schwarzman, who was given an honorary knighthood last year by the UK government, is restoring Conholt Park, a 17th century 2,500-acre estate in Wiltshire that he bought for £80mn in 2022. As he makes plans to furnish the house, he is rapidly building a collection of masterpieces by making private offers to owners through dealers.

He recently acquired Reynolds’ “Portrait of Lady Worsley” from the family of David Lascelles, Earl of Harewood, for about £25mn. The portrait, which has been at Harewood House in West Yorkshire since the 18th century, shows a society heiress who was involved in a notorious court case after eloping with her lover.

Schwarzman, co-founder of private equity group Blackstone, has also bought Gainsborough’s portrait “Lady Bate-Dudley”, a 1787 painting which has been on long-term loan to London’s Tate Gallery. It was withdrawn from the Tate collection last year after the owner sold it privately through Simon Dickinson, a London gallery.

The billionaire declined to comment this week but people close to the transactions confirmed that he was the buyer of both works. The Lascelles family decided to sell the Reynolds’ portrait to help cover the upkeep of Harewood House after receiving an anonymous offer through Christie’s private sales department.

The £25mn price is a record for Reynolds, apart from the £50mn paid by the National Portrait Gallery and the J Paul Getty Museum in Los Angeles two years ago for the exceptional “Portrait of Omai”, a Polynesian islander. The sale price of the Gainsborough is not known, but it is thought to be well in excess of the artist’s auction record of £8.2mn in 2019.

Representatives of Schwarzman have made approaches to other owners of rare 18th century paintings, according to people with knowledge of the London market. Sales have been made easier by the fact that he is not applying for export licences for the works, so there is no risk of any deal being blocked by the UK government.

London art advisers said there had been rumours for months of an anonymous buyer bidding for works at high prices. The market in 18th century paintings is thin because few tend to be offered for sale, and it often takes a buyer willing to offer a knockout price to families that have held them for decades.

Schwarzman also owns Miramar, a Gilded Age mansion in Newport, Rhode Island that he has restored and filled with art. He said last year that it would become a private art museum on the death of him and his wife Christine. His honorary knighthood was partly in recognition of his philanthropy in the UK, including a £185mn gift to Oxford university.

Reynolds’ portrait of Seymour Fleming, who became Lady Worsley by marriage in 1775, is an iconic painting of the stepdaughter of the first Lord Harewood. Her husband Sir Richard Worsley brought a case of criminal adultery against the military officer with whom she had an affair, provoking a scandal that was dramatised by the BBC in 2015.