Financial Markets Calm, Nvidia and AMD Give US Government 15% of Revenue, Corporate and Geopolitical Reviews
Latest stock market news
• Financial markets are slightly positive in the morning - US stock index futures are up 0.2% on average, the VIX index is falling below 17, oil is down almost 1%.
Bitcoin is around $120,000, and Ethereum has exceeded $4,300.
• It’s been a quiet start to the week, with Japan on holiday and President Trump busy playing golf. It’s worth noting that Nikkei futures on the Chicago Board of Trade are just a step away from all-time highs, suggesting the cash index could well reach them this week. The Nikkei still has a P/E of just 19, compared to 22 for the S&P 500 and nearly 33 for the Nasdaq, which is essentially a premium for AI.
• The bad news is that Nvidia and AMD have agreed to give the US government 15% of the revenue from AI chip sales to China in exchange for export licenses. It would be a highly unusual deal, especially given that the US initially blocked the sale on national security grounds. Is it a tax? A fee? Where will the money go? How will it be distributed? So many unknowns.
• For the dollar and bonds, the main economic event on Tuesday will be U.S. consumer prices, where the impact of tariffs could push the benchmark rate up 0.3% to an annual pace of 3.0% and further from the Federal Reserve's 2% target.
Forecasts range from 2.9% to 3.2%, suggesting some upside potential that could test market bets on a rate cut in September. Analysts believe it would take something truly shocking to move the rate significantly, given the recent job losses that are now shaping the policy outlook.
• The US trade deal with China is set to expire on Tuesday, and while there is widespread speculation that it will be extended, neither side has made any announcements on the matter.
• Chaos appears to be a feature rather than a bug. Take COMEX gold futures, which surged last week after U.S. Customs said the most actively traded gold bars, produced mainly by Switzerland, would be hit with tariffs.
On Friday, the White House assured the market that this was “misinformation” and that clarification would be forthcoming, but nothing more was heard. The copper market suffered similar tariff-induced turmoil last week.
• Last week, the Japanese trade mission had to rush to Washington to eliminate double taxation on its exports. Japan believes the problem has been resolved, but there is no written confirmation yet.
• Oil prices have now fallen on the chance that talks between Trump and Russian leader Putin, scheduled for Friday, do lead to progress on the Ukraine issue. However, progress seems unlikely given that the White House is pushing the idea of a territorial swap that Ukraine will never agree to.
There are also reports from Europe that Trump envoy Steve Witkoff misunderstood Putin's proposal at a meeting last week, indicating some risk that the entire Alaska adventure could be called off prematurely.
• Nvidia and AMD to give US government 15% of their revenue from chip sales in China - FT.
In exchange for export licenses, the companies agreed to pay 15% of sales of their H20 and MI308 chips in China. It is the first such agreement.
The US Commerce Department has started issuing licenses to Nvidia (NVDA) to export its H20 chips to China - Reuters.
Chinese state media have said Nvidia's H20 chips are dangerous for the country and have called on consumers to boycott them.
• Trump accuses Nancy Pelosi of insider trading.
“Crooked Nancy Pelosi and her very ‘interesting’ husband beat every hedge fund in 2024.
In other words, these two rather mediocre ‘minds’ beat every single super genius on Wall Street, thousands of them. This is all INSIDE INFORMATION! Is anyone even investigating this??? She is a disgusting degenerate who impeached me twice WITHOUT ANY BASIS and LOST! How do you like it now, Nancy??”
• Grok 4 is now free: Elon Musk has opened access to his most advanced neural network for all users.
Musk's AI capabilities are almost comparable to GPT-5, and in some tasks even surpass it.
• JPMorgan notes that the U.S. Treasury and small-cap market is pricing in significantly higher recession risk than is seen in the U.S. large-cap and corporate bond markets.
• The current earnings season has been one of the strongest in recent years.
About 63% of S&P 500 companies beat earnings expectations by at least one standard deviation — the highest in four years, and excluding the post-pandemic recovery — the best quarter in at least 25 years (the long-term average is 48%).
At the same time, only 10% of companies missed forecasts by the same amount, the lowest in a year and below the average of 13%.
• Monthly trading volume on Coinbase Exchange fell from $89 billion in April to less than $57 billion in June, while in Q1 it did not fall below $100 billion, - Kaiko.
• German naval vessel manufacturer goes public. Will the company be able to follow in Rheinmetall's footsteps?
We are talking about Thyssenkrupp subsidiary Thyssenkrupp Marine Systems (TKMS), Germany's largest naval vessel manufacturer, which is becoming an independent entity and intends to list 49% of its shares on the stock exchange.
• Nvidia's weight in the S&P 500 is 8%, the largest of any individual stock since data began in 1981 - Apollo.
NVDA has a P/E of 58x, but a forward P/E of 31x.
