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With stocks, passive management is king — but bond funds do not work the same way

Other than “gold” and “slop”, there has been another word on investors’ lips in the past year: bubble. For those retail investors keen to protect their portfolios, there is a retro solution: add more bonds to your portfolio.

The simplistic 60/40 equities/bonds strategy may have gone out of fashion since the bond bear market which followed Russia’s full-scale invasion of Ukraine, but the appetite for bonds in an uncertain world is back in a big way.

The question is, how best to gain access to defensive income investments: through active or passive management?

When it comes to stocks, passive inflows now far exceed the amount put into active funds. But a passive approach to bonds does not work the same way.

Over the past decade, cumulative flows into active open-ended and exchange traded bond funds (ETFs) have outpaced those of passive funds by roughly a trillion dollars, according to data from Morningstar.

Why have active funds attracted more attention? There are a number of reasons to prefer active over index-tracking passive, says Johanna Kyrklund, group chief investment officer at Schroders.

First, she says, bond markets have plenty of exploitable inefficiencies for active managers, including potentially profitable mispriced bonds. Also, there may be attractive opportunities, such as new issues, which are not in any index.

And there is a technical reason. Equity benchmark indices usually depend upon market capitalisation, which often reflects a company’s financial prospects. Not so in bond indices. Borrowing more with bonds can increase the weighting of an issuer, even if that boosts leverage to high levels. (Note last year’s massively debt-fuelled US M&A deals, including for Electronic Arts and Warner Bros Discovery.)

“The bond market is a continuum,” says Mara Dobrescu, a director in fixed income strategies at Morningstar. “At one end are very liquid and high- quality government bonds. Here, passive investment can work very well using ETFs. But as you move away from these — for example towards corporate, emerging market and securitised debt — it gets harder to track these passively.”

While active equity portfolio managers have a poor record on average against major indices, they have more luck on bonds. Long-term studies from Morningstar show that only about a fifth of active stock fund managers beat their benchmarks over long periods. But the “success rate” is over 50 per cent for active bond managers.

For investors focused on the highest returns from fixed income, active managers can provide this potential while also avoiding defaults, which could mean losses. “Bonds don’t have the upside of equities, but [theoretically] do have the same downside,” says Bryn Jones, head of fixed income at Rathbones.

“Active managers may be the right choice but [one should] think about fees over the long term,” points out James Norton, who oversees UK and European financial planners at Vanguard. “Fees are important in a [fixed income] asset class that already has lower returns than other classes.” On average, passive bond funds charge around 20 basis points compared with 90 basis points for active funds, says Morningstar.

Those firms that specialise in passive bond management, such as Vanguard and BlackRock’s iShares, now perceive passive as complementary to active funds. “We think that the active versus passive split is outdated,” says Vasiliki Pachatouridi, European head of fixed income product strategy at iShares. “Having a blended approach is the most cost-effective,” she adds, enabling any savings to be directed to those active funds if desired.

Individual investors can learn from the professionals. Becky Qin helps run Fidelity International’s multi-asset portfolios, specialising in fixed income. She has the choice of both Fidelity funds and external offerings. “We only use passive when the fund is very cost conscious,” she says. Her team may use passive funds for high-grade corporate bonds, for example. “We know that in the investment grade space [the market] is liquid enough.”

Other professional investors use passive funds as low-cost defensive ballast. While stocks can offer long-term growth, having a slug of passive bonds can help. “You can get the risk management and save a ton of money on fees,” says Nuwan Goonetilleke, head of capital markets at Phoenix Group, a pension fund specialist.

For others, passive provides the best way to express defensive views. “We do use passives quite a bit on government bonds,” says Jason Da Silva at Arbuthnot Latham, a private bank. “There’s a dearth of active managers in [the government bond segment] who outperform their index.”

As Dobrescu at Morningstar says, bond investors are fully aware that “active management isn’t dead but expensive active managed funds will be under pressure”.

