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China’s yearslong effort to develop robotaxis is starting to gain traction with consumers —but it’s also rattling taxi drivers worried about losing their jobs as a result of increasing competition.
Baidu’s robotaxi unit Apollo Go became one of the top 10 trending hashtags on social media platform Weibo on Wednesday amid reports of rapid user adoption in Wuhan city, where the company began operating fully staffless vehicles in certain districts 24/7 in March.
China had more than 7 million registered ride-hailing drivers as of the end of May, roughly twice as many versus the 3.51 million drivers reported for July 2021, according to the Ministry of Transport.

More than 70% of Baidu Apollo Go robotaxi rides in Wuhan were fully driverless as of April, and the company said in May it expected 100% of the rides to be completely autonomous in coming quarters.
Bloomberg | Bloomberg | Getty Images

BEIJING — China’s yearslong effort to develop robotaxis is starting to gain traction with consumers — but it’s also rattling taxi drivers worried about losing their jobs as a result of increasing competition.
Just as GM’s Cruise and Alphabet’s Waymo have rolled out driverless taxis in San Francisco and Phoenix, Arizona, local Chinese governments from Beijing to Guangzhou have allowed domestic players to operate robotaxi rides for the public.

This week, the rising prominence of robotaxis in China began trending on social media.
As of Thursday morning, videos about fully autonomous driving taxi experiences were the 12th most popular topic on Douyin, Bytedance’s China version of TikTok.
Baidu’s robotaxi unit Apollo Go became one of the top 10 trending hashtags on social media platform Weibo on Wednesday following reports of rapid user adoption in Wuhan city.
The company began operating fully driverless vehicles in certain districts of Wuhan, 24/7 in March.
Wuhan is the largest operational region for Baidu’s Apollo Go, one of the largest robotaxi operators in China. The company has more than 500 robotaxis operating in the city and plans to increase that to 1,000 by the end of the year.

When contacted by CNBC, Baidu had no official updates to share.
The increased attention on robotaxis comes as major Chinese cities ramp up support, while smaller cities restricted ride-hailing apps in the last few months.

Top social media posts on Wednesday were quick to extrapolate from Wuhan’s robotaxi tests, predicting an impending nationwide rollout and spawning hashtags like: “Are driverless ride-hailing cars stealing people’s rice bowls.” That’s according to a CNBC translation of the Chinese.
Also making the rounds on social media was an appeal in late June by a taxi company in Wuhan seeking reduced taxes and more restrictions on Apollo Go robotaxis as well as the number of ride-hailing cars.
CNBC was unable to independently verify the document, which claimed the taxi company had to stop operating four of its 159-car fleet since April due to falling income.
Wage growth in China overall has slowed from around 10% annual increases prior to the pandemic, to 4% in recent years, according to Goldman Sachs analysis published last month. The pace improved to 5.6% year-on-year growth in the first quarter, the report said.

Ride-hailing drivers on the rise

A surge of new companies and ride-hailing drivers have meanwhile prompted some local governments to restrict the industry.
The city of Guyuan in Ningxia autonomous region announced that as of May 12, it was suspending online ride-hailing businesses.
“Our city’s taxi market is already saturated,” the announcement said in Chinese, translated by CNBC.
Separately, the southwestern city of Guiyang had suspended new ride-hailing licenses for half a year through June. The announcement said authorities were able to remove some non-compliant ride-hailing businesses and cars.
China had more than 7 million registered ride-hailing drivers as of the end of May, according to the Ministry of Transport.
That’s roughly twice as many versus the 3.51 million drivers reported for July 2021, and 570,000 more drivers than the ministry reported as of November.
In comparison, the U.S. had nearly 400,000 taxi and ride-hailing drivers, shuttle drivers and chauffeurs in 2022, according to the latest available figures from the Bureau of Labor Statistics.
The number of ride-hailing companies in China has also climbed, from 241 in 2021 to 351 in May this year, according to the Ministry of Transport.

