Above the Fold, From Alcatraz to Zuppi

Plans for a new (old) prison, and turmoil in the non-profit world

The Rock

When I imagine the readership of this newsletter, I envision most of you scrolling and forecasting while leisurely gazing out the windows of your beautiful high-rise apartments overlooking the San Francisco Bay. Perhaps in a couple months, you might have a new construction in your view. President Trump has called for the reopening of Alcatraz, to house America’s “most ruthless and violent offenders.”

Californians are quite skeptical of this plan, due to the high costs of reopening a long-vacated prison and the potential loss of a valuable tourist destination. Manifold traders are also skeptical:

However, this move comes amid a growing partisan divide around US policies on crime, immigration, and deportations. Trump’s comments to the press on the gang affiliation of Abrego Garcia, for example, highlight his administration’s commitment to symbolic measures on crime-reduction, gambling that arbitrary and severe punishments may lead to crime and migrant flow reduction. While Manifold traders think it is unlikely that Abrego Garcia was a member of MS-13…

…Manifold traders remain unsure on whether he will return to the United States, where his presence would build on an ongoing media narrative around the administration’s arbitrary imprisonments of immigrants.

Despite Trump’s hardline language against violent criminals, violent crime in the vicinity of Alcatraz appears to have dropped precipitously with new city governance. Perhaps local criminals were cowed by some advance knowledge of the plans to re-open Alcatraz.

Non-Profits Keeping Control

Just a couple miles to the south, OpenAI has canceled its plans—for the moment at least—to buy out from its own nonprofit’s control of the company. It now appears set to restructure to a public benefits corporation with the non-profit entity retaining control. In doing so, it will actually join a long list of successful companies with this somewhat unusual structure, such as Mastercard, Novo Nordisk, Rolex, and IKEA.

This came as a surprise to traders, who at the start of the year were over 80% confident that OpenAI would find a way to abandon their current non-profit structure, although since March, traders were more skeptical of the likelihood.

This comes during a time of soaring revenue for the company, which looks to make over $12 billion annualized by the end of 2025, up from $3.7 billion in 2024.

Traders were also caught slightly unawares by the rapidity of OpenAI’s acquisition of Windsurf, despite rumors, and attention now turns to how they’ll mold the AI code editing company, with markets indicating that OpenAI will hold back from striking other frontier labs’ models from the software.

OpenAI’s struggles over the last few months have been well-documented. Google’s models have outpaced them in many benchmarks, OpenAI had to recall an update to 4o because it exhibited strange sycophantic behavior, and Musk’s lawsuit against the companies appears potentially unaffected by their concessions on corporate restructuring. As the New York Knicks and Denver Nuggets might be thinking, however, winning cures all ills. Continued innovation would be a panacea for OpenAI’s troubles, and their long-heralded GPT-5 appears just a couple months away:

Non-Profits Losing Control

Speaking of powerful non-profits, potential changes to their tax-free status has caused an open war between Harvard and the Trump administration. In a grammar error-riddled letter from the Secretary of Education, the administration laid out its case against Harvard, accusing it of defrauding the American people.

The administration has a lot of levers it can pull, although the clout and weight of Harvard, as well as its lawyers, may have something to say about that. Revoking Harvard’s ability to enroll international students, for example, would hamstring its recruiting efforts: currently about a third of Harvard’s grad student researchers are international students.

While it appears quite likely that the Trump administration will make formal efforts to revoke Harvard’s tax-exempt status, traders think they are unlikely to succeed, with a large gap between these two markets:

And with neither side appearing likely to budge soon, the fight could drag on for months:

Roundup

The papal conclave begins in a matter of hours, so get your bets in before it’s underway. With no clear favorite, it’s likely to be an exciting ride over the next 2-4 days as pilgrims peer for smoke above the Sistine Chapel:

Also as of the last 24 hours, you can now forecast on crucial topics relevant to all Americans, such as whether the Trump administration will release fake economic data…

…or whether Jar Jar Binks will appear in the second season of Disney+ hit series Andor.

Happy Forecasting!

-Above the Fold