TheChek News Flow

DAX:

MDAX:

SDAX:

Economists have noticed that betting markets like Kalshi and Polymarket are pretty good at predicting not just political events but economic data, too.

Economists at top banks and investment firms who command high salaries to divine the direction of the economy expected the latest jobs report on Wednesday to show that about 68,000 jobs were added last month.

A crowd of anonymous online gamblers placing bets on Kalshi, a prediction site, expected to see 54,000 new jobs.

The report ended up showing the U.S. economy had added 130,000 jobs at the start of the year. Both groups had missed the mark by a wide margin — and to similar degrees.

Over the five years that Kalshi has existed, its thousands of gamblers have proved as accurate on average at predicting certain economic indicators as the highly trained forecasters, a working paper published last month by the National Bureau of Economic Research found. The crowd is also pretty good at predicting interest rate decisions from the Federal Reserve, and even better than the professionals at predicting the rate of inflation.

“Getting information from a large pool of people can be a remarkably good form of forecasting,” said Jonathan Wright, an economics professor at Johns Hopkins University who co-wrote the paper.

Thomas Simons, a U.S. economist with Jefferies, the investment firm, took notice when Kevin Warsh was leading in the prediction markets to be President Trump’s nominee for chair of the Federal Reserve. Mr. Simons had dismissed the possibility because of Mr. Warsh’s past advocacy for higher interest rates, rather than the lower rates that Mr. Trump prefers.

“‘How could it possibly be that he’s at the head of this? It doesn’t make any sense,’” Mr. Simons recalled thinking.

But the markets turned out to be right, and he decided he shouldn’t disregard the odds. Bettors, he realized, have one advantage: They don’t have to make a prediction if they’re not highly confident that they’re right. Professional forecasters don’t have a choice; even if the data are confusing and they don’t have much conviction in the number, they guess.

“You have to forecast these numbers every month even when you don’t necessarily think you have some kind of edge,” Mr. Simons said. “So it starts to make me feel like, if I go back to my priors on this, the people who have edge are the ones who are going to participate.”

Another working paper, by economists at the London Business School and Yale University, found that Polymarket bettors as a whole forecast corporate earnings more accurately than the analysts who are paid to advise investors on whether to buy or sell.

Theis Jensen, a Yale professor who worked on the paper, thinks the comparatively good performance by thousands of amateurs can be chalked up to incentives. Professional analysts may have conflicts of interest, such as their firm’s trading commissions, which might rise in response to rosier forecasts. Analysts may also avoid publishing earnings forecasts that are out of the norm, which can lead to more embarrassment than sticking with the crowd.

“The nice thing about prediction markets is that you have to put your money where your mouth is,” Mr. Jensen said, “and so that highly incentivizes you to state your true beliefs.”

Of course, that has been true for decades. The first online prediction markets emerged in the early 2000s. Sites like Intrade focused mostly on elections and the likelihood of other world events, and were generally found to be fairly accurate. In the 2010s, U.S. regulators cracked down, ruling that they were operating as illegal gambling platforms.

But some platforms continued to operate in Europe, where political and economic contracts are a sideshow to enormous volumes of sports betting. The same is still true of Kalshi, which won a lawsuit allowing it to operate legally in 2024, and Polymarket, which is only sporadically accessible in the United States as lawsuits have blocked trading in many states.

And yet betting volume even on nonsports questions has expanded at such a torrid pace that forecasters and analysts are taking notice. On any given day, more than $60 million is at stake on the platforms on political and economic questions — far more than the earlier platforms reached.

Edward Ridgely runs Stand, a company that allows bettors to trade simultaneously on Kalshi and Polymarket and follow other large traders. He said many of his highest-volume customers worked in the same fields where they wagered. One user in Hong Kong buys and sells Nvidia stock in his day job and uses the tariff-related prediction market contracts as a hedge.

“If the Trump tariffs escalate toward China or something, he can get out of his position and not get blown away,” Mr. Ridgely said.

He sees another piece of evidence that bettors specialize: Most of them aren’t good at everything. “You can see that a lot of the traders who are really good at elections aren’t very good at crypto. Or if you’re really good at crypto, you’re not very good at geopolitics,” he said.

Michael Feroli, chief U.S. economist of J.P. Morgan, has access to a deep well of expertise from the bank’s political affairs staff, country specialists and equity researchers. But he still looks at the markets to get a more precise estimate.

“Whenever you talk to D.C. people, they’ll say, ‘Well, I think they’ll get the budget done.’ So, what’s the probability?” Mr. Feroli said. “It’s a different language. Oftentimes you’ve got to really push to get a quantitative answer.”

