Musk Clashes with Brazil, Congress Targets Chinese Biotech Companies, Tencent Rethinks Gaming,

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Aug 30, 2024

House Plans Votes on Biosecure Act, Other Measures Hitting China - Bloomberg

House Republican leaders plan to vote on measures targeting Chinese companies early next month, including a bill to bar federal contractors from doing business with five Chinese biotechnology firms. The Biosecure Act passed the House Oversight Committee in May and would affect five companies to start: BGI Group, MGI, Complete Genomics, WuXi AppTec, and WuXi Biologics. The bill has strong support in both the House and Senate, but Senator Rand Paul could potentially block its passage. The companies have argued that they do not pose a risk to national security and are focused on improving health innovation. Lawmakers were also told to expect votes on other measures restricting business with Chinese companies.

Tencent, NetEase Rethink Japan Approach as Game Strategy Stalls - Bloomberg

Jake Sullivan, President Joe Biden's national security aide, visited China last year to discuss US tech curbs.
Huawei rolled out a new phone or AI chip during the visit, which led to memes on Chinese social media branding Sullivan as a "Huawei ambassador."
US officials described the technical aspects of Huawei's phone as mediocre and believe US efforts to maintain a technological edge on China are working.
The US actively negotiates with Dutch and Japanese officials to further restrict Beijing's ability to produce advanced semiconductors. The US has also banned China from buying the most advanced AI accelerators from Nvidia Corp. and Advanced Micro Devices Inc.

Autodesk Raises Outlook After Activist Investor Criticism - Bloomberg

Autodesk raised its full-year earnings outlook to $8.18-8.31 per share, topping analysts' average estimate, following pressure from activist investor Starboard Value LP. The company has been scrutinized since delaying its financial filings in April due to an accounting investigation. CEO Andrew Anagnost has replaced its CFO and Starboard has pushed for changes such as increasing margins and considering the ouster of him. Disciplined execution is driving efficiency and margins that are among the best in the industry, driving sustainable shareholder value over many years. The stock rose about 5% in extended trading after closing at $258.23 in New York.

Data Centers Face Seven-Year Wait for Power Hookups in Virginia - Bloomberg

Dominion Energy expects the time to connect large data centers to increase by 1 to 3 years.
The longer wait time only applies to data centers that need more than 100 megawatts of electricity.

Musk’s Clash With Brazil Deepens, Threatening X and Starlink - Bloomberg

A top court justice in Brazil has blocked SpaceX's Starlink bank accounts to force Elon Musk to pay fines.
Musk has lashed out at the justice, threatening to block X in Brazil if it doesn't appoint a legal representative.

Telegram Founder Pavel Durov’s Indictment Thrusts Encryption Into the Spotlight - New York Times

The criminal charges against Pavel Durov, the founder of Telegram, raised concerns in Silicon Valley about encryption and the app's approach to privacy and security.
French authorities accused Telegram of providing cryptology services aimed at ensuring confidentiality without a license, which raised eyebrows at US tech companies including Signal, Apple, and Meta's WhatsApp.
Some Silicon Valley companies believe that could damage the credibility of encrypted messaging apps writ large, putting them in a tricky position of whether to rally around their rival. encrypted messaging has been a long-running point of friction between governments and tech companies around the world, while law enforcement and governments have argued that the technology enables illicit behaviors. (
Signal and WhatsApp are popular messaging apps that are encrypted by default, while Telegram requires users to manually opt into encryption through a hard-to-find setting within the app. The quality of Telegram's encryption has been debated by security experts.

Can China Tech Find a Home in Silicon Valley? - New York Times

Chinese entrepreneurs and venture capitalists are seeking opportunities outside their home country for growth.
Chinese tech professionals are moving to Silicon Valley for opportunities they don't believe are available in China anymore
Investors and entrepreneurs are seeking the next China due to China's economic slump and government clampdown on private companies
The heightened tensions between China and the United States make it difficult to operate as a Chinese-based business with international ambitions
Venture capitalists used to raise money from funds managed by America's university endowments, retirement pensions, and wealthy individuals to invest in Chinese start-ups
Both governments have made it difficult for Chinese companies to list stock for sale in New York, their main way to cash in
14 Chinese venture capitalists and entrepreneurs interviewed are working in Silicon Valley or making plans to do so
Most requested anonymity to avoid attracting attention from Beijing or Washington.

Hong Kong Journalists Convicted of Sedition in Stand News Case - New York Times

Two former editors of Stand News, Patrick Lam and Chung Pui-kuen, have been convicted of conspiring to publish seditious materials on the liberal news outlet.
Hong Kong has a new national security law that targets so-called foreign interference and has led to a clampdown on dissent in the city's media.
Local news outlets already self-censor to survive and some foreign news organizations have left or moved out of Hong Kong due to increasing scrutiny from the authorities. The trial is the latest example of the authorities' campaign against dissent in Hong Kong that has seen scores of activists, opposition politicians, and ordinary citizens sent to jail. The verdict could impose an additional chilling effect on the local media industry that has been exercising self-censorship heavily since 2020. Hong Kong's press freedom ranking fell to 135th out of 180 countries and territories, according to an index compiled by Reporters Without Borders.

