Foreign investor holdings of Treasuries climbed to a record high in June, showcasing sustained overseas demand for US government debt even as a slump in the dollar stoked concerns about sentiment toward American assets.
Foreign holdings totaled $9.13 trillion for June, up $80.2 billion from May, Treasury Department figures showed Friday. For the first half of the year, foreign holdings went up by $508.1 billion. That was during a period in which one benchmark gauge of the dollar tumbled by almost 11%, the most since 1973.
Britain and Belgium saw the biggest gains in holdings, while India — currently embroiled in a trade battle with the Trump administration — and Ireland posted declines. China’s stockpile was little changed. Holdings are affected by net sales or purchases along with shifts in valuation. The Bloomberg US Treasury index advanced in June, after a selloff the previous month.
Japan, the biggest holder of Treasuries, saw a $12.6 billion rise in its holdings, to $1.15 trillion, while China’s stockpile — now the third larges, behind the UK — ticked up $100 million $756.4 billion. Belgium, whose holdings include Chinese custodial accounts according to market analysts, saw its stockpile go up by $17.9 billion, to $433.4 billion.
Britain’s holdings jumped by $48.7 billion, the most since March 2023, to $858.1 billion.
India’s total dropped by $7.9 billion, to $227.4 billion.
Overseas holdings of Treasuries have been in focus against a backdrop of concern about foreign demand after President Donald Trump slapped tariff increases on the rest of the world. Foreign funds and governments hold over 30% of US Treasuries outstanding.
In 1981, the year Airbus SE announced it would build a new single-aisle jetliner to take on Boeing Co., the 737 ruled the roost.
The US-made narrowbody, already in use for more than a decade, had reshaped the airline industry by making shorter routes cheaper and more profitable to operate. By 1988, when Airbus began producing its upstart A320, Boeing had built a formidable lead by delivering some 1,500 of its cigar-shaped best-seller.
It’s taken the better part of four decades, but Airbus has finally caught up: The A320 series is poised to overtake its US competitor as the most-delivered commercial airliner in history, according to aviation consultancy Cirium. As of early August, Airbus had winnowed the gap to just 20 units, with 12,155 lifetime A320-family shipments, according to the data. That difference is likely to disappear as soon as next month.
“Did anyone back then expect it could become number one – and on such high production volumes?” Max Kingsley-Jones, head of advisory at Cirium Ascend, wrote of the A320 in a recent social-media post. “I certainly didn’t, and nor probably did Airbus.”
The A320’s success mirrors the European planemaker’s decades-long rise from fledgling planemaker to serious contender, and finally Boeing’s better. By the early 2000s, annual deliveries of the A320 and its derivatives had surpassed the 737 family; total orders eclipsed the Boeing jet in 2019. But the 737 stubbornly remained the most-delivered commercial aircraft of all time.
At the outset, Airbus faced an uphill battle. The European planemaker, an assemblage of aerospace manufacturers formed in 1970 with backing from European governments, didn’t yet offer a full aircraft lineup. Infighting hindered everything from product planning to manufacturing, and leadership decisions had to finely balance French and German commercial and political interests.
Yet it was clear even then that Airbus needed a presence in the narrowbody segment to firmly establish itself as Boeing’s top rival. Those aircraft are by far the most widely flown category in commercial aviation, typically connecting city pairs on shorter routes.
Higher fuel costs and the deregulation of the US aviation industry in the late 1970s had given the European planemaker an opening with American airline executives, who clamored for an all-new single-aisle, according to a history of Airbus written by journalist Nicola Clark.
To set the A320 apart, Airbus took some risks. It selected digital fly-by-wire controls that saved weight over traditional hydraulic systems, and gave pilots a side-stick at their right or left hand instead of a centrally mounted yoke. The aircraft also sat higher off the ground than the 737 and came with a choice of two engines, giving customers greater flexibility.
Airbus’s gamble paid off. Today, the A320 and 737 make up nearly half of the global passenger jet fleet in service. And the A320’s success contrasts with strategic blunders like the A380 behemoth that proved short-lived because airlines couldn’t profitably operate the giant plane. Boeing maintained that smaller, nimbler planes like the 787 Dreamliner would have an edge — a prediction that proved right.
Yet the longtime dominance of the two narrowbody aircraft raises questions about the vitality of a duopoly system that favors stability over innovation. Both airplane makers have repeatedly opted for incremental changes that squeeze efficiencies out of their top-selling models, rather than going the more expensive route of designing a replacement aircraft from scratch.
Airbus was first to introduce new engines to its A320, turning the neo variant into a huge hit with airlines seeking to cut their fuel bill. Under pressure, Boeing followed, but its approach proved calamitous. The US planemaker came up with the 737 Max, strapping more powerful engines onto the aircraft’s aging, low-slung frame.
It installed an automated flight-stabilizing feature called MCAS to help manage the higher thrust and balance out the plane. Regulators later found MCAS contributed to two deadly 737 Max crashes that led to a global grounding of the jet for 20 months, starting in 2019.
More recently, Airbus has been bedeviled by issues with the fuel-efficient engines that power the A320neo. High-tech coatings that allow its Pratt & Whitney geared turbofans to run at hotter temperatures have shown flaws, forcing airline customers to send aircraft in for extra maintenance, backing up repair shops and grounding hundreds of jets waiting for inspection and repair.
With both narrowbody families near the end of their evolutionary timeline, analysts and investors have begun asking about what’s next. China, for its part, is seeking to muscle into the market with its Comac C919 model that’s begun operating in the country, but hasn’t so far been certified to fly in Europe or the US.
