Economic growth will be even better if rates are aligned with the fundamentals, says Joe Lavorgna
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Bloomberg
2 minutes ago
- Bloomberg
PPI Jumps by Most in Three Years as Companies Pass Along Tariff Costs
US wholesale inflation accelerated in July by the most in three years, suggesting companies are passing along higher import costs related to tariffs. The producer price index increased 0.9% from a month earlier, the largest advance since consumer inflation peaked in June 2022, according to a Bureau of Labor Statistics report out Thursday. The PPI rose 3.3% from a year ago. Services costs increased 1.1% last month — the most since March 2022. Within services, margins at wholesalers and retailers jumped 2%, led by machinery and equipment wholesaling. Goods prices excluding food and energy rose 0.4%. The report indicates companies are adjusting their pricing of goods and services to help offset costs associated with higher US tariffs, despite the softening of demand in the first half of the year. Stock-index futures declined and Treasury yields rose after the wholesale inflation data. Bloomberg Enda Curran reports. (Source: Bloomberg)
Fast Company
31 minutes ago
- Fast Company
Why Nvidia and AMD's China pay-to-play deal with Trump could backfire
Welcome to AI Decoded, Fast Company 's weekly newsletter that breaks down the most important news in the world of AI. You can sign up to receive this newsletter every week via email here. Why Nvidia's and AMD's China deal with Trump could backfire The companies making the most money from the AI boom are the ones selling the processors, such as Nvidia and AMD. On Monday those two chip giants cut a deal with the Trump administration that will allow them to sell their products into the China market. For Nvidia—the dominant provider of AI chips powering the generative AI boom—the agreement means that it can once again sell its H20 chip to Chinese developers. It's the latest chapter in a long saga. The Biden administration blocked the sale of Nvidia's most powerful AI chips to China in 2022, but deemed the sale of the less powerful H20 chip an acceptable national security risk. The Trump administration continued blocking sales of Nvidia's H200 and Blackwell chips. But in April, it went a step further by effectively blocking the sale of the H20 chips, too. The new deal shows that Nvidia CEO Jensen Huang's charm offensive in Washington, D.C., convinced the Trump administration that the U.S.'s technological, economic, and national security goals are best served when the world's AI models and apps are built to run on chips made by U.S.-based companies (like Nvidia). Or maybe the Trump Administration just wanted a piece of the action all along. The administration exploited its jurisdiction over export policy to extract a percentage of Nvidia and AMD's Chinese sales payable to the U.S. Treasury. 'I said, 'Listen, I want 20% if I'm going to approve this for you, for the country,'' Trump said during a press conference on August 12, describing his negotiation with Nvidia's Huang. He added that Nvidia negotiated the percentage down to 15%. That cut could amount to as much as $3 billion this year, given the high demand for the H20 chips. Trump's demand for 15% is something new in U.S. trade policy. 'The 15% take indeed sets a precedent,' Columbia Business School professor Lori Yue tells Fast Company. 'It may encourage other companies to adopt similar strategies, viewing profit-sharing as a work-around to government bans.' This could lead to a pay‑to‑play arrangement where only the richest corporations can afford to pay the government for permission to sell into a foreign market. Indeed, Treasury Secretary Scott Bessent hinted during a TV interview that the approach could spread to other products in other industries. The administration's tax will very likely translate into higher chip prices for Nvidia and AMD's Chinese customers, such as Tencent. The Chinese government has recently blasted Nvidia's H20 chips over security concerns, and the new 15% tax is likely to rankle Beijing even more. The Chinese government would like to see AI developers building their models and apps on top of AI chips from China-based Huawei. The Trump aAdministration may be driving some of Nvidia's Chinese customers to do just that, even if it requires rebuilding their infrastructure and tech stacks. Musk's Grok chatbot is making noise but falling behind Grok, xAI's chatbot, has had a rough week. The model that powers the Grok chatbot on X is Grok 4, which was announced July 9. At