How Wall Street Learned About Last Week’s Labor Data Before the Public - New York Times

The Bureau of Labor Statistics (BLS) had a recent lapse in publishing revised payrolls data before they were available online.
The payroll revision data showed a large downward revision to job growth in 2023 and early 2024 was not published on the agency's website at 10 a.m. as scheduled due to a technical issue
Banks and research firms that serve hedge funds managed to confirm a closely-watched economic data as much as 20 minutes before the data was posted online
It is unclear how many investors got early access to the data or whether anyone actually traded on the information
Wall Street funds that make money by betting on every minor move in economic data managed to access the figures before the public at large
This incident highlights the blurry relationship lines between the government data provider and the financial firms that are among its heaviest data users
Going forward, the labor bureau will no longer have separate protocols for news releases and website updates
Senior staff will verify that the data are available to the public before responding to individual inquiries or providing data related to a current release

Africa’s Debt Crisis Has ‘Catastrophic Implications’ for the World - New York Times

African nations are facing crushing obligations to foreign creditors that have sapped growth and stoked social instability.
The continent's foreign debt reached over $1.1 trillion at the end of last year, with more than two dozen countries having excessive debt or at high risk of it
Africa's debt crisis is considered the worst yet due to the amounts owed and the huge increase in the number and type of foreign creditors
Economic stagnation, government corruption, and mismanagement have left many African countries vulnerable to brutal wars, military coups, and antigovernment riots
Debt overshadows nearly everything that happens in Africa, leaving less money for services like health care, education, and climate change
A wave of destabilizing debt defaults will end up severely undermining progress on the green transition with catastrophic implications for the entire world
Central banks in wealthy countries are fighting inflation with higher interest rates, further sapping purchasing power
Many African countries have zero per capita income growth in the past decade.

Elon Musk’s X braced for ban in Brazil amid fight with judge over accounts - Financial Times

Elon Musk's X expects to be banned in Brazil after refusing to meet a 24-hour deadline to name a legal representative in the country.
The social media platform closed its Brazil office last week after receiving a secret order from justice Alexandre de Moraes insisting it take down certain accounts or its legal representative would face fines or arrest.
X's legal representative resigned, leading to the freezing of her bank accounts, and the platform plans to publish all related court filings related to her illegal demands. b
Musk, a self-declared free speech absolutist, has repeatedly clashed with de Maraes over censorship requests to remove or suspend some accounts. b- The ban is likely to hurt X at a time when the company has been struggling to maintain financial health. - Musk has increasingly weighed in on foreign politics through the platform he bought for $44bn, championing rightwing politicians globally while attacking leftwing leaders.

Nvidia valuation falls almost $200bn after earnings report - Financial Times

Nvidia's latest earnings report failed to live up to Wall Street's expectations.
The declines trimmed more than $100bn from the Silicon Valley-based company's market value.

California’s divisive AI safety bill sets up tough decision for governor Newsom - Financial Times

California Governor Gavin Newsom will decide whether to sign or veto a controversial AI bill after it cleared its final hurdle in the state legislature.
The bill would enforce strict regulations on technology companies developing AI models in California
It would require safety testing for advanced AI models that cost more than $100mn to develop or require a high level of computing power
Developers would need to create a "kill switch" to turn off their models if they go wrong and face legal action by the state attorney-general if they are not compliant
They would also have to guarantee they will not develop models with hazardous capabilities and hire third-party auditors to assess safety practices
Critics argue that the bill burdens start-ups with onerous and unrealistic requirements and stifles innovation
Some of the largest technology and AI companies, including Google, Meta, and OpenAI, have expressed concerns about the bill
Supporters argue that it provides a clear regulatory framework for fast-developing technology and protects the public interest.

CrowdStrike is down but not out - Financial Times

CrowdStrike, a US cyber security group, experienced a massive IT outage on July 19.
The impact on this year's revenues is estimated to be about $100mn, a 2.5% cut compared to previous guidance
Investors are not convinced, with CrowdStrike's market value down by nearly $20bn since the outage
Legal risk from Delta Air Lines, which said the outage cost it $500mn, may be a factor in the perception of legal risk
Rival Palo Alto Networks and SentinelOne shares are up 10-20% suggesting a stronger competitive position relative to CrowdStrike
Existing customers may ask for discounts and extensions, but the impact from this may only be around $77mn over the next 12 months.

