Archive

April 2025

Browsing

Nintendo on Friday announced that retail preorder for its Nintendo Switch 2 gaming system will begin on April 24 starting at $449.99.

Preorders for the hotly anticipated console were initially slated for April 9, but Nintendo delayed the date to assess the impact of the far-reaching, aggressive “reciprocal” tariffs that President Donald Trump announced earlier this month.

Most electronics companies, including Nintendo, manufacture their products in Asia. Nintendo’s Switch 1 consoles were made in China and Vietnam, Reuters reported in 2019. Trump has imposed a 145% tariff rate on China and a 10% rate on Vietnam. The latter is down from 46%, after he instituted a 90-day pause to allow for negotiations.

Nintendo said Friday that the Switch 2 will cost $449.99 in the U.S., which is the same price the company first announced on April 2.

“We apologize for the retail pre-order delay, and hope this reduces some of the uncertainty our consumers may be experiencing,” Nintendo said in a statement. “We thank our customers for their patience, and we share their excitement to experience Nintendo Switch 2 starting June 5, 2025.”

The Nintendo Switch 2 and “Mario Kart World bundle will cost $499.99, the digital version “Mario Kart World” will cost $79.99 and the digital version of “Donkey Kong Bananza” will cost $69.99, Nintendo said. All of those prices remain unchanged from the company’s initial announcement.

However, accessories for the Nintendo Switch 2 will “experience price adjustments,” the company said, and other future changes in costs are possible for “any Nintendo product.”

It will cost gamers $10 more to by the dock set, $1 more to buy the controller strap and $5 more to buy most other accessories, for instance.

Retailer Best Buy said Friday that it will also begin accepting preorders for the Nintendo Switch 2 console, games and accessories on April 24.

The company said that for the first time in six years, most of its stores will open at midnight for the official launch day, June 5, so that customers can “get their hands on their new Switch 2 immediately.”

This post appeared first on NBC NEWS

Rep. Don Bacon, R-Neb., on Monday signaled he wouldn’t tolerate Defense Secretary Pete Hegseth allegedly once again sharing sensitive information about military operations in a Signal group chat. 

‘If the reporting is true, this is unacceptable. I would never tell the White House what to do, but I wouldn’t tolerate it,’ Bacon told Fox News Digital, reiterating his comments first reported by Politico. 

Bacon, a retired military officer and Republican on the House Armed Services Committee, said it would be ‘unacceptable’ if Hegseth sent classified information in a Signal chat about a mission in Yemen targeting the Houthis. The New York Times reported on Sunday that Hegseth shared information about the March 15 strikes in Yemen in a private Signal group chat that included his wife, brother and personal lawyer, claiming they were essentially the same plans shared in the separate Signal chat that included an editor of The Atlantic. 

Bacon told Politico he had reservations about Hegseth’s experience since his nomination, and while a spokesperson for Bacon’s office emphasized to Fox News Digital that he would not tell President Donald Trump to fire Hegseth, Bacon said he ‘wouldn’t tolerate’ the latest Hegseth reporting if he was the commander in chief. 

White House officials have joined Hegseth in denying the reporting. 

‘No matter how many times the legacy media tries to resurrect the same nonstory, they can’t change the fact that no classified information was shared. Recently fired ‘leakers’ are continuing to misrepresent the truth to soothe their shattered egos and undermine the president’s agenda, but the administration will continue to hold them accountable,’ White House spokesperson Anna Kelly told Fox News Digital.

Trump himself shut down the reporting, calling it ‘fake news’ and touting recruitment rates and Hegseth’s leadership of the armed forces.

‘The president stands strongly behind Secretary Hegseth, who is doing a phenomenal job leading the Pentagon,’ White House press secretary Karoline Leavitt said on Fox News on Monday. 

Hegseth lamented ‘disgruntled employees’ and ‘anonymous smears’ when pressed by reporters during the White House Easter Egg roll about the latest Signal controversy.

‘This is why we’re fighting the fake news media. This group right here is full of hoaxsters,’ Hegseth said.