Coral beaches, Andean peaks and the world’s tallest waterfall give the country huge potential as a tourist destination

For obvious reasons, financial discussions around Venezuela’s future mostly revolve around its enormous oil reserves. But Donald Trump’s talk of turning Gaza into a “Riviera of the Middle East” last year suggests it is worth considering another kind of trade that — one day — could help bring prosperity to the tottering Latin American country: tourism.

Holidaymakers are economically significant for many of Venezuela’s near neighbours. Foreign tourist spending makes up about 6 per cent of Costa Rica’s GDP, and about 7 per cent of Panama’s. In Venezuela, the equivalent sum is about 0.5 per cent, based on estimates from the World Travel & Tourism Council.

That’s not a surprise: much of the economy is informal, while infrastructure and rule of law are weak, even by regional standards. Costa Rica ranks 54th in the Global Peace Index, a proxy for general safety and stability; Venezuela is 139th.

Seen from space, it should be otherwise. Coral beaches, Andean peaks and the world’s tallest uninterrupted waterfall are precious assets. A steady stream of well-heeled consumers would undoubtedly help a country that Deutsche Bank flags as the world’s poorest on a per capita basis, by some measures.

Costa Rica, a tiny country that has pointedly targeted US travellers, welcomed about 2.9mn tourists in 2024, and they spent a total of $5.5bn, according to UN Tourism. A stable Venezuela, which is roughly the same flight time from the US and with twice the coastline, ought to be able to beat that with ease. For Trump, a serial resort builder who has repeatedly failed to crack Latin America, this potential is unlikely to go unnoticed.

Today, potential is all it is. Even absent political unrest, tourist essentials such as airports would need to be built or restored; roads upgraded; rampant crime kept under control. For giant companies such as Marriott, which retains four franchised properties in Venezuela where rivals mostly left, it would take powerful incentives to add risk that investors won’t reward anyway.

Nonetheless, whoever runs Venezuela once the current turmoil has resolved has good reason to try. Imagine the country was able to attract 7mn tourists a year, on a par with Colombia, and that each spent $1,500, somewhat less than Costa Rica. That’s almost $11bn of direct spending. Then think that each $1 a tourist spends can create up to $3.50 of value, according to World Economic Forum estimates. For a country with perhaps $98bn of GDP this year, on Citigroup estimates, that’s a big windfall.

Some US investors will flinch at the memory of past bad bets on Venezuelan tourism. Blackstone fell foul of strongman politics in 2009 when Hugo Chávez breezily expropriated one of its beachfront Hilton hotels in a fit of pique over the way the resort was run. Then again, if the troubled country can find stability — at this stage still an “if” — even sceptical financiers may again start to take notice.

Benedetta Petruzzo joins the company in a new role, flanking the brand’s cofounders and co-CEOs Danny Harris and Marco DeGeorge. In her first interview at Alo, she outlines what’s next for the brand.

MILAN – Alo is committing to its global expansion by appointing former Dior and Miu Miu executive Benedetta Petruzzo international chief executive officer.

Effective Saturday, Petruzzo will join the company in the newly created role, while the brand’s cofounders Danny Harris and Marco DeGeorge will remain co-CEOs.

Petruzzo joins the Los Angeles-based wellness brand with a proven track record in the luxury industry. Most recently she was managing director at Christian Dior Couture, which she joined after serving as CEO at Miu Miu during a period of significant growth. Under her lead, the Prada Group-owned label became one of fashion’s most coveted names, with retail sales soaring.

Prior to that, Petruzzo was executive vice president for North America at Kering Eyewear, spending five years at the company. Holding degrees in business administration and a master of science in management from Bocconi University in Milan, she started her career in finance before joining management consultancy Bain & Co., where she specialized in the retail and luxury sectors.

Petruzzo’s appointment at Alo not only reflects the brand’s ambition in transitioning from a leader in the activewear space to a multicategory luxury label, but also the growing heat surrounding the wellness category overall.

Alo is banking on that interest. Petruzzo will help spearhead the next chapter of the company and further propel its international expansion by evolving the brand’s storytelling, client experience and market strategy while keeping wellness at the core of its proposition.