On the quantitative questions that are his stock in trade, like forecasting changes to the Consumer Price Index and gross domestic product, Mr. Feroli suspects something else is going on: The betting markets are just following the experts. That could mean monitoring the Bloomberg consensus, reading research from the big investment houses or tracking the futures markets and investor expectations that groups like the Chicago Mercantile Exchange already aggregate.

Tara Sinclair, an economist at George Washington University who studies forecasting, agrees that is likely. And therein lies a danger in prediction markets: If the crowd were to supplant professional forecasters, individual bettors would lose out.

“They would be making the jobs of their contributors harder, because now they have individual sources of information to draw from,” Ms. Sinclair said. “If they replace all of that, then they won’t have those to also go to.”

Most forecasters aren’t worried about that, because they do more than predict numbers. Every estimate comes with a detailed analysis of the factors underneath the headline number, which is what investors and companies need to figure out how to spend money.

“Surprises happen, and people want to know, ‘What does this mean, what’s going to happen, what’s driving it?’” said Michael Pugliese, a U.S. economist with Wells Fargo. “I think that’s a lot of nuanced, important information that you’d want to have when you are making decisions, as an operator in these markets.”

But prediction markets could become an input for some complex forecasts, like those constructed by the Federal Reserve. Justin Wolfers, an economics professor at the University of Michigan who studied and wrote about the earlier iterations of prediction markets, has told Fed officials that they should take those markets into consideration. They have been hesitant, he said.

“There’s a deep problem, which is, if you were to do this, you democratize decision making,” Mr. Wolfers said. “Right now the senior economist has a ton of power. Their view goes.”

It may also be true that neither individual experts nor a collective of thousands are the best at predicting the future. Over the past decade, a group called Good Judgment has developed a model of selecting people with good track records of figuring out what will happen. These “superforecasters” are applied to longer-range questions of interest to paying clients. They work collaboratively, but ultimately cast their own votes.

Warren Hatch, the organization’s chief executive, thinks prediction markets complement his group’s services because they focus on shorter-term questions and expand the use of probabilistic thinking.

Now he is watching the emergence of another predictive force: artificial intelligence, which can synthesize large amounts of standardized information to come up with reasonably good estimates. But A.I. can have a tough time with questions that more have to do with humans and culture, and less to do with numbers and metrics.

“When the data is sparse and the environment is in flux, machines are backward looking by definition,” Mr. Hatch said. “And that’s where I think the space for humans will remain.”

US university endowments are collectively closing in on $1tn assets under management. While a trillion bucks isn’t quite what it used to be, it’s still a lot of money; and the distributions make important contributions to their sideline of higher education.

That number is from the annual NACUBO-Commonfund Study of Endowments, which dropped today. We picked through the deets to see if there was anything interesting to say beyond gawping at their sheer size.

Popping these funds on a map you can see where asset ownership is concentrated. And concentrated it is, with more than half clustered in just six states — Massachusetts, California, Texas, New York, Pennsylvania, and Connecticut.

The really big individual endowments are associated with the usual suspects (Harvard, Yale, Stanford and Princeton), but there are now thirty-two funds that have over $5bn of assets. And this class of mega-endowment accounts for almost three-fifths of the total universe of university funds.

Do they invest differently to the minnows? The NACUBO-Commonfund Study of Endowments fortunately answers this most pressing of questions.

And the answer is 🥁

. . .

. . .

. . . 

. . . exactly what you’d expect. The bigger the endowment, the greater the allocation to private assets.

You can toggle the filter in our chart below to see how asset allocation varies across different sized endowments, split either by share of fund count or share of total endowment assets. We’ve even included a ‘boring old columns’ option for readers who have enough excitement in their lives without funky Marimekko data visualisations:

Endowments with less than $100mn in assets have held close to 60 per cent of assets in stocks and around 10 per cent in some mix of private equity and marketable alternatives (mostly hedge funds, but also private credit).

Mega-funds, with the economies of scale to employ specialist investment staff, can negotiate better terms with managers — and can therefore do more sophisticated things at a lower cost — tend to have only a quarter of assets in stocks. But they hold over half of assets in private equity and marketable alternatives. Hardly breaking news.

How did this work out for them? Toggle the drop down menu to ping through performance periods.

Over the year to June 30, 2025 the average fund return was pretty much the same across the size distribution. Over three years, the average return falls as the average fund size increases. This likely reflects public markets’ outperformance of private equity etc. Over five and 10 year timeframes, returns to scale emerge — maybe due to those clever internal investment staff adding value with astute private dealmaking, maybe due to the abundance of cheap leverage.