China pushes ahead with robotaxi support

Multiple Chinese ministries in January released a plan to promote cloud-connected cars, including tests of at least 200 low-speed unmanned vehicles in each pilot region. Last week, the same authorities released a list of 20 initial pilot cities, including Beijing, Shanghai, Chongqing and Wuhan.
Those cities have already allowed robotaxi operators to test cars in suburban areas.
Beijing city in November 2021 started to allow Baidu’s Apollo Go and startup Pony.ai to collect fares from the public for rides with a safety driver inside the robotaxis.
Last year, Beijing city let the operators remove all staff from a few of the vehicles. The city last month released draft rules that put the responsibility of a robotaxi traffic violation on the car owner and manager if there is no driver.
The public-facing rides are currently subsidized, and the number of vehicles on the road are still far lower than those of traditional taxis.
The Apollo Go app showed Thursday that a 45-minute robotaxi ride from Daxing airport to a southern suburb of Beijing would be fully subsidized – the entire 193.84 yuan ($26.66) cost was waived. The app also showed a 16-minute robotaxi ride within that Beijing suburb would cost 10.36 yuan, about half the 20 yuan fare listed by ride-hailing apps, which can call taxis.

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Baidu CEO Robin Li told investors in May that more than 70% of Apollo Go robotaxi rides in April were fully driverless, with no human staff inside. He predicted that share would reach 100% in the coming quarters — and allow Apollo Go to break even in Wuhan first.
The city is the capital of Hubei province, which proclaimed in a June 1 article its efforts to become the world’s first autonomous driving city.
“I just got my driver’s license … and there’s already driverless cars? What was the point of me taking the test?” according to a Chinese comment on the article, translated by CNBC.
“In the short term, there’s no way autonomous driving can replace drivers,” the Hubei government account said in its reply. More

Wall Street is getting ready for a new batch of cryptocurrency exchange-traded funds: ethereum. 
Spot ether ETFs could hit the market as soon as this week, pending U.S. Securities and Exchange Commission approval, and Bitwise Asset Management’s Matthew Hougan plans to get in on the action.

“What you’re seeing is this sort of the birth of a new asset class,” the firm’s chief investment officer told CNBC’s “ETF Edge” on Monday.
Hougan’s firm is applying for spot ether ETFs.
“If you want to invest in the growth of tokenization, ethereum is like the picks and shovels play,” Hougan said. “It underpins all of it. … I think that is going to appeal to a lot of people.”
He thinks cryptocurrency ETFs overall are a multiyear story. Hougan is referring to the first spot bitcoin ETFs that launched in January. He sees their success as a good indicator of the future.
“It’s [bitcoin] moving into the mainstream,” he noted. “That’s going to be a multiyear story.”

Spot bitcoin ETFs have attracted about $15 billion since their launch and currently hold two of the top ETF inflows this year, according to FactSet.
Hougan views bitcoin’s recent success as unprecedented and sees it as a bullish indicator for spot ether ETFs. 
“If we get five or 10 or 15 billion dollars in the first two years of these ethereum ETFs, that is a massive runaway success,” Hougan said.

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Federal Reserve Chair Jerome Powell is set to testify on Capitol Hill before the U.S. House Financial Services Committee on Wednesday.

The appearance comes after Powell appeared before the Senate Committee on Banking, Housing and Urban Affairs on Tuesday. There, Powell said U.S. economic growth is still solid but acknowledged that the central bank now sees the economy as having the two-sided risk of rising unemployment at the same time as inflation is still above its 2% target.
“Reducing policy restraint too late or too little could unduly weaken economic activity and employment,” Powell said Tuesday, referring to the risk that keeping interest rates high can damage the economy, too.
Investors will be listening to hear if Powell gives any hints about when the Fed might begin to cut rates. The central bank has a meeting later this month, though traders see a cut in July as unlikely.
Representatives could also ask about the Fed’s oversight of banks, including the potential risks of commercial real estate to regional lenders. More

The Federal Reserve raised interest rates aggressively starting in March 2022 to tame high inflation.
That underpinned historic strength in the U.S. dollar versus many major global currencies like the euro and Japanese yen. American tourists enjoyed greater buying power abroad.
The Fed expects to cut rates once in 2024 and four more times in 2025. That could weaken the dollar.