“We believe the future of luxury is wellness — and we’re building a global ecosystem around that belief,” said Harris. “Benedetta’s luxury expertise, strategic rigor, and feel for brand energy will help us take Alo’s momentum to the next level. She understands how to build desire at the highest end of the market while staying true to a brand’s DNA, which is exactly what this next chapter of Alo requires.”

In her first interview in the new role, Petruzzo told WWD that accepting the job “was natural — this was love at first sight.”

Already an Alo customer, she explained that a fortuitous meeting with Harris sparked an immediate connection, both on personal and professional levels. “In our conversation, I was impressed by the pureness and authenticity of the idea behind this company,” said Petruzzo.

“I wasn’t actively looking for a new job, and this wasn’t a case of an analytic choice. Even though I’m a person of numbers, I take the most important decisions with the heart and the guts,” she continued. “There was a strong connection I didn’t wanted to ignore, maybe because I’m turning 40 and I want to be more and more intentional in what I do. I believe in the identity of this brand and what it stands for.”

The brand ethos of wellness is luxury is among the aspects that resonated most with Petruzzo, who underscored the bond the company has with its community.

“The customer of the future expects brands to align with how they live, move and feel. We see great potential for our community to grow globally. Alo is uniquely positioned to lead that future,” she said, underscoring that the brand hasn’t expressed its full potential yet.

Declining to disclose sales figures and goals, Petruzzo highlighted how the firm has “ambitious objectives but the main driver of our growth would be staying true to our DNA and making sure that we grow sustainably in the long term.”

“So we are not in a rush, but [still eager] to enlarge our community. [The focus is not moving] as fast as we can, but in the best way possible,” she said.

The retail rollout will be key. Alo currently operates 75 international stores across 25 countries and ships to more than 100 global destinations. The company aims to scale up its distribution footprint and leverage its physical stores — dubbed Alo Sanctuaries — not just as transactional spaces but hubs for community-building experiences.

“In 2026, if you want to buy a product you don’t need to go to a store, but I do believe they are essential to experience a brand — that is not a mere logo, but a creative platform telling stories,” said Petruzzo. “Our stores are called in this way because when you step into a sanctuary you connect with yourself. And that’s what we aim to do with events, hosting meditation and mindfulness sessions and yoga classes, getting to know the community around us and trying to become relevant for it.”

In a case of serendipity, the Italian executive joined the company just when it planted its first retail flag in her homeland. Quietly opened in Rome at the end of 2025, the unit marks Alo’s 12th outpost in Europe.

Located in central Via del Babuino, a stone’s throw away from the landmark Spanish Steps, the 6,921-square-foot store across two levels blends Italian heritage with the brand’s contemporary image. The interior concept mixes original brick and sculptural elements with furniture and displays in wood and marble, showcasing Alo’s full range of high-performance and fashion-forward clothing conceived for movement and recovery, as well as its growing accessories category, including an area dedicated to bags.

“This is the capital of a country which is very important for us, not only in terms of business but overall relevance for its fundamental role in fashion and luxury, but also craftsmanship, know-how and art of living,” said Petruzzo. She sees an affinity between the Californian values of mindfulness and wellness with the ones of living well and enjoying ordinary moments that are rooted in Italian culture.

“There’s a connection between the two lifestyles… and I’m sure the Italian market will respond well to what Alo stands for. There’s so much space to grow and to let the brand be known here,” she said. Previously, Alo was only available to purchase in the country through its e-commerce.

“We wanted this to be a space that is not only just for transactions, especially because it’s the first in a new market for us, so it has to be an expression of the brand,” she said. “Of course, we want this sanctuary to be a commercial success but creating the community around it is extremely important.”

To this end, the company will introduce its Alo Runners Club in Rome and, starting this week, it will stage a 30-day schedule of events and classes, including Ayla Pilates, Aura Sacred Space and Zem Yoga Studio.

The Rome store will be followed by a significant rollout plan, with a particular focus on Europe and Asia. Petruzzo pointed to a “high double-digit number of new openings” but declined to share details, explaining “this is a moving target, because there’s much interest around Alo but we want to do things with intention and at the right pace.”