Boeing Chief Executive Officer Kelly Ortberg said in July that the company is working internally toward a next-generation plane, but is waiting for engine technology and other factors to fall into place, including restoring cash flow after years of setbacks.
“That’s not today and probably not tomorrow,” he said on a July 29 call.
Airbus’s healthier finances give it more flexibility to explore design leaps. CEO Guillaume Faury toyed with rolling out a hydrogen-powered aircraft — potentially with a radical “flying wing” design — in the mid-2030s but has since pushed back the effort to focus on a conventional A320 successor.
The Toulouse, France-based company is considering an open-rotor engine that would save fuel through its architecture rather than the current jet turbines that push the limits of physics to eke out gains.
Speaking at the Paris Air Show in June, Faury called the A320 “quite an old platform” and affirmed plans to launch a successor by the end of this decade, with service entry in the mid-2030s.
“I have a lot of focus on preparing that next-generation of single aisle,” Faury said. “We are very steady and very committed to this.”
Current and former OpenAI employees plan to sell approximately $6 billion worth of shares to an investor group that includes Thrive Capital, SoftBank Group Corp. and Dragoneer Investment Group, in a deal that values the ChatGPT maker at $500 billion, according to people familiar with the matter.
The talks are early and the size of the share sale could still change, said the people, who asked not to be identified discussing private information. The secondary share investment is on top of SoftBank’s commitment to lead OpenAI’s $40 billion funding round, which values the company at $300 billion, according to another person familiar with the deal. That round remains ongoing, with OpenAI recently securing $8.3 billion from a syndicate of investors.
Representatives for Dragoneer and Thrive didn’t respond to requests for comment. Spokespeople for OpenAI and SoftBank declined to comment. All three firms are existing OpenAI backers.
The secondary share sale, which was first reported by Bloomberg, will give OpenAI employees a chance to get cash-rich amid a high-stakes talent war in the artificial intelligence industry. Companies like Meta Platforms Inc. are offering massive salaries to recruit AI talent from OpenAI and other startups. This year, several OpenAI employees have exited for Meta, including Shengjia Zhao, a co-creator of ChatGPT.
Allowing employees to sell shares is an important tool for startups trying to retain top talent, without requiring the company to go public or be acquired. In some cases, early investors also use these deals to sell down their stakes, though OpenAI investors are not eligible to do so in this round, according to a person familiar with the matter. Current and former employees who spent at least two years at the company are able to participate.
With its participation in the share sale, as well as its previous commitments, SoftBank is making a pivotal bet on the success of OpenAI. In addition to those deals, the Japanese conglomerate headed by Masayoshi Son recently closed a separate $1 billion purchase of OpenAI employee shares at a $300 billion valuation, according to a person familiar with the matter. Negotiations for that deal started before talks around the $500 billion secondary valuation began, they said.
The $500 billion valuation would make OpenAI the world’s most valuable startup, surpassing Elon Musk’s SpaceX. The company expects revenue to triple this year to $12.7 billion, up from $3.7 billion in 2024, Bloomberg has reported. And the secondary deal talks come on the heels of the release of its highly-anticipated GPT-5 model.
This week, OpenAI chief Sam Altman sat down with a group of reporters and shared his vision for the company, including that it wants to spend trillions of dollars on the infrastructure required to run AI services in the “not very distant future.”
“You should expect a bunch of economists to wring their hands and say, ‘This is so crazy, it’s so reckless,’ and whatever,” Altman said. “And we’ll just be like, ‘You know what? Let us do our thing.’”
Michael Saylor has built a career on testing how far conviction can bend markets—part financier, part preacher. Now the Strategy Inc. chairman is betting that same belief on what may be his riskiest financing experiment yet.
Over the years, Saylor has urged followers to pour their savings into Bitcoin, mortgage their homes, even “sell a kidney.” To admirers, he’s a prophet with a balance sheet; to skeptics, a showman with an obsession. Either way, he’s turned a once-obscure software company into the world’s largest corporate holder of Bitcoin, playing the markets with a conviction most executives would never dare.
Now, Saylor is asking for a different kind of leap of faith: embracing an unorthodox financing instrument— perpetual preferred stock—to shift away from common stock sales and convertible bonds that helped build a $75 billion Bitcoin war chest. The twist: these securities never mature and some can skip dividend payments, making them flexible for the issuer but unnerving for investors.
Branded “Stretch,” the latest issuance pays dividends with a variable rate and offers no voting rights. This kind of security is neither debt nor common equity, but Saylor hopes it combines advantages of both, giving him fresh cash to keep buying Bitcoin without heavily diluting shareholders. Over the next four years, he plans to retire billions in convertible notes, curtail common stock sales, and issue more preferred offerings as his main funding source.
The gamble is audacious: to create, as the firm puts it, a “BTC Credit Model,” where a volatile asset underpins a stream of income securities. If there’s big demand, he speculates it could even raise “$100 billion… even $200 billion” in theory. If not, Strategy, as MicroStrategy now calls itself, could be left juggling payouts with no buyers. Selling Bitcoin is a near-taboo, given Saylor’s ‘hold on for dear life’ gospel that coins are sacred. Supporters see the preferreds as a clever way to keep crypto buying; critics warn that the payouts are costly and could become a burden if Bitcoin’s price turns.
So far this year, the company has raised around $6 billion across four perpetual preferred offerings. The latest, a $2.5 billion “Stretch” tranche, ranked among the largest crypto capital raises this year, eclipsing Circle’s high-profile IPO. Nearly a quarter of the sale went to retail buyers, per a firm presentation, cementing Saylor’s devoted following as a key funding source.
