Good morning. Andrew here. As President Trump heads to Alaska this morning to meet with President Vladimir Putin of Russia, we take a look at some of the negotiating points that may arise — and affect business. We’re also thinking this morning about reports that the U.S. may take a direct stake in Intel. It would be relatively unprecedented. On one side, the federal government has already given Intel an extraordinary amount of money in the form of subsidies via the Chips Act. On the other, making the government a shareholder raises all sorts of questions about the kind of free-market capitalism that the U.S. has been trying to export around the world. What could it mean for the way our trading partners approach the U.S.? Will they become more protectionist and push for more of their own national champions? Or is this just a way to extract something from a struggling company? (Was this newsletter forwarded to you? Sign up here.)
What’s at stakeHeading into today’s summit meeting with President Vladimir Putin of Russia, President Trump has been trying to temper expectations. There’s a “25 percent chance this meeting will not be a successful meeting,” he told Fox News Radio yesterday. But the stakes couldn’t be any bigger. It is the first face-to-face meeting between the heads of the two global powers since Russia’s 2022 invasion of Ukraine, which upended global energy markets and prompted bruising Western sanctions on Moscow. The Kremlin-controlled media has already spun the talks as a public relations coup for Putin, a conclusion that President Volodymyr Zelensky of Ukraine regrettably shares. The hastily arranged talks have flabbergasted Europe. The Russian allies China, India and Brazil — weighed down by Trump’s tariffs — and the multinationals who operate in those countries will be closely watching, too. War, the future of NATO and potential economic cooperation are high on the agenda. Trump is calling for a cease-fire, seeing an end to the conflict as a top foreign policy aim. Among Russia’s many asks: getting sanctions lifted. “Putin probably has an advantage, largely because Putin is the old, well-schooled K.G.B. officer” trained in the art of persuasion and manipulation, Holger Schmieding, an economist at Berenberg Bank, told DealBook. “Whereas Trump is an intuitive guy who could go either this way or that way.” (The Times’s David Sanger games out how today’s talks could go down.) Putin’s objective, Schmieding added, is to appeal to Trump’s business interests, and “to get the discussion as much away from Ukraine as he possibly can.” Here’s what to watch: Sanctions and tariffs relief: Trump has warned of “severe consequences” if Russia doesn’t halt its war in Ukraine. Does that extend to Moscow’s trading partners like India, which has been hit by some of Trump’s steepest tariffs because it buys Russian oil? Treasury Secretary Scott Bessent suggested this week that it might. If so, companies, like Apple, which have in recent years built up manufacturing in India also have something riding on today’s talks. Who’s in the room? The Russian delegation includes Anton Siluanov, the finance minister, and Kirill Dmitriev, Putin’s envoy on foreign investment. Dmitriev’s presence could revive “the tempting prospect of resuming billions of dollars in lost U.S.-Russia commerce — as Dmitriev has framed it,” Charles Hecker, a geopolitical risk consultant who for decades advised Western companies on doing business in Russia, told DealBook. Could the talks be a first step toward normalizing economic ties? “I’m keeping in touch with a number of people in the business community who are watching this very closely,” Hecker said. It’s worth remembering though: Trade between Russia and the U.S. is tiny and not just because Russian industry is heavily sanctioned. “The business climate both legally and operationally on the ground in Russia is firmly anti-Western at the moment,” he added.