The Trump administration has maintained that no classified material was transmitted in the Signal chat reported by The Atlantic. Signal is an encrypted messaging app with additional security measures that keep messages private to those included in the correspondence.

Fox News Digtal’s Emma Colton contributed to this report.

This post appeared first on FOX NEWS

The Dow Jones Index has entered a correction this year, having dropped by over 13% from its highest level. The index, which tracks 30 blue-chip companies, was trading at $39,100, and has recently formed a death cross for the first time in over three years. This article examines the three primary reasons for its crash and how its stocks are performing.

3 reasons why the Dow Jones Index crashed

There are three main reasons why the Dow Jones Index has plummeted this year. First, it has dropped because of the Federal Reserve, which has maintained a more hawkish tone this year. It slashed rates three times last year, and pointed to two more this year even as the economy slows.

Most Fed officials who have talked recently have said that the bank was ready to intervene if the economy slowed drastically.

At the same time, Donald Trump is studying whether he has the power to fire Jerome Powell from the Fed. Such a move would be unprecedented and would raise questions about the bank’s independence.

Historically, US assets, such as stocks and the US dollar, have performed well due to the perceived independence of the Fed.

Second, the Dow Jones Index has also plummeted due to the ongoing trade war, which risks pushing the US into a deep recession. The base 10% tariff and the 145% rate from China has raised concerns that the US economy will continue weakening. Analysts believe that corporate earnings will be impacted.

Third, the Dow Jones has declined due to its exposure to technology. It holds tech companies like Microsoft, Apple, Salesforce, and NVIDIA. While these are all good companies, there is a risk that they will slow down as signs that the AI bubble is bursting emerges.

Dow Jones Index stocks performance 

Most companies in the Dow Jones Industrial Average have declined this year. Still, some all-weather firms have done well because they are less exposed to US tariffs on other countries.

Coca-Cola stock price has jumped by 17% this year because its business does well in all market conditions. Customers will not stop drinking soda because of a recession or stagflation. 

Verizon stock has risen by 10% this year, while Johnson & Johnson, IBM, McDonald’s, Amgen, Travelers, Visa, and Walmart have all risen by over 4%. These firms – except IBM – are all-weather companies that are less exposed to tariff measures. 

Nike is the worst-performing Dow Jones stock this year as it crashed by 27%. This decline is due to the company facing substantial competition from firms such as On Holding, Adidas, and Under Armour. Also, the management’s efforts to turn around the firm are taking longer to achieve results.

Tech firms like Salesforce, NVDIA, Amazon, Apple, and Microsoft have all plunged by over 22% this year. This decline is due to the woes in the technology sector and its perceived overvaluation. 

The other top laggards in the Dow Jones are firms like Walt Disney, Caterpillar, American Express, and Honeywell International.

Looking ahead, the Dow Jones price action will depend on the Fed and Donald Trump. A sign that the Fed is prepared to cut interest rates will be bullish thing for the index.

Further, the start of negotiations with other countries, especially China, will be a bullish thing for the index. 

The ongoing earnings season will largely have no major impact on the Dow Jones and other US indices as the results don’t include Trump’s tariffs. 

History shows that the Dow Jones and other US indices like the S&P 500 and Nasdaq indices, always recover from a correction. 

Read more: Is it safe to buy the dip in the S&P 500 index ETFs like SPY and VOO?

The post How are the Dow Jones index stocks fairing in 2025? appeared first on Invezz

Capital One Financial’s application to acquire Discover Financial Services in a $35.3 billion all-stock deal has officially been approved by the Federal Reserve and the Office of the Comptroller of the Currency, the regulators announced on Friday.

“The Board evaluated the application under the statutory factors it is required to consider, including the financial and managerial resources of the companies, the convenience and needs of the communities to be served by the combined organization, and the competitive and financial stability impacts of the proposal,” the Fed said in a release.

Capital One first announced it had entered into a definitive agreement to acquire Discover in February 2024. It will also indirectly acquire Discover Bank through the transaction, which was approved by the Office of the Comptroller of the Currency on Friday.

