US, Europe Work on Ukraine Security; US Weighs 10% Stake in Intel | Bloomberg Brief 8/19/2025

US, Europe Work on Ukraine Security; US Weighs 10% Stake in Intel | Bloomberg Brief 8/19/2025

Brief Summary

This Bloomberg Brief episode covers key market and geopolitical updates. It discusses potential meetings involving Presidents Trump, Putin, and Zelenskyy, SoftBank's investment in Intel, and market reactions ahead of Jackson Hole. The episode also features insights on yield curve dynamics, the impact of Dutch pension reforms, and the Federal Reserve's potential actions. Additionally, it addresses U.S.-China relations, Nvidia's new chip for China, and security guarantees for Ukraine.

  • SoftBank invests $2 billion in Intel, U.S. considers a 10% stake.
  • Yield curve steepening driven by fiscal and inflation factors.
  • Trump proposes meetings with Putin and Zelenskyy for peace talks.
  • Nvidia prepares new chip for China amid regulatory scrutiny.
  • Focus on security guarantees for Ukraine and European involvement.

Intro

The show begins with a preview of the day's key topics, including President Trump's call for meetings between Presidents Putin and Zelenskyy, the Trump administration's consideration of a 10% stake in Intel, SoftBank's surprise $2 billion investment in Intel, and the stock market's performance ahead of retail earnings and the Jackson Hole Economic Symposium. The S&P 500 is slightly down, and there's tension on the long end of the yield curve.

First Look Movers

Valerie details premarket stock movements, highlighting SoftBank's $2 billion investment in Intel, which has caused Intel shares to rise by 6.5%. This follows the U.S. announcement of potentially converting Chip Act funding into a 10% equity stake. Intel's stock has increased over 25% since the CEO met with Donald Trump. Palo Alto Networks, a cybersecurity software firm, is also seeing shares jump 5.5% due to a bullish revenue forecast driven by strong demand for their AI-enabled software security systems. Additionally, drone stocks are trading positively following a report of a potential $50 billion deal between Ukraine and the U.S. to produce drones in Ukraine.

Sam Lynton-Brown, BNP Paribas Markets 360 Head of Global Macro Strategy

Sam Lynton-Brown from BNP Paribas discusses the steepening yield curve, attributing it to fiscal and inflation factors in the U.S. and fiscal issues and pension reforms in Europe, particularly in the Netherlands. He notes that the U.S. deficit is running lower than last year, and the Treasury plans to fund incremental financing through bills rather than bonds, suggesting long-end bonds could outperform. He identifies a key risk as the market pricing in less inflation credibility from the Fed, which could pressure U.S. markets. For Europe, he points out that the euro swaps curve is expected to steepen significantly. Regarding Jackson Hole, he believes it's tricky for the Fed, especially Powell, and the Fed's reaction will depend on employment data. He suggests that if Powell leans dovish, it might indicate a risk-mitigating 25-bit cut in September, possibly with a remessaging of the Fed’s reaction function.

Trending on the Terminal

The segment covers trending stories, including discussions within the Trump administration to take a 10% stake in Intel by converting some or all of the company's chips from the U.S. CHIPS Act into equity. SoftBank's $2 billion investment in Intel is also highlighted as a move to become a central player in AI. Additionally, Apple is expanding iPhone production in India, aiming to reduce dependence on China, and is producing all four iPhone models in India ahead of the next month's debut.

Front Page News

The front pages of major newspapers are reviewed, with most leading with the meeting between President Zelenskyy. Nvidia is reported to be producing a new, more powerful chip for India, with testing expected to begin early next month. Hamas has accepted a cease-fire proposal by Gaza, which includes the release of prisoners, though it's unclear if Netanyahu will accept the proposal. Lastly, Air Canada flight attendants have ended their strike, which was focused on higher pay and compensation for periods when the plane is not in motion.

First Look Movers

Valerie revisits premarket stock movements, reiterating Intel's 6% rise following SoftBank's $2 billion investment and the U.S. government's potential 10% equity stake. Palo Alto Networks is up 3% after raising revenue guidance due to strong demand for AI-enabled security products. Geopolitically, Ukraine and the U.S. are reportedly considering a $50 billion deal to invest in drone technology, boosting drone stocks in the U.S.

Keith Lerner, Truist Co-CIO and Chief Market Strategist

Keith Lerner from Truist discusses the market's proximity to all-time highs and tight credit spreads, expressing confidence in the market's ability to continue pushing higher due to strong earnings, particularly in the tech sector. He notes that the broadening of earnings to small caps is driven by small-cap tech, financials, and industrials. While acknowledging concerns about market concentration, he points out that the tech sector's year-over-year growth is not as extreme as during the dot-com bubble. He also addresses the presence of froth in certain market corners like Bitcoin and SPACs. Lerner believes tariffs still matter but companies have adapted. He touches on the potential for government involvement in corporate America, emphasizing the importance of relative earnings momentum and valuations in investment decisions.

What to Watch

The segment outlines key events for the day, including the imminent release of Home Depot's earnings, housing starts and building permit data, and a conversation with Fed Governor Michelle Bowman. Intel's shares are up 6.5% due to SoftBank's investment and the potential U.S. stake. Palo Alto's shares are also up more than 5.5% due to a stronger-than-presented forecast. Medtronic is adding directors to its board, with Elliott Management becoming a major holder. Overall, the market is quiet, with bonds and stocks barely moving, while oil is down slightly. The meeting between Zelenskyy and the coalition in Europe is also mentioned, along with Trump's push for bilateral and trilateral talks.

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