Thoughts for the day NEWS
5 July 25 NOT Recommendations
Kevin Hassett, the chief economic adviser at the White House, is becoming a prominent candidate for the position of the next chair of the Federal Reserve, as reported by individuals who have spoken with White House officials. This comes as President Donald Trump considers appointing a central bank leader who is more in line with his views.
The selection process is still in flux, and it is not guaranteed that Hassett will be chosen. However, Hassett, who heads the National Economic Council and was a significant economic adviser during Trump's initial term, possesses certain advantages that others do not, according to sources familiar with the situation.
Donald Trump’s suggested 30% tariff on goods from the European Union is considered "effectively prohibitive" to transatlantic trade and may provoke retaliation, according to the chief negotiator of the bloc.
During a briefing with reporters in Brussels on Monday, prior to a meeting of trade ministers, Maros Sefcovic cautioned that countermeasures could be considered as a response to the US president’s tariffs.
“The current uncertainty caused by unjustified tariffs cannot persist indefinitely,” he said. “Therefore we must prepare for all outcomes, including — if necessary — well- considered, proportionate counter measures to restore the balance in our transatlantic relationship.”
The European Union has compiled a list of countermeasures worth €72 billion aimed at US products, which includes Boeing airplanes, automobiles, and bourbon. Previously, Donald Trump expressed his willingness to engage in further trade discussions.
The euro's upward trend encounters challenges as Trump's 30% tariffs on the EU are implemented. With the EU split on how to respond and the ECB maintaining a dovish stance, the recent increases in the currency's value could be vulnerable to a substantial decline.
US President Donald Trump warned of significant financial penalties against Russia should it fail to cease hostilities with Ukraine, while also committing to provide additional weaponry to Kyiv.
“We will implement very high tariffs if we do not reach an agreement in 50 days, with tariffs around 100%,” Trump stated on Monday during a discussion with NATO Secretary General Mark Rutte at the White House.
Trump indicated that these levies would be classified as "secondary tariffs," though he did not elaborate further.
Francois Bayrou is set to present a plan today aimed at significantly reducing France's deficit, paving the way for a parliamentary conflict that could potentially lead to another government collapse.
Bayrou will outline a plan to sharply narrow France's deficit, including €40 billion of spending cuts and tax increases for 2026.
Bayrou lacks backing for the deep fiscal repair needed to reassure investors, with no majority in the National Assembly and opposition parties united against him.
The government faces constraints in cutting spending, with less direct control over local authorities and the social security system, and separate pledges to allocate more resources to areas including defence.
British retail sales surged by 3.1% in June compared to the previous year, driven by robust food sales along with a rise in the sales of fans and sports equipment, according to the BRC report.
The warm weather contributed positively to retail sales in June; however, the robust BRC reading reflects more than just a single favourable month. The core message from the BRC has been obscured due to the not-seasonally adjusted survey being influenced by the shift of Easter to April this year, compared to March of the previous year.
Japanese inflation is robust enough for the Bank of Japan to contemplate a rate increase as early as October, provided that tariff uncertainties diminish, according to Hideo Hayakawa, the central bank's former chief economist.
JGBs were under pressure with the 30-year yield climbing to a record and the return on the 10-year note at the highest level since 2008. “Bond vigilantes are finally focusing on Japan” where debt to GDP is about 250%, and politicians are talking about tax cuts to stay in power.
According to local media polls, Japan's ruling Liberal Democratic Party (LDP) and its coalition partner may be in jeopardy of losing their majority in the upcoming upper house elections on Sunday.
Headline CPI inflation slowed to 2.1%YoY in June (from 2.8%YoY in the previous month) largely led by decline in food prices and favourable base effect.
Core inflation, on the other hand, accelerated to 4.4%YoY (vs. 4.2%YoY in May) and core inflation (ex gold), was also up by 10bps to 3.5%YoY in June.
China's GDP grew by 5.2% in the second quarter compared to the same period last year, surpassing forecasts.
In contrast, other indicators presented a mixed picture; June's industrial output was better than anticipated, whereas retail sales fell short of expectations.
China's crude oil imports are anticipated to remain robust, with projections indicating that the country will accumulate as much as 140 million barrels for its reserves, according to Energy Aspects. In June, the nation's apparent oil demand experienced a significant increase of 7.8% compared to the same month last year.
Chinese steel production declined more than 9% year on year in June.
China’s rare earth magnet exports collapsed.
Total shipments FELL 76% YoY in May, to 1,238 tons, the least since February 2020. Exports to the US FELL 92% YoY to 46 tons, and LESS than 1/10 of what was recorded in March.
Source: Global Markets Investors
Trade wars, geopolitical risks fuel de-dollarization trend. Central banks consider diversifying reserves into euro and renminbi. Political and geopolitical risks are now top concerns for global reserve managers, according to the UBS Annual Reserve Manager Survey 2025, which gathered responses from nearly 40 central banks between May and June 2025. Despite these concerns, 79% of reserve managers believe the US dollar will retain its status as the global reserve currency in the coming years.