Ditto for the product catalog, which will keep expanding to offer a total look to customers while staying true to the brand’s core business. For one, there’s more in the pipeline for the Alo Atelier collection, which marked the brand’s foray into the world of luxury when it launched with limited-edition pieces in 2021. Consumers’ demand and its success signaled to the brand that its community was seeking out elevated and design-forward styles to shop, encouraging Alo to further explore that direction.

To wit, last year the company introduced its first luxury handbag line, handcrafted in Florence from Italian calfskin and suede and coming with a hand-selected Alo crystal. Last month, it expanded the range, complementing the full-sized pieces with the launch of mini styles.

Also, in footwear, the brand recently unveiled its first sneaker collaboration, releasing an updated version of its debut Recovery Mode style with six-time NBA All-Star and Golden State Warriors guard Jimmy Butler.

Former Google, Apple Researchers Raising $50 Million for New Visual AI Startup

The Takeaway

The new startup, Elorian, is in talks with investors to raise a seed round of around $50 million, said Dai and another person with direct knowledge of the matter. Striker Venture Partners, a venture capital firm founded last October by Max Gazor, former general partner at VC firm CRV, is in talks to lead the round, said the person.

Yinfei Yang, an Apple research scientist who worked on that company’s AI models before departing in December, is a co-founder of Elorian, said the person. Both Dai and Yang have updated their LinkedIn profiles to show they’re working at a “stealth” company, and Dai’s indicates that he is CEO.

In a phone interview on Saturday, Dai said Elorian focuses specifically on building AI models that can visually interpret and analyze the physical world by simultaneously processing images, video and audio. While robotics is one potential use for Elorian’s AI, Dai said the startup envisions many others, without elaborating. Yang did not immediately respond to a request for comment.

Early AI models from developers like OpenAI were trained only on text, but there has been a shift in recent years toward models trained on images and video. This area of research, known as visual reasoning, is now a focus for many large AI providers and startups, including Google, OpenAI and Anthropic. Amazon launched a similar AI model last month at its annual cloud conference.

Visual reasoning models are designed for complex AI applications, such as robotics systems, because their ability to combine multiple functions saves developers the work of stitching together different AI models. Some researchers say the technology is valuable for AI agents that need to interpret and understand images like screenshots to carry out advanced tasks such as handling retail product returns and reviewing legal documents.

At Google DeepMind, Dai was co-leader of the data-focused pre-training work that underpins Gemini models, according to his LinkedIn profile. Dai has co-authored research papers with other well-known Google researchers, including Quoc V. Le and Jeff Dean, chief scientist for Google DeepMind and Google Research.

Dai was a pioneer in language models and has been working on pre-training–related research for the past two decades, the person said. Much of his research has focused on developing techniques for evaluating the quality of the data used in training AI models and ensuring that models are trained on data from a range of difference sources, added the person.

Tech elite exchange criticism and tips about state wealth tax proposal that has sent some billionaires home shopping

In an industry town that has grown increasingly divided over politics, the proposal to tax 5% of California billionaires’ wealth has united Silicon Valley titans.

They are airing their grievances in an active Signal chat called, “Save California.” The chat includes dozens of tech elite, including Anduril co-founder Palmer Luckey, Trump administration crypto czar David Sacks, and Ripple co-founder Chris Larsen, a big Kamala Harris donor. The participants have sounded off against the tax, suggested alternatives and, in some cases, shared about their efforts to weaken their ties to California.

Messages in the online cocoon have lambasted the proposal as “Communism” and “poorly defined” because it would lead to tech founders and their companies exiting California and a weakened Silicon Valley. Others have focused on their love for California and on how the state can create economic growth and jobs or, in the words of one message to the group chat, be “pro-prosperity for all.”

Participants have said California should first focus on rooting out fraud and waste before searching for new sources of funds. Some have pointed to social-media posts by Bill Ackman, the billionaire hedge-fund manager based in New York, suggesting the closure of a tax loophole the ultrawealthy sometimes use as a better alternative for raising revenue.

