Stocks Rise Ahead of PCE; China Vows Tariff Tête-à-Tête
Equity futures rise after a tumultuous week for risk amid tariff confusion and as Nvidia began to lose its shine for investors. China vows retaliation against President Trump's levies after he announced an additional 10% tariff on the nation. Cayla Seder of State Street expects the turbulence to remain high, but thinks the foundations underlying the market are still strong. Europe provides cheap options due to being less well served from a capital market standpoint, says Park Square's Robin Doumar. 'Bloomberg Brief' delivers the market news, data and analysis you need to set your agenda. (Source: Bloomberg)
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Associated Press
30 minutes ago
- Associated Press
ICE is using no-bid contracts, boosting big firms, to get more detention beds
LEAVENWORTH, Kan. (AP) — Leavenworth, Kansas, occupies a mythic space in American crime, its name alone evoking a short hand for serving hard time. The federal penitentiary housed gangsters Al Capone and Machine Gun Kelly — in a building so storied that it inspired the term 'the big house.' Now Kansas' oldest city could soon be detaining far less famous people, migrants swept up in President Donald Trump's promise of mass deportations of those living in the U.S. illegally. The federal government has signed a deal with the private prison firm CoreCivic Corp. to reopen a 1,033-bed prison in Leavenworth as part of a surge of contracts U.S. Immigration and Customs Enforcement has issued without seeking competitive bids. ICE has cited a 'compelling urgency' for thousands more detention beds, and its efforts have sent profit estimates soaring for politically connected private companies, including CoreCivic, based in the Nashville, Tennessee, area and another giant firm, the Geo Group Inc., headquartered in southern Florida. That push faces resistance. Leavenworth filed a lawsuit against CoreCivic after it tried to reopen without city officials signing off on the deal, quoting a federal judge's past description of the now-shuttered prison as 'a hell hole.' The case in Leavenworth serves as another test of the limits of the Republican president's unusually aggressive tactics to force migrant removals. To get more detention beds, the Trump administration has modified dozens of existing agreements with contractors and used no-bid contracts. One pays $73 million to a company led by former federal immigration officials for 'immigration enforcement support teams' to handle administrative tasks, such as helping coordinate removals, triaging complaints or telling ICE if someone is a risk to community safety. Just last week , Geo Group announced that ICE modified a contract for an existing detention center in southeastern Georgia so that the company could reopen an idle prison on adjacent land to hold 1,868 migrants — and earn $66 million in annual revenue. 'Never in our 42-year company history have we had so much activity and demand for our services as we are seeing right now,' said CoreCivic CEO Damon Hininger during an earnings call last month with shareholders. A tax-cutting and budget reconciliation measure approved last month by the House includes $45 billion over four years for immigrant detention, a threefold spending increase. The Senate is now considering that legislation. Declaring an emergency to expedite contracts When Trump started his second term in January, CoreCivic and Geo had around 20 idle facilities, partly because of sentencing reforms that reduced prison populations. But the Trump administration wants to more than double the existing 41,000 beds for detaining migrants to at least 100,000 beds and — if private prison executives' predictions are accurate — possibly to more than 150,000. ICE declared a national emergency on the U.S. border with Mexico as part of its justification for authorizing nine five-year contracts for a combined 10,312 beds without 'Full and Open Competition.' Only three of the nine potential facilities were listed in ICE's document: Leavenworth, a 2,560-bed CoreCivic-owned facility in California City, California, and an 1,800-bed Geo-owned prison in Baldwin, Michigan. The agreement for the Leavenworth facility hasn't been released, nor have documents for the other two sites. CoreCivic and Geo Group officials said last month on earnings calls that ICE used what are known as letter contracts, meant to speed things up when time is critical. Charles Tiefer, a contract expert and professor emeritus of law at the University of Baltimore Law School, said letter contracts normally are reserved for minor matters, not the big changes he sees ICE making to previous agreements. 'I think that a letter contract is a pathetic way to make big important contracts,' he said. A Kansas prison town becomes a priority CoreCivic's Leavenworth facility quickly became a priority for ICE and the company because of its central location. Leavenworth, with 37,000 residents, is only 10 miles (16 kilometers) to the west of the Kansas City International Airport. The facility would hold men and women and is within ICE's area of operations for Chicago, 420 miles (676 kilometers) to the northeast. 