August 20 Financial Breakfast: Meta considers a comprehensive reduction of its AI department, Nasdaq falls 1.46%, Bitcoin and Ethereum plummet!

According to The New York Times, Meta, the parent company of social media platform Facebook and messaging software WhatsApp, is considering a comprehensive reduction in the scale of its artificial intelligence (AI) department. Investors are leaning towards caution ahead of the Jackson Hole global central bank annual meeting, with the Nasdaq falling 1.46%, large tech stocks under pressure, and Bitcoin and Ethereum also experiencing significant declines. Interest rate futures indicate that the Federal Reserve is expected to cut rates twice this year, each by 25 basis points, with the first rate cut window locked in for September.

The three major U.S. stock indices generally fell, with the Dow Jones rising 10 points; the S&P 500 down 0.59%; the Nasdaq dropping 1.46%, closing at 21,314 points; and the Golden Dragon Index, which reflects the performance of Chinese concept stocks, falling 0.9%. European stocks performed well, with shares in the UK, France, and Germany rising 0.34%, 1.21%, and 0.45%, respectively, with UK stocks hitting a historic closing high. In terms of popular stocks, Home Depot, the largest home improvement retailer in the U.S., saw ideal same-store sales growth in July, with its stock price soaring 3.1%; Nvidia's stock price closed down sharply by 3.5%, while Amazon, Alphabet, Meta, and Netflix fell between 1% and 2.5%. Palantir dropped another 9.4%, sliding for the fifth consecutive trading day from its record high.

The U.S. dollar index rose 0.15% to 98.28; the euro/dollar fell 0.13%, marking two consecutive days of decline. The dollar/yen fell 0.13%, with a rebound stalling at 148.0; gold fell 0.52%, reporting at 3,316; WTI crude oil fell 0.93%, stabilizing at 61.5; Bitcoin fell 2.72%, reporting at $113,100; and Ethereum fell 4.59%, reporting at $4,114.

Macro News

U.S. White House: Plans for a meeting between Putin and Zelensky are underway

U.S. White House Press Secretary Karine Jean-Pierre stated on Tuesday that plans for a bilateral meeting between Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky are currently in progress, discussing various options. According to Politico, sources close to the U.S. government revealed that the White House is planning a possible meeting of the leaders of the U.S., Russia, and Ukraine in Budapest, Hungary, hoping to end the prolonged war between Russia and Ukraine. The U.S. Secret Service is preparing for this summit, with Budapest being the White House's preferred location.

However, there are no signs of easing in the Russia-Ukraine conflict, as Russia launched its largest airstrike against Ukraine in over a month on Tuesday. On the same day, Trump, in an interview with Fox News, acknowledged that Putin may not want to reach an agreement at all, believing that in a few weeks, we will know Putin's intentions. European leaders are weighing the possibility of taking more sanctions to increase pressure on Russian President Putin as part of a broader push to end the war in Ukraine.

As the Ukraine crisis shows signs of cooling, European defense stocks plummeted by 2.6%, with Italian arms manufacturer Leonardo's stock price dropping by 10.2%, and Germany's Hensoldt falling by 9.6%. The UK stock market hit a historic closing high, with the FTSE 100 index closing at 9,189 points, up 0.34%. Vandana Hari, founder of Vanda Insights, believes that the path to resolving the Russia-Ukraine conflict has opened, but it may be a long road ahead, and she expects oil prices to remain in a wait-and-see mode The United States includes 407 categories of steel and aluminum derivative products in the tariff list

The U.S. Department of Commerce announced on Tuesday that it has added 407 product categories to the steel and aluminum tariff list, with a tax rate of 50%. The statement from the Department of Commerce indicated that the newly added list covers a wide range of products, including wind turbines and their parts, mobile cranes, railway vehicles, furniture, compressors, and pump equipment, among hundreds of others. Freight industry insiders described that any shiny metal or products slightly related to steel and aluminum are likely to be included in the tariff list. The expanded tariff list officially took effect on August 18.

U.S. new home starts rise to a five-month high, builders remain cautious

New home starts in the U.S. rose to a five-month high in July, primarily driven by a further rebound in multi-family housing construction. Government data released on Tuesday showed that new home starts increased by 5.2% last month, at an annualized rate of 1.43 million units, exceeding market expectations. Multi-family housing starts in July grew nearly 10%, at an annualized rate of 489,000 units, marking the fastest growth rate since mid-2023.

Despite the rebound in new home starts, U.S. home builders have become more cautious over the past two years. Doubling mortgage rates have limited demand and led to the highest level of new home supply since 2007. Although developers have cut prices and offered numerous incentives, residential construction has dragged down the economy in four of the past five quarters. July building permits fell by 2.8%, at an annualized rate of 1.35 million units, the lowest in five years.

Bowman: The Federal Reserve's view on AI and cryptocurrency is about to change

Michelle Bowman, a member of the U.S. Federal Reserve Board and Vice Chair for Supervision, stated that banks and regulators must embrace the benefits brought by new technologies such as artificial intelligence and cryptocurrency, or risk diminishing their role in the economy.

Bowman indicated that change is imminent, and ideally, regulators will allow the use of new technologies to surge in ways that benefit the banking system; failing to do so could result in the banking system losing its connection with consumers, businesses, and the overall economy. Bowman called on the industry to help regulators better understand blockchain and digital assets, as well as the potential of using new technologies to address issues like fraud.