• Spot BTC ETFs saw net inflows of $404 million on August 8.
Spot ETH ETFs saw net inflows of $461 million, with BlackRock's ETHA fund raising $255 million of that.
REX-Osprey's SOL ETF saw net inflows of $6.4 million.
• Binance partners with Spain's BBVA to store assets - FT
Cryptocurrency exchange Binance is teaming up with Spanish bank BBVA to allow its customers to store digital assets off-exchange. The move is part of Binance's strategy to restore investor confidence after a record fine imposed by US authorities nearly two years ago, the Financial Times reports.
• Despite the active implementation of AI in business processes, currently only about 10% of companies use AI to produce goods and services, and only 1% have solutions that significantly impact business, - JPMorgan.
AI is more likely to transform the roles of workers than replace them completely: for example, in the field of software development, the demand for specialists is even growing.
• OpenAI brought back the GPT-4o model after the launch of GPT-5.
Users are complaining en masse about the quality of the new model. They note that it:
- works slowly and is "stupid",
- makes basic mistakes,
- responds sparingly, formulaically and without emotion.
Dozens, and sometimes hundreds of topics with complaints appear on Reddit. The community is unhappy, and many believe that the new model is noticeably worse than previous versions.
• In 5 years, mice and keyboards will be in the trash.
Future Windows will only work via AI voice chat, Microsoft warned.
Instead of "ticking and typing," we should talk to the computer - like a colleague on the phone.
/ Will the days of quiet offices be over? But what if a person doesn't want to talk, but is used to working in silence?
Key events that could impact markets on Monday:
- No important data.
Current Fundamental Reviews
• Thousands of people took to the streets in Tel Aviv and other cities in Israel
after the prime minister's decision to establish full control over the Gaza Strip, the Times of Israel reports.
Israel plans to announce the mobilization of tens of thousands of reservists for the full occupation of the Gaza Strip - media.
Netanyahu presented a five-point plan to end the war in the Gaza Strip
The plan, called "Five Principles for Ending the War," calls for the disarmament of Hamas, the release of all Israeli hostages, the demilitarization of the Gaza Strip, and the transfer of power in the region to a "non-Israeli peaceful civilian administration." Israel, according to Benjamin Netanyahu's plan, would bear "responsibility for security" in Gaza.
• Putin appears to have teamed up with Libyan general to spark new EU migrant crisis - The Telegraph
The European Commission has tracked an increase in flights between the eastern Libyan city of Benghazi and Minsk,
with officials saying the trend suggests possible coordination with General Khalifa Haftar, the military dictator who controls much of eastern Libya, to facilitate a wave of illegal migration to the EU.
• Xi Jinping tightens control over military after corruption scandals - NYT
The leadership of the Chinese military is being purged: several top generals have disappeared or are under investigation.
Investigations have even affected commanders personally promoted by Xi Jinping, which indicates deep problems in the military elite.
• Discontent is growing in the UK over the problem of illegal immigrants, with anti-immigration protests taking place in a number of cities across the country – GB News.
• India’s refusal to purchase Russian oil will cost the country $9 billion in 2025 and $12 billion in 2026, the Indian State Bank calculated.
• China is seeking to ease US export controls on high-bandwidth memory chips as part of a trade deal, the FT said.
The issue has been raised in three months of talks with the US, which say the measure limits the ability of Chinese companies, including Huawei, to build their own AI chips.
• Barclays says the changing structure of US trade has limited the impact of the tariff changes for now.
The bulk of the change is a shift away from trade with China.
However, most of the impact of the tariffs has not yet been felt in the US economy, Barclays economists say.
• The Visa Spending Momentum Index hit recent highs in July, the highest since the pandemic
, which defies current consensus given strong real employment income.
• JPMorgan Chief Economist Michael Feroli: If Miran is confirmed as Fed chair before the September meeting, keeping rates steady could result in at least three Fed officials advocating for a rate cut in September.
“That’s a lot of disagreement,” Feroli wrote.
“For Powell, risk-management considerations at the next meeting could go beyond balancing employment and inflation risks, and we now see the path of least resistance as pushing the next 25bp rate cut to the September meeting.”
• The July U.S. consumer price index is due out on Tuesday, showing how tariffs are affecting inflation.
Wall Street economists expect core inflation to have risen 2.8% year-on-year in July, faster than the 2.7% rise seen in June.
On a “core” basis, which excludes food and energy prices, the CPI is expected to have risen 3% year-on-year in July, compared with 2.9% in June. The monthly increase in core prices is expected to be 0.3%, up from the 0.2% seen a month earlier.
UBS senior economist Alan Detmeister wrote in a note to clients that tariffs are driving the acceleration in inflation, and the July data will mark the start of several months of an uptrend. Detmeister forecasts the core CPI to rise to 3.5% by the end of the year from 2.9% in June.