the time, xAI said the new model was the most intelligent one in the world. And the model did achieve state-of-the-art performance on several benchmark tests, including the superhard Humanity's Last Exam, on which it scored 25.4%, three points higher than Google's Gemini 2.5 Pro. As of August 11, the Grok chatbot is available free to all X users, even those on the free tier. In one sense, it marked an immediate improvement. The social platform's permissive environment has made it a clearinghouse for all kinds of misinformation and unsupported claims. Now far more people are using Grok to quickly fact-check those statements. But on August 7 OpenAI released its new GPT-5 model, which outperforms the Grok 4 models on many independent benchmarks. GPT‑5 shows state-of-the-art reasoning, math and coding skills, visual understanding, creative writing, and health-related question performance. However, GPT‑5 scored poorly on SimpleBench, ranking 5th behind Grok 4 and others in humanlike reasoning and social intelligence. While the benchmark results were circulating—and a GPT-5 backlash was growing—xAI CEO Elon Musk threatened to sue Apple for giving OpenAI's ChatGPT app the top ranking among free apps in the App Store (the Grok app ranks fifth). Must presented no evidence, appearing to simply be lashing out. And to make matters worse, Grok's problems with inappropriate content resurfaced this week. After being taken offline for spewing antisemitic rhetoric in July, the chatbot was again briefly taken offline Monday—this time for reasons not divulged by X. The chatbot had an opinion, however, telling one user that it had been taken offline after angrily stating that the U.S. and Israel's war on Gaza was a 'genocide.' One user demonstrated that after Grok had been turned on again, it no longer stated that Gaza should be classified as a genocide. During the 2024 presidential campaign, Donald Trump won the support of some tech billionaires, such as Marc Andreessen and Elon Musk, by promising to use a light-touch approach to regulating tech companies, including AI companies. Now Public Citizen is out with a report detailing the extent to which the administration has dialed back oversight and enforcement actions on the tech industry. In just six months with Trump in the Oval Office, the U.S. government has withdrawn or halted 47 of 143 federal enforcement actions against tech companies, the report states. At the start of Trump's second term, 104 technology companies faced 143 federal investigations and enforcement actions. The administration has withdrawn 38 actions and halted 9 others against 45 companies. Beneficiaries include eBay, Meta, Microsoft, PayPal, SpaceX, and Tesla. The report suggests that political spending generated returns through dropped prosecutions and policy changes. Tech corporations, executives, and investors spent $1.2 billion during the 2024 election cycle, including $863 million in donations to super PACs, $222 million in payments to Trump businesses, $76 million in lobbying efforts, and $25 million in inauguration donations, Public Citizen reports.
Yahoo
an hour ago
- Yahoo
Fed's Musalem says half-point rate cut not warranted
-- St. Louis Federal Reserve President Alberto Musalem stated that a half-point interest rate cut at the Fed's September meeting is not justified by current economic conditions. Speaking on CNBC Thursday, Musalem said such a substantial reduction is "unsupported by the current state of the economy and the outlook," noting that the country remains near full employment while inflation continues to run above the Fed's 2% target. His comments followed the release of new data showing higher than expected increases in wholesale prices in July, and came after Treasury Secretary Scott Bessent suggested that recent weak jobs numbers could prompt a larger rate reduction at the Fed's September 16-17 meeting. Musalem also expressed concern about the impact of higher import taxes, stating that businesses are still "right in the beginning of that window" for tariffs to influence prices. He indicated there is a "reasonable probability" that price pressures could prove more persistent than expected. While acknowledging he has raised his assessment of risks facing the labor market, Musalem's stance suggests resistance to aggressive monetary easing despite recent calls for more substantial action. Related articles Fed's Musalem says half-point rate cut not warranted Victoria's Secret Exposed: The Warning Sign Behind the Stock's 52% Collapse These Under-the-Radar Stocks Offer Better Risk-Reward Ratio Than Nvidia
