Good Afternoon. AI hype meets a dose of reality, with tech stocks sliding for a second day, but Google is leaning in, rolling out its new Pixel lineup with Gemini AI at the center. Meanwhile, the Fed is wrestling with tariffs and Trump’s pressure campaign, while retailers are rethinking where they set up shop, with California increasingly left off the map.

—Rosie, Wyatt, Evan & Conor

🔥 What’s Hot: 🔥

🥶 What’s Not: 🥶

1. U.S. tech stocks slide on ‘bubble’ talk and MIT study doubts the hype

The News: AI fever cooled for a second straight day as investors trimmed positions in tech’s biggest names. Nvidia slipped another 0.8%, Alphabet fell 0.6%, and Amazon, Apple, and Meta each dropped more than 1%. Chipmakers led losses, AMD and Broadcom sank over 2%, Micron tumbled 5%, while CoreWeave and Palantir also slid. The pullback followed an MIT study showing 95% of companies see no ROI from generative AI and OpenAI CEO Sam Altman warning that investors may be caught in a bubble.

Why It Matters: The MIT study is a big deal. Markets are being forced to ask: is AI a productivity revolution or just another dot-com rerun? Investors are still betting on the long-term winners like Nvidia, but short-term, inflated expectations are colliding with thin profits. The lesson is as old as Wall Street itself hype can drive stocks up, but reality eventually asks for receipts. With Nvidia’s earnings due next week, Wall Street is bracing to see whether their earnings can reassure markets or if this correction has further to run.
Source: finance.yahoo.com

2. Fed Stuck Between Tariffs, Jobs and Trump’s Pressure

The News: Minutes from the Fed’s July meeting show a rare split among policymakers: two governors pushed for rate cuts while most voted to hold steady, citing persistent tariff-driven inflation risks. The debate underscored a balancing act between cooling prices and signs of labor market weakness. It was the first time in over 30 years multiple governors dissented on a rate decision. Adding fuel, President Trump ratcheted up his campaign to reshape the central bank, demanding Fed Governor Lisa Cook resign over unproven mortgage fraud allegations. Cook, appointed by Biden in 2022, has not commented, and no investigation has been announced. The call comes just weeks after Governor Adriana Kugler resigned, giving Trump another seat to fill and more influence over the Fed’s direction.

Why It Matters: The Fed is already walking a tightrope: tariffs are keeping inflation sticky even as jobs growth slows, and Powell will face heavy scrutiny at Jackson Hole this Friday on how he plans to navigate the tension. Trump’s pressure campaign raises the stakes further, threatening to politicize decisions that are supposed to stay independent. For markets, that means interest rate expectations aren’t just about economic data anymore they may be about who’s calling the shots at the Fed. For the Fed, the only thing harder than fighting inflation may be fighting off Trump.
Source: cnbc.com

3. Lowe's buys Foundation Building Materials for $8.8B

The News: Lowe’s is making its biggest bet yet on professional contractors, announcing an $8.8 billion all-cash acquisition of Foundation Building Materials (FBM). The deal, expected to close later this year, will add FBM’s 370+ locations and 40,000 pro customers across the U.S. and Canada, giving Lowe’s a much larger footprint in drywall, insulation, and other building supplies. FBM pulled in $6.5 billion in revenue last year, growing at double-digit rates. The move follows Home Depot’s own $4.3 billion purchase of GMS just weeks ago and its $18 billion SRS Distribution takeover last year, escalating an arms race for dominance in the $500 billion professional contractor market.

Why It Matters: Professional builders are the crown jewels of home improvement: they buy in bulk, generate steadier demand than weekend DIYers, and drive higher margins. Home Depot has long held the edge, with roughly half its sales tied to pros compared to Lowe’s ~30%. This deal helps narrow that gap, positioning Lowe’s to win more of the lucrative repeat business fueling industry growth. With both giants spending billions to lock up suppliers, the “Pro battleground” is starting to look more like a heavyweight title fight and every contractor’s shopping list just became prime real estate.
Source: apnews.com

4. Google’s latest smartphone AI is leaving Apple in the dust

The News: Google unveiled four new Pixel 10 smartphones and a new Pixel Watch at its Made by Google event in New York, but the real headliner was its AI. The devices feature Gemini-powered tools like “Magic Cue,” which automatically surfaces useful info across apps, think pulling dinner reservations from Gmail into a text reply or showing flight details mid-call without app-hopping. Other AI upgrades include real-time voice translation, AI-assisted photography, and smarter weather alerts. Google’s AI showcase comes as Apple lags in the race: its upgraded Siri won’t arrive until 2026, leaving iPhones without comparable capabilities. While Google still only holds about 3% of U.S. smartphone shipments versus Apple’s 49% and Samsung’s 31%, its AI software could spread more widely through Samsung’s Galaxy devices, since the two companies collaborate on Android and AI features.