“I have no past knowledge of any company doing this the way that MicroStrategy has just to capitalize on the retail fervor,” said Michael Youngworth, head of global convertibles and preferred strategy at Bank of America.
That retail tilt stands out in the corporate preferred market, dominated by investment-grade utilities and banks. Strategy is unrated, making its preferreds junior in the structure and outside the comfort zone of many fixed-income investors. If retail appetite fades, Saylor would need to win over insurers and pensions—the buyers he says he hopes to attract—or risk falling short of his blockbuster-fundraising ambitions.
Since the start of 2024, Saylor has raised over $40 billion through a mix of stock and bonds—$27 billion from common equity sales, $13.8 billion from fixed-income securities—transforming Strategy into a Bitcoin proxy for Wall Street. Part of the pivot is practical: the convertibles market excludes retail.
Strategy CEO Phong Le framed the shift as a way to build a more resilient capital structure—a contrast to 2022’s “crypto winter,” when the company was burdened by a Bitcoin-backed loan from Silvergate and other debt. “Over time, we may not have convertible notes,” he said, “we will be relying on perpetual preferred notes that don’t ever come due.”
Yet the plan depends on paying large, ongoing dividends in perpetuity, using an asset—Bitcoin—that produces no income and has historically lost half its value in months. If Bitcoin prices fall and investors lose interest, the company could be stuck with big bills and no easy way to raise fresh cash.
Perpetual preferreds don’t mature, and in some cases, dividends can be deferred without triggering default. Under current terms, Strategy can pay some obligations in cash or shares and certain payouts are non-cumulative, meaning missed payments don’t have to be made up. For now, payouts are financed largely by selling common stock through its at-the-market program—a stream Saylor has vowed to slow, but not shut off entirely. Still, the company has said it could sell shares even below its typical 2.5 net asset-value threshold, if needed to cover debt interest or preferred dividends.
Perpetual preferreds never have to be repaid, unlike convertibles, which either dilute shareholders if they convert or must be repaid in cash if they don’t. That matters because one of Strategy’s quietest advantages has been its ability to sell stock at prices well above the value of its Bitcoin holdings. It’s a gap Saylor himself dubbed the “mNAV premium” – a multiple of net asset value, helping Saylor raise cash and buy Bitcoin at a discount.
“With their mNAV premium compressing in recent weeks, I think management is rightfully concerned about creating too much dilution,” said Brian Dobson, managing director for disruptive technology equity research at Clear Street.
Still, the funding model brings its own hazards. “These are high-yielding instruments,” said Youngworth. “Paying coupons of 8% to 10% in perpetuity could be quite challenging.” Liquidity, a concern for any company with little operating revenue beyond security sales, could tighten sharply in a Bitcoin downturn.
To short seller Jim Chanos, the non-cumulative variety of preferreds are “crazy” for institutions to buy — perpetual, non-redeemable, with dividends paid only at the issuer’s discretion. “If I don’t pay the dividends, they are not cumulative. I don’t have to pay them back,” he told Bloomberg TV in June. Chanos says Strategy’s effective leverage has plateaued and sees the preferred push as another way to juice it. He’s suggested shorting the stock while long Bitcoin, betting the premium will collapse.
In Strategy’s capital structure, these units sit above common stock but are subordinate to convertible bonds, lacking the protections of regular debt. Wall Street managers have tended to favor those convertible bonds, which are easier to hedge through market-neutral trades. The preferreds are typically harder to hedge, and retiring convertibles would remove a popular arbitrage vehicle.
The whole approach works only if Bitcoin stays valuable and investor confidence holds. If he’s right, Bitcoin could inch closer to being treated as mainstream financial collateral. If he’s wrong, his balance sheet will be a cautionary tale: what happens when you try to turn a volatile asset into an income stream—and the market stops believing.
Still, the danger may come from the broader market as digital-asset treasury companies pile on risk.
“I think there are some indications of a bubble in crypto treasury companies,” said Yuliya Guseva, who directs Rutgers Law School’s blockchain and fintech program. “If the market appetite dries up, then the model will no longer persist.”
Audi must secure jobs and production in Germany before building a factory in the US over President Donald Trump’s tariffs, the carmaker’s top labor official said.
The Volkswagen AG-owned brand is reviewing several options for setting up its own manufacturing hub in the US, where VW already operates one plant and is building another for the Scout nameplate. Audi’s labor leaders are willing to back an expansion in the country only if management gives long-term guarantees for jobs and output at home, said Jörg Schlagbauer, the company’s works council chief.
“We are not refusing to discuss the matter, but for capacity reasons we do not see any need to build a plant in the US at present,” Schlagbauer, who also is Audi’s deputy board chairman, told Bloomberg in emailed comments. “If we need a plant in the US for political reasons, it cannot be at the expense of employees and capacity utilization in Germany.”
Trump’s trade moves and his push to curtail support for EVs are hitting Volkswagen’s premium brands at a difficult time. While Audi and Porsche AG are under pressure to move production to the US because they lack plants there, lower demand in China and muted sales in Europe mean their factories at home are running below capacity, and labor leaders are wary about giving up more output.
Audi reached an agreement with employee representatives in March to cut 7,500 German positions by 2029 via buyouts and early retirement — in exchange for extending job security guarantees for remaining workers until 2033. The company is in the process of informing employees about the offers, though so far “no significant staff reductions” have taken place, a labor spokesperson said.
The Volkswagen AG-owned brand is reviewing several options for setting up its own manufacturing hub in the US, where VW already operates one plant and is building another for the Scout nameplate.