'That would mean that people targeted in the Chicago area and in Illinois would end up going to this facility down in Kansas,' said Jesse Franzblau, a senior policy analyst for the National Immigrant Justice Center. Prisons have long been an important part of Leavenworth's economy, employing hundreds of workers to guard prisoners held in two military facilities, the nation's first federal penitentiary, a Kansas correctional facility and a county jail within 6 miles (10 kilometers) of city hall. Resistance from Trump country The Leavenworth area's politics might have been expected to help CoreCivic. Trump carried its county by more than 20 percentage points in each of his three campaigns for president. But skeptical city officials argue that CoreCivic needs a special use permit to reopen its facility. CoreCivic disagrees, saying that it doesn't because it never abandoned the facility and that the permitting process would take too long. Leavenworth sued the company to force it to get one, and a state-court judge last week issued an order requiring it. An attorney for the city, Joe Hatley, said the legal fight indicates how much ill will CoreCivic generated when it held criminal suspects there for trials in federal court for the U.S. Marshals Service. In late 2021, CoreCivic stopped housing pretrial detainees in its Leavenworth facility after then-President Joe Biden, a Democrat, called on the U.S. Department of Justice to curb the use of private prisons. In the months before the closure, the American Civil Liberties Union and federal public defenders detailed stabbings, suicides, a homicide and inmate rights violations in a letter to the White House. CoreCivic responded at the time that the claims were 'false and defamatory.' Vacancies among correctional officers were as high as 23%, according to a Department of Justice report from 2017. 'It was just mayhem,' recalled William Rogers, who worked as a guard at the CoreCivic facility in Leavenworth from 2016 through 2020. He said repeated assaults sent him to the emergency room three times, including once after a blow to the head that required 14 staples. The critics have included a federal judge When Leavenworth sued CoreCivic, it opened its lawsuit with a quote from U.S. District Court Judge Julie Robinson — an appointee of President George W. Bush, a Republican — who said of the prison: 'The only way I could describe it frankly, what's going on at CoreCivic right now is it's an absolute hell hole.' The city's lawsuit described detainees locked in showers as punishment. It said that sheets and towels from the facility clogged up the wastewater system and that CoreCivic impeded the city police force's ability to investigate sexual assaults and other violent crimes. The facility had no inmates when CoreCivic gave reporters a tour earlier this year, and it looked scrubbed top to bottom and the smell of disinfectant hung in the air. One unit for inmates had a painting on one wall featuring a covered wagon. During the tour, when asked about the allegations of past problems, Misty Mackey, a longtime CoreCivic employee who was tapped to serve as warden there, apologized for past employees' experiences and said the company officials 'do our best to make sure that we learn from different situations.' ICE moves quickly across the CoreCivic's Leavenworth prison, other once-shuttered facilities could come online near major immigrant population centers, from New York to Los Angeles, to help Trump fulfill his deportation plans. ICE wants to reopen existing facilities because it's faster than building new ones, said Marcela Hernandez, the organizing director for the Detention Watch Network, which has organized nationwide protests against ICE detention. Counties often lease out jail space for immigrant detention, but ICE said some jurisdictions have passed ordinances barring that. ICE has used contract modifications to reopen shuttered lockups like the 1,000-bed Delaney Hall Facility in Newark, New Jersey, and a 2,500-bed facility in Dilley, Texas, offering no explanations why new, competitively bid contracts weren't sought. The Newark facility, with its own history of problems, resumed intakes May 1, and disorder broke out at the facility Thursday night. Newark Mayor Ras Baraka, a Democrat who previously was arrested there and accused of trespassing, cited reports of a possible uprising, and the Department of Homeland Security confirmed four escapes. The contract modification for Dilley, which was built to hold families and resumed operations in March, calls its units 'neighborhoods' and gives them names like Brown Bear and Blue Butterfly. The financial details for the Newark and Dilley contract modifications are blacked out in online copies, as they for more than 50 other agreements ICE has signed since Trump took office. ICE didn't respond to a request for comment. From idle prisons to a 'gold rush' Private prison executives are forecasting hundreds of millions of dollars in new ICE profits. Since Trump's reelection in November, CoreCivic's stock has risen in price by 56% and Geo's by 73%. 'It's the gold rush,' Michael A. Hallett, a professor of criminal justice at the University of North Florida who studies private prisons. 'All of a sudden, demand is spiraling. And when you're the only provider that can meet demand, you can pretty much set your terms.' Geo's former lobbyist Pam Bondi is now the U.S. attorney general. It anticipates that all of its idle prisons will be activated this year, its executive chairman, George Zoley, told shareholders. CoreCivic, which along with Geo donated millions of dollars to largely GOP candidates at all levels of government and national political groups, is equally optimistic. It began daily talks with the Trump administration immediately after the election in November, said Hininger. CoreCivic officials said ICE's letter contracts provide initial funding to begin reopening facilities while the company negotiates a longer-term deal. The Leavenworth deal is worth $4.2 million a month to the company, it disclosed in a court filing. Tiefer, who served on an independent commission established to study government contracting for the Iraq and Afghanistan wars, said ICE is 'placing a very dicey long-term bet' because of its past problems and said ICE is giving CoreCivic 'the keys to the treasury' without competition. But financial analysts on company earnings calls have been delighted. When CoreCivic announced its letter contracts, Joe Gomes, of the financial services firm Noble Capital Markets, responded with, 'Great news.' 'Are you hiding any more of them on us?' he asked. ___ Hanna reported from Topeka, Kan. Associated Press writers Joshua Goodman in Miami and Morgan Lee, in Santa Fe, N.M., contributed reporting.
