Cold shoulder:<\/b> \u201cThere seems to be a mini ice-age in Asia this morning,\u201d Deutsche Bank\u2019s Jim Reid told clients this morning. \u201cSoftBank is around -14% lower after the NYT suggested that OpenAI may delay its IPO until 2027. This follows a sharp decline for the Magnificent 7 (-2.54%) yesterday. The tech mega cap index moved deeper into correction territory \u2026 in response to demand surges for memory and storage, [and] the news played into broader concerns that AI data centres were generating inflationary pressures.\u201d\u00a0<\/span><\/p>\n Just a thought:<\/b> If chip shortages are forcing tech companies to raise prices, that will feed through into their Q2 and Q3 revenues. So it is not entirely clear that this selloff is warranted.\u00a0<\/span><\/p>\n S&P 500 futures<\/b> were down 0.54% this morning. The index closed flat yesterday.\u00a0<\/span><\/p>\n<\/li>\n In Europe,<\/b> the Stoxx 600 was down 0.83% in early trading, and the U.K.\u2019s FTSE 100 was down 0.75% before lunch.<\/span><\/p>\n<\/li>\n Asia: <\/b>South Korea\u2019s KOSPI was down 5.81%. Japan\u2019s Nikkei 225 was down 4.15%. India\u2019s Nifty 50 was up 0.14%. China\u2019s CSI 300 was down 3.03%.\u00a0<\/span><\/p>\n<\/li>\n Brent crude<\/b> was $72 per barrel this morning, down from a high of $75 yesterday.<\/span><\/p>\n<\/li>\n Bitcoin<\/b> was at $60K.<\/span><\/p>\n<\/li>\n<\/ul>\n One reason Micron\u2019s blowout earnings <\/span>can move the entire market<\/span> is because the company\u2019s fortunes reflect the entire industry. In this mammoth AI investment cycle, the demand for chips of all kinds has sent prices through the roof for all suppliers of devices, as this chart (below) shows. It\u2019s a \u201cmemory supply crisis\u201d according to Marion Laboure and her colleagues at Deutsche Bank.\u00a0<\/span><\/p>\n \u201cThe AI squeeze is crowding out the economy’s ability to serve the day-to-day needs of ordinary people. Qualcomm and AMD have both flagged memory constraints actively hitting consumer-device demand. We are already seeing it in U.S. purchasing price inflation (PPI): the electronic components and accessories – which captures semiconductor and memory-devices prices – rose +26.9% y\/y in May, up from +5.9% y\/y rise in January.\u201d<\/span><\/p>\n <\/p>\n <\/span><\/p>\n U.S. GDP growth in 2027 will be 3%, well above consensus forecasts, according to Vanguard\u2019s Jumana Saleheen and Thiago Ferreira, and a large chunk of this will come from the billions going into building out AI infrastructure.\u00a0<\/span><\/p>\n \u201c<\/b>AI investment to date, however, suggests we are in the early stages of a profound economic shift that could reshape productivity over the coming decade,\u201d <\/span>they said<\/span>. \u201cThis wave of investment resembles historic periods of large-scale capital expansion, such as the railroad buildout in the 19th century and the late-1990s technology boom.\u201d<\/span><\/p>\n <\/p>\n <\/span><\/p>\n Inflation in the U.S. is getting worse, according to Bank of America\u2019s Claudio Irigoyen. \u201cCore\u201d inflation\u2014the personal consumption expenditure number most closely watched by the Fed\u2014came in at 4.1% for May. That\u2019s a lot higher than the Fed\u2019s current interest rate, which is 3.5%, implying that the Fed\u2019s base rate isn’t doing much to bring down inflation.<\/span><\/p>\n The problem, according to Irigoyen, is that the Fed has spent the last five years \u201clooking through\u201d short-term supply shocks such as the wars in Ukraine and Iran, in hopes that brief price rises were temporary. But as Irigoyen\u2019s chart shows, the Fed has been tolerating \u201ctemporary\u201d for the last five years.<\/span><\/p>\n \u201cWhile one-offs are partly to blame, and tariffs should roll off, most of the FOMC seems to be losing patience after 5 years of high inflation and more recurrent supply shocks,\u201d he told clients. That explains why a plurality of traders in the CME Fedwatch futures market now see a 0.25% rise in rates coming in September.