Weekly newsletter 125
All market and portfolio news for the week
Welcome to all new subscribers! Subscribers to Outperforming the Market get full access to the Barbell Portfolio, all my intrinsic value, 1-year and 3-year price targets in the Price Target Report, and real-time trade alerts when I place buy and sell orders. (I am fully invested in the Barbell Portfolio)
In addition, subscribers get a weekly deep dive on Fridays, a weekly newsletter on Mondays, and other earnings analysis, market review and portfolio review articles during the week. All links can be found consolidated here.
Articles posted in the last week
Market Updates
US job growth
US job growth picks up with help from public education hiring. US job growth exceeded expectations in June, with payrolls increasing 147,000, driven by a jump in state and local government employment, particularly in education. Private payrolls rose just 74,000 in June, the least since October, indicating a slowdown in hiring across the rest of the economy, with declines in manufacturing, wholesale trade, and business services. The jobless rate declined to 4.1%, and Treasury yields rose, taking pressure off the Federal Reserve to lower interest rates, as the report validated the Fed's patient stance toward rate cuts.
US job openings
US job openings in May climb to highest since November, driven largely by leisure and hospitality, and layoffs declined. Available positions increased by 374,000 to 7.77 million, exceeding consensus. The number of layoffs fell by 188,000 in May, bringing the layoff rate down to 1%, while hiring declined, led by drops in health care and manufacturing. The number of vacancies per unemployed worker rose to 1.1, and the quits rate edged up slightly, suggesting a stable labor market despite economic uncertainty.
US manufacturing activity
US manufacturing activity contracted in June for a fourth month, with orders and employment shrinking at a faster pace. The Institute for Supply Management (ISM)'s manufacturing index edged up 0.5 point to 49, indicating contraction, with bookings contracting by the most in three months and employment contracting for five straight months. Higher materials costs remain an issue for producers, with the ISM price measure ticking up to 69.7, near the highest level since June 2022, and companies are focused on accelerating headcount reductions due to a lack of clarity on demand.
US private payrolls
US private payrolls fell for the first time in more than two years in June as economic uncertainty hampered hiring, but low layoffs continued to anchor the labor market. Private payrolls dropped by 33,000 jobs last month, the first decline since March 2023, after a downwardly revised increase of 29,000 in May, the ADP National Employment Report showed on Wednesday. There were job losses in the professional and business services, education and health services, and financial activities sectors. But the leisure and hospitality, manufacturing, and construction industries added jobs.
Fed
Fed Bostic urges patience amid uncertainty, resilient economy. Bostic advocates for a wait-and-see approach to monetary policy amid economic uncertainty, citing the need to avoid reversing course on interest rates. He expresses concern that tariff-related price increases may lead to a slow trickle of price increases, causing elevated inflation readings over the next year or more. He also notes that higher US government debt levels could eventually affect policymakers, potentially "crowding out" other activities and impacting prices and employment in material ways.
Trump wins broad economic policy shift as House passes tax bill.
The House passed a $3.4 trillion fiscal package that cuts taxes, curtails spending on safety-net programs, and reverses much of Joe Biden’s efforts to move the country toward a clean-energy economy. President Donald Trump secured the passage of the bill, which he plans to sign on Friday, after leveraging his sway over the Republican party to overcome resistance from conservative hardliners and swing-state GOP moderates. Democrats opposed the bill, saying it will strip health care for millions of people who depend on Medicaid to fund tax cuts for the wealthy, while Republicans argue it will bolster economic growth with $4.5 trillion in tax cuts.
US lifts chip design export curbs as part of new China deal.
The Trump administration has lifted some export license requirements for chip design software sales in China as part of a trade deal. The US Commerce Department informed Siemens AG that it no longer needs government licenses to do business in China, and Siemens has restored full access to its software and technology for Chinese customers. The trade agreement allows shipments of chip-design software, ethane, and jet engines to China, provided Beijing speeds up approval of critical mineral exports.
OpenAI
OpenAI casts doubt on Robinhood’s new tokenized equity products, advising caution to customers and stating that the tokens are not company equity, and OpenAI did not collaborate on or endorse the offering. Robinhood's CEO responded that while the tokens aren't technically equity, they give retail investors exposure to private assets, and the firm will own the shares backing the tokens. This has sparked debate about the safety and function of tokenized equities for retail investors, and what those tokens actually represent.
OpenAI says it has no plans to use Google's in-house chip to power its products. The AI lab is in early testing with some of Google's tensor processing units (“TPUs”), but it has no plans to deploy them at scale right now. While it is common for AI labs to test different chips, using new hardware at scale could take much longer and would require different architecture and software support. Currently, OpenAI is actively using Nvidia's GPUs, and AMD's AI chips to power its growing demand, while developing its own chip.
