Technologies

White House allows blocked reporters in after judge lifts Trump ban

District Judge Tim Kelly said the three outlets should have their access immediately restored from the ban the president had announced on Sept. 18.

The White House on Thursday began readmitting journalists from three media outlets — MS NOW, CNN and Politico — after a federal judge temporarily lifted President Donald Trump’s ban on those outlets.

The move came after Secret Service officers initially barred some journalists from those outlets from entering the White House earlier Thursday despite the order by Judge Timothy Kelly.

Kelly ordered Trump and other defendants in a lawsuit by the outlets reply to their new court filing notifying him of non-compliance with his temporary restraining order against the president’s ban.

The White House’s director of operations responded to Kelly with a declaration that said the White House had restored press passes to the affected outlets. The outlets by that time had begun reporting that their journalists were being admitted to the White House.

Kelly issued his restraining order, which will last for at least 14 days, late Wednesday night. It directed the White House to “immediately” restore access to the three outlets.

The outlets had been blocked from entering the White House since Saturday, a day after Trump announced his ban.

The president had initially said he was blocking the outlets from the White House because of “cumulative stories” that contained lies about him and his administration.

The outlets in their civil complaint said that statement by Trump, and subsequent ones, bolstered their claim that he was violating their First Amendment rights to a free press by targeting them for what they reported about him.

In his order Wednesday in U.S. District Court in Washington, Kelly said the three outlets had shown they were likely to win their lawsuit challenging Trump’s ban, “at least on their Fifth Amendment due process claim.”

The judge, whom Trump appointed in 2017, said the ban appeared to clearly violate two federal appeals court rulings that require advance notice and an opportunity to be heard to journalists whose White House press passes are targeted for revocation.

Kelly said he was bound to follow the rulings in those cases, “full stop,” which were issued in the U.S. Court of Appeals for the District of Columbia Circuit.

Trump did not warn the outlets he wanted to bar them before imposing his ban. The Justice Department issued explanations for the ban to the outlets on Tuesday, a day after they sued to block the ban.

Kelly, in his ruling, also said he was “skeptical” of the Justice Department’s claims that Trump was actually motivated by a need to safeguard national security in revoking the outlets’ access.

“Nothing in the record that predates this suit suggests that the revocation of Plaintiffs’ hard passes was motivated by national security concerns,” Kelly wrote.

“Certainly, that is not what President Trump said when he announced that he was ‘banning’ Plaintiffs from the White House — instead, he focused on the alleged lack of truthfulness and negativity of Plaintiffs’ reporting.”

Kelly also said that “nothing” in the letters to the outlets citing their purported endangering of national security with their reports suggests an urgent need to ban them.

“Indeed, some of the reporting identified by Defendants in the letters to Plaintiffs stretches back months or years,” Kelly wrote.

“Simply put — the record lacks factual support for Defendants’ contention that the revocation of Plaintiffs’ hard passes will in fact protect national security or that national security will be endangered if the Court orders their passes reinstated while this litigation proceeds,” the judge wrote.

Kelly declined to grant a request by the Justice Department to delay the temporary restraining order against Trump’s ban from taking effect immediately.

And Kelly noted that “temporary restraining orders are generally unappealable.”

The White House didn’t immediately respond to CNBC’s request for comment on the ruling.

A lawyer for the outlets, Theodore Boutrous Jr., welcomed Kelly’s ruling order, calling it “a strong ruling vindicating freedom of the press, due process and the rule of law.”

“We greatly appreciate the court’s swift action,” Boutrous said in a statement.

The White House, when asked for comment about the order Thursday, replied with a link to the court filing in which its director of operations notified Kelly about the measures the White House had taken to restore the press credentials of the outlets.

On Thursday, Kelly, in an order, told the outlets to file any motion seeking a preliminary injunction, which would continue to prevent the White House from implementing Trump’s ban while their lawsuit continues, by Sept. 28.

Kelly, who told the defendants in the lawsuit to respond to such a motion by Oct. 2, said in his order, “The Court will set a hearing at a later date but intends to rule expeditiously on the motion for a preliminary injunction.”

Disclosure: CNBC and MS NOW are divisions of Versant Media.

Technologies

Apple and Meta team up to make Muse AI model run on Mac computers

Apple and Meta are collaborating to make Muse Spark Open easier to run locally on clustered Mac Studio systems, according to the companies.

Tim Cook and Mark Zuckerberg have clashed for years, but with John Ternus taking the reins at Apple

Technologies

CoreWeave credit default swaps hit distress levels as investors sour on AI debt

Signs of distressed deepened in CoreWeave on Thursday.

CoreWeave’s credit stress continued to spiral on Thursday amid a broader sell-off in AI-related names.