Some Golden State billionaires have already taken steps to create more distance. Peter Thiel’s private investment firm Thiel Capital, which has been largely based in Los Angeles, said it signed a lease for office space in Miami.

Google co-founders Larry Page and Sergey Brin—two of the world’s richest people, each with an estimated fortune of more than $250 billion—have been shopping for new Florida homes. The Wall Street Journal reported Wednesday that Page spent $173.4 million on two waterfront estates in Miami, and that Brin was in discussions to buy a Miami home.

Garry Tan, chief executive of startup incubator Y Combinator, in late December posted on X, “We would have to consider Austin or Cambridge programs if this [wealth tax] were to pass the ballot.”

The proposed ballot initiative that has kicked off billionaire agita was introduced by the Service Employees International Union-United Healthcare Workers West in October. It calls for a one-time 5% tax on the assets of individuals with a net worth of more than $1 billion.

The proposal would tax an individual’s holdings around the world, including stock in public and private companies and assets like artwork. It would exclude the value of certain retirement accounts and real estate.

The SEIU-UHW expects the tax would raise some $100 billion from about 200 individuals and would offset looming healthcare cuts in the GOP tax bill signed into law last year by President Trump. The union’s revenue estimate accounts for some degree of evasion by billionaires.

In a statement, Debru Carthan, an executive committee member of the union, said, “We’re simply trying to keep emergency rooms open and save patient lives…the few who left have shown the world just how outrageously greedy they truly are.”

The proposal needs about 875,000 signatures to get on the November ballot, where it would need a simple majority to pass. It would retroactively apply to billionaires who were residents of the state on Jan. 1, 2026.

Nvidia CEO Jensen Huang, who lives in the Bay Area and now has a roughly $150 billion nest egg, has said he was fine with the tax.

The billionaires on the Save California chat—which also includes venture capitalist John Hering, a prominent backer of Elon Musk’s ventures—are less sanguine.

Some members messaged that they didn’t want to move from California because they are settled with their families, but felt frustrated with Rep. Ro Khanna (D., Calif.), whose district covers Silicon Valley and has been an outspoken proponent of the proposed levy. The New York Times earlier reported that some billionaires had privately communicated on a long-shot effort to unseat Khanna.

Khanna said in an interview that the wealth tax should be structured in a way that isn’t a tax on illiquid stakes or voting shares. “There has to be some provisions in addressing that,” he said. “I’m working to bring together tech leaders and labor leaders to have those conversations.”

One co-drafter of the tax proposal, David Gamage, a professor at the University of Missouri School of Law, said individuals wouldn’t be forced to liquidate shares, noting that options such as borrowing against assets and deferring payments are available.

Some ideas floated by billionaires and conveyed to labor leaders include: giving the government illiquid stock for around 10 years as a no- or low-interest loan; taxing the loans on assets; or applying the tax to stock that is already public, people familiar with the discussions said.

Phone calls are slated for next week to explore a possible consensus, though there are also calls slated to explore how the billionaires could defeat the tax proposal.

On the Signal chat, some participants have raised the idea that economic growth, as measured by GDP, slowed in some countries that have enacted wealth taxes.

Discussion also has touched on the effect Silicon Valley enjoys from the clustering of tech founders, companies, investors and universities. Some feared an exodus of entrepreneurs would dampen that effect.

Supporters of the tax cite the growth of many California-based companies, including the run-up in artificial intelligence, and say the state’s billionaires would remain among the world’s richest people after the tax.

Advisers working with the union to get the proposal on the ballot have said the 5% tax rate was modest because billionaires’ wealth has been growing an average 7.5% a year, controlling for inflation.

Some wealthy California residents with long memories worry the one-time tax could become permanent. In 2012, California voters passed Proposition 30, which introduced a temporary tax increase for top earners, said Jared Walczak of the conservative Tax Foundation. Another proposition later extended those income tax changes until 2030.

