Good morning. Lila MacLellan here, filling in for Sheryl today. Jane Fraser, CEO of Citigroup, is a widely respected leader, but she recently told me about the chief executive she admires. “Julie is one of the top leaders in the corporate world, period,” she said of Accenture CEO Julie Sweet. “I mean, there aren’t many other people who can come close.”
“She’s very clear-eyed; she’s always curious,” Fraser also told me. “I think this is probably what will give her incredible longevity as a leader.”
As I write in a profile that also appears in the latest edition of Fortune magazine, Accenture’s results support Fraser’s views. Sweet took control of the tech-forward consulting giant in 2019, leaving her post as CEO of North America to take the corner office. Accenture’s market cap has grown from $90 billion in 2018, the year before Sweet was named global CEO, to $149 billion today. And in 2018, Accenture recorded annual revenue of $41 billion. Last year, it was $65 billion.
Some of that growth can be attributed to Accenture’s famously aggressive acquisitions strategy, which once earned the company the title of “world’s most acquisitive firm.” Indeed, Sweet first joined Accenture in 2010 as general counsel and was recruited because of her career as an attorney who led large and often innovative M&A deals.
But Sweet’s leadership style—shaped by her unique history—also explains her success at the firm and Accenture’s eye-popping organic growth. As I learned, Sweet managed to stay ahead of several trends, including cloud migration, partly by studying emerging technology, taking in many points of view, and then acting quickly when she sees an opportunity. To Fraser’s point, Sweet’s curiosity and openness arguably allowed her to see the rise of generative AI long before ChatGPT arrived. Despite current headwinds in its federal contracting business, analysts say Sweet has now positioned Accenture to take advantage of a coming massive cycle of AI adoption as some of the globe’s largest businesses look for assistance. Even if generative AI itself eats away at some of the demand for Accenture’s IT services, as one analyst suggested, companies will keep coming to Accenture for ever-more-complicated AI projects.
“We’ve already been leading,” Sweet told me, describing the company’s focus on AI, “but we are doubling down on that because we know that the unlock for clients in difficult times is scaling the impact of AI.” Read the full profile here.
The Trump family’s crypto business World Liberty Financial is using a publicly-listed company, ALT5 Sigma Corporation, to raise $1.5 billion for the purchase of its WLFI token. In a press release on Monday, ALT5 Sigma announced that it would sell a combination of 200 million new and existing shares and use the proceeds to buy the Trump family token.
The move represents an effort by the Trump family to capitalize on a recent trend of using either small publicly traded or blank-check companies to let a broader swathe of traders gain exposure to cryptocurrencies.
The strategy was first popularized by Michael Saylor, who renamed his decades-old software company MicroStrategy to Strategy as he transformed it into a Bitcoin behemoth. He and company executives began adding billions of dollars in Bitcoin to the balance sheet for the firm, which prompted traders to see the company’s stock as a proxy for the world’s largest cryptocurrency. Strategy’s market capitalization soon soared along with Bitcoin’s rise.
Now, a flood of other copycats have entered the market. In addition to Bitcoin, there are treasury companies for cryptocurrencies like Ethereum, Sui, Ethena, and now WLFI. All pitch their companies’ stock as a proxy for the cryptocurrencies they hold and a way for traditional investors to gain exposure to crypto.
“One small step for mankind, one giant leap for WLFI,” said the X account for World Liberty Financial, announcing the raise.
Zach Witkoff, the CEO of World Liberty and son of President Donald Trump’s Steve Witkoff, will become chairman of the board of directors at ALT5 Sigma. Eric Trump, son of the president and cofounder of World Liberty, will also join the board, and Zak Folkman, the crypto company’s COO, will become a board observer.
World Liberty was the lead investor in the raise. Other investors weren’t disclosed. A spokesperson for World Liberty Financial declined to comment.
World Liberty Financial’s move into the public markets is the Trump family’s latest expansion of its crypto empire. President Trump and First Lady Melania Trump have their own memecoins. Eric Trump and Donald Trump Jr. have not only backed World Liberty but also spun up their own Bitcoin mining firm.
And Trump Media and Technology, the publicly traded company that encompasses Trump’s social media site Truth Social, has also recently pivoted to crypto and added $2 billion in Bitcoin to its balance sheet.
As tech giants announce hundreds of billions in new data center investments, we’re witnessing a fundamental misunderstanding of our compute shortage problem. The industry’s current approach, throwing money at massive infrastructure projects, resembles adding two more lanes to a congested highway. It might offer temporary relief, but it doesn’t solve the underlying problem.
Yet here’s the uncomfortable truth. Most of these resources will remain dramatically underutilized. The average server utilization rate hovers between 12%-18% of capacity, while an estimated 10 million servers sit completely idle, representing $30 billion in wasted capital. Even active servers rarely exceed 50% utilization, meaning the majority of our existing compute infrastructure is essentially burning energy while doing nothing productive.
The highway analogy holds true
When faced with traffic congestion, the instinctive response is to add more lanes. But transportation researchers have documented what’s known as “induced demand.” It’s a counterintuitive finding that proves additional capacity temporarily reduces congestion until it attracts more drivers, ultimately returning traffic to previous levels. The same phenomenon applies to data centers.
Building new data centers is the easy solution, but it’s neither sustainable nor efficient. As I’ve witnessed firsthand in developing compute orchestration platforms, the real problem isn’t capacity. It’s allocation and optimization. There’s already an abundant supply sitting idle across thousands of data centers worldwide. The challenge lies in efficiently connecting this scattered, underutilized capacity with demand.
The Environmental Reckoning Data center energy consumption is projected to triple by 2030, reaching 2,967 TWh annually. Goldman Sachs estimates that data center power demand will grow 160% by 2030. While tech giants are purchasing entire nuclear power plants to fuel their data centers, cities across the country are hitting hard limits on energy capacity for new facilities.
This energy crunch highlights the significant strains on our infrastructure and is a subtle admission that we’ve constructed a fundamentally unsustainable system. The fact that companies are now buying their own power plants rather than relying on existing grids reveals how our exponential appetite for computation has outpaced our ability to power it responsibly.
The distributed alternative
The solution isn’t more centralized infrastructure. It’s smarter orchestration of existing resources. Modern software can aggregate idle compute from data centers, enterprise servers, and even consumer devices into unified, on-demand compute pools. This distributed approach offers several advantages:
Immediate availability: Instead of waiting years for new data center construction, distributed networks can utilize existing idle capacity instantly.
Cost efficiency: Leveraging underutilized resources costs significantly less than building new infrastructure.
Environmental sustainability: Maximizing existing hardware utilization reduces the need for new manufacturing and energy consumption.
Resilience: Distributed systems are inherently more fault-tolerant than centralized mega-facilities.
The technical reality
The technology to orchestrate distributed compute already exists. Some network models already demonstrate how software can abstract away the complexity of managing resources across multiple providers and locations. Docker containers and modern orchestration tools make workload portability seamless. The missing piece is just the industry’s willingness to embrace a fundamentally different approach.
Companies need to recognize that most servers are idle 70%-85% of the time. It’s not a hardware problem requiring more infrastructure. Nor is it a capacity issue. It’s an orchestration and allocation problem requiring smarter software.
Instead of building our way out with increasingly expensive and environmentally destructive mega-projects, we need to embrace distributed orchestration that maximizes existing resources.
This requires a fundamental shift in thinking. Rather than viewing compute as something that must be owned and housed in massive facilities, we need to treat it like a utility available on demand from the most efficient sources, regardless of location or ownership.
So, before asking ourselves if we can afford to build $7 trillion worth of new data centers by 2030, we should ask whether we can pursue a smarter, more sustainable approach to compute infrastructure. The technology exists today to orchestrate distributed compute at scale. What we need now is the vision to implement it.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
S&P 500 futures were flat this morning as global markets rested at or near their all-time highs. Investors are optimistic the U.S. Federal Reserve will cut rates in September, despite an uptick in inflation, in part because of President Trump’s appointment of Stephen Miran to the Fed. If inflation is 0.3% or less, a rate cut is expected; a higher reading could derail these hopes and cause market turmoil.
S&P 500 futures were flat this morning after the index closed up 0.78% on Friday, a new all-time high. Japan’s Nikkei 225 reached a record peak too, up 1.85% today. Stocks in Europe broadly held their gains in early trading.
Why all the optimism?
