Global Chips Battle Intensifies, Apple Nears Deal with OpenAI | Bloomberg Technology

Global Chips Battle Intensifies, Apple Nears Deal with OpenAI | Bloomberg Technology

U.S. Economy and Markets

  • Despite inflationary pressures, the New York Fed's consumer sentiment index remains high at 3.3%.
  • The 2-year yield and borrowing costs remain elevated, while the Bloomberg Dollar Index is down, reflecting some anxiety around inflation.
  • Bitcoin is trading higher by 2.3% against the slightly stronger dollar.
  • U.S. government officials, including Treasury Secretary Janet Yellen, express concerns about China's trade practices and potential escalation of trade tensions.
  • Investors are advised to focus on U.S. investments due to regulatory pressure and trade tensions in China, which could impact global growth and markets.
  • Despite concerns about inflation, there is growing confidence that inflationary pressures are easing, partly due to U.S. fiscal policy.
  • The U.S. government is investing heavily in the semiconductor industry, which is seen as a strategic sector.
  • Valuations in U.S. semiconductor companies are considered reasonable given their strong earnings growth and visibility into 2025 earnings.
  • The Federal Reserve is leaning towards a rate cut in the fourth quarter, but the timing may depend on economic data and the upcoming election.

Global Chip Industry and Competition

  • Intel is up 3% due to a potential $11 billion financing deal with Apollo for a fab in Ireland.
  • ARM is preparing to launch an AI product next year with financial support from SoftBank, leading to a 5% increase in its stock price.
  • NVIDIA's stock price rises slightly despite reports that China has instructed domestic companies to stop ordering chips from the company.
  • The global battle for chip dominance is intensifying, with the U.S. and European Union investing $800 billion in the sector.
  • Ian King, a Bloomberg reporter, emphasizes the importance of controlling AI production due to its potential economic and security implications.
  • ARM's involvement with OpenAI and the broader context of U.S.-China competitiveness are discussed.

Biden Administration's EV Tariff Proposal

  • The Biden administration is considering imposing a 102.5% tariff on Chinese electric vehicles (EVs) to protect the US auto industry.
  • Currently, there are only four China-made EVs available in the US market, but the Biden administration wants to prevent China from flooding the market with cheaper EVs in the future.
  • The US automakers are currently protected by 25% tariffs imposed during the Trump era.
  • The Biden administration wants to give US EV manufacturers a fighting chance by providing subsidies and incentives to encourage domestic production.

France Attracting Foreign Investments

  • French President Emmanuel Macron has announced over 50 billion euros in foreign investments from US tech giants and banks to boost France's economy and establish Paris as Europe's post-Brexit financial hub.
  • Macron's annual "Choose France" event brings together international CEOs to encourage investment in the French economy.
  • France's economy is currently on shaky footing, but Macron's efforts to attract foreign investment and reform the economy may help improve its relative worth compared to other European countries.

Tech Industry Developments

  • Alphabet is up 11.6% on news that Apple may integrate OpenAI's ChatGPT into the new iPhone, potentially challenging Google's dominance in search.
  • Apple's partnership with OpenAI is seen as a strategic move to showcase AI features at the upcoming Worldwide Developer Conference and drive iPhone sales.
  • Some analysts believe that Apple's partnership with OpenAI is an acknowledgment of its limitations in AI innovation and that it may not be able to develop its own model to compete with the likes of OpenAI and Google.
  • SoftBank plans to become more aggressive in AI and other fields after reporting a second-quarter profit and a surge in asset value.
  • SoftBank aims to produce an SUV similar to Tesla's Model Y by 2025 and is embarking on a major expansion in electric car production.
  • 01, a Beijing-based tech pioneer, is introducing its first AI application for consumers, focusing on capitalizing on the technology's potential in China.

Meme Stock Frenzy and Retail Trading

  • GameStop shares surge by 100% in two days following a social media post from Keith Gill, known as Roaring Kitty, who sparked the original interest in the stock.
  • Retail investors are actively buying meme stocks like Reddit and Robinhood, leading to a surge in trading volume.
  • Trading platforms are experiencing technical difficulties due to the high volume of buy orders, resulting in failed trades and order backlogs.
  • The current short interest in meme stocks is around 24%, significantly lower compared to the 140% short interest in GameStop during the 2021 short squeeze.
  • The influx of retail orders, particularly from platforms that don't offer after-hours or premarket trading, is causing market volatility and trading halts.

Bill Hwang's Fraud Trial

  • Bill Hwang's trial on fraud, racketeering, and conspiracy charges is underway, with the defense arguing that Hwang was responsible for his own funds and made bets based on his beliefs in the companies he invested in.
  • The trial is expected to last several weeks and will involve witnesses, including counterparties from UBS and former employees who pleaded guilty.
  • The defense plans to show that the banks acted independently and were eager to work with Bill Hwang when he was at his peak.
  • Credit Suisse's own risk assessment contributed to its failure, and this evidence may be presented in the trial.

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