SeongJoon Cho/Bloomberg via Getty Images

The U.S. Federal Reserve may start cutting interest rates before year’s end. That could make future trips abroad more expensive for the nation’s travelers.
That’s due to how interest-rate policy affects the strength of the U.S. dollar.

Here’s the basic idea: An environment of rising U.S. interest rates relative to those in other nations is generally “dollar positive,” said Jonathan Petersen, senior markets economist and foreign exchange specialist at Capital Economics.
In other words, rising rates underpin a stronger U.S. dollar versus foreign currencies. Americans can buy more stuff with their money overseas.
The opposite dynamic — falling interest rates — tends to be “dollar negative,” Petersen said. A weaker dollar means Americans can buy less abroad.

Fed officials in June signaled they expect to cut rates once in 2024 and four additional times in 2025.
“Our expectation for now is the dollar will come under more pressure next year,” Petersen said.

However, that’s not necessarily a foregone conclusion. Some financial experts think the dollar’s strength may have staying power.
“There have been quite a few headlines calling for the U.S. dollar’s demise,” Richard Madigan, chief investment officer at J.P. Morgan Private Bank, wrote in a recent note. “I continue to believe the dollar remains the one-eyed man in the land of the blind.”

Why the U.S. dollar gives a ‘discount’ overseas

The Fed started raising interest rates aggressively in March 2022 to tame high pandemic-era inflation. By July 2023, the central bank had raised rates to their highest level in 23 years.
The dollar’s strength surged against that backdrop.
The Nominal Broad U.S. Dollar Index is higher than at any pre-pandemic point dating to at least 2006, when the central bank started tracking such data. The index gauges the dollar’s appreciation relative to currencies of the nation’s main trading partners such as the euro, the Canadian dollar and the Japanese yen.
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For example, in July 2022, the U.S. dollar reached parity with the euro for the first time in 20 years, meaning they had a 1:1 exchange rate. (The euro has since rebounded a bit.)
In early July, the U.S. dollar hit its strongest level against the yen in 38 years.
A strong U.S. dollar gives “a discount on everything you’re purchasing while you’re abroad,” Petersen said.
“In a sense, it’s never been cheaper to go to Japan,” he added.

A record number of Americans visited Japan in April, according to the Asian nation’s tourism board. Benjamin Atwater, a communications specialist at InsideAsia Tours, a travel agency, attributes that partly to the financial incentive bestowed by a strong dollar.
In fact, he personally recently extended a work trip to Japan by a week and a half — instead of opting to travel elsewhere in Asia — largely because of the favorable exchange rate.
Everything from meals, hotels, souvenirs and the rental car were a “great value,” said Atwater, who lives in Denver and has long wanted to travel to Japan.
“It was always portrayed as one of the most expensive places you can go, [but] I was getting some of best steaks I’ve ever had for like $12,” he said.

How interest rates impact the U.S. dollar

In reality, the dynamics driving dollar fluctuations are more complex than whether the Fed raises or lowers interest rates.
The differential in U.S. rates versus other nations is what’s significant, economists said. Fed policy doesn’t exist in a vacuum: Other central banks are also simultaneously making interest-rate choices.
The European Central Bank cut interest rates in June, for example. Meanwhile, the Fed has kept rates higher for longer than many forecasters anticipated — meaning the rate differential between the U.S. and Europe has widened, helping support the dollar.
“The Fed’s on hold, other central banks are getting ready to ease and the Bank of Japan (BoJ) seems stuck in a moment,” J.P. Morgan’s Madigan wrote.