Because investors think the U.S. Federal Reserve will almost definitely cut interest rates in September, and they are hoping that the consumer price inflation report—due tomorrow—won’t show a significant rise in inflation.
The “Fed put” is in full effect, according to JPMorgan: “We expect moderate weakening in the macro data but enough to trigger a prompt Fed response” in September, according to Fabio Bassi and his colleagues.
Analyst consensus is that inflation will tick up 0.3% to 3%, according to ING, a small enough rise that the Fed will be able to ignore it in favor of cutting rates. The weak jobs report on August 1 was such a surprise that the central bank is now expected to ignore a small amount of inflation in favor of supporting the economy with a new dose of cheaper money.
“Tomorrow’s US CPI report … could prove to be one of the larger events of the summer for markets,” Jim Reid and his team at Deutsche Bank told clients this morning.
If CPI goes up by 0.3% or less, “that is a number that can probably be seen as acceptable for the Federal Reserve to proceed with a September cut (90% priced in), given the backdrop of a significantly weaker jobs market,” ING’s Frantisek Taborsky and Francesco Pesole said in a note this morning.
There’s one other reason investors are so confident that cut is coming next month: President Trump added Stephen Miran as a temporary Fed governor. They view him as having a single mission, to persuade the Federal Open Markets Committee to lower rates and weaken the dollar.
“Stephen Miran drew headlines earlier this year for proposing a ‘Mar-a-Lago Accord’ to weaken the dollar and boost US exports. While the administration hasn’t formally embraced the idea, his appointment signals clear discomfort with dollar strength,” Convera’s George Vessey said in an email this morning. “Miran’s stance firmly aligns with the dovish camp.”
Of course, the reverse is true, too. If that inflation report comes in higher than expectations tomorrow, then the prospect of a September cut could disappear, which will likely cause some drama and selling tomorrow morning.
Here’s a snapshot of the action prior to the opening bell in New York:
S&P 500 futures were flat this morning, premarket, after the index closed up 0.78% on Friday.
STOXX Europe 600 was flat in early trading.
The U.K.’s FTSE 100 was up 0.25% in early trading.
Japan’s Nikkei 225 was up 1.85%, hitting a new all-time high.
“Quiet quitting.” “Coffee badging.” “Workcations.” We’ve all heard workplace buzzwords like these (and maybe recognized the behaviors they describe). These terms for burnout and disillusionment have spread like wildfire on TikTok and other social media platforms since the pandemic upended workplace norms.
But HR leaders often don’t give these concepts much credence. A new survey found that nearly 40% of HR professionals said they felt uninterested in buzzwords, and 52% felt curious, but cautious.
Should companies pay more attention to this language that satirizes the very structures they rely upon? The study, from research and advisory firm McLean & Company, says yes—with some caveats.
Nobody wants their company to undergo a “Great Resignation” or their workforce to be plagued by “resenteeism.” So when new buzzwords surface, senior leaders often turn to HR for guidance, while employees might want to see their experiences validated and addressed, said Grace Ewles, a director at McLean’s HR Research and Advisory Services. The first step is to investigate, she said.
“When we’re buying a car, we want to do our research,” Ewles said. “It’s the same thing when we’re hearing about buzzwords.” When a new one pops up, HR leaders should “take that opportunity to step back and really understand what’s driving that buzzword,” she said.
Ewles advises leaders to ask themselves: What does the buzzword mean in the context of our organization? Leaders should review internal data—such as employee engagement surveys or focus groups—to validate or disprove the phenomena described by the buzzwords. Often, the behaviors referenced can be a signal of larger problems.
If the data shows some validity, such as high levels of burnout or a desire for stronger work-life balance, it’s a signal that there’s something to learn from the buzzwords, she said.
The big question is, what can be done about it? “I think it really comes back to having employee listening strategies,” Ewles said. “Making sure that we have a pulse, that we have that two-way communication with employees.”
Once the research and listening is done, it’s time for concrete action.
Kristin Stoller Editorial Director, Fortune Live Media [email protected]
Sometimes, amid the memecoins and pay-for-access scandals, it can be difficult to remember that the crypto industry was built on the principles of privacy and autonomy. The elusive Satoshi Nakamoto released the Bitcoin white paper in the wake of the 2008 financial crisis, after all. Even as Wall Street swallows blockchain technology whole, the core is still a spirit of disintermediation.
I joined Fortune in August 2022, the same month that the U.S. Treasury Department sanctioned Tornado Cash, a virtual currency mixer that allowed users to input their (very traceable) cryptocurrency holdings and receive an anonymous output. The software, predictably, became a favorite of terrorist organizations and North Korean-affiliated hacking groups, but it also embodied the cypherpunk ideology that birthed the crypto sector.
OFAC’s action created novel questions, such as whether a piece of code, rather than a person or organization, can be sanctioned. It also drew the ire of privacy advocates, who argued that internet users should have the right to own and send digital cash without government interference, just as offline people can with physical cash (to a degree). These, more than crypto bros trying to drive up the price of their tokens through sex toy-related stunts, are the fascinating dilemmas raised by blockchain technology, and what sets it apart from other forms of financial technology. (And as much as I hoped topics like Tornado Cash would dominate my coverage, Sam Bankman-Fried’s FTX empire collapsed two months later.)
A year after the sanctions, the Department of Justice brought charges against the creators of Tornado Cash, with one, Roman Storm, arrested in the United States. This was a tricky case for the crypto industry to get behind. The DOJ’s indictment made clear that the founders knew their software’s main utility was to help money launderers, including North Korea’s Lazarus Group, and they were earning millions of dollars off the platform through their own proprietary token. In a recurring segment I like to call “Are you taking notes on a criminal f***ing conspiracy,” one founder admitted over text that they had to relinquish control over the software to make it seem like they weren’t the owners. As one former DOJ prosecutor told me at the time, “These are pretty egregious facts.”
But many powerful voices in the crypto industry, including the venture giant Paradigm, still threw their weight behind Storm, arguing that the government’s case eroded the idea of privacy-preserving software and was in direct contradiction to previous guidance issued by the financial crimes division of the Treasury Department.
Storm’s initial trial, which was held in the same courthouse that hosted Bankman-Fried, wrapped up last week. Though he avoided two of the more serious charges, the jury still found him guilty on one, related to operating an unlicensed money transmitting business. His advocates are vowing to fight it, arguing that the decision sets a dangerous precedent for the future of privacy software.
The more interesting question is why the case was allowed to continue under the Trump administration, which has broadly embraced the crypto sector—or at least the elements more tied to financial gains. The Securities and Exchange Commission abandoned cases against Coinbase and Justin Sun, and the DOJ issued a memo announcing the end of “regulation by prosecution” against the blockchain industry. They even dropped one of the lesser charges against Storm about registration. But the core charge—that a developer should be responsible for non-custodial software—was allowed to continue.
The refrain since Trump returned to office has been that, thanks to the lax new regulatory approach, crypto enforcement is off the table. Unfortunately for Storm, it seems that’s restricted to memecoins.
Through June 2025, about one-third of newly named chief executives stepped into their roles on an interim basis, up from just 9% during the same period last year, according to Challenger, Gray & Christmas. Some are corporate veterans parachuting in to stabilize a company (think: Howard Schultz’s return to Starbucks). Others are internal lieutenants tapped to hold the line while boards search for a permanent leader.
On paper, the interim role can look like a golden ticket: a fast track to the C-suite, a chance to prove one’s mettle, and instant résumé credibility. It offers exposure to full P&L responsibility, access to the board, and the ability to shape the organization during a pivotal moment. What’s more, internal and external candidates have an equal shot at making the gig permanent, with 20% of each group ultimately keeping the role, Challenger’s data shows.
The risks are less glamorous. Interim CEOs often inherit crises without the authority to enact sweeping change. They’re accountable for results, but key decisions may still rest with the board or a hands-on owner. The built-in expiration date can also leave them politically exposed if they’re passed over for the permanent spot, and the intensity of high-stakes transitions makes burnout a constant threat. Many don’t last long enough to leave a mark: At WeWork, Artie Minson and Sebastian Gunningham shared interim CEO duties after Adam Neumann’s ouster, but neither secured the top job, and both exited within months once a successor was named.
For executives considering an interim role offer, the question is whether the position is a genuine springboard or simply a high-stakes temp job. The smartest way to decide, recruiters say, is to run it through three filters:
Is your scope, authority, and decision-making power clearly defined, with resources to match?
Does the role advance one’s long-term career vision, even if you don’t get the permanent job?