Oracle
Oracle, OpenAI expands Stargate deal for more US data centers. OpenAI has agreed to rent a massive amount of computing power from Oracle’s data centers as part of its Stargate initiative. The rental will total about 4.5 gigawatts of data center power in the US, which could power millions of American homes. Oracle will develop multiple data centers across the US to meet the additional demand from OpenAI, with sites in several states under consideration.
Apple
Apple weighs using Anthropic or OpenAI to power Siri, instead of its own in-house models. Apple has had discussions with both companies about using their large language models for Siri, asking them to train versions of their LLMs that could run on Apple's cloud infrastructure for testing. Nevertheless, Apple's investigation into third-party models is at an early stage and the company has not made a final decision on using them.
Microsoft
Microsoft's next-generation Maia AI chip is facing a delay of at least six months, The Information reported on Friday. When the chip, code-named Braga, goes into production, it is expected to fall well short of the performance of Nvidia's Blackwell chip that was released late last year. Microsoft had hoped to use the Braga chip in its data centers this year, but unanticipated changes to its design, staffing constraints and high turnover were contributing to the delay. Like its Big Tech peers, Microsoft has focused heavily on developing custom processors for artificial intelligence operations and general-purpose applications, a move that would help reduce the tech giant's reliance on pricey Nvidia chips.
Microsoft signs deal to power Premier League’s AI tools, migrating the league's "core technology infrastructure" to its Azure cloud-computing service. The Premier League's mobile apps and website will feature an artificially intelligent chatbot powered by Microsoft's AI services, and the league's fantasy games will also use the technology. The deal replaces Oracle Corp.'s previous cloud-computing services arrangement with the Premier League, which expired at the end of the season earlier this year.
Microsoft cut around 9,000 jobs in the second major wave of layoffs this year, to control costs and increase spending on artificial intelligence. The layoffs will affect less than 4% of the company's total workforce, across teams, geographies, and tenure, and aim to streamline processes and reduce management layers. The job cuts may help offset rising spending on AI infrastructure and reflect a greater push to use AI tools internally, according to an analyst with Bloomberg Intelligence.
CoreWeave
CoreWeave receives the first AI server system based on Nvidia's newest high-end chip, the GB300 NVL72 rack of servers. The new system will allow CoreWeave's clients to develop and deploy larger, more complex AI models that are exponentially faster than ever before, with plans to deploy more systems throughout the year. The deployment underscores CoreWeave's increasing focus on renting cloud computing power to companies that need access to powerful Nvidia chips to train and run AI software.
Baidu
Baidu overhauls search engine with AI features, voice function to make it more like an AI chatbot. The company's search engine has grown bloated and complicated, and it wants to focus on natural language searches and voice searches in several Chinese dialects. Baidu is also rolling out its first image-to-video model to compete with rivals and hopes AI-generated search content will help advertising pick up.
BYD
BYD shelves plans to build a major plant in Mexico due to geopolitical tensions and uncertainty from US President Donald Trump's trade policies. The company remains interested in expanding in the Americas, but has no timeline to make a new investment, and wants to wait for more clarity before making a decision. BYD has opened its first factory outside Asia in Brazil, which will be capable of producing 150,000 vehicles annually, with plans to expand capacity to 300,000 cars in about two years.
Ripple
Ripple applies for US national bank charter as crypto eyes next frontier. Crypto firm Ripple is applying for a national bank charter in the United States, its CEO wrote in a social media post, following a similar move by stablecoin giant Circle. The move reflects a broader push by crypto firms for regulatory clarity and deeper integration with the traditional financial system. A charter would allow crypto companies to settle payments faster and cut costs by bypassing intermediary banks, while also providing a stamp of legitimacy after years of what they claim has been regulatory sidelining. Ripple's charter will need to be approved by the Office of the Comptroller of the Currency, a top banking regulator. An OCC spokesperson confirmed it had received a charter application from the company.
Figma
Figma disclosed higher revenue and profit for the first three months of 2025, as the cloud-based designer platform prepares to list on the NYSE more than a year after its $20 billion planned sale to Adobe was scrapped. The company's IPO is poised to be one of the most high-profile listings this year, signaling that concerns stirred by U.S. tariffs are quickly fading in the wake of a scorching equities rally. The company is also sharpening its focus on AI, with the company doubling down on the technology, co-founder and CEO Dylan Field wrote in a letter attached to the filing.
Surge AI
Scale AI’s bigger rival Surge AI seeks up to $1billion capital raise, as it seeks to capitalize on growing user demand amid Scale AI's recent customer exodus. The company, founded by former Google and Meta engineer Edwin Chen, is targeting a valuation of over $15 billion, cautioning that the talks are still in early stages and the final number could be higher. The funding would be a mix of primary and secondary capital that provides liquidity for the employees.