Terraform Labs Pte. co-founder Do Kwon pleaded guilty to charges in a US fraud prosecution tied to the $40 billion collapse of the TerraUSD stablecoin in 2022.
Kwon pleaded guilty to conspiracy and wire fraud under an agreement with prosecutors at a hearing in New York on Tuesday. The 33-year-old, dressed in a yellow prison jumpsuit, also agreed to forfeit $19.3 million and some properties as part of the plea deal.
“I knowingly agreed with others to defraud, and did in fact defraud, purchasers of cryptocurrencies issued by my company, Terraform Labs,” Kwon said, reading from a statement. “What I did was wrong and I want to apologize for my conduct. I take full responsibility.”
Kwon was charged in both South Korea and the U.S. in connection with the implosion of Singapore-based Terraform’s TerraUSD, which shook the crypto world in the spring of 2022 and helped trigger the meltdown of cryptocurrency exchange FTX.
The guilty plea averts a trial set for next year before U.S. District Judge Paul Engelmayer.
He was charged in 2023 and was extradited to the U.S. in January, after spending almost two years in Montenegro, where he’d been arrested and convicted of using a phony passport while a fugitive from charges in his native South Korea.
U.S. prosecutors said the longest sentence they will seek under the plea deal is 12 years. The maximum U.S. sentences are five years for the conspiracy count and 20 years for the wire fraud charge.
Sentencing is scheduled for Dec. 11. He had faced nine charges under the indictment.
After he serves half of his sentence, the U.S. will support Kwon spending the remainder of his prison term in South Korea, if he abides by the terms of his plea deal and qualifies under transfer program.
Kwon had been a fugitive from the South Korean charges for months when he and Terraform’s former chief financial officer were caught with fake passports in March 2023 trying to board a Dubai-bound private jet at the airport in Montenegro’s capital, Podgorica.
SEC Case
Terraform and Kwon, who owned 92% of the company, were found liable for civil fraud in a 2024 suit by the U.S. Securities and Exchange Commission. A jury in New York, at the end of a two-week trial, determined that Kwon and Terraform misled investors—a dismal sign for the former crypto mogul’s chances of beating criminal charges.
The jury found that Terraform and Kwon falsely claimed that Chai, a popular Korean payment application, was using Terraform’s blockchain technology to make transactions. The jurors also found investors were misled about the stability of the stablecoin, which Kwon and Terraform claimed was algorithmically pegged to the US dollar.
Terraform and Kwon later agreed to pay $4.47 billion and to wind down the firm, in a deal to resolve the case.
The case is US v. Kwon, 23-cr-0151, US District Court, Southern District of New York (Manhattan).
President Donald Trump said members of his Cabinet would continue discussions with Lip-Bu Tan in the coming days after meeting with the Intel Corp. chief executive officer at the White House on Monday.
“The meeting was a very interesting one,” Trump said in a social media post. “His success and rise is an amazing story. Mr. Tan and my Cabinet members are going to spend time together, and bring suggestions to me during the next week.” Intel didn’t immediately respond to a request for comment on Tan’s meeting with Trump.
The warm remarks were a stark reversal from just four days earlier, when Trump called for Tan’s resignation and accused him of having conflicts of interest.
Trump last week wrote in a post on Truth Social that Tan should step down as chief of the American chipmaker, describing him as “highly CONFLICTED.”
The post came after Republican Senator Tom Cotton asked the chairman of Intel’s board to answer questions about Tan’s ties to China, including investments in the country’s semiconductor companies and others with connections to its military.
Tan has said he has the full backing of the company’s board and had reached out to the White House to clear up what he called “misinformation” about his track record.
The chipmaker’s shares jumped more than 2% in extended trading following Trump’s post on Monday. The stock declined 3.1% on Aug. 7, the day of the president’s initial remarks.
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.
Palantir Technologies Inc.’s meteoric rise is pushing the company’s valuation further into record territory, forcing bullish investors to bank on increasingly robust future growth to justify its current level.
Shares of the defense maker closed at another all-time high Friday, bringing gains since its 2021 debut to near 2,500%. The stock is up almost 150% this year, a rally underpinned by the company’s growing use of artificial intelligence, business ties to the US government and most recently, a stellarearnings report.
That surge has made Palantir eye-wateringly expensive compared to its peers: trading at 245 times forward earnings, it is the most richly-valued company in the S&P 500 Index. By comparison, chipmaker Nvidia Corp., another big gainer, trades at just 35 times forward earnings.
Palantir is “turning into a bit of a difficult valuation story to sell, but it’s a great company,” said Mark Giarelli of Morningstar Investment Service, who has sell-equivalent rating on the stock. The valuation “causes heartburn, but that’s the story right now.”
Plenty of Wall Street pros and retail investors alike are happy to hang on for now, wary of missing out on further upside. Still, it’s getting hard for them to ignore the increasingly high bar Palantir must meet to justify its performance over the longer term. Damian Reimertz of Bloomberg Intelligence estimates the company would need to generate $60 billion over the next 12 months to trade at a comparable valuation to its peers.
That calculation — based on a comparison of the software companies’ enterprise value-to-sales ratio — is many times higher than the $4 billion in revenues Wall Street expects Palantir to earn in fiscal 2025 or the $5.7 billion analysts forecast for next year.
Valuation is also a sticking point for Gil Luria, managing director and head of technology research at DA Davidson & Co. Luria praised Palantir’s quarterly results and called it “the best story in all of software” in a recent note.