A teachers union is making an effort to introduce an initiative on the November ballot making the higher rates permanent, Walczak said. California has one of the highest top income-tax rates in the nation, at 13.3%, not counting a significant state payroll tax.

San Francisco accountant Richard Pon, whose clients include ultrahigh net-worth individuals, said he generally is opposed to higher taxes and identifies as Republican because of that stance. But he supports the healthcare union’s proposal.

“I’m not going to be a billionaire,” Pon said. “It’s never going to impact me.”

Swiss food giant has added a batch of formula with best-before date of June 16, 2027, to its recall list

Nestlé Hong Kong has recalled another batch of baby milk formula over fears of potential bacterial contamination, while the latest government tests found no toxins in the brand’s products currently on sale locally.

A spokeswoman for Nestlé Hong Kong said on Saturday that the company had added a batch of formula with a best-before date of June 16, 2027, to its recall list first released on Tuesday over cereulide, a toxin derived from the microorganism Bacillus cereus.

“The batch only had a small amount enter the market,” the spokeswoman said.

The latest recalled product is Nan PRO 1 2HMO baby milk formula (800 grams) with the batch number 51670742F2.

Nestlé has been embroiled in a global scare over the potential contamination of certain batches of baby milk formula with a toxin that can cause food poisoning. No cases of babies affected by the toxin had been reported in Hong Kong as of Saturday.

A spokesman for the Food and Environmental Hygiene Department said on Saturday evening that its Centre for Food Safety had met Nestlé Hong Kong earlier in the day. He said the centre’s test results for sampled formula, both those still on the market and the latest recalled batch, were satisfactory.

“The Centre for Food Safety has collected samples of powdered infant and young children’s formula from the market for Bacillus cereus testing. The test results so far were satisfactory,” the spokesman said.

The centre issued a warning on Tuesday when the Swiss food giant’s Hong Kong unit began recalling 21 batches of milk formula products after similar actions in several European countries.

Nestlé had said it had launched precautionary measures after discovering an ingredient from a supplier, used in the affected batches, could contain a heat-stable substance derived from Bacillus cereus.

Consuming food contaminated with excessive Bacillus cereus or its heat-stable toxins could lead to symptoms such as vomiting and diarrhoea.

As of Thursday, Hong Kong authorities had ruled out 13 out of 14 reports of infants feeling unwell after consuming the affected formulas as unrelated to the toxin. The cause of the 14th case had yet to be determined on Thursday.

The Department of Health said it had received 49 inquiries related to the recall, mostly requests for advice on switching to other baby milk formulas.

Nestlé also announced on Saturday that it would set up two customer service centres in Tsim Sha Tsui and Causeway Bay to help refund customers who had to recycle formula.

Its spokeswoman also said the firm had tripled the number of hotlines – from 23 to 69 – to handle recall-related inquiries.

Sergey Brin is joining his Google co-founder, Larry Page, in reducing ties to the state where they built their fortunes.

For nearly three decades, Google has been steeped in the lore of Silicon Valley.

Larry Page and Sergey Brin, two Stanford University graduate students, created the search engine in 1998 and built the start-up out of a friend’s garage in Menlo Park, Calif. Over time, Google became a nearly $4 trillion juggernaut, helping to cement the Northern California region as the global epicenter of the internet industry.

Now, Mr. Brin and Mr. Page are cutting some ties with the state where they made their fortunes.

In the 10 days before Christmas, an entity connected to Mr. Brin, 52, terminated or moved 15 California limited liability companies that oversee some of his business interests and investments out of the state, according to documents seen by The New York Times. Seven of the companies — including those that appear to manage one of Mr. Brin’s superyachts and his interest in a private air terminal at San Jose’s international airport — were converted into Nevada entities.

Mr. Brin is joining Mr. Page, 52, in reducing his California presence. More than 45 California limited liability companies associated with Mr. Page filed documents last month to either become inactive or move out of the state, according to state records. A trust with ties to Mr. Page also purchased a $71.9 million mansion in Miami’s Coconut Grove neighborhood this week, according to a deed seen by The Times.