U.S. Commerce Secretary: Intel must exchange equity for government subsidies, hinting that TSMC and Samsung may follow suit

U.S. Commerce Secretary Gina Raimondo made it clear on Tuesday that Intel must hand over equity to the U.S. government in exchange for funding from the U.S. CHIPS Act, to secure the returns that Americans deserve. This news drove Intel's stock price up 7% on Tuesday. Earlier reports indicated that the Trump administration was considering holding a 10% stake in Intel, which, if realized, would make the U.S. government its largest shareholder.

Raimondo emphasized that the government's potential stake would consist of non-voting shares and hinted that Trump might require other companies receiving funding from the CHIPS Act, such as TSMC and Samsung, to make similar arrangements.

Intel and SoftBank also announced on Monday that they have reached an agreement, with SoftBank investing $2 billion for approximately 2% equity in Intel, becoming the company's fifth-largest shareholder. Intel had previously been approved for $7.9 billion in government subsidies, while TSMC received $6.6 billion to support its facility construction in Arizona Taro Kono: Japan Must Gradually Raise Interest Rates

Taro Kono, a senior member of the ruling Liberal Democratic Party and considered one of the candidates for the next Prime Minister of Japan, stated in an interview with Reuters that Japan must raise interest rates and reorganize its finances to boost the weak yen. He believes that having real borrowing costs remain negative for an extended period is undesirable, and it would be better to start raising interest rates sooner, although he feels that the rate hikes "have come too late."

He also mentioned that the weak yen was once seen as a blessing for Japan's export-dependent economy, but it has now become a source of severe inflation, which is eroding corporate profits and harming the interests of pensioners. He said that the best way to address rising living costs is to reverse the yen's weakness and seek to strengthen the yen. The government and the Bank of Japan must reach an agreement on a new economic framework to replace the so-called "Abenomics." The Bank of Japan should gradually raise interest rates, while the government should restore fiscal health based on a new agreement that replaces "Abenomics."

Market Overview

U.S. Stocks: The three major U.S. stock indices were mixed, with the Dow Jones up 0.02%, the S&P 500 down 0.59%, and the Nasdaq down 1.46%.

European Stocks: European stock markets rose across the board, with the German DAX 30 index up 0.45%. The French CAC 40 index rose 1.21%. The UK FTSE 100 index increased by 0.34%.

Bond Market: The yield on the U.S. 10-year benchmark Treasury bond is about 4.31%, down 2 basis points from the previous trading day.

Commodities: Gold fell 0.54%, trading at $3,315 per ounce. WTI crude oil dropped 0.93%, priced at $62.0 per barrel.

Foreign Exchange: The U.S. dollar index rose 0.15%, reported at 98.28. The USD/JPY fell 0.13%, and the EUR/USD also decreased by 0.13%.

Cryptocurrency: Bitcoin fell 2.92% in the last 24 hours, currently priced at $112,870. Ethereum dropped 5.55% in the last 24 hours, currently at $4,075.

Hong Kong Stocks: The Hang Seng Index night market futures closed at 24,977 points, down 143 points, compared to the previous day's closing of 25,122 points, a discount of 146 points, with a turnover of 9,234 contracts. The night market futures for the National Index closed at 8,955 points, a discount of 51 points compared to the previous day's closing.

Global Company News

Meta Reportedly Considering Major Cuts to AI Department

According to The New York Times, Meta, the parent company of social media platform Facebook and messaging app WhatsApp, is considering significant cuts to its artificial intelligence (AI) department. The report states that Meta is expected to announce on Tuesday that it will split its Superintelligence Labs into four departments, with one focusing on AI research; another focusing on a potential powerful AI called "Superintelligence"; a third department focusing on products; and a fourth department focusing on data centers and other AI hardware infrastructure.

This restructuring may be the last of its kind for the foreseeable future, aimed at better organizing Meta to achieve its superintelligence goals and to develop AI products more quickly to compete with other companies. It is expected that some senior AI executives will leave, and since the number of employees in the AI department has grown to several thousand in recent years, Meta is also considering an overall reduction in the size of its AI department, including layoffs or transferring employees to other departments within the company NVIDIA plans to develop a scaled-down version of the Blackwell chip for China

American artificial intelligence (AI) chip manufacturer NVIDIA is reportedly developing a new AI chip, B30A, based on its latest Blackwell architecture for China, which is more powerful than the H20 currently approved for sale in China. NVIDIA stated to CNBC on Tuesday that the group is evaluating various products to formulate the company's development roadmap to be well-prepared for competition within the scope permitted by the government.

Altman: GPT-6 will bring true personalization

OpenAI CEO Sam Altman revealed that GPT-6 is on the way, and its release will be shorter than the gap between GPT-4 and GPT-5; according to Altman, GPT-6 will not only respond to user inquiries but also adapt to users, allowing people to create chatbots that reflect personal preferences. He believes that memory is key to truly personalizing ChatGPT, as it needs to remember who you are—your preferences, habits, and quirks—and adjust accordingly. People want AI to have memory, and they hope that product features can understand them.

Today's Key News Preview

China's one-year loan market quoted interest rate as of August 20

Reserve Bank of New Zealand announces interest rate decision

Reserve Bank of New Zealand Governor Orr holds a press conference

Germany's July PPI month-on-month

UK's July CPI month-on-month

UK's July Retail Price Index month-on-month

European Central Bank President Lagarde attends a meeting

Eurozone's July CPI year-on-year final value

Eurozone's July CPI month-on-month final value

US EIA crude oil inventory for the week ending August 15

US EIA Cushing crude oil inventory for the week ending August 15

US EIA strategic petroleum reserve inventory for the week ending August 15

Federal Reserve Governor Waller speaks at a blockchain seminar

Federal Reserve releases minutes of the monetary policy meeting

New York crude oil September futures complete final trading on the exchange

Federal Reserve's Bostic speaks on economic outlook