But he estimates that the company would have to grow at 50% annually for the next five years and maintain a 50% margin in order to get its forward price to earnings ratio down to 30, in line with the likes of Microsoft Corp. and Advanced Micro Devices Inc. Palantir’s adjusted earnings per share are expected to grow at a 56% rate this year, falling to 31% and 33% in the next two years, respectively.
In a broader sign of Wall Street’s unease, more than twice as many analysts assign the stock sell or hold ratings than buy, according to data compiled by Bloomberg. Still, Palantir’s shares have become a must-own for portfolio managers concerned with beating performance benchmarks, said David Wagner of Aptus Capital Advisors, which holds shares of the company.
“There’s a lot of investors that just can’t ignore it,” said Wagner. “They don’t believe in the stock, but they’re tired of it just hurting them on a relative performance standpoint.”
‘Squint Your Eyes’
Palantir bulls are betting that the company’s business performance will support its stock price over the long term, a path taken by many of today’s Big Tech elite. Online streamer Netflix Inc., for instance, traded north of 280 times forward earnings at a 2015 peak, and now stands at a forward P/E of 40.
“Definitely Palantir is part of that AI craze, but not everything that goes to a valuation of 200 is a bubble,” said Que Nguyen, chief investment officer of equity strategies at Research Affiliates, referring to Netflix.
Brent Bracelin at Piper Sandler boosted his price target on shares to $182 from $170 following earnings and maintained his overweight rating. He is counting on the company to continue growing aggressively and sustain high free cash flow margins through 2030, aided by a market for defense spending estimated at $1 trillion in the US alone.
“You have to squint your eyes. You kind of have to believe that these audacious growth goals can be achieved,” he said.
Of course, there are numerous examples of stock rallies that cooled when companies couldn’t meet Wall Street’s elevated expectations. Shares of Tesla Inc. are down nearly 20% this year, in part because the company’s results aren’t keeping pace with its lofty valuation of about 148 times forward earnings.
While Palantir aced its most recent earnings report, its high valuation could exacerbate a selloff if the company stumbles in the future, said Morningstar’s Giarelli.
“Palantir is trading at such a high multiple relative to everyone else that there’s just so much gravity underneath their stock chart,” he said. “There’s a lot of room below the stock chart for it to reprice in a negative way because it’s had such a stellar run.”
For Mark Malek, chief investment officer at Siebert Financial, valuations remain a concern. Still, Palantir’s potential for growth has kept him holding on to the stock.
“It’s uncomfortable to buy it at these levels, but we’re not afraid to buy when stocks are overvalued,” he said. “Where else are you finding 30% growth rates out there?”
Alex Karp, chief executive officer of Palantir Technologies, during the Allen & Co. Media and Technology Conference in Sun Valley, Idaho, on July 12, 2023.
US consumers probably experienced a slight pickup in underlying inflation in July as retailers gradually raised prices on a variety of items subject to higher import duties.
The core consumer price index, regarded as a measure of underlying inflation because it strips out volatile food and energy costs, rose 0.3% in July, according to the median projection in a Bloomberg survey of economists. In June, core CPI edged up 0.2% from the prior month.
While that would be the biggest gain since the start of the year, Americans — at least those who drive — are finding some offset at the gas pump. Cheaper gasoline probably helped limit the overall CPI to a 0.2% gain, the government’s report on Tuesday is expected to show.
Higher US tariffs have started to filter through to consumers in categories such as household furnishings and recreational goods. But a separate measure of core services inflation has so far remained tame. Still, many economists expect higher import duties to keep gradually feeding through.
That’s the dilemma for Federal Reserve officials who’ve kept interest rates unchanged this year in hopes of gaining clarity on whether tariffs will lead to sustained inflation. At the same time, the labor market — the other half of their dual policy mandate — is showing signs of losing momentum.
As concerns build about the durability of the job market, many companies are exploring ways to limit the tariff pass-through to price-sensitive consumers. Economists expect government figures on Friday to show a solid gain in July retail sales as incentives helped fuel vehicle purchases and Amazon’s Prime Day sale drew in online shoppers.
Excluding auto dealers, economists have penciled in a more moderate advance. And when adjusted for price changes, the retail sales figures will likely underscore an uninspiring consumer spending environment.
Among other economic data in the coming week, a Fed report is likely to show stagnant factory output as manufacturers contend with evolving tariffs policy.
A preliminary trade truce between the US and China is set to expire on Tuesday, but a move to extend the detente is still possible.
The Bank of Canada will release a summary of the deliberations that led it to hold its benchmark rate at 2.75% for a third consecutive meeting; it also left the door open to more cuts if the economy weakens and inflation is contained. Home sales data for July will reveal whether sales gains continued for a third straight month.
Elsewhere, several Chinese data releases, gross domestic product readings for the UK and Switzerland, and a possible rate cut in Australia are among the highlights.
Asia
Asia has a hectic data calendar, led by a wave of Chinese indicators, GDP reports from several economies, and a closely-watched rate decision in Australia. The week will see credit numbers from China, which will be assessed for signs that policymakers’ efforts to revive economic growth are beginning to bear fruit. Money supply data will offer a complementary signal on underlying liquidity conditions.
On Tuesday, the Reserve Bank of Australia is poised to lower policy rates for a third time this year after second-quarter inflation cooled further. A gauge of Australian business confidence due the same day will offer a timely read on sentiment heading into the second half. Wednesday brings Australia’s wages data, followed by the employment report on Thursday.
India reports CPI data on Tuesday, which will likely show prices cooled further in July from a year ago. Wholesale prices follow on Thursday, and will indicate whether cost pass-through remains muted.