<\/span><\/p>\n <\/p>\n <\/span><\/p>\n In late October 1956, Britain and France\u2014alongside Israel\u2014invaded Egypt after President Gamal Abdel Nasser nationalized the Suez Canal, the vital trade artery connecting Europe to Asia. Militarily, the operation was a success. Within days, Anglo-French forces controlled the northern portion of the canal, but it unraveled off the battlefield, <\/span>Fortune<\/span><\/i>\u2019s Nick Lichtenberg writes<\/span>.<\/span><\/p>\n The U.S., alarmed by the unilateral action and unwilling to allow its allies to destabilize the Cold War equilibrium, applied crushing pressure. Washington threatened to withhold emergency IMF loans. The British pound came under speculative attack. It was financial warfare, and it worked. British Prime Minister Anthony Eden, facing a currency crisis, withdrew from Egypt in humiliation within weeks. The military had won. The empire had lost. And what followed was a cascade that Bridgewater Associates founder Ray Dalio describes as the classic sequence of imperial decline: allies stopped deferring to London; creditors reassessed British debt; the pound sterling\u2014which had served as the world\u2019s reserve currency for over a century\u2014began its long retreat.<\/span><\/p>\n Everyone agrees that you hate AI, but only Mark Cuban sees why Silicon Valley is powerless to fix it<\/span> – Nick Lichtenberg<\/span><\/p>\n Alan Greenspan said 3 years with Gerald Ford beat 18 at the Fed. His death at 100 raises the question: was he right?<\/span> – Simon Bowmaker and Paul Wachtel<\/span><\/p>\n Meet Micron, the under-the-radar chipmaker that just reported a 346% sales surge and helped stop a global AI selloff<\/span> – Marco Quiroz-Gutierrez<\/span><\/p>\n Washington gutted the office that manages your student loans. Next week, it has to reinvent them<\/span> – Jacqueline Munis<\/span><\/p>\n The bond market knows something about the $39 trillion national debt that Washington doesn\u2019t<\/span> – Eva Roytburg<\/span><\/p>\n Private equity gets cut of two of Taylor Swift\u2019s biggest pop hits through Max Martin\u2019s catalog sale<\/span> – Mia Osmonbekov<\/span><\/p>\n <\/p>\n <\/span><\/p>\n Britain\u2019s momentous decision to leave the E.U. is 10 years old this year. James Moberly and Sven Jari Stehn of Goldman Sachs have been tracking its effect, and discovered that it turned out worse than their initial estimates. \u201cReal GDP is around 6% below its counterfactual path, more than our previous 5% estimate two years ago,\u201d they said in a recent note. Other research generally finds the hit is in the 6-8% range, they say. One obvious reason: With the U.K. losing its free access to its nearest, biggest, and richest trading partner, \u201cgoods trade volumes have underperformed by 10-15% since the referendum,\u201d they wrote.<\/span><\/p>\n The amount of GDP growth forecast to be created by increased spending on defense, <\/span>according to Panmure Liberum\u2019s Joachim Klement<\/span>. Germany has earmarked \u20ac1 trillion for fiscal stimulus over the next 10 years, half of which will go on defense. That is the equivalent of an additional 25% on top of German GDP over a decade. \u201cThe German Council of Economic Experts went through the German budget line by line to see how much of this fiscal stimulus is wasted,\u201d Klement wrote on his Substack. \u201cAbout half is wasted in the form of accounting gimmicks and government consumption that doesn\u2019t boost growth. But even so, Germany will experience a GDP growth boost of about 6.5 percentage points in the next seven years or almost one percentage point of extra GDP growth per year.\u201d<\/span><\/p>\n Jamie Dimon upends succession race at JPMorgan again<\/span> – FT<\/span><\/p>\n Red Lobster\u2019s Ultimate Endless Shrimp promotion described as a \u2019car crash for the company, lawsuit says<\/span> – CNBC<\/span><\/p>\n Trump administration asks OpenAI to limit next model release<\/span> – Axios<\/span><\/p>\n How Iran Devastated an American Naval Base\u2014and Caused a U.S. Recalculation<\/span> – WSJ<\/span><\/p>\n Traffic Flows Through Hormuz Despite Shock Container Ship Attack<\/span> – Bloomberg<\/span><\/p>\n OpenAI Leans Toward Waiting Until Next Year for I.P.O.