U.S. Federal Reserve Chair Jerome Powell speaks during a Senate Banking, Housing, and Urban Affairs Committee hearing on July 9, 2024. 
Bonnie Cash | Getty Images News | Getty Images

“If Japan wants the yen to stabilize, policy rates need to move higher,” he added. “That doesn’t appear to be happening anytime soon. With the ECB expected to cut ahead of the Fed, I expect current euro weakness to also prevail.”
This is happening against the backdrop of a relatively strong U.S. economy, which also generally supports a strong dollar, Petersen said. At a high level, a strong economy means there will generally be higher economic growth and/or inflation, which means a greater likelihood the Fed will keep interest rates relatively high, he said.
A strong economy also typically incentivizes foreigners to park more money in the U.S., he said.
For example, investors generally get a better return on cash when interest rates are high. If an investor in Europe or Asia were getting perhaps 1% or 2% on bank account holdings while such holdings in the U.S. were yielding 5%, that investor might shift some money to the U.S., Petersen said.

Or, an investor might want more to hold more of their portfolio in U.S. rather than European stocks if the economic growth outlook wasn’t good in Europe, he said.
In such cases, foreigners buy dollar-denominated financial assets. They’d sell their local currency and buy the dollar, a process that ultimately bids up the dollar’s strength, Petersen said.
Exchange rates “all come down to capital flows,” he said.
While these dynamics also hold true in emerging markets, currency fluctuations can be more volatile than in developed nations due to factors like political shocks and risks to commodity prices like those of oil, he added.

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Bill Gross’ Janus Henderson Global Unconstrained Bond Fund suffered more than $200 million in redemptions last month, lowering assets to $1.25 billion from over $2.24 billion in February.
Lucy Nicholson | Reuters

Longtime investor Bill Gross believes Elon Musk’s Tesla is behaving like a speculative play among retail investors.
“Tesla acting like a meme stock — sagging fundamentals, straight up price action,” the former chief investment officer and co-founder of Pimco said in a post on X Tuesday afternoon. “But then there seems to be a new meme stock every other day now. Most are pump and dump.”

Tesla is on a stunning 10-day winning streak, up a whopping 43.6% since June 24. The rally was initially triggered by Tesla’s second-quarter vehicle production and deliveries numbers that beat analyst expectations.

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Tesla’s run

Gross, who at one time was the most influential investor in the U.S. bond market, seems to think that the strong delivery report wasn’t enough to justify such an eye-popping run.
The 80-year-old investor also compared Tesla to Chewy, Zapp, and the “old favorite” GameStop. Chewy recently gained meme status after online personality Roaring Kitty, who inspired 2021’s GameStop mania, bought a sizable stake in the pet retailer.
Gross revealed previously that he dabbled in trading GameStop and AMC options for quick profits in 2022, calling those “lottery-ticket stocks.”
Shares of Tesla are still up just about 6%, lagging the S&P 500, which has gained 17%. More

China’s consumer prices rose by 0.2% in June from a year ago, missing expectations for a 0.4% increase, according to a Reuters poll.
Core CPI, which strips out more volatile food and energy prices, rose by 0.6% year-on-year in June.
China’s producer price index fell by 0.8% year-on-year in June, in-line with forecasts.

Consumers are shopping at a supermarket in Qingzhou, China, on June 12, 2024. 
Nurphoto | Nurphoto | Getty Images

BEIJING — China’s consumer price inflation rose by 0.2% in June from a year ago, missing expectations, while producer prices fell in-line with forecasts, data from the National Bureau of Statistics on Wednesday showed.
China’s consumer price index was expected to rise by 0.4% year-on-year in June, according to a poll by Reuters.

The producer price index, which measures factory-gate prices, dropped by 0.8% from a year ago — in line with expectations.
Core CPI, which strips out more volatile food and energy prices, rose by 0.6% year-on-year in June, slightly slower than the 0.7% increase for the first six months of the year.

The risk of deflation has not faded in China. Domestic demand remains weak.

