Saudi Crown Prince Mohammed bin Salman told US President Donald Trump in a phone call Thursday that the Gulf nation will invest $600 billion in the United States over the next four years, Saudi state media reported.

Trump immediately went into rough-and-tumble Manhattan real estate negotiator mode and put pressure on the kingdom to up its offer. “I’ll be asking the crown prince, who’s a fantastic guy, to round it out to around $1 trillion,” he let the world know during a remote address to the World Economic Forum. 

That’s going to be a tall order even for bin Salman, whose kingdom faces a set of steep economic hurdles that aren’t getting any lower.

Breaking Their Budget

Saudi Arabia was one of Trump’s closest allies during his first term in office — earlier this week, he claimed that the country agreed to buy $450 billion worth of American goods after he paid a state visit in 2017.

His circle remained close with the kingdom while he was out of office, too: Affinity Partners, the investment firm led by Trump’s son-in-law Jared Kushner, received $2 billion in backing from the Public Investment Fund, the sovereign wealth vehicle controlled by bin Salman, in 2022. Liberty Strategic Capital, the private equity shop of Trump’s former Treasury Secretary Steven Mnuchin, got $1 billion.

But Saudi Arabia — which was a splashy investor in global technology and entertainment through the PFI for much of the past decade — has committed to shrink its foreign investments to focus on a group of much-ballyhooed megaprojects at home — like the (increasingly scaled back) $1.5 trillion futuristic planned city Neom. That means both bin Salman’s pledge and Trump’s request to increase it raise a simple question: how?

• Saudi’s gross domestic product in 2023 was $1 trillion, according to World Bank data, meaning the $600 billion pledge is worth more than half the country’s GDP. Saudi Arabia is facing a $27 billion budget shortfall this year because of softening energy prices — oil accounts for 40% of Saudi GDP — and the mountains of cash it’s spending on megaprojects, which include multiple tourist resorts. 
• Saudi Arabia is also set to host the 2029 Asian Winter Games, Expo 2030, and the 2034 World Cup, which will demand massive and time-sensitive infrastructure spending.

Words Move Markets: About those oil prices that the kingdom depends on for a massive chunk of revenues: Trump said he plans to ask Saudi Arabia and other OPEC nations to “bring down the cost of oil” (presumably by boosting production) and threatened to use tariffs to earn cooperation. The price of crude fell by 1% after his comments. Better find that $600 billion — er, $1 trillion — quick.

Aside from a few Elon Musk potshots, Sam Altman’s had a pretty good week.

First, the OpenAI CEO got to trumpet a new AI infrastructure investment project. And then a biotech company he backs scored a major fundraise a couple days later. Retro Biosciences announced it has raised $1 billion to further its research into anti-aging technology. The very same day, Neko, a healthtech startup cofounded by Spotify CEO Daniel Ek, announced a $260 million fundraise to build clinics in the US.

Age Before Funding

The pandemic saw a flurry of investment in biotech startups (can you guess why?) but, according to a recent article in Nature, the past three years have seen shrinking investments in the sector. That is, until last year, when life seemed to return to biotech — although Nature noted that there was something of a gap, with big companies working on well-established areas of research attracting chunky funding rounds while smaller, more innovative startups working on more unproven science were left vacuuming up the crumbs. 

In that sense, Retro Biosciences has bucked the trend, though it probably helped that it has Altman’s name attached and the company leans heavily on the idea that it will use AI (funnily enough, OpenAI’s AI) to find treatments to halt or even reverse the aging process: 

• The Financial Times reports that Retro Biosciences is putting its $1 billion in fresh cash towards getting three drugs to trial, including one designed to treat Alzheimer’s. “The line we’re drawing in the sand is, damn it, we’re going to have our first drug out in the 2020s,” Sandro Salsano, a financier leading the fundraise who has also joined Retro Bioscience’s board, told the FT.
• Drug discovery has been touted as one of the best, most tangibly useful, applications of AI. Demis Hassabis, CEO of Google AI division DeepMind as well as Isomorphic labs, an Alphabet-owned AI drug discovery company, told Davos earlier this week: “We’ll hopefully have some AI-designed drugs in clinical trials by the end of the year.”

Scanning for Demand: Daniel Ek’s Neko is slightly less buzzy, specializing in full-body scans to provide preventative health data. So far, it has started clinics in its home city of Stockholm and in London, and CEO Hjalmar Nilsonne told TechCrunch the company has scanned 10,000 people and has a waiting list of 100,000. “It’s very clear that there’s incredible demand for a different way of thinking about health care,” Nilsonne told TechCrunch.

When the Federal Reserve meets again next week, it’s all but certain to hold interest rates steady. What happens after that? Well…

In an interview with the Financial Times, Dan Ivascyn, chief investment officer at asset management giant Pimco, predicted the Fed would hold rates steady for the “foreseeable future” — or possibly even raise them. But in his video message played for world business leaders at the World Economic Forum in Davos on Thursday, newly inaugurated President Donald Trump laid out a much different vision of the future. Much, much different.

Interested Yet?

When the Fed cut interest rates by a quarter-point in its last meeting in December, consensus opinion held that the board would institute just two more rate cuts through 2025. Since then, the reality of the Fed’s “two-handle” inflation problem — that is, inflation sticking at below 3% but above the 2% target — has begun to sink in; on Wednesday, JPMorgan CEO Jamie Dimon urged Davos attendees to make peace with sticky prices, especially with likely-inflationary tariffs en route (or, at least, supposedly en route).

Fixed-income investment juggernaut Pimco — like much of Wall Street — has come around to the “two-handle” reality:

• According to CME Group’s FedWatch tool, traders are pricing in no movement in next week’s Fed meeting with 99% certainty, and don’t see another cut likely until at least June. After that, the tool shows around a 50% chance of another cut before the end of the year.
• Pimco’s Ivascyn, meanwhile, has told the FT that “we’re not out of the woods yet from an inflation perspective” and that it’s “certainly possible” we could see rate increases sooner than later. Part of his evidence? Recent surveys showing consumers are expecting inflation to increase again, which has been a leading indicator in the past.

Presidential POV: Never one to stick with the status quo, Trump is instead taking a big stick to interest rates. On Thursday, the president bucked both consensus expectations on rate cuts and seemingly threatened the Federal Reserve’s long-standing independence, saying he will “demand that interest rates drop immediately.” But why stop there? “Likewise, they should be dropping all over the world,” he added. “Interest rates should follow us all over.”