Still, it’s been rare for the average fund of any size to beat a 60:40 portfolio of S&P 500 stocks and Barclays US Aggregate bonds. Which is pretty interesting given how sophisticated US endowments are supposed to be.

The dollar-weighted average allocation to assets classed as equity (including privates and hedge funds) is a little more than three-quarters of assets, so it’s also notable that a 75:25 portfolio of US stocks and bonds has proved unbeatable by size-cohort averages.

But perhaps it’s unfair to measure these funds against a benchmark they didn’t choose. Alphaville has muttered about Reform UK’s habit of doing precisely this when it comes to measuring UK Local Government Pension Scheme administering authorities’ performance. So we should at least be consistent.

According to the NACUBO survey, almost 40 per cent of endowments have an inflation-plus return, and another third have a fixed nominal return target. The average spread above inflation for the real-return-targeters is 4.9 per cent, and the average nominal target is 7.2 per cent per annum. So, if US inflation turns out to be in line with the current US Treasury 10-year break-even inflation rate of 2.3 per cent, 7.2 per cent looks like the magic hurdle rate for most funds.

As MainFT wrote last week, some endowment’s return targets have been far more aggressive than 7.2 per cent. But for the most part, it looks like university endowments across the size distribution have done well versus their targets.

Even if they could’ve crushed it by simply buying a balanced index fund.

The WhatsApp moment for money is here

This is the year that stablecoins are becoming part of the mainstream for online and international payments

The internet made information global. Crypto is making a similar impact on money. While recent headlines might fixate on prices of bitcoin, a deeper and longer-lasting shift is under way in digital payments. This is the year that stablecoins, or cryptocurrencies pegged to assets such as the dollar, are becoming part of the mainstream for online and international payments.

Call it money’s “WhatsApp moment”. Just as chat apps like WhatsApp collapsed the cost of international messaging from, say, 30 cents per text to zero, stablecoins are doing the same in financial transactions. The numbers bear this out: stablecoins moved over $12tn in value last year, after filtering out bots and other inorganic activity — volumes that are rising towards Visa’s $17tn of transactions last year but made at a fraction of the cost.

In the process, stablecoins are bringing the internet’s original vision of openness and interoperability to finance. Given how blockchain technology allows stablecoins to be programmed, money is in effect becoming software.

While most stablecoin transactions currently come from “crypto-native” and global business dealings versus everyday consumer activity, this is changing. As more improvements arrive to make transactions more frictionless for users, including integration with more traditional finance partners, so too will mass adoption.

People all over the world will barely recognise when they’re using stablecoins when making transactions supported by them. Most people will assume they’re just using dollars. And they will be, because the differences between a stablecoin and a dollar are becoming an abstraction for the end user. With each token backed by one dollar or equivalent assets, the names don’t matter. What matters is that the product is more reliable than any payments technology that came before it while also being practically free and light-years faster given that settlement is near instant.

Stablecoins also show what’s possible when policy and technology align. The Genius Act last year established clear US rules for stablecoins. Even more critically, Congress is now considering the Clarity Act, which would regulate the broader ecosystem of blockchain networks and digital assets that underpin stablecoins. The Clarity Act will help determine whether these networks scale to become part of the global financial infrastructure, or stall. When you provide a level playing field for challengers to compete on and room to innovate, markets work their magic. That’s how the web beat incumbents; how the US came to dominate the internet; and it’s how stablecoins will surpass today’s payments structures.

Businesses are already recognising the advantages of stablecoins. Some of the world’s biggest tech companies, banks, and retailers are working on initiatives to use them or, like Fidelity, have already issued their own. The payments giant Stripe, which acquired multiple crypto companies in the past year or so, now supports stablecoins at checkout, instantly lowering payment processing fees from about 3 per cent to 1.5 per cent, with plenty of room to go lower. SpaceX uses stablecoins to move money out of places like Argentina and Nigeria, where local banking systems are fragile or capital controls are tight. Some companies use stablecoins to pay their global workforces faster. Eventually, the internet could be transformed into an open market bustling with machine-to-machine commerce, where AI agents broker deals and settle contracts in real time on behalf of users.

Stablecoin adoption also has an under-appreciated second-order effect too: The tokens reinforce dollar dominance in a multi-polar world, creating a strong new source of demand for US debt. Leading stablecoin issuers like Circle and Tether already have nearly $140bn in direct holdings of short-term US government debt, making them a top 20 holder of US debt today. If stablecoin adoption keeps growing at current rates, stablecoins will vault into the top 10 by next year. (The Citi Institute even sees a scenario where stablecoins could be the number one holder of US debt relative to foreign governments and commercial banks by 2030.)