Saudi Arabia has requested consulting firms to perform a strategic assessment of its ambitious initiative to construct a futuristic city called The Line, as reported by several sources familiar with the situation, while the kingdom evaluates its priorities for project-related spending.
A division of the sovereign wealth fund is seeking the firms' insights on the viability of the current plans for The Line - envisioned as a 170-kilometer (105-mile) long car-free city that is part of Saudi Arabia’s Neom development project - and to propose potential modifications, according to the sources, who preferred to remain anonymous due to the confidential nature of the discussions.
The Line stands as one of the flagship endeavours of Crown Prince Mohammed bin Salman’s $2 trillion strategy to transition Saudi Arabia into a post-oil economy. Its announcement in 2017 drew significant attention due to the immense scale of the proposed construction. At one stage, the government anticipated that it would accommodate 1.5 million residents by 2030, and it is still intended to feature a stadium atop a skyscraper to host matches for the 2034 men’s football World Cup.
The biotechnology sector is undergoing a significant transformation, propelled by Chinese pharmaceutical companies that have evolved from mere imitators to formidable competitors against Western innovation.
The quantity of new drugs in China — targeting cancer, weight loss, and other conditions — surged to over 1,250 last year, greatly exceeding the European Union's figures and nearly matching the United States' total of approximately 1,440.
China is not only close to equalling the US but is also on a rapid growth path. This level of expansion is unprecedented.
The insights, derived from an examination of a database managed by the pharmaceutical intelligence firm Norstella, indicate a pivotal change in the locus of medical innovation. With President Donald Trump already threatening tariffs on the pharmaceutical industry, China's advancements in biotechnology — the magnitude of which is gradually becoming apparent — risk evolving into another battleground of superpower competition, akin to artificial intelligence and electric vehicles.
President Donald Trump is set to announce a $70 billion investment in artificial intelligence and energy in Pennsylvania on Tuesday, marking the latest initiative from the White House to accelerate the development of this emerging technology.
Trump will be accompanied by Republican Senator David McCormick, who is hosting the inaugural Pennsylvania Energy and Innovation Summit at Carnegie Mellon University. Leaders in AI and energy, including up to 60 executives, are anticipated to be present.
Among those expected to take part are Larry Fink from BlackRock Inc., Alex Karp from Palantir Technologies Inc., Dario Amodei from Anthropic, Darren Woods from Exxon Mobil Corp., and Mike Wirth from Chevron Corp., according to the official.
Apple Inc. is under pressure to revamp its corporate strategy in order to boost its faltering artificial intelligence initiatives.
Concerned by a decline in share prices that has wiped out over $640 billion in market value this year, and irritated by the slow rollout of AI features, investors are urging Apple to depart from its established practices by making a significant acquisition and actively seeking out talent.
Meta's CEO Mark Zuckerberg has invested heavily in his AI goals. The owner of Facebook has recently attracted an engineer who previously led Apple's AI models team, offering a compensation package worth hundreds of millions of dollars over several years.
Meta Platforms Inc. CEO Mark Zuckerberg announced that the company is constructing several large data centers to support its artificial intelligence initiatives, with the first expected to be operational next year.
“We’re naming the first one Prometheus, and it will be operational in 2026,” Zuckerberg stated in a post on his social media platform Threads on Monday. “We’re also developing several additional titan clusters,” he added, referring to the expansive data centre facilities.
The financial resources supporting Elon Musk's trillion-dollar empire are increasingly being directed toward artificial intelligence.
Musk plans for Tesla to invest in xAI rather than acquire it completely. Musk said he didn’t support a merger of the companies but wanted Tesla investors to get exposure to the growth at xAI.
There is limited information available regarding xAI's financial performance since it is a privately owned entity. However, we do know that it issued $3 billion in secured debt, which is set to mature in 2030, at the end of June, with a coupon rate of 12.5%, currently yielding just over 12%. The spread of approximately 8 percentage points over Treasuries is comparable to that of triple-C rated bonds. This does not indicate that investors are eager to finance xAI's significant cash burn, which is estimated to exceed $1 billion monthly. Tesla's reported cash balance of $37 billion could support Musk's AI initiative.
Musk shared the plan for Tesla shareholders to vote on new funding on Sunday.
However, aside from clear potential conflicts of interest, what benefits would Tesla gain from this? One could argue that xAI's technology would assist in achieving Tesla's goals in autonomy and robotics. Yet, with a complete merger seemingly off the table for now, why would Tesla choose to invest instead of simply contracting for services?
One aspect to monitor is whether Musk's dismissal of an acquisition will ultimately remain firm. Based on current calculations, and considering the reported $200 billion valuation target for xAI's upcoming funding round, acquiring the company with stock would enable him to increase his current stake in Tesla from just under 13%, excluding options, to over 16% in a merged entity.