If it ends abruptly, do you have a next move or a narrative that strengthens your professional brand?
If the answers lean heavily toward “yes,” the interim title could be a career accelerant. If not, it may be wiser to hold out for a role with permanence and real decision-making power.
Goldman Sachs estimates U.S. consumers now shoulder two-thirds of President Trump’s new tariff costs, with more companies planning to pass them on in the future and foreign exporters refuse to “eat” the price hikes. The bank expects the measures to lift core PCE inflation to 3.2% by year-end, adding pressure to the Fed’s 2% target.
When President Trump announced his tariff agenda, he said it would be foreign companies and consumers that would “eat” the price hikes. That’s a take which may be proved optimistic at best, and misguided at worst.
While tariffs have yet to significantly shift the dial on inflation—prompting individuals like Treasury Secretary Scott Bessent to label them the “dog that didn’t bark”—analysts are widely expecting the hikes to ultimately be paid for by the U.S.
So far the sharpest end of the tariff regime has yet to be felt. President Trump delayed his ‘Liberation Day’ tariffs by three months in order to agree deals with trading partners.
Some negotiations have proved successful, with framework deals done with the U.K., the E.U. and Japan to name a few, drastically lowering tariff rates from Trump’s initial threats back in April. Yet countries which haven’t yet agreed to a deal (who received letters informing them of their new tariff rate) saw their effective export rate rise on the deadline of August 7.
That includes nations like India, which is facing a rate of 25% that may double on August 27 as punishment for buying Russian oil. Likewise, while the Trump administration has touted a deal near-done with China on many occasions, nothing beyond an agreement to delay tit-for-tat price increases until this week has been confirmed.
With a slew of tariffs now effectively in place, Goldman Sachs believes that the cost absorbed by foreign exporters will grow over time, but will remain low.
Economist Elsie Peng wrote in a note yesterday seen by Fortune that Goldman believes exporters absorbed 14% of the costs of all tariffs in June, which will rise to 25% by October if the sanctions follow a similar trajectory to the price hikes administered by the Trump administration in his first term.
But the portion consumers can expect to pay is also on the rise. Peng noted that around 36% of the 2025 tariff costs were passed onto consumer prices after three months of implementation and around 67% were passed on after four months.
The economist added that “although the passthrough rate appears to be increasing rapidly over time, it still remains somewhat below the passthrough rate that we estimate at the same point in time during the 2018-2019 trade war.”
One portion of the economy which intends to reduce its share is U.S. businesses. The Conference Board released its U.S. CEO Confidence report for the third quarter last week, which revealed 64% are certain they’d be passing the price hike onto consumers, and a further 16% said they’re still considering.
This is a higher rate than previously identified (following the prediction of Goldman Sachs) as only in June the New York Fed reported a smaller 45% of services firms were intending to pass on the full extent of their tariff-related increases.
Peng noted that her maths “implies that U.S. businesses have absorbed more than half of the tariff costs so far but that their share would fall to less than 10%. This net impact on U.S. businesses likely masks that some companies have absorbed a larger share of tariff costs, while some domestic producers shielded from import competition have raised their own prices and benefited.”
Inflation passthrough
Of course, if consumers are paying higher prices for goods and services then the Federal Reserve’s job of keeping inflation to 2% will only get more difficult.
Goldman Sachs believes this will be the case, writing: “Our analysis implies that tariff effects have boosted the core PCE price level by 0.20% so far.
“We expect another 0.16% impact in July, followed by an additional 0.5% from August through December. This would leave core PCE inflation at 3.2% year-over-year in December, assuming that the underlying inflation trend net of tariff effects is 2.4%.”
Reflecting on the June CPI report (the latest available at the time of writing), Macquarie’s North America economists David Doyle and Chinara Azizova commented that the data was already showing hints of passthrough inflation.
They wrote last month: “Notable price pressures were apparent in household furnishings and supplies, apparel, video and audio products, sporting goods, and toys. This list suggests impacts from tariffs on the data. One measure that reflects this is core goods ex used cars and trucks. This accelerated to +0.3% MoM, its strongest pace since Feb-23. It also shows an accelerating monthly trend.”
Many economists are hoping Fed chairman Jerome Powell will see through this inflation and lower the base rate, in part to offset an alarming jobs report from the Bureau of Labor Statistics a matter of weeks ago. But analysts can’t hold their breath—after all, Powell made the point at his last press conference that by not raising rates (a move which truly would have upset markets) he is already seeing through such pressures.
Picture this: it’s a scorching summer day in the U.S. You wake up in a cool, comfortable room after a solid night’s sleep. You head to work, where the temperature is optimised for concentration. Unless you step outside for a lunchtime walk, you’re completely protected from the heat.
Now picture the same scenario in an average European city. You wake up after a night of tossing and turning. You’re sticky, uncomfortable, and already dreading the commute. Jammed on a crowded train, you suffer through a heavy delay as your city’s transport infrastructure struggles in the face of extreme temperatures. If you’re working from home, the only relief comes from a fan slowly circulating warm air around the room.
The fundamental difference between these two realities? Air conditioning.
In the U.S., 90% of households have AC. In Europe? Just 20% on average. In some countries, such as the UK, that number falls to less than 5%.
At first glance, this might seem like a minor difference — fodder for TikTok skits or Reddit debates, where Americans and Europeans poke fun at each other’s respective abilities to handle summer weather. But when the temperature rises, the impact on productivity is anything but trivial.
Heat is an existential threat to some European economies
Europe is the fastest-warming continent on Earth. Across the primarily AC-free nations, heat waves can (and increasingly do) shut down schools, disrupt businesses, and make it impossible for people to function at their best. Employers are forced to shift working hours to protect staff from the heat, those with caring responsibilities struggle to look after the most vulnerable (children, the elderly) and families are caught in a daily battle for comfort and efficiency. This climate vulnerability isn’t just inconvenient, it’s a serious threat to economic competitiveness.
Economists are already warning that Europe’s failure to adapt to a hotter future could dampen its growth prospects. Tourism too looks set to suffer. As heatwaves become more frequent, particularly in Southern Europe, holiday-makers are starting to look elsewhere in search of more comfortable climes. This presents an existential threat to the lifeblood of economies, particularly across the Mediterranean.
As the continent struggles to balance the demands of climate change and economic growth, heat is a growing liability.
Public calls for AC are getting louder. In the UK, searches for homes with air conditioning have soared and AC is quickly becoming a middle class status symbol. In France, politicians like Marine Le Pen have jumped on the bandwagon, announcing a “grand plan for air conditioning”. You might imagine that the solution is simple: copy the US playbook and roll out air conditioning across Europe.
Tempting as it may seem, it’s not quite that straightforward.
The grid isn’t up to the job
Air conditioning is electricity-intensive. And most European nations don’t have the grid infrastructure to support a shift of this scale. This fragility was laid bare in Italy this summer, when a heat-wave-induced surge in demand for AC triggered blackouts.
Europe’s national grids are straining at the seams: struggling to keep pace with the range of resilience upgrades required for modern consumption, and grappling with the volume of clean energy sources clamouring to connect. (It’s a deep irony that the vast quantities of solar power brought about by hotter, drier summers — which could unlock AC capabilities without creating a new carbon burden — can’t be properly harnessed due to grid connection delays.)
Across large swathes of Europe, buildings are also older and poorly insulated. Planning restrictions are tighter and the culture of renting rather than owning complicates installation.
Collectively, beleaguered grids and logistical challenges means those sweaty nights and lethargic days risk becoming part and parcel of European summers.
To escape this incrementally hotter bind and unlock US-style levels of productivity that AC-enabled environments can bring, we need smarter infrastructure and more investment in it.
That means using advanced modelling and AI to understand where grids are weakest, how demand is shifting, and where small, targeted upgrades could unlock big gains. It means simulating future heat scenarios to stress-test energy networks before a crisis hits or a capacity expansion is attempted. It means replacing guesswork with precision so that investments in cooling — and the infrastructure behind it — actually pay off.
Only with this kind of intelligent planning can Europe move fast enough to adapt to a hotter future — without burning out its grids, budgets, or climate goals in the process.
Air conditioning may be the fix, but without addressing the underlying infrastructure challenges, Europe will continue to sweat through the heat and suffer the economic consequences. And across the pond? Well, the Americans are just waking up from a great night’s sleep.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
In today’s CEO Daily: Diane Brady talks to Rolls-Royce CEO Tufan Erginbilgiç.