This isn’t just about payments. It’s a realignment of global finance. The internet gave us borderless communication. Stablecoins give us borderless value transfer. With clear rules and market structure in place, they can become both the pipes and the pillars of a new financial system.

Lebanon’s divisive banking bill jeopardises reform agenda

Draft law sets out who should repay savers whose deposits were frozen during country’s devastating financial collapse

Political divisions in Lebanon over a controversial banking bill could derail the country’s drive to pass reforms that would secure an IMF deal and pull it out of its crushing financial crisis.

The draft law is the most important in a series of reforms Prime Minister Nawaf Salam’s government has introduced since taking office last year, vowing to restructure the banking sector and negotiate a deal with the IMF where its predecessors had failed.  

Lebanon’s 2019 economic collapse, triggered by a foreign currency crunch and decades of policies by a central bank governor facing embezzlement charges, which he denies, was ranked by the World Bank as one of the worst globally in nearly two centuries.

Much of the country was plunged into poverty as the local currency lost more than 90 per cent of its value, banks cut savers off from their money and the government defaulted on its debt.

More than six years later, Lebanon’s finance ministry, the central bank and banking sector remain divided over how much of the estimated $70bn of losses from the crisis commercial banks should bear versus the state. 

The controversial bill is a pillar of the IMF’s requirements for any funding deal and outlines how hundreds of thousands of depositors whose savings were frozen will be repaid.

Wrangling over who should shoulder the biggest losses will intensify when parliamentarians debate the bill formally in the coming weeks.

“The government is trying to placate big depositors, the banks, the public and the IMF at the same time, and you really can’t do that within debt sustainability constraints,” said Mike Azar, an expert on Lebanon’s financial crisis.

Every depositor will be paid up to $100,000 within four years under the proposal, with the central bank contributing 60 per cent and commercial banks 40 per cent.

Large depositors will also receive securities issued by the central bank. Backed by revenues from central bank assets, or proceeds from their liquidation, these will mature over 10 to 20 years, depending on the size of the deposit. Commercial banks will cover a fifth of those payments. 

The draft law has long been the most contentious of Lebanon’s reform attempts because it forces bank shareholders to absorb losses and is an admission to depositors that not all of their money will be returned, which is seen as politically toxic, Azar said.

Banks warn the bill threatens their existence and punishes those with the most money, with little guarantee the securities will maintain their value or be paid back on time.

“The draft adopts a logic that amounts to the liquidation of the banking sector,” the Association of Banks in Lebanon said in January. “It sacrifices large depositors, upon whom the Lebanese economy depends, destroys confidence in the banking sector, [and] wipes out banks’ capital.”

Disagreements over the proposal centre on two main points: how much the state will pay the central bank to fund the plan, and whether commercial banks will bear losses before or after a deduction for items such as interest earned and money transferred abroad.

An IMF deal is seen by Lebanese authorities as key to recovering from the crisis. But to unlock funding, the IMF says Lebanon must pass laws that restructure its banking sector and address the losses from the disaster.

Previous administrations have failed to pass most of the reforms demanded by the IMF — stymied by infighting and pushback from economic and political elites. A preliminary 2022 deal with the IMF stalled after authorities failed to deliver the required changes.

The latest government has said it is determined to negotiate an agreement. It has already enacted a banking secrecy law and a framework for how authorities should approach defaulting banks — both key reforms demanded by the IMF.

But the draft of the latest law falls short of IMF requirements. The Fund is not satisfied that the reforms would leave the state able to pay for public services and honour its debts. It also wants bank equity to be depleted before the deduction on deposits applies.

That puts it at odds with commercial lenders, the central bank and politicians who want the state to shoulder more of the losses and for the deduction to apply first.

Yassine Jaber, Lebanon’s finance minister, said that if the state was forced to foot a large part of the bill, the burden would fall on taxpayers.

“Who will pay? Who is the state? Who is the treasury?” Jaber said in an interview with the FT. “The state is people.” 

“In agreement with the IMF, our priority is the small depositors, who are the majority of the people,” Jaber said, adding that 85 per cent of accounts will be repaid in full over the first four years of the plan.

While some MPs will push in coming weeks for changes that satisfy the IMF, others want amendments that align with the central bank and banks’ position. Ministers for the powerful Lebanese Forces party opposed the law in cabinet.

Banks and some politicians accuse the state of spending much of the money that was lost in the crisis and say it is now dodging responsibility.