Trade figures during the week will show how strong India’s external sector was before Trump imposed an additional 25% tariff on Indian goods over its ongoing purchases of Russian energy, taking the total import levy to 50%.
On Wednesday, Thailand’s central bank is expected to cut rates amid subdued price pressures and weak economic growth.
Thailand’s King Maha Vajiralongkorn has endorsed the appointment of Vitai Ratanakorn as the nation’s new central bank governor, capping a monthslong selection process that has been overshadowed by concerns over government attempts to erode the autonomy of the Bank of Thailand. Vitai is set to take office from Oct. 1, according to a Royal Gazette notification issued Sunday.
Also on Wednesday, New Zealand releases retail card spending data, South Korea publishes its unemployment rate for July, and Japan releases its producer price index — a gauge of wholesale inflation.
China’s big reveal comes on Friday, with a suite of July activity data including industrial production, retail sales, fixed asset investment, and jobless figures.
Also on Friday, Japan publishes preliminary estimates of second-quarter GDP, with forecasts suggesting the country likely avoided a recession.
Singapore, Malaysia, Taiwan and Hong Kong are among the other economies reporting GDP, providing a broader look at growth momentum and external balances across the region.
For more, read Bloomberg Economics’ full Week Ahead for Asia
Europe, Middle East, Africa
The UK will take prominence again with some key data reports. Following Thursday’s Bank of England rate cut, after which officials said they’re on “alert” for second-round effects from a spike in inflation, wage data will be released on Tuesday. Economists anticipate a slight slowdown in pay growth for private-sector workers.
Meanwhile, second-quarter GDP is expected to show economic momentum slowing sharply after a growth spurt at the start of the year, meshing with the BOE’s view that the economy has started to show more slack.
Much of continental Europe will be on holiday on Friday, and data may be sparse too. Germany’s ZEW index of investor sentiment comes on Tuesday. In the wider euro region, a second take of GDP, along with June industrial production, will be published on Thursday.
In Switzerland, still reeling from Trump’s imposition of a 39% tariff, initial data on Friday may reveal that the economy suddenly contracted in the second quarter, even before that trade shock hit. Investors will also be watching for any update on Bern and Washington inching toward a trade deal after all.
Norwegian inflation is set for Monday. Three days later, the central bank in Oslo is likely to keep its rate at 4.25% after its first post-pandemic cut in June surprised investors.
Recent data included weaker retail sales, rising unemployment and gloomier industrial sentiment, though price pressures have also appeared to be stickier. Most economists expect two more quarter-point cuts in Norway this year, in September and December.
Some monetary decisions are also due in Africa:
On Tuesday, Kenya’s central bank will probably adjust the key rate lower for a seventh straight time, from 9.75%, with inflation expected to remain below the 5% midpoint of its target range in the near term.
Uganda’s policymakers will probably leave their rate at 9.75% to gauge the impact of US tariffs on inflation and keep local debt and swaps attractive to investors.
On Wednesday, the Bank of Zambia may cut borrowing costs. Its real interest rate is the highest in six years, with the spread between the policy benchmark and the annual inflation rate at 1.5 percentage points in July after price growth eased.
Namibia may also lower its rate, to 6.5% from 6.75%, in a bid to boost the economy. Inflation there is near the floor of its 3% to 6% target range.
In Russia on Wednesday, analysts expect inflation to have fallen below 9% in July from 9.4% a month earlier.
Turkish central bank Governor Fatih Karahan will present the latest 2025 inflation outlook at a quarterly meeting on Thursday.
And finally, on Friday in Israel, inflation is expected to have eased to 3.1% in July from 3.3% a month earlier.
For more, read Bloomberg Economics’ full Week Ahead for EMEA
Latin America
Brazil’s central bank gets the week rolling with its Focus survey of market expectations. Analysts have been slowly trimming their consumer price forecasts, but all estimates remain well above the 3% target through the forecast horizon.
Data on Tuesday should show that Brazilian consumer prices for July ticked down ever so slightly from June’s 5.35% print, substantiating the central bank’s hawkish rate hold at 15% on July 30.
Chile’s central bank on Wednesday publishes the minutes of its July 29 meeting, at which policymakers delivered their first cut of 2025, voting unanimously for a quarter-point reduction, to 4.75%. The post-decision statement maintained guidance for more monetary easing in the coming quarters due to a weak labor market and slowing inflation.
Also due on Wednesday is Argentina’s July consumer prices report. Analysts surveyed by the central bank expect a slight uptick in the monthly reading from June’s 1.6%, with the year-on-year figure drifting lower from 39.4%.
Inflation in Peru’s megacity capital of Lima has been below the 2% midpoint of the central bank’s target range all year, but the early consensus expects the central bank to keep its key rate unchanged at 4.5% for a third straight meeting.
Colombia is all but certain to have posted an eighth straight quarter of growth in the three months through June.
The nation’s central bank, which in June highlighted that the economy had gained momentum, is forecasting a 2.7% rise in GDP this year and 2.9% in 2026, up from 1.7% in 2024.
The thing about trading stocks is everyone has an opinion. And right now there’s an unusual divergence in the market that’s as stark as man versus machine.
Computer-guided traders haven’t been this bullish on stocks compared to their human counterparts since early 2020, before the depths of the Covid pandemic, according to Parag Thatte, a strategist at Deutsche Bank AG.
The two groups look at different cues to form their opinions, so it’s not a shock that they see the market differently. While computer-driven fast-money quants use systematic strategies based on momentum and volatility signals, discretionary money managers are individuals looking at economic and earnings trends to guide their moves.
