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Thursday, July 31st, 2025
World News - Trump Makes Trade Deal With Korea
FT
President Trump announced a trade deal with South Korea on Wednesday imposing 15% tariffs on Korean goods in exchange for $350 billion in US investments controlled by Trump, plus $100 billion in US energy purchases and additional investments to be announced during South Korean President Lee Jae Myung's upcoming White House visit. The agreement reduces the previous 25% car tariff to 15%, matching similar deals with Japan and the EU, and comes as countries rush to negotiate before Trump's August 1 deadline for implementing steep "reciprocal" tariffs. While South Korea maintains parity with Japanese and European competitors, the deal effectively eliminates the competitive advantage Korea previously held under its comprehensive free trade agreement with the US, which had allowed near-zero tariff rates on bilateral trade.
Tech — Big Tech Earning
Microsoft
Microsoft's market capitalization soared past $4 trillion in after-hours trading on July 30, 2025, following an earnings report that revealed a jump in Azure cloud revenue and the company's fastest revenue growth in over three years. The company reported that Azure and other cloud services brought in over $75 billion in fiscal 2025, a 34% increase from the prior year, fueling an 8% stock surge that lifted its value to about $4.1 trillion. This milestone makes Microsoft the second company, after Nvidia—which reached $4 trillion earlier in July—to join the exclusive $4 trillion club. Both firms have surpassed Apple on the market cap leaderboard, with Nvidia leading among big tech stocks in 2025, up 33% for the year, while Microsoft shares are up 22%, outpacing the S&P 500’s 8% gain. Apple, meanwhile, holds third place at about $3.2 trillion as its shares have declined 17% on investor concerns over its AI strategy.
Meta
Meta is accelerating its artificial intelligence investments, announcing that robust advertising revenue enables aggressive spending on AI talent, infrastructure, and data centers. In Q2 2025, Meta reported $47.5 billion in revenue—up 22% year-over-year—and raised its 2025 capital expenditure forecast to $66–72 billion, mainly to support next-generation AI capabilities. The company’s executives highlighted that AI-powered ad tools are already delivering meaningful revenue gains, fueling optimism for further growth. Meta’s approach includes lavish compensation to attract elite researchers, restructuring its AI division into Meta Superintelligence Labs led by Alexandr Wang, and acquiring a notable 49% stake in Scale AI. While expensive, this AI push differentiates Meta from its uneven hardware bets and is in step with competitors like Microsoft and Alphabet, all racing to build infrastructure and recruit talent needed for transformative AI. Investors rewarded Meta’s AI strategy, sending its shares up more than 10% after hours on the strong earnings and bullish outlook.
Economics — China’s Factory Activity Stumbles
China’s factory activity contracted more sharply than expected in July 2025, with the official manufacturing purchasing managers’ index (PMI) falling to 49.3—a six-month low—down from 49.7 in June and below the forecasted 49.7. This marks the fourth consecutive month of contraction, reflecting both weaker exports and persistent soft domestic demand despite a temporary tariff truce with the US. Non-manufacturing activity barely grew, with the services and construction PMI dipping to 50.1. The National Bureau of Statistics attributed the downturn to seasonal factors and significant weather disruptions, but recent data also show shipping volumes dropping and consumer confidence deteriorating, raising fears that China’s economic momentum may slow further in the second half of the year even after a strong first half exceeded the government’s 5% growth target.
Culture — The Dark Horse of AI Labs
Economists
Anthropic, an AI lab founded by former OpenAI researchers with a strong focus on ethical and safety-first principles, has rapidly emerged as a commercial powerhouse despite initial skepticism in Silicon Valley about putting mission above profit. Led by CEO Dario Amodei, Anthropic has seen its annual recurring revenue skyrocket—estimated “substantially beyond” $4 billion in 2025—by serving enterprise customers who value robust, trustworthy AI for business-to-business applications, mainly through its Claude family of models. The company’s success is rooted in a philosophy that treats safety as a scientific discipline, employing teams to audit and interpret models to proactively mitigate risks, and deliberately forgoing the pursuit of potentially addictive consumer products to focus on workplace tools instead. While this missionary zeal has required navigating awkward tradeoffs—such as raising capital from sources outside the company’s comfort zone—it has also driven wider industry improvements, as competitors are pressured to match Anthropic’s safety standards. Anthropic’s founders maintain that, as AI reshapes economies, prioritizing safety and democratic values is not only morally urgent but also commercially synergistic, attracting partners, customers, and investors even as it complicates growth.
The Daily Spark
Almost 90% of stablecoin use is crypto trading, which will likely continue to grow.
The big breakthrough will be if US dollar stablecoins will be used for retail payments globally.
If the US dollar stablecoin market grows into the trillions, it will significantly grow demand for US T-bills.
There are financial stability risks because money will be moved around quickly if depositors lose confidence in a stablecoin issuer.
Song Recommendation - Like Sunny Days, Like Rainy Days
Quote of the Day
“The desire to reach for the stars is ambitious. The desire to reach hearts is wise.”
― Maya Angelou