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This article is an on-site version of our FirstFT newsletter. Subscribers can sign up to our Asia, Europe/Africa or Americas edition to get the newsletter delivered every weekday morning. Explore all of our newsletters hereGood morning and welcome back to FirstFT Asia. In today’s newsletter: Nvidia’s latest resultsThe Chinese gadget maker taking on Tesla and AppleIndia’s judicial backlog“Ninja stealth rally” drives Japanese stocksWe start with artificial intelligence chipmaker Nvidia’s hotly anticipated results, which were released yesterday amid market jitters about whether the momentum around AI can continue. Here’s what to know.Solid results: Nvidia reported revenue of $46.7bn for the quarter to July 28, up 56 per cent year on year and slightly above consensus estimates of $46.5bn, according to Visible Alpha. The company said it expected $54bn in sales for the current quarter, plus or minus 2 per cent, compared with expectations of $53.8bn.Why Nvidia matters: The $4tn tech giant’s role in designing the advanced chips that are used to develop and run AI models such as ChatGPT has propelled it to become the world’s most valuable group by market capitalisation and made it a bellwether for the AI boom. Its shares took a hit last week during a widespread sell-off in companies linked to AI, after a negative report on its practical applications and comments by OpenAI chief executive Sam Altman about investors overhyping the technology. China outlook uncertain: Nvidia has become embroiled in US President Donald Trump’s trade war with Beijing. Analysts said Nvidia’s decision not to include China AI chip revenue in its outlook disappointed investors after it cut a deal with the Trump administration to resume sales of the H20 chip, which Nvidia designed for the Chinese market. Gene Munster, managing partner at Deepwater Asset Management, said excluding China meant Nvidia’s guidance was lower than what some had expected. “That $54bn doesn’t include the H20 — and I was shocked that they didn’t,” he said. Read the full story.Chinese AI: China’s chipmakers are seeking to triple the country’s total output of AI processors next year, as Beijing races the US to develop the most advanced AI.More AI news: OpenAI’s corporate restructuring is likely to slip into next year, as the ChatGPT maker negotiates over key terms of its future relationship with Microsoft.Here’s what else we’re keeping tabs on today:Economic data: Japan publishes July trade statistics and Malaysia reports producer prices for the month,Monetary policy: Central banks in South Korea and the Philippines announce their rate decisions.Five more top stories1. Punitive US tariffs on India over its purchases of discounted Russian oil took effect yesterday, dealing a blow to the world’s fastest-growing large economy and deepening a rift between Washington and New Delhi. The 25 per cent levy, which came on top of a 25 per cent “reciprocal” tariff, raised duties on India to among the highest in the world.2. Denmark has summoned the top US diplomat in the country over reports that American citizens with alleged links to President Donald Trump have been conducting covert influence operations in Greenland. Lars Løkke Rasmussen, Denmark’s foreign minister, said that there were “foreign actors” attempting to influence the future of Greenland and that all such efforts were “unacceptable”.3. A Pentagon unit responsible for boosting the adoption of new commercial technologies by the US military is preparing to deploy officials to dozens of allied countries, as Washington struggles to counter China’s military build-up on its own. The plan includes sending a representative to Taiwan this year to speed up collaboration on drones, as well as posting an official in Japan. 4. Mitsubishi Corporation has blamed high turbine costs for its withdrawal from three major offshore wind projects in Japan, in a retreat that marks a setback for the country’s energy self-sufficiency drive. The projects were part of a push by Japan to adopt more renewable power but the country’s offshore wind adoption has been more challenging than other nations. Here’s why.5. Argentine President Javier Milei was evacuated from an election campaign event yesterday after stones were thrown at his motorcade amid public anger over allegations of corruption in his administration. A presidential spokesperson said there were no injuries and blamed the attack on militants from the Peronist opposition. Read the full story.News in-depthXiaomi’s latest electric vehicle, the YU7 SUV, received 200,000 pre-orders in just three minutes at launch More
Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Long-term UK borrowing costs have neared their highest level this century, as worries over the country’s economic outlook combine with a rise in global bond yields stoked by Donald Trump’s battle with the US Federal Reserve.In a move that intensifies pressure on chancellor Rachel Reeves ahead of her Autumn Budget, the yield on 30-year UK government debt rose as high as 5.64 per cent in early trading on Wednesday — its highest point for four months and just below a level last reached in 1998. Yields later fell back to 5.6 per cent. Mark Sobel, a former US Treasury official and US chair of think-tank OMFIF, said that, like other big economies, the UK was “ensnared in a fiscal trap” of anaemic growth and high taxes. “Large debt and deficits will continue, keeping upward pressure on bond yields,” he added. While global bond yields have risen in the wake of Trump’s campaign against the Fed and Germany’s moves to increase debt and spending, gilts have been harder hit than other bonds this month.Thirty-year gilt yields, which rise as bond prices fall, have increased 0.23 percentage points since the start of August, compared with 0.13 percentage points on German Bunds and 0.06 percentage points for US Treasuries.If sustained, the recent increases in gilt yields would reduce Reeves’ headroom from £9.9bn as of the Spring Statement to £5.3bn, according to Alex Kerr, an economist at Capital Economics. Increased debt servicing costs, combined with potential downgrades to growth forecasts by the Office for Budget Responsibility, might force the chancellor to raise as much as £27bn in her Budget to close the hole in the public