Yahoo
32 minutes ago
- Yahoo
Trump blocks California rules for greener vehicles and gas-powered car ban
Donald Trump has blocked California's first-in-the-nation rule banning the sale of new gas-powered cars by 2035, signing a resolution on Thursday to stymie the state's ambitious attempt to tackle the climate crisis by pivoting to greener vehicles. The state quickly announced it was challenging the move in court, with California's attorney general holding a news conference to discuss the lawsuit before Trump's signing ceremony ended at the White House. The resolution was approved by Congress last month and aims to quash the country's most aggressive attempt to phase out gas-powered cars. Trump also signed measures to overturn state policies curbing tailpipe emissions in certain vehicles and smog-forming nitrogen oxide pollution from trucks. Related: Fury as Republicans go 'nuclear' in fight over California car emissions California has some of the worst smog and air quality issues in the nation, and has for decades been able to seek waivers from the Environmental Protection Agency that have allowed the state to adopt stricter emissions standards than the federal government. But Trump, who has pledged to revive the US auto manufacturing industry and boost oil and gas drilling, called California's regulations 'crazy'. 'It's been a disaster for this country,' he said at a White House ceremony where he signed the resolutions. In his first term, Trump revoked California's ability to enforce its own standards, which Joe Biden reinstated in 2022. The move is the latest in an ongoing battle between the Trump administration and heavily Democratic California over issues including tariffs, LGBTQ+ rights and immigration. The state is already involved in more than two dozen lawsuits challenging Trump administration actions, and the state's attorney general, Rob Bonta, announced the latest one at a news conference in California. Ten other states, all with Democratic attorneys general, joined the lawsuit filed on Thursday. 'The federal government's actions are not only unlawful; they're irrational and wildly partisan,' Bonta said. 'They come at the direct expense of the health and the wellbeing of our people.' The three resolutions Trump signed will block California's rule phasing out gas-powered cars and ending the sale of new ones by 2035. They will also kill rules that phase out the sale of medium- and heavy-duty diesel vehicles and cut tailpipe emissions from trucks. In his remarks at the White House, Trump expressed doubts about the performance and reliability of electric vehicles, though he had some notably positive comments about the company owned by Elon Musk, despite their fractured relationship. 'I like Tesla,' Trump said. In remarks that often meandered off topic, Trump used the East Room ceremony to also muse on windmills, which he claimed 'are killing our country', the prospect of getting electrocuted by an electric-powered boat if it sank and whether he'd risk a shark attack by jumping as the boat went down. 'I'll take electrocution every single day,' the president said. When it comes to cars, Trump said he likes combustion engines but, for those that prefer otherwise, 'if you want to buy electric, you can buy electric'. The Alliance for Automotive Innovation, which represents major carmakers, applauded Trump's action. 'Everyone agreed these EV sales mandates were never achievable and wildly unrealistic,' John Bozzella, the group's president and CEO, said in a statement. Newsom, who is considered a likely 2028 Democratic presidential candidate, said Trump's action was a continuation of his 'all-out assault' on California. 'And this time he's destroying our clean air and America's global competitiveness in the process,' Newsom said in a statement. 'We are suing to stop this latest illegal action by a president who is a wholly owned subsidiary of big polluters.' Related: 'Putting profit over people': big gas is waging war on a California clean air rule The signings come as Trump has pledged to revive American auto manufacturing and boost oil and gas drilling. The move follows other steps the Trump administration has taken to roll back rules that aim to protect air and water and reduce emissions that cause climate change. The Environmental Protection Agency on Wednesday proposed repealing rules that limit greenhouse gas emissions from power plants fueled by coal and natural gas. Dan Becker with the Center for Biological Diversity, said the signing of the resolutions was 'Trump's latest betrayal of democracy'. 'Signing this bill is a flagrant abuse of the law to reward big oil and big auto corporations at the expense of everyday people's health and their wallets,' Becker said in a Associated Press contributed reporting
Yahoo
33 minutes ago
- Yahoo
Meta Investors Cheer as Zuckerberg Doubles Down on AI Commitment