Ark’s assessment update on Grok 4
Grok 4’s performance has leapfrogged the competition on critical benchmarks like the Graduate-Level Google-Proof Q&A Benchmark (GPQA), as shown below. xAI’s strategy of scaling massive compute clusters—potentially the largest currently in use—with a ten-fold increase in the computing power associated with reinforcement learning have led to a hockey stick increase in its performance relative to the competition. Its integration of tool use during pre-training is revolutionary. By empowering Grok to integrate external tools earlier in the training process, xAI has unlocked efficiency gains in real-world tests: on Humanity’s Last Exam, Grok 4 achieved 38.6% accuracy with tools, 13.2 percentage points higher than the 25.4% without tools. Other leading models like Gemini 2.5 Pro and OpenAI’s o3 have not benefited as much from tool use: Gemini 2.5 Pro and o3 scored 24.9% and 21.0% without tools, respectively, but only 26.9% and 21.6% with tools, underscoring the power of Grok’s unique approach.
BMW AG executives are set to address concerns regarding declining sales in China and escalating global trade tensions during an upcoming meeting with investors and analysts in Munich.
Ericsson AB's earnings surpassed analysts' forecasts, driven by an increase in US sales that enhanced the market for 5G telecom equipment during the second quarter.
Chief Financial Officer Lars Sandström stated that the robust kronor and the weak dollar significantly impacted earnings, resulting in a 5 billion kronor reduction in Ericsson's revenue.
JPMorgan, Wells Fargo, and Citi are set to begin the Wall Street earnings season, with anticipated record trading resulting from Trump's April tariff shock likely to offer a significant boost. This week marks the beginning of earnings season, starting with the major banks. It is anticipated that all six of the largest lenders in the US will report growth in trading revenue.
Nvidia anticipates that sales of its H20 chip to China will recommence, following assurances from Washington regarding the approval of shipments. This marks a surprising turnaround from the White House, which had imposed a ban on exports in April.
Trump is scheduled to reveal $70 billion in investments focused on AI and energy in Pennsylvania today.
Volvo Car AB is incurring an impairment charge of 11.4 billion Swedish kronor ($1.2 billion) as a result of delays in the production of certain electric models and the rising costs associated with tariffs.
ConocoPhillips submitted an application to drill four exploratory wells and conduct seismic studies in the National Petroleum Reserve of Alaska.
Oil prices fell for the second consecutive session as traders expressed scepticism about US President Donald Trump's strategy being a significant barrier to Moscow's energy exports.
OPEC+ further accelerated its production hikes to 548 kbpd for August, putting the group on track to complete its unwinding of the latest cut tranche by September.
Executives at Vanguard Group Inc., following the principles of the esteemed Jack Bogle, have expressed their views on cryptocurrency unequivocally.
Bitcoin is deemed "inappropriate" for long-term investors. Furthermore, digital assets are viewed more as speculation rather than genuine investments. They are categorized as an "immature asset class" with limited historical context and "no inherent economic value," which can potentially cause "havoc" in investment portfolios.
Nevertheless, due to the rational approach of index investing, the $10 trillion asset management powerhouse has emerged as the largest supporter of Strategy, the software company that notably transformed itself into a representative of Bitcoin and became a symbol of the industry's aspirations.
Bitcoin has surpassed $123,000 for the first time, with investor excitement showing little sign of waning as the US House of Representatives is set to review significant industry legislation during its upcoming "Crypto Week" starting Monday.
Advancements in essential crypto legislation are providing new momentum to the rally. This week, the House will discuss and potentially vote on the CLARITY Act, the Anti-CBDC Surveillance State Act, and the Senate’s GENIUS stablecoin package as Republicans aim to push forward Trump’s crypto-friendly agenda.
The potential for a definitive US regulatory framework, combined with Bitcoin’s consistent growth despite Trump’s unpredictable trade policies, has strengthened institutional investors' confidence in this asset class.
This change indicates a more developed view of Bitcoin — not just as a speculative investment, but as a macro hedge and a fundamentally scarce store of value.
Last week, investors injected over $2.7 billion into the group of US Bitcoin ETFs, marking the fifth-largest net inflow since their launch in January of the previous year. Together, the 12 ETFs now oversee approximately $151 billion in assets. Additionally, open interest in Bitcoin futures hit a record high of $86.3 billion on Monday, according to data from Coinglass.
Tokenized stocks are currently gaining significant attention – recognized as the next major onchain asset with practical utility and broad appeal.
While tokenized stocks are depicted as a revolutionary application of blockchain technology, these products are still in their infancy and have considerable progress to make.
For many tokenized stocks, holders do not actually own the asset they have acquired. Instead, they receive onchain IOUs that allow them to exchange tokens for the monetary value (i.e., stablecoins or cash) represented by their holdings.
In contrast to traditional stock ownership through a registered brokerage, the complex legal structures used to create tokenized shares also strip holders of essential rights, such as direct claims to company assets and the ability to vote with their shares.
When compared to digitally native assets, which are valued for their trustless characteristics and complete independence from counterparties, users of tokenized stocks are fully reliant on the financial stability of a centralized custodian to redeem their claims for monetary value.