Still, this degree of disagreement is rare — and historically, it doesn’t last long, Thatte said.
“Discretionary investors are waiting for something to give, whether that’s slowing growth or a spike in inflation in the second half of the year from tariffs,” he said. “As the data trickles in, their concerns will either be proven right if the market sells off on growth fears, or the economy will remain resilient, in which case discretionary managers would likely begin to lift their stock exposure on economic optimism.”
Wall Street offers a lot of confident predictions, but the reality is nobody knows what will happen with President Donald Trump’s trade agenda or the Federal Reserve’s interest-rate policy.
With the S&P 500 Index hitting repeatedly hitting all-time highs, professional investors aren’t sticking around to find out. As of the week ended Aug. 1, they’d cut their equity exposure from neutral to modestly underweight on lingering uncertainty surrounding global trade, corporate earnings and economic growth, according to data compiled by Deutsche Bank.
“No one wants to buy pricier stocks already at records so some are praying for any selloff as an excuse to buy,” said Frank Monkam, head of macro trading at Buffalo Bayou Commodities.
Chasing Momentum
Trend-following algorithmic funds, however, are chasing that momentum. They’ve been lured into a buying spree after cut-to-the-bone positioning in the spring cleared the path to return in recent months as the S&P 500 rallied almost 30% from its April low. Through the week ended Aug. 1, long equity positions for systematic strategies were the highest since January 2020, Deutsche Bank’s data show.
This divergence underpins the tug-of-war between technical and fundamental forces, with the S&P 500 stuck in a tight range after posting its longest streak of tranquility in two years in July.
The Cboe Volatility Index — or VIX — which measures implied volatility of the benchmark US equity futures via out-of-the-money options, closed at 15.15 on Friday, near the lowest level since February. The VVIX, which measures the volatility of volatility, dropped for the third time in four weeks.
“The rubber band can only stretch so far before it snaps,” said Colton Loder, managing principal of the alternative investment firm Cohalo. “So the potential for a mean-reversion selloff is higher when there’s systematic crowding, like now.”
This kind of collective piling into a trade periodically happens with computer-driven strategies. In early 2023, for instance, quants loaded up on US stocks on the heels of the S&P 500’s 19% drop in 2022, until volatility spiked in March of that year during the regional banking tumult. And in late 2019, fast-money traders powered stocks to records after a breakthrough in trade talks between Washington and Beijing.
This time around, however, Thatte expects this split between man and machine to last weeks, not months. If discretionary traders start selling in response to weaker growth or softening corporate earnings trends, pushing volatility higher, computer-based strategies are likely to begin to unwind their positions as well, he said.
In addition, fast-money investors will likely reach full exposure to US equities by September, which could prompt them to sell stocks as they become vulnerable to downside market shocks, according to Scott Rubner of Citadel Securities.
CTA Risk
Given how systematic funds operate, selling may start with commodity trading advisors, or CTAs, unwinding extreme positioning, Loder said. That would increase the risk of sharp reversals in the stock market, although there would need to be a substantial selloff for a spike in volatility to last, he added.
CTAs, who have been persistent stock buyers, are long $50 billion of US stocks, putting them in the 92nd percentile of historical exposure, according to Goldman Sachs Group Inc. However, the S&P 500 would need to breach 6,100, a decline of roughly 4.5% from where the index closed on Friday, for CTAs to begin dumping stocks, said Maxwell Grinacoff, head of equity derivatives research at UBS Group AG.
So the question is, with quant positioning this stretched to the bullish side and pressure building in the stock market due to extreme levels of uncertainty, can any rally from here really last?
“Things are starting to feel toppy,” said Grinacoff, adding that the upside for stocks “is likely exhausted” in the short run given that CTA positioning is near max long. “This is a bit worrisome, but it’s not raising alarm bells yet.”
What’s more, any pullback from systematic selling would likely create an opportunity for discretionary asset managers who missed out on this year’s gains to re-enter the market as buyers, warding off a more severe plunge, according to Cohalo’s Loder.
“Whatever triggers the next drawdown is a mystery,” he said. “But when that eventually happens, asset-manager exposure and discretionary positioning is so light that it will add fuel to a ‘buy the dip’ mentality and prevent an even bigger selloff.”
Vinay Prasad, who was recently ousted as the top vaccine and gene therapy regulator at the US Food and Drug Administration, is returning to his role, the Department of Health and Human Services said Saturday.
Prasad is returning at the FDA’s request, HHS spokesperson Andrew Nixon said in a written statement. “Neither the White House nor HHS will allow the fake news media to distract from the critical work the FDA is carrying out under the Trump administration,” Nixon said.
Prasad will resume leadership of the Center for Biologics Evaluation and Research, Nixon said. It’s unclear whether he will also retake two other roles he held at the agency as chief science officer and chief medical officer.
Prasad abruptly departed the agency on July 29 after a conservative backlash in part over his handling of safety issues with Sarepta Therapeutics Inc.’s gene therapy. Laura Loomer, an ally of Donald Trump, had said he was not aligned with the president’s agenda and has aggressively lobbied against his return.
FDA Commissioner Marty Makary told reporters on Monday that he was trying to persuade Prasad to return to the agency.
Though Prasad was in his role for less than three months before his ouster, he managed to stir controversy at the agency. He demanded more studies of Covid vaccines, overruled his own scientific review staff and took a confrontational approach that gave critics fodder to claim he could stymie scientific innovation.