“The state cannot act as if it was sitting on the Copacabana beaches and it read in a newspaper that there is a crisis in distant Lebanon,” said Nassib Ghobril, chief economist at Byblos Bank, one of Lebanon’s biggest lenders.

A major concern for the IMF is a clause that says the state must recapitalise the central bank if needed.

Azar warned that because the central bank and the banks may not be able to meet their future payment obligations under the bill, this could impose a large potential debt on the state and cause it to default on its debts again.

The draft law also says the finance ministry must agree with the central bank how much the state owes it — a sum that is bitterly contested.

Critics have said a high amount risks balancing the central bank’s books — minimising the banks’ liabilities — at the expense of government spending and the broader economy.

The central bank said in a statement it had “worked collaboratively” with the finance ministry “to determine the state’s obligations” towards it.

Discussions around the bill were “constructive”, it said, adding: “There are no insurmountable obstacles — only serious and ongoing negotiations”.

Jaber said the government wanted to “reach an understanding with the IMF on what’s, in their opinion, a ratio that will keep our debt sustainability reasonable to be able to move on with an agreement”.

If the demands of the central bank and banks are met, he warned, parliament “will kill the IMF deal”.

Big Tech group’s AI chief predicts white-collar work could be automated within 18 months

Microsoft is pursuing “true self-sufficiency” in AI by building its own powerful models and reducing its reliance on OpenAI, according to the company’s AI chief.

Mustafa Suleyman told the FT that the strategic shift follows a restructuring of its relationship with the ChatGPT maker in October. That has prompted the $3tn company to build its most advanced technology independently, rather than rely on an external partner.

“We have to develop our own foundation models, which are at the absolute frontier, with gigawatt-scale compute and some of the very best AI training teams in the world,” said the Google Deepmind co-founder who joined Microsoft in 2024.

The software giant is investing heavily in assembling and organising the vast datasets needed to train advanced systems. “That’s our true self-sufficiency mission,” he added.

Microsoft, one of OpenAI’s biggest and earliest investors, has relied on OpenAI’s models to power its own AI tools such as its Copilot software assistant.

Last year, it agreed to allow the start-up to complete a corporate restructuring, retaining a $135bn stake in the ChatGPT maker and keeping access to the group’s most advanced models until 2032.

But the deal also provides OpenAI greater freedom to seek new investors and infrastructure partners, potentially turning it into a more direct competitor.

Microsoft has spread its bets further, investing in other model makers such as Anthropic and Mistral. But the company has also accelerated the development of its own in-house models, which Suleyman said would launch “sometime this year”.

In particular, Suleyman said Microsoft’s goal is to capture more of the enterprise market by working on “professional grade AGI” [artificial general intelligence], meaning powerful AI tools that can complete daily tasks for knowledge workers.

“White-collar work, where you’re sitting down at a computer, either being a lawyer or an accountant or a project manager or a marketing person — most of those tasks will be fully automated by an AI within the next 12 to 18 months,” Suleyman said. 

These AI agents will be able to co-ordinate better within the workflows of large institutions in the next two to three years, he added. The AI tools will also be able to learn and improve over time, taking more autonomous actions.

“Creating a new model is going to be like creating a podcast or writing a blog,” he said. “It is going to be possible to design an AI that suits your requirements for every institutional organisation and person on the planet.”

However, Microsoft faces stiff competition in the enterprise market. Anthropic has gained a strong lead in AI-powered coding tools, while OpenAI and Google are also investing heavily in securing lucrative corporate AI deals. 

Microsoft has forecast it will spend $140bn in capital expenditure in its fiscal year, which ends in June, as it increases spending on the infrastructure needed to build AI.

Investor fears that such spending is inflating an AI “bubble” have hammered Big Tech stocks, with Microsoft’s shares down more than 13 per cent over the past month.

“There’s no question these are unprecedented times, and I think markets are trying to wrap their head around how this plays out over the next five years,” said Suleyman. But he added: “We all have no doubt that these returns do compound to revenue and to bottom line.”

Suleyman said another focus for Microsoft was applying AI to healthcare in an effort to build “medical superintelligence”, where AI programs can help solve staffing crises and long waiting times for overstretched health systems. Last year, the company unveiled an AI diagnostic tool, which it claims can outperform doctors on some tasks. 

He added Microsoft’s goal was to build “humanist superintelligence”, meaning AI technologies that remain under human control, addressing growing concerns that rival AI labs were rushing to build powerful technologies that resist the oversight of their creators.

“We have to reset that and make the assumption that we should only bring a system like that into the world, that we are sure we can control and operates in a subordinate way to us,” he said. 