Another entity jointly managed by Mr. Brin and Mr. Page moved out of California and to Nevada on Christmas Eve, according to a filing seen by The Times.

The Google founders’ shrinking connections to California underscore the impact of a potential ballot measure that would affect the state’s wealthiest residents. Proposed by a health care union, the measure calls for Californians worth more than $1 billion to pay a one-time tax that would be equivalent of 5 percent of their assets. If the measure gains enough signatures to reach the state ballot in November and wins approval, it would retroactively apply to anyone who lived in the state as of Jan. 1 and they would have five years to pay it.

The potential wealth tax has already caused some California billionaires to establish more ties outside the state. Last month, the venture capitalist Peter Thiel announced that he opened an office for his family investment firm in Miami. David Sacks, the tech investor and White House adviser on artificial intelligence and cryptocurrency, unveiled a new office for his venture capital firm, Craft Ventures, in Austin, Texas.

But the actions of Mr. Brin and Mr. Page stand out because of their wealth — their combined net worths total more than $518 billion, as estimated by Forbes — and how closely identified they are with California. While both stepped down from day-to-day management of Google and its parent, Alphabet, in 2019, they remain on the board of the company and Mr. Brin has recently become more active in Google’s A.I. efforts.

Mr. Brin and Mr. Page still have connections to California, including homes across the state. It’s unclear how much time they will be spending in the state this year.

A representative for Mr. Brin declined to comment. Google and representatives for Mr. Page did not respond to requests for comment. The Wall Street Journal previously reported on Mr. Page’s Miami home purchase and Business Insider reported on some details of the shifting of Mr. Page and Mr. Brin’s companies.

The ballot initiative, which was proposed by the Service Employees International Union-United Healthcare Workers West to offset federal budget cuts that will affect California’s health care system, has elicited a broad spectrum of reactions.

Gov. Gavin Newsom has called the measure bad policy, arguing that it will lead billionaires to simply move to tax-friendlier states. Representative Ro Khanna, a Democrat whose district includes part of Silicon Valley, has defended the initiative, drawing criticism from tech investors and entrepreneurs who are discussing funding a challenger to his seat.

Others have said the proposed tax could drive entrepreneurs and investors out of California, which could then stifle innovation. Reid Hoffman, the billionaire co-founder of LinkedIn and a Silicon Valley resident, said the measure was a “horrendous idea” that might force founders and executives to sell shares in companies that they run simply to fulfill the tax obligation.

“Poorly designed taxes incentivize avoidance, capital flight, and distortions that ultimately raise less revenue,” Mr. Hoffman posted on social media on Wednesday. Mr. Hoffman’s spokeswoman said he was not available for comment.

Jensen Huang, the chief executive of Nvidia and one of California’s wealthiest men, was among the few billionaires who publicly said they accepted the wealth tax. “We chose to live in Silicon Valley and whatever taxes they would like to apply, so be it,” he said in an interview with Bloomberg Television this week, adding that he was “perfectly fine” with it.

An Nvidia spokesman declined to comment.

In a statement, Suzanne Jimenez, chief of staff at Service Employees International Union-United Healthcare Workers West, said an exodus of billionaires from California was overblown.

“The overwhelming majority of billionaires have chosen to stay in California past the Jan. 1 deadline,” she said. “Only a very small percentage left before the deadline, despite weeks of Chicken Little talking points claiming a modest tax would trigger a mass departure.”

The billionaire and philanthropist has made a nearly $8 billion payment to the private foundation of his ex-wife, Melinda French Gates, tax filings show.

Andrew here. Theodore Schleifer is reporting that Bill Gates’ foundation made a $7.9 billion payment to the private foundation of his ex-wife, Melinda French Gates.

We’re also waiting on the latest jobs numbers, the first time we’ll be getting on-time numbers from the government in months. And, we could hear from the Supreme Court on Friday about whether President Trump’s tariff regime is legal.

There’s also an interesting question about how prediction markets determine who wins a bet — leaving some users angry. We explain below.