Prasad and Makary asked Sarepta last month to stop shipping Sarepta’s treatment for Duchenne muscular dystrophy, Elevidys, following three deaths that were linked to the company’s gene therapies. Sarepta initially refused, then relented, leading to an outcry that the agency had overstepped.
Shares in biotech firms soared on news of Prasad’s departure from the agency. His return was reported earlier by Endpoints News.
Wall Street economists disagree on what’s behind a sharp slowdown in US job growth, highlighting a divide that is central to the broader outlook for the economy.
Some argue the pullback in hiring mostly reflects a smaller supply of workers, thanks in part to President Donald Trump’s immigration crackdown. Others say the slowdown is largely due to a more concerning retrenchment in demand.
The distinction is critical. If difficulty finding workers is the main factor, weak hiring trends probably aren’t foreshadowing wider layoffs, and the Federal Reserve can keep interest rates high. But if hiring is mostly slowing because of waning demand for labor, that would call for the central bank to intervene.
“Whether what we’re seeing is all immigration effects or if it’s true demand effects is definitely the key question,” said Veronica Clark, an economist at Citigroup Inc. “There very likely are some immigration effects in the data, but details also suggest weaker demand unrelated to immigration, which seems to be getting worse.”
The latest jobs report from the Bureau of Labor Statistics, published on Aug. 1, shocked financial markets with weak hiring figures for July and steep downward revisions to the prior two months. It was such a surprise that Trump fired the head of BLS, accusing the agency, without evidence, of rigging the numbers to make him look bad.
Those adjustments brought the pace of payroll growth down to just 35,000 on average over the last three months, the slowest since 2020. While the unemployment rate edged up to 4.2% in July, matching the highest level since 2021, it’s still not much different than where it’s been over the past year.
Analysts spent an unusual amount of time over the following week continuing to dissect the report. The Trump administration’s dramatic changes in trade and immigration policy this year have made the job of reading the labor market much more challenging, just as those shifts have raised the stakes for continued economic expansion.
Read More: Autopsy of a Black Swan — July’s Payroll Revisions
The key question hinges on the impact of reduced immigration. Two days before the release of the report, Fed Chair Jerome Powell told reporters the Fed would discount a slowdown in hiring in the months ahead as long as the unemployment rate doesn’t rise.
The Fed chief even suggested the so-called breakeven rate — the number of jobs the US economy needs to add each month to keep the unemployment rate stable — could be as low as zero, given what’s happening with immigration.
Powell’s interpretation, and the jobs report itself, sorted Wall Street into two main camps. Many top economists — including those at Morgan Stanley, Barclays Plc and Bank of America Corp. — pointed to signs that the hiring slowdown was more about reduced labor supply, predicting that the Fed would wait to begin cutting rates until at least December.
Other economists — such as those at Goldman Sachs Group Inc., Citigroup Inc. and UBS Group AG — interpreted the rapid deterioration in hiring more as a sign of weak labor demand, which would push the Fed to commence with rate reductions at its next policy meeting in September.
“We see little contradiction between slow employment growth and a low unemployment rate when the effects of immigration controls are taken into account,” Morgan Stanley economists led by Michael Gapen wrote in an Aug. 1 report following the release of the figures. Still, given how quickly hiring appears to be slowing, “it would not take much for us to alter our views,” they said.
Both sides marshaled various data points to support their analysis. The problem is nothing amid the plethora of statistics contained in the jobs report itself can definitively answer the question one way or the other.
Immigration Policy
The report does include a breakdown of foreign and native-born workers based on a survey of households, and the numbers indicate the foreign-born workforce and population has fallen by about a million over the last three months — a number administration officials were quick to seize on in touting their immigration policy achievements.
“Since the president took office, he created about 2.5 million jobs for Americans, whereas we’ve eliminated about a million jobs for foreign-born workers,” Stephen Miran, chair of the White House Council of Economic Advisers, said in an Aug. 1 CNN TV appearance.
“That’s a result of our strong immigration policy, of our strong border policy, keeping America safe,” said Miran, whom Trump nominated Thursday to fill a temporary slot on the Fed’s Board of Governors.
But many analysts, including those at Bloomberg Economics, have written off the decline in the labor force, noting it is largely related to how the data are constructed. Many economists point to a simultaneous, implausible surge in the native-born workforce and population numbers.
“It’s not that we’ve suddenly given birth to a lot of 16-year-olds and boosted the native population,” said Jonathan Pingle, the chief US economist at UBS.
With the report’s demographic breakdown based on the household survey looking increasingly questionable, analysts are trying to focus more on what the data on hiring from a survey of businesses — the one that saw the big downward revisions for May and June — is saying.
The best way to do that is to come up with a list of industries most reliant on an immigrant workforce and try to estimate whether those are faring obviously worse. And different people are drawing different conclusions from essentially the same exercise.
Bank of America economists highlighted weak hiring in construction, manufacturing and leisure and hospitality, sectors where undocumented immigrants and those who are losing their legal status are more likely to be employed. Goldman Sachs economists, meanwhile, noted industries most reliant on immigration aren’t really seeing slower job growth than, say, those disproportionately exposed to tariffs.
The labor force participation rate has fallen 0.4 percentage point over the last three months, marking the biggest such drop in eight years, excluding the onset of the pandemic.
Those who see immigration as the culprit behind the hiring slowdown cite the drop in participation as an indicator of dwindling supply. Citi’s Clark said worsening demand conditions could be weighing on it too.
“Both of those issues would imply labor supply falling this year — slowing immigration and weak demand, as labor force participation typically falls in downturns,” Clark said. “But if weak demand is the more overwhelming force, it won’t be enough to keep the unemployment rate from rising.”
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