Under the agreement, Discover shareholders will receive 1.0192 Capital One shares for each Discover share or about a 26% premium from Discover’s closing price of $110.49 at the time, Capital One said in a release.

Capital One and Discover are among the largest credit card issuers in the U.S., and the merger will expand Capital One’s deposit base and its credit card offerings. 

As a condition of the merger, Capital One said it will comply with the Fed’s action against Discover, according to the release. The Fed fined Discover $100 million for overcharging certain interchange fees from 2007 through 2023, and the company is repaying those fees to affected customers.

The OCC said it approved Capital One’s application on the condition that it would take “corrective actions” to remediate harm and address the “root causes” of outstanding enforcement actions against Discover.

After the deal closes, Capital One shareholders will hold 60% of the combined company, while Discover shareholders own 40%, according to the February 2024 release.

In a joint statement, Capital One and Discover said they expect to close the deal on May 18.

This post appeared first on NBC NEWS

Russian President Vladimir Putin has announced a temporary Easter ceasefire in his country’s war with Ukraine, the Kremlin said Saturday.

The war has raged for more than three years and cost the lives of tens of thousands of people on both sides. 

‘Guided by humanitarian considerations, today from 18:00 to 00:00 from Sunday to Monday, the Russian side declares an Easter truce,’’ Putin said in a video posted by the Russian ministry of Foreign Affairs.

‘I order that all military actions be stopped for this period.’

In the video, Putin is joined by Chief of the General Staff Valery Gerasimov.

The move appeared to be scoffed at by Ukrainian President Volodymyr Zelenskyy who said shortly after the announcement that air raid alerts were ringing out across Ukraine.

‘As for yet another attempt by Putin to play with human lives—at this moment, air raid alerts are spreading across Ukraine,’ Zelenskyy wrote on X while giving an update on troop positions. It wasn’t entirely clear of he was addressing the truce.

‘At 17:15, Russian attack drones were detected in our skies. Ukrainian air defense and aviation have already begun working to protect us. Shahed drones in our skies reveal Putin’s true attitude toward Easter and toward human life.’

Zelenskyy wrote that Ukrainian forces were battling in the Kursk region and holding their positions. 

‘In the Belgorod region, our warriors have advanced and expanded our zone of control,’ he wrote.

Russia’s Defense Ministry, however, said its forces pushed Ukrainian troops from one of their last remaining footholds in Russia’s Kursk region, where Ukrainian troops staged a surprise incursion last year.

The temporary ceasefire comes after President Donald Trump on Thursday said an 80-page minerals deal will be signed with Ukraine in one week. Treasury Secretary Scott Bessent later amended that it would likely be signed on April 26. 

Details on the agreement still remain relatively unknown, though recent reporting by Bloomberg has suggested the U.S. has eased back its demands of repayment for its aid in Ukraine’s fight against Russia from $300 billion to $100 billion. 

On Friday, Trump said the U.S. will ‘just take a pass’ at peace efforts for Ukraine if Russian President Vladimir Putin refuses to agree to ceasefire terms. 

‘If for some reason, one of the two parties makes it very difficult, we’re just going to say ‘you’re foolish, you’re fools, you’re horrible people,’ and we’re going to just take a pass,’ Trump told reporters. ‘But hopefully we won’t have to do that.’

Fox News’ Caitlin McFall and The Associated Press contributed to this report. 

This post appeared first on FOX NEWS

A fortnight ago, investors were counting down the hours to President Trump’s announcement of ‘reciprocal tariffs’. Global stock indices, led by the US majors, were already exhibiting evidence of investor concern.

The Dow and the Russell 2000 (a less popular stock index, but an important indicator of the mood towards US mid-cap, domestically-focused corporations) had both peaked in November.

The S&P 500 and NASDAQ, which both contain a significant weighting towards the tech giants, hit their all-time highs in mid-February. 

Since then, all the US majors sold off, taking them back below levels last seen just after Trump’s election victory on 5th November. They had a mild recovery in the latter half of March.