A $7.9 billion Gates divorce payout

Bill Gates donated almost $8 billion to the private foundation of Melinda French Gates as part of their divorce settlement, one of the largest charitable contributions ever publicly recorded.

That is according to a tax filing reviewed by The Times’s Theodore Schleifer, which shows the first specific financial terms of the couple’s high-profile split in 2021 followed by the separation of their charitable efforts in 2024.

Gates made the $7.88 billion donation in 2024 to a relatively new foundation started by French Gates called the Pivotal Philanthropies Foundation, according to the document.

Some background: When French Gates announced in May 2024 that she would resign as a co-chair of the Bill and Melinda Gates Foundation, she suggested that Gates would donate $12.5 billion to her own efforts to improve peoples’ lives. She said in a statement that “under the terms of my agreement with Bill” that she would “have an additional $12.5 billion to commit to my work on behalf of women and families.”

But the precise terms of their philanthropic split were not made public.

More money could be coming. Tax filings for 2025, which will not be public until later this year, could reveal the balance of the money that French Gates said would be committed to her philanthropic work — about $4.6 billion. It is also possible that some of that seemingly missing money was not given to a charitable foundation, but to an entity, such as French Gates’s limited-liability company, Pivotal Ventures, that does not file a tax return.

A spokesperson for Gates did not return requests for comment. Pivotal declined to elaborate on the discrepancy, but confirmed that the $12.5 billion agreement has been fulfilled. The nearly $7.9 billion donation, a Pivotal spokesperson said, was part of that agreement.

Pivotal Philanthropies Foundation is now one of America’s largest private foundations. Established in late 2022, the year after the divorce, it had $604 million on hand at the end of 2023. A year later, it had $7.4 billion in assets, after making under $500 million in charitable donations that year.

The billionaire and philanthropist has made a nearly $8 billion payment to the private foundation of his ex-wife, Melinda French Gates, tax filings show.

Andrew here. Theodore Schleifer is reporting that Bill Gates’ foundation made a $7.9 billion payment to the private foundation of his ex-wife, Melinda French Gates.

We’re also waiting on the latest jobs numbers, the first time we’ll be getting on-time numbers from the government in months. And, we could hear from the Supreme Court on Friday about whether President Trump’s tariff regime is legal.

There’s also an interesting question about how prediction markets determine who wins a bet — leaving some users angry. We explain below.

A $7.9 billion Gates divorce payout

Bill Gates donated almost $8 billion to the private foundation of Melinda French Gates as part of their divorce settlement, one of the largest charitable contributions ever publicly recorded.

That is according to a tax filing reviewed by The Times’s Theodore Schleifer, which shows the first specific financial terms of the couple’s high-profile split in 2021 followed by the separation of their charitable efforts in 2024.

Gates made the $7.88 billion donation in 2024 to a relatively new foundation started by French Gates called the Pivotal Philanthropies Foundation, according to the document.

Some background: When French Gates announced in May 2024 that she would resign as a co-chair of the Bill and Melinda Gates Foundation, she suggested that Gates would donate $12.5 billion to her own efforts to improve peoples’ lives. She said in a statement that “under the terms of my agreement with Bill” that she would “have an additional $12.5 billion to commit to my work on behalf of women and families.”

But the precise terms of their philanthropic split were not made public.

More money could be coming. Tax filings for 2025, which will not be public until later this year, could reveal the balance of the money that French Gates said would be committed to her philanthropic work — about $4.6 billion. It is also possible that some of that seemingly missing money was not given to a charitable foundation, but to an entity, such as French Gates’s limited-liability company, Pivotal Ventures, that does not file a tax return.

A spokesperson for Gates did not return requests for comment. Pivotal declined to elaborate on the discrepancy, but confirmed that the $12.5 billion agreement has been fulfilled. The nearly $7.9 billion donation, a Pivotal spokesperson said, was part of that agreement.

Pivotal Philanthropies Foundation is now one of America’s largest private foundations. Established in late 2022, the year after the divorce, it had $604 million on hand at the end of 2023. A year later, it had $7.4 billion in assets, after making under $500 million in charitable donations that year.