The big story: The fall of Intel, and Trump’s attacks on its CEO.
The markets: Bouyant.
Plus: All the news and watercooler chat from Fortune.
Good morning. I recently spoke with Rolls-Royce CEO Tufan Erginbilgiç about the art and science of transformation. I caught him on a good day, fresh from reporting a 50% jump in half-year profits to £1.7 billion (about $2.3 billion), that’s helped the U.K. aerospace company’s stock price more than double so far this year.
Erginbilgiç says he’s “changed everything about the company” since becoming CEO in early 2023. He drove 17 initiatives across the organization through four so-called pillars of getting everyone aligned around confronting reality, driving efficiency, setting clear targets and “normalizing intensity” to get things done.
“Underperforming companies stop talking about performing,” he told me. “They stop communicating because it looks ugly. You need to tell them what your vision is to make this a great company … It’s not restructuring I’m after. Transformation is a lot more holistic and ambitious.”
And his response to tariffs, geopolitical challenges and ever-shifting technologies is to focus on making Rolls-Royce more proactive and agile. “You can’t always influence the macro stuff but you influence how you deal with it,” says Erginbilgiç, who created a large task force that reports to him every two weeks.
When trying to align 50,000 people around transformation, his advice is not to obsess over the latest AI or budget target. “Nobody gets excited about budgets,” he says. “Tell people what good looks like.”
“Frankly,” wrote a J.P. Morgan securities analyst just after the AOL Time Warner merger was announced, “it is difficult to project the true potential of this new entity, but we know it is big.” That statement might not get far in a logic class, but it rather nicely captures the widespread confusion about the payoff in this deal. The murkiness won’t be dispelled soon. Even at Internet speed, it will take some time for the world to judge whether AOL overpaid in offering 1.5 shares of its stock for each Time Warner share, or whether Time Warner sold its impressive assets too cheaply, or whether this is truly a marriage made in heaven.
In this article, later on, we will ourselves take a stab at figuring out what this company may do for investors. But first recognize that “big” indisputably is the word for the deal by one basic measure. Even after the merger announcement had knocked AOL down in price, a pro forma AOL Time Warner had a market value of around $290 billion. That’s not Microsoft, which leads the nation at about $585 billion. But it puts the new company about fifth on the market-value list, ahead of such heavyweights as IBM and Citigroup.
There’s another word that applies to this transaction in a vital way: “small.” In the torrent of early analysis about the merger, it was amazing how little anyone talked about earnings—real, bottom-line earnings. That could be, of course, because they are almost too measly to find. For its fiscal year, ended last June, AOL had earnings of $762 million, and for the 12 months ended in December, earnings were about $1 billion. Time Warner’s 1999 results have yet to be reported, but its full-year net should be around $1.3 billion. So run a total and you have bottom-line profits for 1999 of roughly $2.3 billion. On that basis, the combined company is selling at well over 100 times earnings.
But the $2.3 billion figure is also something of a fooler: It includes very large nonrecurring gains at both companies and also, at Time Warner, some dollars slated for preferred dividends. If these items were subtracted, to get an ongoing profit figure for common shareholders, the two companies together would have bottom-line profits of under $ 1 billion. That makes the price/earnings multiple climb to 300.
But, hey, who cares? In both the Internet and media worlds, people seldom talk bottom-line earnings. Instead, they talk bigger figures, bearing strange, made-up names that begin with the letter “e.” Here it seems that AOL and Time Warner do not speak precisely the same language. AOL reports EBITDA (e-bit-v/Ši), which stands for earnings before interest, taxes, depreciation, and amortization. Time Warner reports EBITA (e-bit-io/i), which states earnings before that same list of interest, taxes, and amortization but acknowledges that depreciation—the year-by-year bookkeeping recognition of capital expenditures made earlier—is a real cost that ought to be subtracted before getting to anything called “earnings.”
In this duel of “Ebs,” something is clearly going to have to give when the two companies merge (assuming they make it to the altar). And here, in fact, is their plan: Jerry Levin, CEO of Time Warner—and the CEO-to-be of AOL Time Warner—says that the merged company will go along with AOL’s practice and will report EBITDA. Hmmm: That means the very real and ever-present cost of depreciation—rising out of Time Warner’s big spending, for example, on its cable systems—is to be ignored in getting to “earnings.” The result, of course, is the highest figure you can get in choosing between the Ebs, which is convenient when you are trying to rationalize a big valuation.
In this article—we are now getting to what the merger may do for investors—FORTUNE will not focus on either of the Ebs, or on bottom-line earnings, for that matter, but will instead get down to a profit figure that a true investor trying to size up a company would indisputably want to know. This figure is profits after depreciation, interest, and taxes—items that are inescapable costs—but before amortization of goodwill, which is a bookkeeping cost that may completely lack economic reality.
By our estimate, AOL and Time Warner had about $4.2 billion of these profits last year. This figure reflects a full bookkeeping charge for taxes, though neither company actually pays much in cash taxes right now. AOL, in fact, ran up so many losses in its early years that it has $7 billion in tax-loss carry-forwards, with these set to expire from 2001 to 2019. They will keep the tax collector away in AOL Time Warner’s early years. But this company has enormous growth in mind, and it should, in pretty quick order, be paying significant taxes. If that turns out to be an inaccurate prediction, the company won’t have flourished: A big company that doesn’t ever pay taxes is almost never a good business.
The key questions are how fast profits might grow and what a given rate of growth would mean to the investors who right now have this big bundle of $290 billion sunk in the two companies. Regardless of what numbers may dazzle you about the deal, that is the one to focus on: the market cap that the company must push up a steep hill to continue rewarding investors (a problem shared by such other highfliers as Cisco).
To start thinking about how AOL Time Warner might meet its challenge, FORTUNE postulated an average annual growth rate for profits of 15% for 15 years, an assumption carrying the thought that growth would be faster than that in the early years and then slow down. This is by no means a growth rate to be sneered at: Most large companies would kill to lock in that kind of performance over a long period. A 15% rate, in any case, would get you, in these after-tax profits we’re talking about, to $34 billion (and to more than $50 billion before taxes). Those are huge amounts: For perspective, General Electric’s equivalent after-tax profits last year were an estimated $12.5 billion.
In the second part of the exercise, we need to make a guess at what the market might pay for $34 billion coming out of a company that in its 15th year would look like a classy winner yet also have gained a certain maturity. Maybe the market would accord those earnings a multiple of 20. That would be a market valuation of $680 billion, against today’s valuation of $290 billion. And what would that mean in terms of an annual return to investors? The stark answer is 5.8%, which an investor might not find acceptable from government bonds, much less AOL Time Warner. In fact, many analysts are saying investors will want an average annual return of 15% from this company, operating as it does in the high-risk world of the Internet. For now, at least, dividends won’t be helping: The new company will pay none.
In any case, FORTUNE tried its projections out on Jerry Levin and found, unsurprisingly, that he really didn’t like them. He said the growth rate we had postulated was simply too low. He didn’t offer a precise alternative, but he did make the point that multiples tend to exceed projected growth rates, often considerably.
So let’s cut through the math and come out with a scenario that would allow AOL Time Warner to give investors what they supposedly want: an annual return of 15%. For them to get that over the next 15 years—hold your hats—the market cap of AOL Time Warner would have to reach $2.4 trillion. Yes, $2.4 trillion. That’s what $290 billion will grow to in 15 years if it rises at a rate of 15% a year. This amount, eye-popping though it is, also happens to fit nicely with the stated ambitions of Levin and AOL’s boss, Steve Case, to make their company the most profitable and valuable in the world.
So now we need a scenario that would transport us to $2.4 trillion. Here’s one: a 15-year growth rate in profits of 22% (to $83 billion after tax) and a multiple, in the 15th year, of 29. Can AOL Time Warner pull that off? It just doesn’t seem likely. Big companies run into the law of large numbers and slow down, as if mud had clutched their feet. Getting to $2.4 trillion would simply be a prodigious feat, implying superb execution—in a very complicated company—and a trashing of every competitor that counted. It also happens that $83 billion (with goodwill stripped out, to get down to net income) would probably leave AOL Time Warner accounting for more than 10% of that year’s FORTUNE 500 profits, which just doesn’t seem economically feasible. (In the coming FORTUNE 500 list, no company is likely to account for as much as 4% of the group’s earnings.) In short, the prospects for a 15% return to investors over the long term, from the current level of $290 billion, do not look great.
