Yes, there are other things to talk about
But we do touch on the Musk-Trump stuff a little, as a treat
Welcome to Cautious Optimism, a newsletter on tech, business, and power.
Happy Friday! Before we get into the big news items of the day, including notes on Cursor’s latest round, let’s pause and clap our hands for Circle. The American stablecoin giant had a great first day’s trading as we reported yesterday. Today in pre-market trading, Circle is up another 13%. Jump in, unicorns, the IPO waters are warm! — Alex
📈 Trending Up: Spyware … Gor … the Cursor effect … drone deliveries … robotic deliveries … the NYTimes-OpenAI spat … AMD’s acquisition game … free speech in China? … AI model quality … Thread AI … house publications … talking … Chinese weapons exports … Russian attacks on Ukraine … uh …
📉 Trending Down: Claude, which cannot lie … Lululemon, on earnings and macro fears … keeping tech out of weapons … Rare Earth stockpiles … credit scores … rapprochement … green energy polling … Deel’s reputation …
The economic pulse
Kicking off the day today is news that non-farm payrolls rose by 139,000 in May, under the 177,000 that we saw in April, but ahead of the +126,00 number that investors expected. And far better than what ADP signaled was coming.
The Good: The domestic labor market is holding up well despite economic uncertainty, tariffs, and geopolitical tensions.
The Bad: If you were hoping for sooner, sharper rate cuts, the good news isn’t.
The CO perspective is that more jobs is good and fewer jobs is bad, and everything downstream from those two facts will sort itself out.
The Musk-Trump Blowup Catchup
If you work for living — journalists, venture capitalists, terminally-online founders excepted — you might have missed parts of the Musk-Trump falling out yesterday. So, to catch you up, here’s a working summary with demonstrated and expected consequences added in for context:
Mid-May: Musk signals he’s pulling back from political spending. An expensive loss after trying to buy a Wisconsin Supreme Court seat failed, and public-opinion blowback, both were likely candidates for the stated decision.
Late May: Musk departs his formal/informal role as part of the DOGE squad. Trump gave him a sendoff while Musk pledged to reduce his time spent working on governmental matters. Tesla investors who wanted Musk back at the helm were excited at the prospect of a return to normalcy. Also, the House passes its version of the ‘big beautiful bill,’ a spending document that blended tax cut extensions, spending cuts, and trillions more room to borrow.
To cap off June, POTUS pulled the nomination of Jared Isaacman to be the next NASA administrator. As companies work with NASA, and the Starlink founder has strong views about the direction of space progress, the move was a blow. Isaacman blamed folks annoyed with Musk for his pulled nomination.
Early June: Shortly after heading back to majority private-sector work, Musk began to agitate against the ‘big beautiful bill,’ which he viewed as insufficiently radical in terms of spending cuts. Debt markets’ signals that American fiscal policy might need more trimming made financial headlines. From June 3rd to June 4th, Musk’s complaints about the bill gained steam, from calling it a “disgusting abomination” to demands that Congress “KILL THE BILL.”
Then things went off the rails:
Trump finally got annoyed enough at Musk’s agitations against a bill that he favors to directly respond, arguing that he would have “won Pennsylvania regardless of Elon,” adding that he was “disappointed with Elon” and thought that he had lost the support of the technologist when “he found out I would cut the EV mandate.”
Musk, amidst a flurry of reposted historical commentary from himself being chill with a reduction in EV subsidies, argued in response that without his support “Trump would have lost the election, Dems would control the House and the Republicans would be 51-49 in the Senate,” adding that Trump was ungrateful for his help. (Some of the Musk tweets were even funny.)
Trump then fired off two Truth Social posts:
That was blastoff from spat to a bloody feud. Musk posted that POTUS is in the “Epstein files,” saying that that fact was why they “have not been made public.”
In response to POTUS threatening to cut off SpaceX contracts, Musk said that his company would “begin decommissioning its Dragon spacecraft immediately.” The Dragon spacecraft is currently earmarked as part of the NASA Moon efforts, meaning that the POTUS-Musk fight could derail the current space mission timelines.
Musk also said, in response to a tweet asking if folks “can finally say that [POTUS’s] tariffs are super stupid,” that the “Trump tariffs will cause a recession in the second half of the year.”
Musk asked his followers if the United States needs a new political party (which matched prior threats that he’s going nowhere in politics, while Trump is out of office in a few years), potentially nabbing GOP votes in future elections.
Then came one more post from the President:
Got all that? The Musk-POTUS partnership has imploded like a poorly designed underwater submersible. Now the two men — one the most powerful, one the wealthiest — are tearing one another down. Tesla shares took a bath yesterday, while the chances that POTUS manages to get his bill through fell.
What matters for startups? Well, I think regulatory relief in areas where Musk was fighting for them will slow. DOGE work relating to aggregating data on American citizens will continue, but the DOGE era of Trump 2.0 has ended the way that many expected it to—in flames.
Moving ahead, the technology-right has to pick a side: Musk, and a push for even sharper spending cuts, or Trump, and his compromise bill. Those inside the administration who are also close to Musk — say, a former venture capitalist and former member of a certain four-man podcast — are now stuck trying to sort out how to split the baby.
Coda: Many politically minded observers highlighted tremors in the Musk-POTUS relationship before it failed. Some folks accused those folks — the media, mostly — of trying to manufacture a divorce. That claim always rested on the view that a future breakup would not prove a self-fulfilling prophecy.
Cursor’s cheap at twice the price
Getting back to news that’s fun instead of grating, let’s talk about Cursor. The AI coding service dropped several key news items yesterday (Bloomberg):