But it was evident that investors were becoming wary. The feeling was that tariffs could go either way. President Trump could announce a modest baseline tariff on those countries he believed were acting ‘unfairly’.

Or he could do something worse. In the end, he did something much, much worse. 

Most tariffs went through a fairly rapid ‘process’ of being postponed, altered and retargeted. But given what has happened since, it looks as if the 10% baseline tariff across exports from the US’s trading partners is much more in line with what the markets were hoping for.

Although in the absence of a string of successful country-by-country negotiations, these could revert to the original reciprocal rates in three months’ time. 

But one thing now looks certain, and that is that the Trump administration’s real target in all this brouhaha is China.

Add in the bellicose rhetoric and thin skins on both sides, and the tariff tiff has morphed into an all-out trade war. Investors are now trying to work out if this can be resolved, and if so, how long it could take.

Analysts have all come up with opposing theories over which side stands to be worst affected, and who is most likely to blink first. One argument goes that President Trump’s readiness to water down most tariffs is a sign of weakness. Maybe.

Although the fact that he ramped up China’s levies to 145% suggests not. It’s also said that China’s authoritarian regime is in a better position to accept hardships on its citizens in a way that Trump can’t.

But China’s economy is in a poor state, no matter what the data says, and its property implosion means that it can’t rely on its domestic market to replace its export market. 

On the other hand, it looks as if the Trump administration may have panicked when US Treasuries went into meltdown. It could accept a sell-off in equities, but not a threat to the world’s ultimate safe-haven asset.

The yield on the 30-year yield had its biggest weekly jump since the 1980s, even as the US dollar was in freefall. It looked as if something had burst. 

Was China to blame? It seems unlikely that they were wholly responsible for the bond market sell-off. It would largely be self-defeating given how much US government debt they own.

Also, such a move would push up the value of the yuan, which would only make life more difficult for Chinese exporters.

It seems more likely that the dislocation between the dollar and US Treasuries was largely due to massive deleveraging by hedge funds and the shadow banking system. 

Markets were a touch calmer in the week leading up to Easter. But it doesn’t feel like the crisis has peaked yet.

The egos involved are just too big, and the stakes far too high. At some stage, this will be resolved. But risk markets look likely to suffer a lot more pain before things get back on a more even keel.  

(David Morrison is a Senior Market Analyst at Trade Nation. Views are his own.)

The post Dangerous times appeared first on Invezz

Alphabet’s Google illegally dominated two markets for online advertising technology, a judge ruled Thursday, dealing another blow to the tech giant and paving the way for U.S. antitrust prosecutors to seek a breakup of its advertising products.

U.S. District Judge Leonie Brinkema in Alexandria, Virginia, found Google liable for “willfully acquiring and maintaining monopoly power” in markets for publisher ad servers and the market for ad exchanges, which sit between buyers and sellers. Websites use publisher ad servers to store and manage their ad inventories.

Antitrust enforcers failed to prove a separate claim that Google had a monopoly in advertiser ad networks, she wrote.

Lee-Anne Mulholland, Google’s vice president of regulatory affairs, said Google will appeal the ruling.

“We won half of this case and we will appeal the other half,” she said in a statement, adding that the company disagrees with the decision about its publisher tools. “Publishers have many options and they choose Google because our ad tech tools are simple, affordable and effective.’

Google’s shares were down around 2.1% at midday.

The decision clears the way for another hearing to determine what Google must do to restore competition in those markets, such as sell off parts of its business at another trial that has yet to be scheduled.

The Justice Department has said Google should have to sell off at least its Google Ad Manager, which includes the company’s publisher ad server and ad exchange.

However, a Google representative said Thursday that Google was optimistic it would not have to divest part of the business as part of any remedy, given the court’s view that its acquisition of advertising tech companies like DoubleClick were not anticompetitive.

Google still faces the possibility that two U.S. courts will order it to sell assets or change its business practices. A judge in Washington will hold a trial next week on the Justice Department’s request to make Google sell its Chrome browser and take other measures to end its dominance in online search.