To be even discussing a distant horizon of 15 years is perhaps madcap, given that the Street’s analysts are for the moment obsessed with what the company might sell at just one year out, in 2001. In mid-January, with AOL trading at about $63 a share, Ulric Weil, an analyst at the Virginia firm Friedman Billings Ramsey, took FORTUNE through his thinking that AOL Time Warner could be around $90 in 2001 (a forecast not nearly as bullish as some others around). He was going to apply an Internet multiple of 22 to AOL’s estimated revenues and a media multiple of 30 to Time Warner’s EBITA; take into account $2.5 billion of estimated “synergy” revenues, which he would also multiply by 22; get to a total value for the company of $500 billion; discount that by 15% to get to a present value; divide by 4.7 billion shares; and, lo, you’d have an expected price of about $90 a share.
Wait, said his listener. “Is there a logic to the multiples of 22 for revenues and 30 for EBITA?” “No,” Weil hooted. “If you’re looking for logic in cybercash, forget it!”
The question of whether there are going to be synergies of convergence—you will please pardon those discredited words—is, needless to say, huge, and very much a part of the murkiness that surrounds the payoff in this merger. The two companies, anticipating they’ll be joined before the end of this year, have told analysts to expect about $1 billion of incremental EBITDA in 2001. The “low-hanging fruit” in this corporate orchard, says one insider, is cuts that both companies can make in advertising and direct-mail costs as they begin to exploit one another’s marketing channels.
Another kind of fruit that may be harvested right away was suggested by ten partnering arrangements that the two companies announced on merger day. The first arrangement? A plan for AOL to feature Time Warner’s In Style magazine. To be sure, a journey to $2.4 trillion must begin with a single step, but as the announcement duly noted, other Time Warner magazines have already had such arrangements with AOL—without a merger, obviously. That raises a point often talked about in big deals: Do you really need to merge to make business arrangements that are beneficial to both sides? No, is one cynic’s answer: “To drink milk, you don’t need to own a cow.”
On the other hand, Jeffrey Sine, a Morgan Stanley Dean Witter investment banker who has worked closely with Time Warner for many years, says he is absolutely convinced that new businesses get “unlocked” when you merge companies and get people to think creatively and cooperatively about what can be done. Amazingly, he pulls an example out of a deal usually thought of as having been a synergistic wasteland: Time Warner’s purchase of Turner Broadcasting four years ago. The example is the Cartoon Network, which has 61 million subscribers and, in Sine’s opinion, has grown into a $2 billion asset. This business, Sine claims, could never have become a prize had not Turner, with its Hanna-Barbera library and expertise in cable networks, gotten to close quarters with Warner Brothers, which brought Looney Tunes and animation skill to the party.
Sine thinks that the hookup of Time Warner and AOL has endless possibilities for creative thinking and that Jerry Levin, in particular, has the kind of intellect to be fascinated by the possibilities. Says Sine: “In Jerry’s mind, a lot of this is, How do I get into a position to tap into the whole new areas of value creation that no one’s heard of or even been thinking about?”
That was surely one of the “fuzzies”—Levin’s term—motivating him to make the deal. But a dominant reason for him to talk merger at all, he says, was the premium he knew it would bring Time Warner’s shareholders. These folks suffered for years after Time Inc. and Warner Communications merged in 1989, until finally the stock price took off. Levin says he was “driven” by a feeling of obligation to the stockholders and by a desire to keep on giving them good returns.
Okay, Levin has engineered a premium for his shareholders. Now, to make the merger work for investors, Case and Levin must move their $290 billion market cap to an extraordinary height. It will be like pushing a boulder up an alp.
OpenAI, the developer behind ChatGPT, released two bombshell AI developments last week. Last Thursday, it released GPT-5, the long-awaited update to its powerful GPT model.
But OpenAI’s earlier decision to release open-source versions of its powerful model—the first time it’s done so since 2020, may be more consequential. OpenAI’s move follows a flood of Chinese AI models spurred by the surprise release from Chinese AI startup DeepSeek.
It’s a major shift for the U.S. AI developer, now worth $300 billion. Open weight models allow developers to fine-tune for specific tasks without retraining it from scratch. Despite its name, OpenAI has focused on releasing closed, proprietary models, meaning developers couldn’t get under the hood to see how they worked—allowing OpenAI to charge for access to its powerful models.
DeepSeek tested that strategy. The Hangzhou-based start-up made waves by releasing models that matched the performance of products from Western rivals like OpenAI and Anthropic. By making its technology openly accessible, DeepSeek allowed developers around the globe to experience the power of its models firsthand.
Since then, Chinese AI development has exploded, with companies large and small rushing to unveil increasingly advanced models. Most releases are open-source.
“Globally, AI labs are feeling the heat as open source models are increasingly recognized for their role in democratizing AI development,” Grace Shao, an China-based AI analyst and founder of AI Proem, says.
U.S. tech stocks have rebounded from the slump triggered by DeepSeek, but the shift to open-source may be more permanent. In March, OpenAI CEO Sam Altman conceded that the developer may have been on the “wrong side of history” by maintaining a closed approach.
The race is now geopolitically charged. Ahead of releasing the open-source models, Altman said he was “excited for the world to be building on an open AI stack created in the United States, based on democratic values, available for free to all and for wide benefit.” Altman’s statement leans into a growing competition over AI–one that developers in the U.S. are worried of losing.
“This plethora of simultaneous open AI models (with published weights and papers about technique) is an ‘idea orgy.’ The collective innovation should easily soar past anything one company can do alone,” Benchmark general partner Bill Gurley wrote on X in late July. “It’s formidable and should easily win over single proprietary players (anywhere in the globe).”
China embraces open-source
Chinese AI firms are now aggressively championing open-source.
Baidu, once the leader in China’s AI development with its ERNIE model, went open-source a few months ago to catch up with Alibaba and DeepSeek. Kuaishou and Tencent have both released open-source video-generation models. Zhipu AI, Moonshot AI and MiniMax–some of China’s so-called “AI tigers”—have also released open-source models in recent weeks.
Rather than closely guard their breakthroughs, Chinese developers think an open approach will encourage greater innovation and encourage adoption. “When the model is open-source, people naturally want to try it out of curiosity,” Baidu CEO Robin Li told analysts in February, soon after the company unveiled its plans to go open-source
And there’s a business argument too: Alibaba executives, for example, argue that their open-source Qwen models encourage companies and startups to use Alibaba’s cloud computing services.
Since DeepSeek’s release, Chinese companies have rushed to integrate Chinese AI models into their products, including social media platforms, cars, and even air-conditioners.
There may also be a psychological element at play. Going open-source lets users around the world see the power of Chinese AI models for themselves, appealing to an up-and-coming tech sector that’s long been denigrated by outsiders as a copycat.
Export controls
China has supported other open-source technologies. Officials back the use of the RISC-V chip design architecture, an open-source alternative to proprietary architectures like ARM and Intel’s x86. RISC-V allows Chinese chip engineers to share best practices and ideas, spurring the growth of the broader sector.
Beijing seeks to develop a self-sufficient semiconductor sector, in part due to concerns of the U.S.’s control of critical parts of the chip supply chain. The Biden administration’s decision to impose chip controls in 2022 intensified China’s push for domestic innovation.
China’s embrace of RISC-V has raised eyebrows in Washington. Last year, the House Select Committee on the Chinese Communist Party recommended that U.S. officials study the risks of RISC-V, and reportedly proposed preventing U.S. citizens from aiding China on the open-source architecture.
Leaders vs. followers
China’s embrace of open-source aligns with the country’s initial position as a runner-up in AI.
“If you’re an OpenAI, an Anthropic, a Google…if you’re really leading, then you have this incredibly valuable asset,” Helen Toner, the director of strategy at Georgetown’s Center for Security and Emerging Technology, said at the Fortune Brainstorm AI Singapore conference in mid-July. “It’s easy to understand why they wouldn’t want to just hand out [their models] for free to their competitors if they’re able to sell access to their closed systems at a premium.”
But for followers, who “can’t compete at the frontier,” releasing an open-source model is a way to show “how advanced you are,” she explained.
Open-source models also “buy a lot of goodwill,” Toner, who once served on OpenAI’s board, added. “What we’ve seen over the last couple years is how much soft power is available to people who are willing to and organizations that are willing to make their technology available freely,” she explained.