“These tools, like any other past technology, are designed to enhance human wellbeing and serve humanity, not exceed humanity.” 

Musk Restructures xAI Team Amid Senior Departures, SpaceX Merger

The Takeaway

The xAI reorg has elevated a handful of technical leaders who now report directly to Musk, including co-founder Guodong Zhang, who leads teams working on coding and image-generation features while also overseeing the leadership team of social media service X, according to a person with direct knowledge of xAI’s operations. Another co-founder, Manuel Kroiss, is also leading xAI’s coding teams alongside Zhang.

Musk has so far left SpaceX’s structure largely untouched, with most of the space firm’s longtime senior leadership team continuing to report to President and Chief Operating Officer Gwynne Shotwell as they focus on getting the company’s Starship into service.

While xAI and SpaceX’s teams are continuing to operate largely separately and in parallel under Musk, there is some overlap. Anthony Armstrong, a former Morgan Stanley banker who was hired as chief financial officer of xAI last fall, now reports to Bret Johnsen, who is CFO of the combined company.

Johnsen has to figure out how to balance SpaceX’s business, which brought in approximately $8 billion in earnings before interest, taxes, depreciation and amortization last year on about $16 billion in revenue, with the huge cash demands of xAI. The AI startup was burning about $1 billion a month for most of 2025 before it merged with SpaceX last Monday, and it is continuing to build out expensive data centers.

Inside xAI, Musk has recently expressed frustration that the company’s data center buildout hasn’t led to a durable lead for the AI models developed by its engineering team, according to the person with direct knowledge of xAI’s operations. That frustration helped prompt development of the new leadership structure, which Musk discussed in an all-hands meeting this Tuesday.

Also on Tuesday, two xAI co-founders, Tony Wu and Jimmy Ba, announced they had left the company. It’s the latest in several overhauls of xAI’s leadership since the company was founded in 2023, which have also contributed to the departures of other key founding staff, including Igor Babuschkin and Christian Szegedy. (One of the co-founders, Greg Yang, did not resign but said in January that he’d moved to an informal advisory role at xAI after working hard at the company aggravated his Lyme disease.)

After publication of this story, Musk posted on X about a reorg. “xAI was reorganized a few days ago to improve speed of execution. As a company grows, especially as quickly as xAI, the structure must evolve just like any living organism,” he said. “This unfortunately required parting ways with some people. We wish them well in future endeavors.”

Under xAI’s latest leadership structure, a co-founder and former Google DeepMind engineer, Toby Pohlen, now leads the company’s Macrohard team, which evolved from a dig at Microsoft and is now part of an effort to automate white-collar work. In an interview published last week, Musk described Macrohard as a “digital human emulation” project that aims to “do anything that a human with access to a computer could do.”

XAI hopes to make its Grok coding tools competitive with the likes of Anthropic’s Claude Code and wants to win over big enterprise customers.

Diego Pasini, a Musk protégé who graduated high school in 2023 and won an xAI hackathon in 2024, still oversees xAI’s AI tutors, who provide specialized data about topics like finance and physics to train its Grok models. Pasini’s responsibilities also now include Grokipedia, which Musk has described as a Grok-powered encyclopedia that is a less “woke” alternative to Wikipedia.

While most core xAI employees are referred to only as “member of technical staff” internally, The Information’s org chart includes more detailed descriptions of their responsibilities when possible.

The org chart also includes several other longer-tenured staff who joined xAI from other Musk companies to build out its data centers, including former Tesla staffer Daniel Rowland and Brent Mayo, who had joined xAI from SpaceX when they were separate companies.

While Musk has said part of the reason for merging xAI into SpaceX is the potential to build data centers in space, xAI is continuing to build out data centers on Earth for now. In December, xAI purchased a building for a third large data center outside Memphis, Tenn., The Information reported, part of a plan to get a million Nvidia graphics processing units online in the region.

XAI and SpaceX did not respond to requests for comment.

Anxiety over high-profile violence has the wealthy spending big on armed security, bunkers and even moats to keep themselves safe from intruders

British music producer Alex Grant was living in an under-construction mega-mansion in Los Angeles when, one morning shortly after 9 a.m., an armed intruder burst into the home.

“He came in and we had a tussle,” recalled Grant, formerly known as Alex Da Kid. Grant managed to call his manager, who phoned the police. Soon, officers and helicopters were on the scene.

He briefly considered abandoning the project after the 2017 break-in but ultimately finished the 24,000-square-foot home, which has eight pools, a car elevator and a nightclub. But, he doubled down on security features, installing a guard house, tall gates and a security system with retina scanners that alert the homeowner to movement in the home. “Later, I found out he had these knives on him,” said Grant, who recently listed the mansion and a neighboring house for $85 million after moving to New York.