Google has previously explored selling off its ad exchange to appease European antitrust regulators, Reuters reported in September.

Brinkema oversaw a three-week trial last year on claims brought by the Justice Department and a coalition of states.

Google used classic monopoly-building tactics of eliminating competitors through acquisitions, locking customers in to using its products and controlling how transactions occurred in the online ad market, prosecutors said at trial.

Google argued the case focused on the past, when it was still working on making its tools able to connect to competitors’ products. Prosecutors also ignored competition from Amazon.com, Comcast and other technology companies as digital ad spending shifted to apps and streaming video, Google’s lawyer said.

The ruling was issued as a district court in Washington, D.C., held its fourth day of an antitrust trial between Meta and the Federal Trade Commission, in which the government similarly accused the company then known as Facebook of monopolizing the social networking market through its acquisitions of Instagram and WhatsApp.

A Google representative said the partially favorable ruling in its case Thursday could point to success for Meta, as well, in defending its acquisitions from the government’s antitrust allegations.

This post appeared first on NBC NEWS

Pro-life activist Mark Houck, who sued the Justice Department over his arrest and prosecution under the Biden administration, said his family has been blocked from settling their lawsuit by an ‘activist’ federal judge. 

Houck filed a lawsuit against the Justice Department last year, seeking restitution for what he called ‘a faulty investigation’ and ‘excessive force’ after a SWAT team of around 25 people arrested him in front of his children.

Now, Houck is appealing the judge’s decision to the Third District Court and calling on the Trump administration to follow through on ending the weaponization of the DOJ against pro-lifers such as him once and for all. He discusses the case with his wife and 40 Days for Life founder Shawn Carney in a new video shared with Fox News Digital. 

‘You live in fear of it happening again, not only to yourselves but to others, and you want to know that this administration, which rode this message to the White House, is willing to step in,’ Houck said in the video, adding, ‘and they’re doing it for other organizations, they’re doing it in the DOGE, they’re doing it with all the things, they’re cleaning house.’ 

In an interview with Fox News Digital, 40 Days for Life President Shawn Carney said: ‘I just think, Democratic or Republican, we’re tired of activist judges on both sides of the political aisle.’ 

‘Nobody likes it – and just, this guy’s a victim,’ Carney said, adding that the Justice Department ‘needs to fix this.’

News of the appeal, which is slated to be filed by 40 Days for Life on behalf of Houck, was shared exclusively with Fox News Digital. The group has already filed a Notice to Appeal to the courts. 

At issue are the settlement negotiations that 40 Days for Life entered into with the Justice Department in early 2025, following Trump’s inauguration.

U.S. District Judge Paul Diamond, a Bush appointee, abruptly issued a motion to dismiss the case last month, effectively ending the negotiations that had been playing out between Houck and the Trump-led Justice Department.

It appears that the motion to dismiss the case had originally been filed by the Biden-led Justice Department, which charged Houck in 2021 for allegedly violating the Freedom of Access to Clinic Entrances, or FACE Act. 

In the video, Carney and Houck discussed the judge’s decision as well as changes in the law enforcement community more broadly, and what they hope to be new priorities of the second Trump administration.

Houck said his family is disappointed by the judge’s actions and added that ‘it reflects poorly against the Trump administration.’

Speaking with Fox News Digital, Carney lamented the dismissal of their lawsuit by Diamond, whom he called an ‘activist’ judge and accused of political bias. Nevertheless, he expressed confidence that the Trump administration would make it right. 

‘We are appealing the decision of the judge to continue the lawsuit against the DOJ,’ Carney said. ‘And of course, if we could get back on track with that, the idea is that then we would be able to settle with DOJ, since they want to settle.’

‘We have a very strong appeal,’ he said of their yet-to-be-filed brief. ‘We’re very confident about the appeal.’

The FBI and Department of Justice did not respond to requests for comment. 

Houck, a longtime volunteer with 40 Days for Life, was arrested in 2021 for his actions outside a Planned Parenthood clinic, which prosecutors said violated the so-called Freedom of Access to Clinic Entrances Act, or FACE Act.

