May 24, 2025, 3:17 AM ET

Bond crisis looming? GOP abandons DOGE, Google disrupts Search with AI, OpenAI buys Jony Ive's IO

The Treasury Department sold $16 billion in newly issued 20-year bonds on Wednesday to weak demand.
Weak auction demand caused yields to spike across the board, with the 10-year Treasury hitting 5% and the 30-year rising to over 5.1%.
The bond market sell-off triggered a rapid decline in major indices, with the S&P 500 dropping 1.5% in 30 minutes.
A 1.5% increase in interest rates above the CBO's baseline of 3.6% implies an additional $5 trillion in interest payments over the next decade.
Japanese bond yields have surged from 2.5% to 3.5%, signaling a potential unwind of the yen carry trade which holds $1.1 trillion in US Treasuries.
Analysts warn that a global sell-off of credit could occur if the "free money" trade unwinds, exacerbating US debt servicing difficulties.

The House passed a tax and spending bill by a one-vote margin, making the 2017 tax cuts permanent and eliminating taxes on tips and overtime.
The Congressional Budget Office (CBO) estimates the bill will reduce tax revenue by $4 trillion over 10 years and add $3–5 trillion to the national debt.
The bill is estimated to increase long-run GDP by 60 basis points if all cuts are implemented, but critics argue this ignores the rising cost of debt service.
The legislation removes financial incentives for short-term power generation, including the cancellation of battery incentives in Florida and energy transfer market rules in Texas.
Critics argue the bill represents a "Christmas tree concoction" where 11th-hour additions created a mismatch between energy supply cuts and AI power demand.
The administration faces a dilemma between passing the bill to avoid a massive tax increase (the status quo) or risking its failure for stricter austerity.
The President endorsed the bill as "big and beautiful," leading to accusations of bad leadership for not utilizing veto power to demand further spending cuts.
There is a growing consensus among the panel that the bill fails to incorporate the fiscal discipline originally promised by the "Doge" agenda.

Google unveiled "AI Mode" at its I/O conference, replacing the traditional list of 10 blue links with comprehensive AI summaries and integrated search.
The market reacted positively to the announcement, with Google stock rising 5% on the day of the event.
Google launched "AI Ultra," a subscription service priced at $250/month bundling YouTube Premium, 30TB of storage, and access to advanced AI models like Imagen and Flow.
The company relaunched "Google Labs" as a primary testing ground for new AI products before graduating them to full production status.
Panelists speculate Google is running A/B tests to transition users from ad-based search to AI-driven experiences over the next 12–18 months.
The shift marks a strategic pivot from ad-reliance toward high-value subscription revenue models to offset potential declines in search click-through rates.

OpenAI acquired Jonathan Ive's company, IO, in an all-stock deal valued at over $6 billion.
The acquisition is widely interpreted as a strategic move to integrate high-end industrial design into a new hardware product, likely a wearable device.
Speculation on the device form factor includes smart glasses or a "puck" that functions as a personal AI assistant with camera and audio capabilities.
Critics noted that the $6.5 billion valuation may be inflated, comparing the deal to the failure of previous wearable startups like Humane.
The "meet-cute" video announcing the deal featured highly effusive language from both parties, which panelists dismissed as corporate marketing.
Concerns were raised regarding the surveillance nature of such devices and the lack of user consent mechanisms in current designs.

The US has initiated an "AI Diplomacy" framework with Middle Eastern nations (Saudi Arabia, UAE, Oman) to replace Biden-era export controls on GPUs.
The new framework requires a "dollar-for-dollar" matching investment where Middle Eastern nations fund AI infrastructure in the US in exchange for access to the American tech stack.
A key provision mandates that at least 80% of compute in Middle Eastern data centers be owned and operated by American cloud service providers.
G42 confirmed a partnership with OpenAI to build a five-gigawatt data center cluster in Abu Dhabi, including reciprocal investments in US AI infrastructure.
The strategy aims to prevent Middle Eastern nations from adopting the Chinese tech stack (Huawei + DeepSeek) due to perceived US hostility.
Panelists argue that export controls on China are necessary, but restricting technology transfers to the rest of the world cedes market share to Beijing.

A 14-month-old baby named KJ became the first patient to receive in vivo CRISPR gene editing, successfully correcting a lethal mutation in the CPS1 gene.
The treatment involved injecting liquid nanoparticles carrying base editors into the blood, which targeted liver cells to convert an "A" to a "G" in the DNA sequence.
The patient has been taken off life-saving medications, marking a potential breakthrough for treating ~20–30,000 genetic conditions caused by single-point A-G mutations.
The Tennessee Valley Authority filed the first application for a Small Modular Reactor (SMR) in the US, seeking faster regulatory approval.
Panelists warn that the US is adding power capacity in "gigawatts" while China adds capacity in "terawatts," with China adding the equivalent of one US power grid every 18 months.
Supply chain constraints are identified as a major bottleneck, with copper and natural gas turbines facing multi-year delays (up to 2030) due to China's manufacturing dominance.
The panel argues that AI and robotics cannot solve fiscal deficits without a parallel "Manhattan Project" to rapidly scale domestic energy production.