In an era of high-profile violence—including the suspected abduction of Savannah Guthrie’s mother from her Arizona home just over a week ago—the wealthy are investing heavily in their personal security, particularly when it comes to their homes.

Security measures once reserved for presidents and royalty—safe rooms, biometric access controls, laser-powered perimeter defenses—are now mainstream items in luxury homes. Executive-protection teams and armed guards patrol gated enclaves and suburban estates, while tech startups are rolling out predictive threat-detection systems built for the ultra-wealthy. The shift reflects a hardening view among the affluent: Traditional policing and communal safety are no longer enough, so security is being privatized, customized.

This new emphasis is reflected in sales data. Roughly 45% of luxury homes sold in 2025 included a reference to privacy or security, according to Coldwell Banker Realty, up from 38% in 2024.

Why the wealthy are on edge

Break-ins at the homes of celebrities and professional athletes have been putting the wealthy on edge. A group of Chilean nationals was indicted last year for stealing items worth more than $2 million from sports stars including Kansas City Chief players Travis Kelce and Patrick Mahomes.

The break-ins, which took place when the players were not home, put fellow athletes on notice. Miami Dolphins player Tua Tagovailoa said he hired personal security to monitor his house when he’s on the road. “Let that be known, they are armed, so I hope if you decide to go to my house you think twice,” he said at a December 2024 press conference. The homes of celebrities like Brad Pitt and Nicole Kidman have also been broken into.

Miami real-estate agent Danny Hertzberg of Coldwell Banker Realty said he began noticing an increased emphasis on security in 2020, when high-profile executives were migrating from New York to Miami during the early days of the Covid pandemic, but it’s ramped up ever more since the ambush killing of UnitedHealthcare CEO Brian Thompson on a Manhattan sidewalk in 2024 and the shooting of Blackstone executive Wesley LePatner and several others in July 2025 at a Park Avenue office tower.

The sheer volume of personal information now available online has heightened anxiety among the wealthy. And the ubiquity of social media has stripped away a layer of anonymity the wealthy once relied on. “Prior to the wide use of social media, most CEOs—whether they’re in private equity, finance or tech—no one knew their names or what they looked like, with few exceptions,” Hertzberg said. “Now, people are tracking them.”

Private jet tracking websites—which allow anyone to monitor private aircraft movements in real time—in particular have “sent chills through the high-net worth community,” he said. Corporations are taking note. Companies offering personal security benefits for CEOs increased by 10% in 2025 compared to 2023, according to a Goldman Sachs Ayco survey. And 27% of respondents offered home security benefits to CEOs, the highest level since 2003.

Building the modern fortress

One entrepreneur capitalizing on this growing demand is David Widerhorn, who got into real estate after selling a tech company in 2017. Widerhorn, 38, recently built an heavily-secured home in Scottsdale, Ariz., that he is trying to sell for $15 million.

In early December, Widerhorn walked through the roughly 8,600-square-foot house, pointing out 32 casino-grade cameras with AI-powered facial and vehicle recognition capabilities. There is also a laser intrusion detection system around the perimeter.

Pausing at a steel double gate in front of the house, he warned that the security system kicks in even before visitors reach the front door, which is fashioned out of three-inch thick solid steel and has 13 deadbolts. Widerhorn said even the landscaping was designed to be a deterrent: There are sour orange trees with four-inch spikes in concrete planters on the edge of the property; just beyond those trees, separating the house and street, is a moat.

“If you try to run through that bush, it will be a bad day for you,” Widerhorn said. Should anyone get past the trees, lasers will detect motion and the system will call the police. Inside the house, three ear-piercing alarms will go off and a fireplace surround in the great room—which is made out of cristallo quartzite and can change color—turns red.

The home’s most fortified feature lies hidden behind a wood-paneled wall: a reinforced concrete safe room with a 2,000-pound door and an air filtration system built to U.S. Army Corps of Engineers standards.

Widerhorn declined to share specifics but said it cost more than $10 million to build the house. About $1 million was spent on bullet-resistant smart glass. And the front-entry security features cost more than $1 million.

In Las Vegas, clients of luxury design-build firm Blue Heron are spending between $100,000 and $1.5 million on security features, including safe rooms and bunkers, said Andrew Kennedy, director of innovation and strategy. Blue Heron is working on new ways to incorporate architecture with security, such as exterior window shades that could be closed with the touch of a button to protect the home’s occupants.