CoreWeave — a so-called neocloud company — has taken on more than $51 billion of debt and obligations to finance its AI infrastructure build-out. It’s now facing a rebellion from stock and bond investors as concerns mount about AI overspending and debt levels.

Yields on CoreWeave debt have continued to climb, with the yield to maturity on its 9.75% bond due in 2031 reaching 15.78%. Bond yields move inversely to prices. Meanwhile, the spread on its five-year credit default swaps, which are insurance against default, at one point soared above 1,140 basis points. It last stood at nearly 1,038 bps — a 16% week-over-week jump and 164% higher than a year ago.

Credit concerns are spreading into AI equities too. CoreWeave’s stock dropped during trading Thursday before recovering and closing 5.94% higher. The moved followed Wednesday’s 15.5% nosedive.

Other neocloud stocks were under similar pressure. Nebius also sank before climbing higher to close 1.29% and and Iren ultimately ended the day down less than 1%.

Anxiety about AI overspending is also spreading. For instance, shares of Micron Technology and Advanced Micro Devices sold off following a big sell-off in South Korean chip stocks. Micron closed up 1.87%, while AMD fell 1.5%.

While AI debt worries have been rising steadily, investors have suddenly grown skittish about the underlying finances of companies borrowing heavily to buy chips, build data centers, and rent out computing power.

Coreweave’s credit default swaps are one place to see that stress.

Credit default swaps are contracts where buyers pay for protection in case the borrower can’t repay its debt. The spread widening in CoreWeave’s CDS means investors view the debt as riskier.

The market is “basically saying ‘no mas’ to AI debt without operating cash flow support,” the Evercore ISI trading desk said.

A spread level of 1,000 basis points or above is generally a sign of credit distress, said Gavan Nolan, executive director of fixed income pricing at S&P Global Market Intelligence.

No one is questioning whether demand for CoreWeave’s services is real, since the company has contracts with all the big hyperscalers, Nolan said. The question is whether the cash flows will ultimately arrive.

“It’s obviously heavily negative free cash flow at the moment, and it needs that cash flow to arrive really to justify all the capex that it’s spending,” Nolan said.

‘Self-fulfilling prophecy’

CEO Mike Intrator dismissed the market moves on Wednesday, according to a memo obtained by CNBC.

“When you are building a new type of technology company there will be periods of time when the market misunderstands and acts irrationally,” he wrote. “We are confident in our backlog which more than supports all of our debt obligations.”

The backlog is over $100 billion, with around two-thirds of it with investment-grade counterparts including Microsoft, Meta, IBM and Caterpillar, Deutsche Bank said in a note Thursday. The firm reiterated its buy-rating on the stock Wednesday, calling the dislocation a buying opportunity.

“The problem is this kind of concern can prove to be a self-fulfilling prophecy, and risks triggering broader issues in other AI-related names,” said Jim Reid, global head of macro and thematic research.

Domino effects may already be happening. Oracle’s five-year CDS spread also spiked this week. It was last at 282 basis points, a roughly 10% increase in one week.

“A downgrade from its BBB rating would risk pressuring IG-only investors into forced sales,” Reid said.

Technologies

Netflix Chief Content Officer Bela Bajaria is leaving, will be replaced by Peter Rice

Netflix announced Bela Bajaria will be replaced by former Disney exec Peter Rice as the company’s chief content officer.

Netflix on Thursday announced Bela Bajaria will be replaced as the company’s chief content officer by former Disney exec Peter Rice, effective Oct. 26.

Rice most recently oversaw Disney’s cable channels, news programming and coverage of major sporting events.

“Peter is one of the most effective at-scale operators in the entertainment industry,” co-CEO Ted Sarandos said in a statement. “I’m excited to welcome him to Netflix as Chief Content Officer as we continue to scale and deliver members more of the stories they love.”

Before Rice was at Disney, he held roles 21st Century Fox and Fox Searchlight Pictures. Netflix in its announcement called him “one of the entertainment industry’s most respected creative executives.” In his new role, Rice will oversee the company’s global content organization, including scripted and unscripted series, film and live events.

″[Netflix has] shown again and again that they’re willing to take chances on distinctive voices and fresh ideas, and I’m excited to work with the team to help bring even more great stories to members everywhere,” he said in a statement.

Bajaria, who is leaving Netflix after nearly 10 years, most recently worked as the company’s global content team. She had been focused on the company’s live sports strategy, looking to create events out of buzzy games and tournaments.

“I’m incredibly grateful for everything she’s done to help Netflix entertain the world,” Sarandos said in a statement.

The announcement comes a day after Netflix instituted layoffs across its organization, eliminating approximately 6% of its workforce, or roughly 1,000 jobs.

The media company will report its next quarterly earnings on Tuesday.

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