(Bloomberg) -- Meta Platforms Inc. keeps writing bigger checks in pursuit of its artificial intelligence strategy, and traders keep cheering it on, encouraged that the expensive bets will keep paying off. Shuttered NY College Has Alumni Fighting Over Its Future Do World's Fairs Still Matter? As Part of a $45 Billion Push, ICE Prepares for a Vast Expansion of Detention Space NYC Renters Brace for Price Hikes After Broker-Fee Ban As American Architects Gather in Boston, Retrofits Are All the Rage The stock is back near record territory after soaring more than 40% from its April low. Last week, Meta finalized a $14.3 billion investment in Scale AI, whose leader is joining a team being assembled by Chief Executive Officer Mark Zuckerberg to pursue artificial general intelligence. That came just after Meta raised its capital spending forecast for 2025 to as much as $72 billion. 'The amount of spending might give some pause, but we're confident Meta can use AI to drive revenue and accelerate growth,' said Jake Seltz, who manages the Allspring LT Large Growth ETF. 'This shows Meta is committed to making the investments it needs to maintain its leadership, and while the stock has had a nice run, we're still bullish on the long-term opportunity.' Meta's rally has coincided with a resurgence in trader appetites for AI-related stocks, after the earnings season alleviated fears that Big Tech companies might rein in spending on expensive computing gear. The rebound marks a shift from earlier in the year, when stocks such as Nvidia Corp. tumbled on concerns about AI models developed on the cheap in China. An exchange traded fund that tracks AI stocks including Inc. is up 32% from a low on April 8, the day before US President Donald Trump paused tariffs on trading partners, sparking a broad relief rally in stocks. Over that period, the Global X Artificial Intelligence & Technology ETF has outperformed the S&P 500 and the tech-heavy Nasdaq 100, which have gained about 20% and 27%, respectively. Allen Bond, portfolio manager at Jensen Investment Management, bought Meta shares for the first time in recent weeks, in part because of the company's aggressive spending on AI. He also cited improved operational efficiencies and the shift away from the so-called metaverse, which prompted the company to change its name from Facebook in 2021. 'Using AI to optimize the data it has on users for revenue is a clear application, one that allows Meta to play offense while Alphabet is playing defense,' Bond said, referring to concerns that the Google parent could lose market share in the lucrative search business to AI services like ChatGPT. 'While AI is expensive, there is good evidence that it is really paying off so far.' Meta's return on invested capital hit a record high of 31% in the first quarter, more than double the levels from 2023 when the company's metaverse ambitions were driving higher spending. Meta uses AI to improve ad targeting and increase engagement across its apps, which also include Instagram and WhatsApp. The Wall Street Journal recently reported that Meta is looking to fully automate ad creation, using AI technologies. Dan Salmon, an analyst at New Street Research, estimated that generative AI creative tools could boost Meta's annual ad revenue growth by 1% to 2% over the next several years, and as much as 4% by the end of the decade. Still, long-term tailwinds from AI are widely expected, raising the question of how much further the stock can rally in the near term. Shares trade at 24.5 times estimated earnings, cheaper than other megacaps, but still above its own average over the past decade of about 22 times. While Wall Street is broadly optimistic — nearly 90% of the analysts tracked by Bloomberg recommend buying — Meta shares are just shy of the average price target, suggesting limited expectations for additional gains. 'It is still in the buy range, since you're getting pretty strong growth for a pretty reasonable price,' said Greg Halter, director of research at the Carnegie Investment Counsel. 'Still, rallies like this don't continue forever, and it certainly isn't the screaming buy it was not too long ago.' Top Tech Stories Taiwan has blacklisted Huawei Technologies Co. and Semiconductor Manufacturing International Corp., dealing another major blow to the two companies spearheading China's efforts to develop cutting-edge AI chip technologies. The Washington Post is investigating a cyber attack on the email accounts of some journalists, prompting the newspaper to beef up its online security. Apple's unveiling of iOS 26 and the Liquid Glass interface was the most discussed part of its developers conference, but the real gems were its enhancements to CarPlay, the Vision Pro and the iPad. Imax Corp.'s Chinese arm is aggressively adding screens across the country, betting on big local and US productions to boost its sales in the world's second-largest film market. Earnings Due Monday Postmarket Digital Turbine --With assistance from Subrat Patnaik. American Mid: Hampton Inn's Good-Enough Formula for World Domination The Spying Scandal Rocking the World of HR Software New Grads Join Worst Entry-Level Job Market in Years As Companies Abandon Climate Pledges, Is There a Silver Lining? The $7 Billion Nicotine-Pouch Market's Next Target? Women ©2025 Bloomberg L.P.