He was acquitted by a Philadelphia jury, but could have faced up to eleven years in prison if convicted.

Both his high-profile arrest at home, and the lengthy prison sentence he could have faced if convicted, prompted outrage from pro-life groups, including 40 Days for Life, where Houck has volunteered since 2007. 

In 2023, after Houck’s acquittal, 40 Days for Life joined Houck in suing the Justice Department over the ordeal, accusing law enforcement personnel of conducting a ‘faulty investigation’ against him, and accusing law enforcement of using ‘excessive force’ in the FBI raid of his family home.

Carney has weighed in on the topic before, saying in a post on X this year that 40 Days for Life was ‘targeted constantly by the Biden DOJ.’ 

‘With 1,000,000 peaceful volunteers we will always fight for free speech for pro-life and pro-abortion Americans alike. God bless Trump and Vance for backing us up,’ said Carney. 

This post appeared first on FOX NEWS

Shareholders of LVMH Moët Hennessy Louis Vuitton voted on Thursday to allow Bernard Arnault to remain at the helm of the company until the age of 85, extending the reign of the man who built the world’s most valuable luxury goods empire.

The move, approved with more than 99% support, raises the maximum age limit for the group’s chairman and chief executive from 80 to 85.

This marks the second such amendment in recent years.

In 2022, LVMH lifted the retirement threshold from 75 to 80.

With Thursday’s vote, the board has further solidified Arnault’s position at the top, even as investors grow increasingly uneasy over the absence of a clearly communicated succession plan.

A meticulously constructed empire

Bernard Arnault, 76, has led LVMH since 1989, steering it through decades of aggressive expansion, blockbuster acquisitions, and surging demand for luxury goods.

From the takeover of Christian Dior and Louis Vuitton to the $16 billion acquisition of Tiffany & Co in 2021, Arnault has crafted a 75-brand empire that spans fashion, jewellery, wine, spirits, hospitality, and more.

His hands-on leadership style—inspecting store layouts, micromanaging deals, and ensuring consistent brand storytelling—has helped deliver exceptional shareholder returns.

According to LSEG data, LVMH has generated an average total return of 13% per year under its leadership, far outpacing the 3% return of the STOXX 600 over the same period.

Yet the very qualities that have made LVMH a success are now sources of concern.

Investors worry that Arnault’s immense influence means that his sudden departure could trigger a sharp decline in LVMH’s share price.

At the same time, the company’s heavy reliance on a single individual introduces significant long-term risk.

The family behind the façade

All five of Arnault’s children are now deeply embedded in the group’s leadership structure.

Delphine Arnault, 50, serves as CEO of Christian Dior and is widely seen as a leading candidate.

Antoine Arnault, 47, oversees communications, image, and sustainability, and chairs Loro Piana.

The younger siblings—Alexandre, 33, Frédéric, 30, and Jean, 26—hold key roles at Tiffany & Co, TAG Heuer, and the watches division, respectively.

Each child holds a senior position, and four of them sit on LVMH’s board. But despite their prominence, Arnault has offered no public indication of who will eventually take over.

The family’s involvement gives the appearance of a tightly managed succession-in-training, yet no formal plan has been communicated.

“The market has long priced in the ‘Arnault premium,’” said a Paris-based luxury analyst.

“But that also means there’s enormous key-man risk. Investors want to know what LVMH looks like in a post-Arnault world.”

Opaque planning fuels uncertainty

Some shareholders have begun to question the group’s lack of transparency.

Two investors told Reuters Breakingviews that they are unaware of any formal emergency or long-term succession plan.

LVMH’s most recent governance report only briefly references a “review of succession planning,” offering no further detail.

In 2022, changes were made to LVMH’s controlling structure to ensure long-term family control.

Arnault restructured the family holding company, Agache SCA, stipulating that the five children would share equal ownership through Agache Commandité.

The shares cannot be sold or transferred for 30 years, nor can they pass outside the family or their direct descendants.

This arrangement effectively guarantees that LVMH will remain under family control for the foreseeable future, but it does not answer the central question of who will lead.