Why It Matters: Smartphones are no longer just about slick cameras or battery life, AI is becoming the new competitive edge. If Google’s Gemini tools prove genuinely useful, they could shape what consumers expect as “table stakes” for future devices. Samsung is already onboard, while Apple risks being seen as a laggard if Siri can’t catch up. In other words, Google may not sell the most phones, but it’s training the market on what phones should do and that could shift the balance of power in Big Tech’s next arms race. The real question: will these AI smarts be the nudge that finally gets die-hard iPhone fans to cross the aisle?
Source: finance.yahoo.com

5. Major retailer says 'no' to California

The News: Bed Bath & Beyond’s executive chairman Marcus Lemonis said the retailer will not open or operate stores in California, citing the state’s high taxes, steep wages, and what he called “endless regulations that strangle growth.” Instead, Californians will be served online. The move comes as the retailer, rebuilt after its 2023 bankruptcy, plans to open 300 new brick-and-mortar stores nationwide over the next two years. But Lemonis said California’s business environment makes it “harder to employ people, harder to keep doors open, and harder to deliver value to customers.”

Why It Matters: This isn’t just about Bed Bath & Beyond as Starbucks, CVS, and other retailers face similar issues, it’s another signal of how policies can shape where businesses expand and how they operate. For investors, it highlights the trade-offs between growth opportunities in massive markets like California and the risks of higher costs. Bed Bath & Beyond’s refusal to enter the country’s most populous state raises a big question: is avoiding California a missed opportunity or a smart way to protect margins?
Source: foxbusiness.com

1. Tech Selloff Spreads to Europe

The News: European markets slipped Wednesday as the U.S. tech selloff crossed the Atlantic. Semiconductor stocks led losses, with the STOXX Europe 600 tech index down nearly 1% after Nvidia shed $160B in value Tuesday and the Magnificent Seven collectively lost over $300B. An MIT study suggesting that 95% of companies investing in generative AI aren’t seeing returns poured fuel on bubble fears, prompting traders to cash in gains ahead of Fed Chair Jerome Powell’s Jackson Hole speech Friday. At the same time, European defense stocks, from BAE to Rheinmetall, slumped as optimism grew around Ukraine peace talks. Betting markets now put the chance of a ceasefire in 2025 at 41%, nearly double earlier this month, though Zelenskyy’s pledge to spend $100B on U.S. weapons could also mean less business for European contractors.

Why It Matters: Tech’s stumble shows how fragile the AI trade has become, Wall Street jitters are now dragging down European markets, reminding investors that sky-high valuations come with nosebleed risks. Defense contractors, until recently the market’s safe bet, are now losing altitude as peace odds rise. Put simply: the tailwinds that powered markets higher, AI hype and defense demand, are wobbling. If Powell doesn’t deliver clarity Friday, investors could be in for a bumpy landing.
Source: morningstar.com

2. China Considers Yuan-Backed Stablecoins to Counter US Dollar Dominance

The News: China is weighing a dramatic reversal on digital assets, with officials considering allowing yuan-backed stablecoins to accelerate the currency’s global adoption, Reuters reports. The State Council could review the plan later this month, with regulators like the People’s Bank of China tasked with implementation if approved. The move would be a major pivot from Beijing’s 2021 ban on crypto trading and mining. It also comes as U.S. dollar-backed stablecoins dominate the $247 billion market, making up more than 99% of supply, while the yuan’s share of global payments has slipped to just 2.9%.

Why It Matters: A yuan-pegged stablecoin would give China a new tool to challenge dollar dominance in global finance, especially as Washington pushes forward with its own regulatory framework for dollar stablecoins. For businesses, it could one day mean faster, cheaper cross-border transactions but Beijing’s strict capital controls remain a huge barrier. If China goes through with it, the stablecoin wars could move from crypto exchanges to the geopolitical stage, with every digital dollar, yuan, or won doubling as a bid for financial influence.
Source: aol.com

3. Government prepares to take over UK's third largest steelworks

The News: The UK is lining up to take control of Liberty Steel’s Speciality Steel UK operations in South Yorkshire if the company slides into administration. The steelworks, employing 1,450 people and serving sectors like aerospace and defense, could be placed under temporary public management while Liberty owner Sanjeev Gupta pursues a “pre-pack” rescue deal. Government officials say plans are ready to be executed this week if needed.

Why It Matters: This could be a lifeline for a firm struggling under the double squeeze of weak demand at home and punishing U.S. steel tariffs abroad. The 50% duties on steel imports, part of the Trump administration’s broader tariff blitz, have made British exports to the U.S. significantly less competitive. U.S. importers are now literally paying almost double, and Liberty Steel is caught in the fallout. In short: Britain may be ready to bail out the furnaces but sooner or later, someone’s going to have to turn down the heat on tariffs or risk melting the whole industry.
Source: bbc.com

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