In Surfside, Fla., the developer of the Delmore, a planned 37-unit ultra-high-end condominium project designed by Zaha Hadid Architects and with units priced at up to $200 million, has tapped a Washington D.C.-based security firm to design the building’s security. The firm, Active Security Consulting, was founded by former U.S. Marine Scout Sniper Walter Hasser and has provided specialized protection for the U.S. Department of Defense as well as the current and former Presidents of the United States.

The firm is working to integrate technology like biometric access, facial recognition and iris scanning into the design of the project, Hasser said. For instance, when a resident or visitor pulls into the building’s parking garage, their car will be scanned for license plate recognition, but facial recognition may also identify the car’s occupants and their level of approved access to the building. That, in turn, triggers the security system to allow that person to unlock only the doors and elevators that they are permitted to pass through. Meanwhile, an AI-powered security system will track movements captured on camera throughout the building, looking for anomalies, Hasser said.

Hertzberg said he recently had a client fly in a security consultant to evaluate a roughly $50 million house he had put under contract. The consultant looked into the viability of installing a complex camera and laser system that could sense any movement on the perimeter of the property, including on the water.

Bay Area real-estate agent Steve Mavromihalis of Compass said he has clients with multiple residences, who send security teams ahead to survey their property before they arrive to ensure it is safe. When Mavromihalis shows high-end homes, he assumes everything he says and does is being monitored. “It’s assumed like the sun’s coming up,” he said.

The fortified life

Hertzberg said an increasing number of his clients are gravitating towards gated communities and are asking questions about whether certain neighborhoods have roving security guards and license plate readers. Particularly in demand are island communities like Miami’s Indian Creek because it’s wholly owned by the residents, meaning they don’t have to allow outsiders onto their streets.

Bay Area cities and towns including Palo Alto, Atherton and Woodside already use license plate readers for neighborhood surveillance, as does Las Vegas. Miami has said it will install cameras this summer to combat crime.

At Rosewood Residences Beverly Hills, developers tapped an outside security firm, Arsec Group, to provide a 24/7 armed guard for the project. High-net-worth Californians are particularly concerned about robberies and burglaries, said Mikey Arana, founder of Arsec, who was formerly an in-house security guard for popstar Justin Bieber. “They’ll be out in Beverly Hills having dinner wearing some jewelry or driving a nice vehicle, then they’ll be followed home,” he said.

Arana said many of his clients previously shied away from arming security guards. Now, they concede it might be necessary. “Sometimes, unfortunately, the only way to stop violent action is with violence response,” he said. The armed security guard patrols the premises with a 9-millimeter pistol strapped to his leg and observes the property via infrared cameras that are dotted around the perimeter of the site.

San Francisco tech entrepreneur Kevin Hartz said he and his high net worth peers in California are increasingly focused on their security. “They’re rethinking how they can be safe in the chaotic, strange world that we’re in today,” he said.

Hartz said he co-founded his own security company, Sauron, in 2024 after being spooked by an attempted break-in at his own home in San Francisco. The person first rang the doorbell, before making his way around the house trying some of the doors and windows. When he couldn’t gain access, he went to Hartz’s next-door neighbor’s home, where he tried to push through the front door. He was arrested by police. “That could have been us,” Hartz said.

The Sauron system, which has only been launched in beta across a few homes in the Bay Area, will differ from other security systems in that it includes deterrence strategies, not only response, said Yvonne McLaughlin, head of client experience at the company. For instance, if it senses an intruder, it could include a feature that automatically triggers sounds, such as dogs barking or police sirens coming closer. Hartz declined to discuss the system’s cost; it’s rumored to be very expensive.

The company sends teams to clients’ homes to take drone footage and photographs and then produces a 3D model to identify security vulnerabilities. It uses Lidar technology—rapid, pulsed laser beams to measure precise distances—and 4K cameras to keep tabs on the property.

Charlie Garcia, founder of R360, a network for centimillionaires, said he and many of his organization’s members also use Global Guardian, a private security and emergency subscription service designed to manage both physical and cyber risk. He said his family is particularly sensitive to security issues because his wife, who is originally from Ecuador, was kidnapped decades ago in a ransom scheme.

“I have a button on my phone. If I touch it, within 45 seconds I get a call from one of their command centers asking me if everything is okay,” he said. A spokesperson for Global Guardian declined to comment on the cost of their services.

During a routine cyber audit conducted by the company, Garcia recently learned that one of his children’s friends had posted a picture to Instagram of the contents of Garcia’s home safe in Fort Lauderdale, which included precious metals.

The family quickly made sure the photo was removed.