<\/span> – NYT<\/span><\/p>\n Ex-Facebook policy chief sues Meta to overturn order barring her from speaking about explosive memoir<\/span> – NY Post<\/span><\/p>\n \u201cThe guy just got $70 billion of funny money to play with to get us to space \u2026 Of course, bond investors are not the same as equity investors. Equity investors, you can take them to Mars. Bond investors are, like, \u2018where is my coupon?\u2019\u201d<\/span><\/p>\n \u2014Ludovic Subran, chief investment officer at Germany\u2019s Allianz, <\/span><\/i>in the FT<\/span><\/i>.<\/span><\/i><\/p>\n TIAA CEO Thasunda Brown Duckett\u2019s job is to persuade you to max out your 401(k), not simply because TIAA is a provider of retirement savings accounts, but because it\u2019s one of the best financial deals available to anyone: 401(k)s shield your money from taxes, usually come with a cash-match from your employer, and if you invest sensibly your gains will compound forever.<\/span><\/p>\n It\u2019s a shame her dad didn\u2019t know that. <\/span>Duckett told <\/span>Fortune<\/span><\/i> that after she graduated college she discovered that her father, who worked at a warehouse and drove trucks\u2014wouldn\u2019t receive enough from his pension to live out retirement comfortably. He had access to a 401(k) through his employer, but the account sat empty.\u00a0<\/span><\/p>\n \u201cI\u2019m like, \u2018Dad, this is not enough money for retirement\u2019\u2026He never contributed $1. That\u2019s 30-plus years of compounding that never got compounded.\u201d<\/span><\/p>\n She persuaded him to start using it immediately. \u201cFast forward, he got to see the benefit of it, Duckett said. \u201cBut he also felt bad that he could have changed the course of his life if he would have been able to know that that benefit was for him, too.\u201d<\/span><\/p>\n<\/div>\n #Memory #supply #crisis #Wall #Street #triggers #huge #selloff #fear #looming #chip #shortages<\/p>\n","protected":false},"excerpt":{"rendered":" Traders are selling tech stocks today in reaction to Apple\u2019s announcement that it would have to raise the prices of its devices to cover the cost of rising memory and… <\/p>\n","protected":false},"author":1,"featured_media":9280,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[3206,1065,816,4967,1150,445,4469,166,1653,1222,6022,3971,379,1709,2687,1152],"class_list":["post-9279","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance-news","tag-chip","tag-crisis","tag-economics","tag-fear","tag-huge","tag-iran","tag-looming","tag-markets","tag-memory","tag-news","tag-selloff","tag-shortages","tag-street","tag-supply","tag-triggers","tag-wall"],"_links":{"self":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts\/9279","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9279"}],"version-history":[{"count":0,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts\/9279\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/media\/9280"}],"wp:attachment":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9279"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9279"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9279"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
Chipmakers are cashing in on a \u201cmemory supply crisis,\u201d Deutsche Bank says<\/b><\/h2>\n
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<\/div>\nVanguard: \u201cHistoric\u201d AI investment cycle is on a par with 19th-century railroads<\/b><\/h2>\n
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<\/div>\nOUT OF PATIENCE<\/h3>\n
The Fed will reach the end of its five-year rope in September<\/b><\/h2>\n
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<\/div>\nONE BIG THING<\/h3>\n
Ray Dalio: The U.S. just had its \u2018Suez moment\u2019\u2014which history says could end an empire<\/b><\/h2>\n
MORE FROM FORTUNE<\/h3>\n
CHART OF THE DAY<\/h3>\n
The disastrous effect of Brexit<\/b><\/h2>\n
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<\/div>\n\n
NUMBER OF THE DAY<\/h3>\n
6.5%<\/h2>\n
THE FRONT PAGES TODAY<\/h3>\n
QUOTE OF THE DAY<\/h3>\n
On SpaceX\u2019s new $25 billion bond sale:<\/b><\/h2>\n
ONE MORE THING<\/h3>\n
What happened when TIAA\u2019s CEO discovered her father didn\u2019t have a 401(k)<\/b><\/h2>\n