Nvidia shares fall even as revenue more than doubles - Financial Times

Nvidia's revenue more than doubled in the past quarter to $30bn, up 122% from a year ago and ahead of analysts' forecasts of $28.7bn.
The company sought to reassure investors that it would see "several billion dollars" in revenue this fiscal year from the next generation of its powerful artificial intelligence chips, despite hitting production problems. However, Nvidia's outlook for the current quarter fell shy of the most ambitious forecasts from analysts who have become accustomed to runaway results from the chipmaker.
Nvidia has authorised another $50bn in share buybacks and expects its data center revenue to grow significantly in the future. The company expects to ship several billion dollars in Blackwell revenue in the fourth quarter and continue into fiscal 2026. The latest quarterly results from Google, Microsoft, Meta and Amazon have shown the size of Big Tech's spending spree to build the infrastructure to train and run AI models.

China's AI Engineers Are Secretly Accessing Banned Nvidia Chips - Wall Street Journal

Chinese AI developers are using American chips like Nvidia H100 chips without importing them to China due to US export controls
They are working with brokers to access computing power overseas, sometimes using techniques from the cryptocurrency world to mask their identity
The tactic comes in response to U.S. export controls that have prevented Chinese companies from directly importing sought-after AI chips developed by US-based Nvidia
Chinese users can still bring Nvidia's chips to China by tapping a network of gray-market sellers, but the process is cumbersome and can't supply all the needs of big users
Decentralized platforms like Aw have emerged in the past two years to take advantage of slower activity in the cryptocurrency field and rent out computing power to AI developers
Buyers and sellers of computing power use a smart contract to extend the anonymity of cryptocurrency to the contract itself, with both parties using blockchain technology
Lawyers familiar with US sanctions say the middlemen connecting buyers and sellers aren't breaking any laws
Nvidia complies with export controls and expects its partners to do the same.

JD.com Shares Fall as Walmart Plans Up to $3.7 Billion Stake Sale - Wall Street Journal

Walmart is selling its stake in JD.com worth up to $3.7 billion, allowing it to focus on its strong China operations for Walmart China and Sam's Club.
The sale signals Walmart's confidence in its ability to compete in the retail market in China
Citi analysts raised their full-year adjusted net profit estimate by 9.6% due to JD.'s strong profit beat in June and potential for net margin expansion this year
Walmart can now focus on expanding its stores in China once it no longer owns JD., but analysts warn of potential competition in general merchandise and supermarket categories.

Alibaba, Tencent Cast Wide Net for AI Upstarts - Wall Street Journal

Alibaba and Tencent are investing billions in incubating China's OpenAI challengers, valuing at least six startups developing large language models at over $1 billion each.
Both companies have shifted focus to making profits after being hamstrung by regulatory clampdowns, Covid-19 pandemic, and a faltering Chinese economy in recent years
Generative AI has emerged as a rare exception to their newfound conservatism
Investment in AI startups is a strategic effort to strengthen their technological edge and expand market influence
40% of Alibaba's deals in China and 30% of Tencent's have targeted AI startups since 2023
China's AI-model arena is getting increasingly crowded, with more than 190 products now on the market, raising fears among some companies that they are falling behind
Computing tasks typically form the majority of capital expenditure of LLM startups
Investors provide computing power support in different ways, including renting out hardware, selling cloud computing at discounted rates, and offering funds earmarked for purchasing chips.

'Nvidia Day' Inspires Watch Parties and Memes, but Fanfare Doesn't Last - Wall Street Journal

Nvidia reported second-quarter earnings and revenue that exceeded Wall Street's expectations, but shares slumped about 7% in after-hours trading.
Nvidia is the best-performing stock in the S&P 500 this year, more than doubling in 2024 so far after more than tripling in 2023
The company is one of the most valuable companies in the world and has an outsize impact on the direction of the market benchmarks
Traders were betting on a swing of around $300 billion in Nvidia shares after the report, but a reaction to that degree hasn't materialized yet
Memes and predictions about the earnings flooded social media ahead of the report
Some market watchers questioned whether Nvidia's comments on his quarterly earnings call would be more important for the market than Federal Reserve Chair Jerome Powell's address in Jackson Hole, Wyo.

Warren Buffett Is Selling Bank of America. Maybe You Should Buy It. - Wall Street Journal

Berkshire Hathaway has been selling down its stake in Bank of America, but its motives are unclear and it has already earned billions of dollars on the investment.
BofA's bond portfolio could be a potential advantage as interest rates fall, with low-yielding bonds likely to rise in value and fixed-rate loans such as auto loans and home mortgages likely to offset the impact of rate cuts.
The bank expects its quarterly net interest income to be lower by roughly $225 million in the fourth quarter from the second quarter if the Fed makes three quarter-point cuts before the end of the year. b
Net interest income is expected to grow 5% in 2025, compared to smaller increases or declines for megabank peers Citigroup, JPMorgan Chase, and Wells Fargo. c) The market might be pricing in some of these tailwinds, but there is still uncertainty about the path of interest rates. d
Other variables such as loan growth and Wall Street deal making could also impact the bank's performance. e-commerce sales and trading opportunities could be attractive to investors. - The Dow Jones Market Data shows a potential for a potential sell-off in the future.