The U.S. may now recognize the “soft power” potential of open-source. “The United States is committed to supporting the development and deployment of open-source and open-weight models,” Michael Kratsios, director of the U.S. Office of Science and Technology Policy, said in South Korea earlier this week
And with OpenAI’s decision, U.S. AI is now perhaps put in a rare position: Following, not leading.
Sam Altman, CEO of OpenAI, delivers remarks at the Integrated Review of the Capital Framework for Large Banks Conference at the Federal Reserve on July 22, 2025 in Washington, DC.
Nvidia Corp. and Advanced Micro Devices Inc. agreed to pay 15% of their revenues from chip sales to China to the US government as part of a deal with the Trump administration to secure export licenses, according to a person familiar with the matter.
Nvidia plans to share 15% of the revenue from sales of its H20 chip in China and AMD will deliver the same share from MI308 revenues, added the person, who asked for anonymity to discuss internal deliberations. The Financial Times earlier reported the development.
It followed a separate report from the Financial Times that the US Commerce Department started issuing H20 licenses on Friday, two days after Nvidia Chief Executive Officer Jensen Huang met President Donald Trump.
The Trump administration had frozen the sale of some advanced chips to China earlier this year as trade tensions spiked between the world’s two largest economies.
An Nvidia spokesperson said the company follows US export rules, adding that while it hasn’t shipped H20 chips to China for months, it hopes the rules will allow US companies to compete in China. AMD didn’t immediately respond to a request for comment.
Separately, Intel Chief Executive Officer Lip-Bu Tan is expected to visit the White House on Monday after Trump called for his dismissal last week over his ties to Chinese businesses, the Wall Street Journal reported Sunday.
1. Yes, the USA NEEDS INTEL, as Intel is the only U.S. company capable of providing state of the art logic manufacturing.
2. Neither Samsung or TSMC plan to bring their state of the art manufacturing to the U.S. in the near term.
3. U.S. customers like Nvidia, Apple, Google, etc needs and should understand they NEED a second source for their lead product manufacturing due to pricing, geographic stability and supply line security reasons.
4. Intel is cash poor and can’t afford to invest in the capacity needed in the future to replace TSMC or even a reasonable fraction of TSMC capacity. They probably need a cash infusion of $40B or so to be competitive. Realistically that investment is 100% of the Chip Act Capital grants so unlikely the USG is the savior.
5. The only place the cash can come from is the customers. They are all cash rich and if 8 of them were willing to invest $5B each then Intel would have a chance.
6. The current Intel CEO’s comments about not investing in new technology (14A) until customers sign up is a joke. To win in this space you need to be the leader in technology not the follower. It takes multiple years to create one of these technologies and no customer wants to sign up for something that is second best.
7. Fortunately Intel has good technology to work with (high NA EUV, backside power, etc) so they have a realistic shot at leadership IF THEY INVEST NOW. They just need the money.
8. Where does the money come from? The customers invest for a piece of Intel and guaranteed supply. Why should they invest? Domestic supply, second source, national security, leverage in negotiating with TSMC, etc. AND IF THE USG GETS ITS ACT TOGETHER, they catalyze the action with a 50% (or whatever number Trump picks) tariff on state of the art semi imports. If we can support domestic steel and aluminum, surely we can support domestic semiconductors.
9. The FFWBMs (four former wise board members) of Intel continue to claim you have to break Intel into two pieces before any customer will invest in Intel. Be serious. There are many company interactions that involve both supply and competition. It is also extremely hard to imagine Intel really competing with the likes of Nvidia, Apple, Meta, Google, Dell, etc in their well established product lines. By all means, if you want to complicate the problem, then take the time to split up Intel and make the FFWBMs happy but if you’re in the business of saving Intel and its core manufacturing strength for the USA then solve the real problem – immediate investment in Intel, committed customers, national security, etc.
10. POTUS and DoC can set the stage, the customers can make the necessary investments, the Intel Board can finally do something positive for the company, and we stop writing opinion pieces on the topic.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
U.S. stocks were poised to add to recent gains as futures on Sunday ticked higher ahead of crucial inflation reports due in the coming week. The consumer price index comes out on Tuesday, and the producer price index follows on Thursday. They will provide fresh clues on how much President Donald Trump’s tariffs are impacting inflation.
Markets were pointing toward another rally on Sunday evening as investors brace for fresh economic data that will deliver new clues on how much President Donald Trump’s tariffs are impacting inflation.
Stocks closed the prior week on a positive note, with the Nasdaq hitting a new closing high and the S&P 500 nearing a return to its record.
Futures tied to the Dow Jones Industrial Average rose 68 points, or 0.15%. S&P 500 futures were up 0.13%, and Nasdaq futures added 0.09%.
The yield on the 10-year Treasury was flat at 4.285% after plunging last week on greater expectations for Fed rate cuts. The U.S. dollar was down 0.02% against the euro and up 0.02% against the yen.
Gold fell 0.93% to $3,458.90 per ounce, with markets waiting for clarification from the Trump administration on how Swiss gold will be tariffed. U.S. oil prices dropped 0.39% to $63.63 per barrel, and Brent crude fell 0.32% to $66.38.
So far, Trump’s tariffs haven’t produced a spike in inflation, which has been coming in below forecasts for months. But businesses have drawn down stockpiles that were built up before the import taxes went into effect, meaning new inventory has been costlier.
Earnings reports for the second quarter have indicated that some companies are absorbing a significant amount of the added costs instead of passing them onto to consumers, who have shown sign of pressure as the economy and hiring slow.
Meanwhile, the Federal Reserve has held off on rate cuts while it waits to see how much tariffs are impacting inflation—and if they are tilting consumers’ longer-term views on inflation.
The consumer price index for July will come out on Tuesday, and Wall Street expects a 0.2% monthly overall increase and a 0.3% uptick in the core CPI.
On a year-over-year basis, prices are expected to accelerate to 2.8% growth from 2.7% in June in the headline rate and heat up to 3.1% growth from 2.9% in the core rate.
The producer price index follows on Thursday, and analysts see a 0.2% monthly increase in the headline PPI and a 0.3% bump in the core PPI.
Meanwhile, several Fed officials are scheduled to speak throughout the week. That’s as the central bank is getting another dovish vote with the appointment of Stephen Miran as governor.
Despite the White House’s attacks on the Fed, Trump’s demands for it to lower rates, and the recent firing of the head of the Bureau of Labor Statistics, Wall Street remains upbeat on stocks.
Morgan Stanley’s Mike Wilson said last week a new bull market has started after previously forecasting that the S&P 500 could reach 7,200 by mid-2026.
Wilson’s view is part of an increased sense of optimism among other top analysts as fears over tariffs ease with the signing of several trade deals.
Last month, Oppenheimer chief investment strategist John Stoltzfus hiked his S&P 500 price target for this year to 7,100 from 5,950, reinstating the outlook he initially made in December 2024.
Signs that artificial intelligence is weighing on the job market are continuing to creep into the data, offering clues on how AI could play a role the next time the economy slips into a downturn. Businesses have historically leaned on automation during recessions, and AI could hit white-collar knowledge workers especially hard, JPMorgan warned.
Businesses trying to do more with less have historically leaned on automation during recessions, but the advent of generative AI could scramble the typical pattern of winners and losers when the next downturn strikes.
While white-collar knowledge workers have previously not suffered from severe recession-induced layoffs or jobless recoveries, the next time could be different, JPMorgan senior U.S. economist Murat Tasci said in a note Tuesday.
“More specifically, we think that during the course of the next recession the speed and the breadth of the adoption of the AI tools and applications in the workplace might induce large-scale displacement for occupations that consist of primarily non-routine cognitive tasks; henceforth non-routine cognitive occupations,” he wrote.
Since the late 1980s, jobs that focus on routine tasks have been disappearing because of automation, Tasci said. That includes “routine cognitive occupations” like sales and office jobs, as well as “routine manual occupations” such as jobs in construction, maintenance, production and transportation.
Over the past four decades, it’s taken longer and longer for routine jobs to bounce back after recessions. In fact, employment in routine occupations has still not returned to its peak before the Great Financial Crisis.
By contrast, “non-routine cognitive occupations”—white-collar knowledge workers like scientists, engineers, designers, and lawyers—were much less cyclical and barely dipped below pre-recession peaks. They have also led prior employment recoveries most of the time, Tasci observed.
‘Ominous’ sign in unemployment pattern
But an unprecedented shift in unemployment trends could indicate that white-collar knowledge workers will suffer a much different fate in the age of AI.