Key decisions in Agache now require unanimous agreement from all five siblings—a setup that could prove cumbersome or fractious in time.

Lessons from luxury rivals

LVMH’s opaque approach to succession contrasts with other family-led luxury firms.

François Pinault, founder of rival group Kering, passed his holding company to his three children in 2001.

In 2005, his son François-Henri Pinault formally took charge as CEO at age 42, providing clear continuity for investors and the business alike.

By comparison, LVMH has opted for incremental changes that extend Bernard Arnault’s grip on the company without offering the market a clear view of what comes next.

“Succession isn’t just about naming a CEO,” said Irina Curbelo, co-founder of Percheron Advisory. “It’s about preserving the essence of the brand empire, and ensuring that family governance doesn’t turn into a bottleneck.”

No imminent change, but longer-term risks remain

Despite growing concerns, few doubt Arnault’s ability to continue leading LVMH in the short term.

He remains mentally sharp, fully engaged, and evidently trusted by the board and shareholders.

But with the latest age-limit amendment pushing any handover potentially another decade away, governance questions are unlikely to fade.

As the luxury industry becomes more competitive and globally complex, the stakes of an unclear succession only grow.

The question facing LVMH now is not just who will succeed Bernard Arnault, but when, how, and whether the group will be prepared when the moment inevitably arrives.

The post As LVMH extends Arnault’s reign, succession concerns still linger: here’s why investors worry appeared first on Invezz

Harvard’s brewing conflict with the Trump administration could come at a steep cost — even for the nation’s richest university.

On April 14, Harvard University President Alan Garber announced the institution would not comply with the administration’s demands, including to “audit” Harvard’s students and faculty for “viewpoint diversity.” The federal government, in response, froze $2.2 billion in multi-year grants and $60 million in multi-year contracts with the university.

According to CNN and multiple other news outlets, the Trump administration has now asked the Internal Revenue Service to revoke Harvard’s tax-exempt status. If the IRS follows through, it would have severe consequences for the university. The many benefits of nonprofit status include tax-free income on investments and tax deductions for donors, education historian Bruce Kimball told CNBC.

Bloomberg estimated the value of Harvard’s tax benefits in excess of $465 million in 2023.

Nonprofits can lose their tax exemptions if the IRS determines they are engaging in political campaign activity or earning too much income from unrelated activities. Few universities have lost their non-profit status. One of the few examples was Christian institution Bob Jones University, which lost its tax exemption in 1983 for racially discriminatory policies.

White House spokesperson Harrison Fields told the Washington Post that the IRS started investigating Harvard before President Donald Trump suggested on Truth Social that the university should be taxed as a “political entity.” The Treasury Department did not reply to a request for comment from CNBC.

A Harvard spokesperson told CNBC that the government has “no legal basis to rescind Harvard’s tax exempt status.”

“The government has long exempted universities from taxes in order to support their educational mission,” the spokesperson wrote in a statement. “Such an unprecedented action would endanger our ability to carry out our educational mission. It would result in diminished financial aid for students, abandonment of critical medical research programs, and lost opportunities for innovation. The unlawful use of this instrument more broadly would have grave consequences for the future of higher education in America.” 

The federal government has challenged Harvard on yet another front, with the Department of Homeland Security threatening to stop international students from enrolling. The Student and Exchange Visitor Program is administered by Immigration and Customs Enforcement, which falls under the DHS.

International students make up more than a quarter of Harvard’s student body. However, Harvard is less financially dependent on international students than many other U.S. universities as it already offers need-based financial aid to international students in its undergraduate program. Many other universities require international students to pay full tuition.

The Harvard spokesperson declined to comment to CNBC on whether the university would sue the administration over the federal funds or any other grounds. Lawyers Robert Hur of King & Spalding and William Burck of Quinn Emanuel are representing Harvard, stating in a letter to the federal government that its demands violate the First Amendment.

Harvard, the nation’s richest university, has more resources than other academic institutions to fund a long legal battle and weather the storm. However, its massive endowment — which has raised questions during the recent developments — is not a piggy bank.