Zhiwei Zhang
chief economist, Pinpoint Asset Management

Pork prices surged by 18.1% in June from a year ago, while beef prices fell by 13.4%. Tourism prices rose by 3.7% year-on-year in June, down by 0.8% from May.
“The risk of deflation has not faded in China. Domestic demand remains weak,” Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said in a note.

He added that China would rely on exports to support growth in the first half of the year.

The country is scheduled to release trade data for June on Friday.
Lackluster domestic demand in China has kept inflation low, in contrast to major economies such as the U.S. where prices have remained elevated. More

In May 27 members of the Community Empowerment Resource Network (CERNET), a Philippine charity, were charged with bankrolling communist rebels. Straight away the case looked strange. A social-media post by police claimed they had jailed Estrella Flores-Catarata, one of CERNET’s associates, who received an award from the UN for her work with indigenous people last year. She has no criminal record and was set free after paying bail. Other charities that support small-scale farmers and help people after natural disasters have also had their top brass charged and accounts frozen for allegedly breaching the Philippines’ Anti-Terrorism Act, a draconian law passed in 2020. More

Leading nonalcoholic brewer Athletic Brewing Company raised an additional $50 million in equity financing in a round led by General Atlantic. 
The brewer plans to use the latest investment to increase production capacity and expand its offerings at global retailers to meet rising consumer demand for nonalcoholic beer.
Athletic holds over 19% market share within nonalcoholic beer and is driving 32% of total nonalcoholic beer category growth, according to NielsenIQ data.

Company founder Bill Shufelt (left) and head brewer John Walker pause at the Athletic Brewing’s nonalcoholic brewery and production plant on March 20, 2019 in Stratford, Connecticut.
Spencer Platt | Getty Images

Leading nonalcoholic brewer Athletic Brewing Company announced Tuesday it’s raised an additional $50 million in equity financing in a round led by General Atlantic. 
The company expects General Atlantic to “ultimately invest significantly beyond that,” Athletic CEO and founder Bill Shufelt told CNBC’s “Squawk Box” Tuesday morning. The brewer plans to use the latest investment to increase production capacity and expand its offerings at global retailers to meet rising consumer demand for nonalcoholic beer.

“We are passionate about transforming the way modern adults drink and converting critics into believers. We’re at the start of a long-term trend, and we couldn’t be more excited to have General Atlantic by our side as Athletic begins its next phase of growth,” the company said in a press release.

Athletic Brewing launched its nonalcoholic craft brewing facilities in 2018 and has since grown to become the 10th largest U.S. craft brewery and 20th largest overall U.S. brewing company, despite only offering nonalcoholic options, according to rankings by the Brewers Association. 
Athletic holds over 19% market share within nonalcoholic beer and is driving 32% of total nonalcoholic beer category growth, according to NielsenIQ data.
“Revenue has more than doubled since our Series D [funding round] about 18 months ago,” Shufelt said on CNBC.
The Wall Street Journal reported Tuesday the company’s valuation has also doubled with the latest fundraising and now stands at $800 million.

The company currently has two brewing facilities in the U.S., one in Milford, Connecticut, and the second in San Diego. Athletic recently announced the purchase of a third U.S. brewing facility, also located in San Diego. Once operational, Athletic expects the facility to help double its U.S. brewing capacity.
“We sold well over 3 million cases, over a 100 million cans, did over $90 million in revenue last year as a company, and we are growing well above that this year,” Shufelt said.
The company’s success is largely attributed to growing health and wellness trends that are driving consumer interest in nonalcoholic beverages.
More than 40% of Americans say they are actively trying to drink less alcohol in 2024, according to recent data by NCSolutions. That percentage jumps to 49% when surveying millennials and 61% for Generation Z, according to the data.
Established beer companies like Heineken, Constellation Brands-owned Corona, Anheuser-Busch’s Budweiser and even Diageo’s Guinness have also hopped on the trend, introducing nonalcoholic beer offerings of their own.
“We want to give people beer they can drink seven nights a week and feel good about,” Shufelt said. “We’ve invested over $100 million in our manufacturing which has really differentiated quality that this segment has never seen before.”

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