For the first time ever, workers from non-routine cognitive occupations now account for a greater share of the unemployed than workers from non-routine manual jobs (i.e. healthcare support, personal care, and food preparation).
“Workers who were last employed in non-routine cognitive jobs have always accounted for the smallest share of the unemployed in the data, until recently,” Tasci said, calling it an “ominous” sign. “This changing pattern might be indicative of rising unemployment risk for these workers going forward.”
Meanwhile, AI doesn’t pose much more additional risk to routine jobs or to non-routine manual jobs that will still require more physical personal interaction, he explained.
The increased threat to white-collar knowledge workers also poses a greater risk to the economy than in the past as they now account for nearly 45% of total employment, up from 30% in the early 1980s.
“A much larger unemployment risk and anemic recovery prospects for these workers might cause the next labor market downturn to look pretty dismal,” Tasci warned. “The jobless recoveries led by anemic growth in routine occupations might repeat again, this time primarily due to an anemic recovery in non-routine cognitive occupations.”
But others aren’t so gloomy about AI and the job market. Tech investor David Sacks, who also serves as the White House czar on AI and crypto, sought to debunk several “Doomer narratives” about artificial general intelligence.
In an X post on Saturday, he said there’s a “clear division of labor between humans and AI,” meaning that people still need to feed AI models necessary context, give them extensive prompts, and verify their output.
“This means that apocalyptic predictions of job loss are as overhyped as AGI itself,” Sacks added. “Instead, the truism that ‘you’re not going to lose your job to AI but to someone who uses AI better than you’ is holding up well.”
For the first time ever, workers from non-routine cognitive occupations account for a greater share of the unemployed than workers from non-routine manual jobs.
President Donald Trump said Sunday that homeless people must be moved “far” from Washington, after days of musing about taking federal control of the US capital where he has falsely suggested crime is rising.
The Republican billionaire has announced a press conference for Monday in which he is expected to reveal his plans for Washington — which is run by the locally elected government of the District of Columbia under congressional oversight.
It is an arrangement Trump has long publicly chafed at. He has threatened to federalize the city and give the White House the final say in how it is run.
“I’m going to make our Capital safer and more beautiful than it ever was before,” the president posted on his Truth Social platform Sunday.
“The Homeless have to move out, IMMEDIATELY. We will give you places to stay, but FAR from the Capital,” he continued, adding that criminals in the city would be swiftly imprisoned.
“It’s all going to happen very fast,” he said.
Washington is ranked 15th on a list of major US cities by homeless population, according to government statistics from last year.
While thousands of people spend each night in shelters or on the streets, the figure are down from pre-pandemic levels.
Earlier this week Trump also threatened to deploy the National Guard as part of a crackdown on what he falsely says is rising crime in Washington.
Violent crime in the capital fell in the first half of 2025 by 26 percent compared with a year earlier, police statistics show.
The city’s crime rates in 2024 were already their lowest in three decades, according to figures produced by the Justice Department before Trump took office.
“We are not experiencing a crime spike,” Washington Mayor Muriel Bowser said Sunday on MSNBC.
While the mayor, a Democrat, was not critical of Trump in her remarks, she said “any comparison to a war torn country is hyperbolic and false.”
Trump’s threat to send in the National Guard comes weeks after he deployed California’s military reserve force into Los Angeles to quell protests over immigration raids, despite objections from local leaders and law enforcement.
The president has frequently mused about using the military to control America’s cities, many of which are under Democratic control and hostile to his nationalist impulses.
Moody’s Analytics chief economist Mark Zandi followed up his earlier warning that the economy is on the brink of a recession. On Sunday, he pointed out that the start of a recession is often not clear until after the fact. For now, the jobs data don’t signal a recession yet, but more than half of U.S. industries are already shedding workers.
The U.S. economy isn’t in a recession yet, but the number of industries cutting back on headcount is concerning, and future revisions to jobs data could show employment is already falling, according to Moody’s Analytics chief economist Mark Zandi.
This time, Zandi pointed out that the start of a recession is often unclear until after the fact, noting that the National Bureau of Economic Research is the official arbiter of when one begins and ends.
According to the NBER, a recession involves “a significant decline in economic activity that is spread across the economy and lasts more than a few months.” It also looks at a range of indicators, including personal income, employment, consumer spending, sales, and industrial production.
Zandi said payroll employment data is by far the most important data point, and declines for more than a month consecutively would signal a downturn. While employment hasn’t started falling yet, it’s barely grown since May, he added.
Payrolls expanded by just 73,000 last month, well below forecasts for about 100,000. Meanwhile, May’s tally was revised down from 144,000 to 19,000, and June’s total was slashed from 147,000 to just 14,000, meaning the average gain over the past three months is now only 35,000.
Because recent revisions have been consistently much lower, Zandi said he wouldn’t be surprised if subsequent revisions show that employment is already declining.
“Also telling is that employment is declining in many industries. In the past, if more than half the ≈400 industries in the payroll survey were shedding jobs, we were in a recession,” he added. “In July, over 53% of industries were cutting jobs, and only healthcare was adding meaningfully to payrolls.”
Last week, Zandi said data often sees big revisions when the economy is at an inflection point, like a recession. And on Wednesday, Federal Reserve Governor Lisa Cook similarly noted that large revisions are “typical of turning points” in the economy.
For now, the Atlanta Fed’s GDP tracker points to continued growth, and the third-quarter forecast even edged up to 2.5% from 2.1% last week, though that’s still a slowdown from 3% in the second quarter.
There are also no signs of mass layoffs as weekly jobless claims haven’t spiked, and the unemployment rate has barely changed, bouncing in a tight range between 4% and 4.2% for more than a year.
But Zandi said the jobless rate will be a “particularly poor barometer of recession” as the recent decrease in the number of foreign-born workers has kept the labor force flat.
“Also note that a recession is defined by a persistent decline in jobs — the decline lasts for at least a few months. We aren’t there yet, and we are thus not in recession,” he explained. “Things could still turn around if the economic policies weighing on the economy soon lift. But that looks increasingly unlikely.”
Wall Street is divided on what the jobs data are saying, with some analysts attributing the slowdown to weak labor demand while others blame weak labor supply amid President Donald Trump’s immigration crackdown.
Bank of America falls into the supply camp and said “markets are conflating recession with stagflation.” But UBS warned of weak demand, pointing out the average workweek is below 2019 levels, and said the labor market is showing signs of “stall speed.”
Last week, economists at JPMorgan also sounded the alarm on a potential downturn. They noted that jobs data show hiring in the private sector has cooled to an average of just 52,000 in the last three months, with sectors outside health and education stalling.
Coupled with the lack of any signs that unwanted separations are surging due to immigration policy, this is a strong signal that business demand for labor has cooled, they said.
“We have consistently emphasized that a slide in labor demand of this magnitude is a recession warning signal,” JPMorgan added. “Firms normally maintain hiring gains through growth downshifts they perceive as transitory. In episodes when labor demand slides with a growth downshift, it is often a precursor to retrenchment.”
More than 70 million Americans sweated through the muggiest first two months of summer on record as climate change has noticeably dialed up the Eastern United States’ humidity in recent decades, an Associated Press data analysis shows.
And that meant uncomfortably warm and potentially dangerous nights in many cities the last several weeks, the National Weather Service said.
Parts of 27 states and Washington, D.C., had a record amount of days that meteorologists call uncomfortable — with average daily dew points of 65 degrees Fahrenheit or higher — in June and July, according to data derived from the Copernicus Climate Service.
And that’s just the daily average. In much of the East, the mugginess kept rising to near tropical levels for a few humid hours. Philadelphia had 29 days, Washington had 27 days and Baltimore had 24 days where the highest dew point simmered to at least 75 degrees, which even the the weather service office in Tampa calls oppressive, according to weather service data.
Dew point is a measure of moisture in the air expressed in degrees that many meteorologists call the most accurate way to describe humidity. The summer of 2025 so far has had dew points that average at least 6 degrees higher than the 1951-2020 normals in Washington, Baltimore, Pittsburgh, Richmond, Columbus and St. Louis, the AP calculations show. The average June and July humidity for the entire country east of the Rockies rose to more than 66 degrees, higher than any year since measurements started in 1950.
“This has been a very muggy summer. The humid heat has been way up,” said Bernadette Woods Placky, chief meteorologist at Climate Central.