finances, he added. Bond fund managers said the UK was facing a growing risk of “stagflation”, where persistent inflation — running at just below 4 per cent — makes it harder for the Bank of England to cut interest rates to support flagging growth. A move to increase taxes to improve the public finances would be likely to “slow growth further, which could put further pressure on the stagflationary issues that are currently present”, said Robert Dishner, senior portfolio manager at US asset manager Neuberger Berman.The rise in yields is also putting the BoE under growing pressure to slow down its so-called quantitative tightening (QT) programme to shrink its balance sheet, which had expanded due to huge bond purchases made in past financial crises. The bank is reducing its balance sheet by £100bn a year at present, partly through sales that analysts warn are pushing down gilt prices.Mark Dowding, fixed income chief investment officer at RBC BlueBay Asset Management, said that investors were “concerned with inflation [and] UK policy credibility”. He warned that unless the government made spending cuts and the BoE halted QT, “the black hole will keep growing, and the risk is a market tantrum”.Despite the recent sell-off in longer-term debt, 10-year gilt yields, the most closely watched yardstick for long-term borrowing costs, were at 4.74 per cent on Wednesday, some way below the 16-year intraday high of 4.93 per cent reached in January. The pound, which has been a victim of past worries over UK debts, has risen 2 per cent so far this month against a weaker dollar. “Long-dated bonds almost everywhere have been under pressure,” said Fidelity International fund manager Mike Riddell. He said gilts had recently underperformed Treasuries “because the Fed has signalled more cuts, while the Bank of England has been hawkish in recent weeks”.Derivatives markets are pricing in just one quarter-point rate cut by the BoE over the next 12 months, against the four expected from the Fed. More
Unlock the White House Watch newsletter for freeYour guide to what Trump’s second term means for Washington, business and the worldThe writer is a distinguished fellow in residence at the Brookings Institution, former chair of the Federal Reserve and former secretary of the TreasuryUS President Donald Trump’s claim that he has “fired” Federal Reserve governor Lisa Cook “for cause” is not only unlawful. It is profoundly dangerous. It represents a direct attempt to politicise the Fed, intimidate its leadership and bend monetary policy to the president’s will. This action threatens to end the independence of the Federal Reserve — and with it, the credibility of the US’s monetary policy both at home and abroad. The law is clear: Federal Reserve governors serve 14-year terms precisely so they cannot be tossed aside by presidents who dislike their views or who seek their allegiance. Removal “for cause” is intended for documented misconduct. “Accusations” are not “cause”. Cook has done her job with integrity — weighing evidence and voting for policies designed to achieve the Fed’s dual mandate of price stability and maximum employment. For Trump to invoke cause here is a fiction; it is a pretext to justify an autocratic power grab.This is not about one Federal Reserve governor. It is about intimidation. By targeting Cook, Trump is sending a chilling message to every member of the Federal Reserve board and to the regional reserve bank presidents who take part in the Federal Open Market Committee: express disagreement with the president’s views and you are next. Such threats could stifle these Federal Reserve leaders in their duty to offer honest, professional and independent views on monetary policy to the public. It could alter their voting behaviour. It would turn an institution renowned for its independence and strong record of accomplishment into a puppet stage for presidential whims and priorities. At the moment, a key Trump administration priority is for the Fed to substantially cut interest rates to reduce the cost of servicing the US government’s $37tn debt. The consequences are likely to be catastrophic. History offers a blunt lesson: chaos follows when leaders capture their central banks and force them to buy government debt or cut interest rates to hold down debt service expense. Germany in the 1920s, Hungary after the second world war. Likewise, Argentina and Turkey quite recently — the names change, but the story is the same. Politicised central banks deliver higher inflation, volatile growth and weakened currencies. Such a road cannot be good for the US. We took this road once before: during the second world war, when the Fed was obliged to hold interest rates down to help the Treasury finance the war. The result was high inflation. In 1951, the Fed and Treasury reached an accord. The Federal Reserve thereafter would focus on price stability and maximum employment. Since that time, those have been its objectives, as legally mandated by Congress. The Fed’s credibility in crafting a responsible monetary policy underpins global confidence in the dollar and in Treasury securities, which are widely regarded as the world’s safest asset. They underpin the US economy. If markets believe the Fed’s hand is guided by political orders, every interest rate decision will lose credibility. Inflation expectations could become unmoored. The dollar’s standing as the world’s reserve currency would be imperilled. Investors and allies alike would conclude that the US no longer has an independent central bank. We would throw away one of our country’s greatest economic assets. And, ironically, this strategy will not even succeed in lowering long-term interest rates. Quite the contrary; long-term interest rates will probably rise due to higher inflation expectations. Trump’s attempted sacking of Cook should be met with outrage, not with shrugs. Congress must defend the Fed’s independence. The courts must strike down this unlawful power play. And the financial community must raise its voice against a direct assault on the credibility of the dollar itself.The independence of the Federal Reserve is not some technocratic nicety. It is the bedrock of US economic stability and global leadership. Trump’s effort to tear it down for personal gain is reckless, corrosive, and profoundly un-American. More