Harvard has an endowment of nearly $52 billion, averaging $2.1 million in endowed funds per student, according to a study by the National Association of College and University Business Officers, or NACUBO, and asset manager Commonfund.

That size makes it larger than than the GDP of many countries.

The endowment generated a 9.6% return last fiscal year, which ended June 30, according to the university’s latest annual report.

Founded in 1636, Harvard has had more time to accumulate assets as the nation’s oldest university. It also has robust donor base, receiving $368 million in gifts to the endowment in 2024. While the university noted that more than three-quarters of the gifts averaged $150 per donor, Harvard has a history of headline-making donations from ultra-rich alumni.

Kimball, emeritus professor of philosophy and history of education at the Ohio State University, attributes the outsized wealth of elite universities like Harvard to a willingness to invest in riskier assets.

University endowments were traditionally invested very conservatively, but in the early 1950s Harvard shifted its allocation to 60% equities and 40% bonds, taking on more risk and creating the opportunity for more upside.

“Universities that didn’t want to assume the risk fell behind,” Kimball told CNBC in March.

Other universities soon followed suit, with Yale University in the 1990s pioneering what would become the “Yale Model” of investing in alternative assets like hedge funds and natural resources. Though it proved lucrative, only universities with large endowments could afford to take on the risk and due diligence that was needed to succeed in alternative investments, according to Kimball.

According to Harvard’s annual report, the largest chunks of the endowment are allocated to private equity (39%) and hedge funds (32%). Public equities constitute another 14% while real estate and bonds/TIPs make up 5% each. The remainder is divided between cash and other real assets, including natural resources.

The university has made substantial portfolio allocation changes over the past seven years, the report notes. The Harvard Management Company has cut the endowment’s exposure to real estate and natural resources from 25% in 2018 to 6%. These cuts allowed the university to increase its private equity allocation. To limit equity exposure, the endowment has upped its hedge fund investments.

University endowments, though occasionally staggering in size, are not slush funds. The pools are actually made up of hundreds or even thousands of smaller funds, the majority of which are restricted by donors to be dedicated to areas including professorships, scholarships or research.

Harvard has some 14,600 separate funds, 80% of which are restricted to specific purposes including financial aid and professorships. Last fiscal year, the endowment distributed $2.4 billion, 70% of which was subject to donors’ directives.

“Most of that money was put in for a specific purpose,” Scott Bok, former chairman of the University of Pennsylvania, told CNBC in March. “Universities don’t have the ability to break open the proverbial piggy bank and just grab the money in whatever way they want.”

Some of these restrictions are overplayed, according to former Northwestern University President Morton Schapiro.

“It’s true that a lot of money is restricted, but it’s restricted to things you’re going to spend on already like need-based aid, study abroad, libraries,” Bok said previously.

Harvard has $9.6 billion in endowed funds that are not subject to donor restrictions. The annual report notes that “while the University has no intention of doing so,” these assets “could be liquidated in the event of an unexpected disruption” under certain conditions.

Liquidating $9.6 billion in assets, nearly 20% of total endowed funds, would come at the cost of future cash flow, as the university would have less to invest.

Harvard did not respond to CNBC’s queries about increasing endowment spending. Like most universities, it aims to spend around 5% of its endowment every year. Assuming the fund generates high-single-digit investment returns, spending just 5% allows the principal to grow and keep pace with inflation.

For now, Harvard is taking a hard look at its operating budget. In mid-March, the university started taking austerity measures, including a temporary hiring pause and denying admission to graduate students waitlisted for this upcoming fall.

Harvard is also issuing $750 million in taxable bonds due September 2035. This past February, the university issued $244 million in tax-exempt bonds. A slew of universities including Princeton and Colgate are also raising debt this spring.

So far, Moody’s has not updated its top-tier AAA rating for Harvard’s bonds. However, when it comes to higher education as a whole, the ratings agency isn’t so optimistic, lowering its outlook to negative in March.

This post appeared first on NBC NEWS