Twice this summer climate scientist and humidity expert Cameron Lee of Kent State University measured dew points of about 82 degrees at his home weather station in Ohio. That’s off the various charts that the weather service uses to describe what dew points feel like.
“There are parts of the United States that are experiencing not only greater average humidity, especially in the spring and summer, but also more extreme humid days,” Lee said. He said super sticky days are now stretching out over more days and more land.
High humidity doesn’t allow the air to cool at night as much as it usually does, and the stickiness contributed to multiple nighttime temperature records from the Ohio Valley through the Mid-Atlantic and up and down coastal states, said Zack Taylor, forecast operations chief at the National Weather Service’s Weather Prediction Center. Raleigh, Charlotte, Nashville, Virginia Beach, Va., and Wilmington, N.C., all reached records for the hottest overnight lows. New York City, Columbus, Atlanta, Richmond, Knoxville, Tennessee and Concord, New Hampshire came close, he said.
“What really impacts the body is that nighttime temperature,” Taylor said. “So if there’s no cooling at night or if there’s a lack of cooling it doesn’t allow your body to cool off and recover from what was probably a really hot afternoon. And so when you start seeing that over several days, that can really wear out the body, especially of course if you don’t have access to cooling centers or air conditioning.”
An extra hot and rainy summer weather pattern is combining with climate change from the burning of coal, oil and natural gas, Woods Placky said.
The area east of the Rockies has on average gained about 2.5 degrees in summer dew point since 1950, the AP analysis of Copernicus data shows. In the 1950s, 1960s, 1970s, 1980s and part of the 1990s, the eastern half of the country had an average dew point in the low 60s, what the weather service calls noticeable but OK. In four of the last six years that number has been near and even over the uncomfortable line of 65.
“It’s huge,” Lee said of the 75-year trend. “This is showing a massive increase over a relatively short period of time.”
That seemingly small increase in average dew points really means the worst ultra-sticky days that used to happen once a year, now happen several times a summer, which is what affects people, Lee said.
Higher humidity and heat feed on each other. A basic law of physics is that the atmosphere holds an extra 4% more water for every degree Fahrenheit (7% for every degree Celsius) warmer it gets, meteorologists said.
For most of the summer, the Midwest and East were stuck under either incredibly hot high pressure systems, which boosted temperatures, or getting heavy and persistent rain in amounts much higher than average, Taylor said. What was mostly missing was the occasional cool front that pushes out the most oppressive heat and humidity. That finally came in August and brought relief, he said.
Humidity varies by region. The West is much drier. The South gets more 65-degree dew points in the summer than the North. But that’s changing.
University of Georgia meteorology professor Marshall Shepherd said uncomfortable humidity is moving further north, into places where people are less used to it.
Summers now, he said, “are not your grandparents’ summers.”
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Borenstein reported from Washington and Wildeman reported from Hartford, Connecticut.
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What is August really about? Owen Lamont, Senior Vice President and Portfolio Manager at Acadian Asset Management, suggests that for normal people, it’s about relaxing on the beach, but for financial markets, it’s “panic season.”
Lamont, who is a leading economist at the $150 billion quantitative hedge fund and has been a faculty member at Harvard University, Yale School of Management, University of Chicago Graduate School of Business, and Princeton University, looked back at financial history, and found a startling pattern. “Even if systematic equities aren’t your thing,” he wrote on his Acadian blog, Owenomics, “you need to be mentally prepared for an epic financial disaster over the coming three months.”
His research draws a direct line between the timing of many of the most devastating financial crises and a centuries-old pattern: market crashes tend to cluster during the so-called “harvest time,” spanning August to October.
The historical pattern
“For grizzled practitioners of systematic equity strategies,” Lamont writes, “August is the cruelest month.” He cast his mind back to the “quant quake” of August 2007, writing that analysts ever since have spent August “compulsively checking our phones and having nightmares about screens full of glowing red numbers.”
When reached for comment by Fortune Intelligence, Lamont said he was calling from the same house in Maine where he was summering during the quant crash of 2007. Every year around this time, he added, that panic is “certainly on my mind,” as it is for any quant equities managers who is over 50 years old.
Although overshadowed by the onset of the Great Financial Crisis in September 2008, Lamont writes that the quant crash was a classic fit, occurring during a sleepy time in markets when liquidity is thin because so many traders are away from their desks. Lamont cites modern research showing that August and September are periods of unusually low trading liquidity, as investors and market makers take summer vacations in the Northern Hemisphere. Lower market liquidity means less capacity to absorb big, sudden trades—a recipe for outsized volatility if a crisis does erupt.
Looking at the past 50 years, Lamont underscores the fact that most major U.S. market crises have struck between August and October, when thinner markets amplified shocks. Among the historic market meltdowns during these months were two in September—1998’s collapse of Long-Term Capital Management and 2008’s Lehman Brothers bankruptcy—and two in October—1987’s Black Monday stock market crash and 1997’s Asian financial crisis. But going back to the founding of the United States itself, he sees a similar pattern.
The deep roots of harvest time
Lamont that America’s first bubble, “Scriptomania,” occurred in July/August 1791, and the Panics of 1857 and 1873 occurred in August and September, respectively. Then the Panic of 1907 followed in October.
The culprit is clear to Lamont: summer vacation. But, in a chicken-or-the-egg discussion, he argues that America’s agricultural economy created the need for time off in the summer, as that was when harvests occurred and money needed to flow from the big East Coast cities and into the Western agricultural regions.
Lamont cited Oliver Mitchell Wentworth Sprague‘s diagnoses of “panic season” in 1910’s History of crises under the national banking system: “With few exceptions all our crises, panics, and periods of less severe monetary stringency, have occurred in the autumn, when the western banks, through the sale of the cereal crops, were in a position to withdraw large sums of money from the East.” The pattern was spotted as far back as 1884 by English economist William Stanley Jevons. The creation of the U.S. Federal Reserve system itself was in part a reaction to such panics, Lamont adds, citing a 1986 American Economic Review article by Jeffrey Miron.
“If you do the rough math, there’s a 10% chance of an epic disaster between August and October this year, and just a 2% chance from November through the following July,” Lamont writes, cautioning investors to “be mentally prepared” for outsized risk in the coming quarter.
Lamont told Fortune Intelligence that he’s not particularly worried about the coming panic season compared to any other. A market crash is still a “rare event,” he said, adding that he’s not aware of any particularly levered players in the market that could spark a crash. But then again, he added, he wasn’t aware of any in August 2007 when the quant crash happened.
Remote harvest time?
Lamont agreed with Fortune‘s comparison of the harvest/panic season thesis to “flash crashes,” which often occur overnight, after trading in America ends and before it starts in Asia. He said that’s a bit of an extreme vacation of an illiquid market, “like what would happen if everyone went asleep.” He reiterated his belief that “weird stuff happens” in illiquid markets. Then he got philosophical about how economics require all of us to have some kind of appetite for weirdness.
What about Europe, which traditionally takes much longer vacations in August, sometimes the whole month, compared to Americans and their much more reserved time-off policy? Lamont agreed, but noted that with America as the world’s global financial center, with a much larger market, the impact of thinner liquidity is felt more strongly. He noted that other academics have covered seasonalities in other countries, such as Australia, where it seems to be the opposite case, or the impact of seasonal affect disorder on trading in northern countries.
Ultimately, he told Fortune, the benefits of the current system outweigh the risks. The “traditional, heavy-handed approach,” he said, would be to shut the market down, calling off trading in August altogether.
Lamont told Fortune of his upbringing in the two schools of economics that revolve around heavy regulation and libertarianism, with the East Coast “saltwater” tradition he learned at MIT was a major influence on him before he spent eight years on faculty at the libertarian “freshwater” school, the University of Chicago. “A basic principle of economics is you should let people trade,” he said, before adding that he also believes in behavioral finance, which holds that “people mess and markets make mistakes.” He believes that governments make mistakes, too, he added.
The whole issue may be resolved over time by the rise of remote work, he added. “One theory would be that because nowadays we can all work remotely, vacations are less impactful on [trading] volume,” he said. Lamont said he was working remotely from his Maine house at the time, the week before his planned August vacation in the same location.
For now, he added, we are trapped in the paradox of tradition that began with our agricultural economy. People take vacation in August because that’s when people take vacation. “Especially with family gatherings,” he said, “you want to be on vacation the same time your relatives are on vacation.” How’s that for behavioral finance.
For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.
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