China’s economy slows again. Data out of Beijing this morning showed that industrial production, retail sales and investment in July far undershot economists’ forecasts. It’s the latest evidence that President Trump’s tariffs are hobbling the world’s second-biggest economy as trade-deal negotiations between the countries drag on. Shares in Intel rally on reports the U.S. government might buy a stake. Trump is said to have discussed the government acquiring a piece of the struggling chipmaker in a meeting this week with Lip-Bu Tan, Intel’s C.E.O., The Wall Street Journal and Bloomberg report. The president has repeatedly signaled his aim to upend the divide between government and business — including angling for “a golden share” from the Nippon Steel-U.S. Steel deal and striking a pay-for-play export pact with Nvidia and Advanced Micro Devices. Mississippi’s social media age-verification law gets the green light from the Supreme Court. The unanimous ruling could strengthen the prospects for similar laws in other states where officials argue such limits are needed to protect minors from online predators. An industry group representing social media platforms, including Instagram and X, argue these laws infringe on users’ First Amendment rights. It may be a temporary setback: In a brief, Justice Brett Kavanaugh wrote that the Mississippi law was “likely unconstitutional,” suggesting the tech giants could succeed in later legal challenges. Rate-cut optimism takes a hitThe S&P 500 notched a third straight record yesterday despite more alarming inflation data. Investors will get more key updates today with the release of retail sales and the University of Michigan consumer sentiment data. A recap: The Producer Price Index, which measures the inflation trends facing businesses, rose at the fastest monthly pace since March 2022, a period when quickly rising prices became a major political headache for the Biden White House. The data add to the Fed’s conundrum. Does the central bank cut interest rates to prop up a sagging labor market, even as inflation continues to run well above its 2 percent target? Wall Street and traders still overwhelmingly anticipate a quarter-point cut at the Fed’s next meeting in September. President Trump and Treasury Secretary Scott Bessent have said the central bank should cut by even more. But Alberto Musalem, the St. Louis Fed president and a voting member on rates, told CNBC yesterday that “it’s too early to say exactly what policy I will be able to support.” Inside the numbers:
The numbers are a bad sign for businesses. “Tariff-exposed goods are rising at a rapid clip, indicating that the willingness and ability of businesses to absorb tariff costs may be beginning to wane,” Matthew Martin, a senior economist at Oxford Economics, wrote in a research note yesterday. It’s dividing Wall Street on what comes next. “The P.P.I. suggests inflation isn’t the non-story some people thought it was after Tuesday’s C.P.I. print,” Chris Larkin, head of trading and investing at E-Trade, wrote. He added that a September rate cut was still likely. Bill Adams, the chief economist at Comerica Bank, wrote that the data puts more weight on the Sept. 5 jobs report to glean clues to the Fed’s next move. Seen and heard, pricing power editionLast week in this space, we reported how companies saw a consumer divide — between the haves and the have-nots — scrambling their profit outlooks amid President Trump’s trade war. On yesterday’s earnings calls, a different kind of split screen emerged: Companies that believe they can raise prices in response to tariffs, without pushing away key customers. And those who probably cannot. Here’s how companies put it: Birkenstock: The sandal maker’s sales in the Americas rose 16 percent last quarter. Birkenstock, which makes most of its shoes in Germany, said it was well positioned to manage 15 percent tariffs on the European Union, partly by raising prices. “Importantly, we saw no pushback or cancellations following the July 1 price increases implemented in response to tariffs,” Oliver Reichert, the company’s C.E.O., told analysts. “We don’t see any slowdown in consumer demand,” he added. Deere: The farm equipment manufacturer reported better-than-expected quarterly earnings. But shares dropped after it lowered its full-year outlook. Deere said it had been forced to sell some products at lower prices than anticipated, which dragged down results. “Customers remain cautious amid ongoing uncertainty,” the company said in its earnings release. “Demand continues to be pressured” by high interest rates, inventory issues and trade uncertainty, Chris Seibert, manager of investor communications, told analysts. Tapestry: The fashion company said tariff-related costs will reach $160 million this year, and weigh on profit, hitting its Kate Spade brand particularly hard. But executives said they felt confident about their pricing power, especially for Coach products. “We remain focused on driving higher full-price selling,” Joanne Crevoiserat, Tapestry’s C.E.O., told analysts. “We’re well-positioned to fully offset the impact of tariffs over time,” she added.
Talking A.I. with the C.E.O. of RobinhoodEvery week, we’re asking a C.E.O. how he or she uses generative artificial intelligence. Vlad Tenev, C.E.O. of the trading app Robinhood and co-founder of the A.I. start-up Harmonic, talked with DealBook’s Sarah Kessler about using A.I. with his children and how he frames its advantages to employees. The interview has been edited and condensed for clarity. How do you use A.I. in your personal life? If I’m trying to put my kids to sleep and I don’t want them to be on their iPads, it turns out A.I. is very, very good at the game “20 Questions.” It can also do “Jeopardy.” At one point they decided to ask A.I. if Santa was real. Chat GPT told them yes, because he’s real in children’s hearts, and makes them happy. And Grok immediately ruined their hopes. What do you make of that difference? It reflects the philosophies behind training the models. One is trained toward just giving you accurate information. The other one probably has more of an element of what it thinks makes humans happy. I think you can debate which one is a higher sign of intelligence. How is Robinhood using A.I.? Coding and software engineering is a big one. Between 25 and 50 percent of our code is machine-generated, and that includes A.I. code. Customer support is another big one. How do you explain that shift in a way that your employees don’t see as a threat? If you were the first accountant who figured out how to use spreadsheets, you had a huge advantage, and then eventually you became at a disadvantage if you weren’t using it. I think with A.I., it’s going to be the same thing, except faster. A lot of people ask, “If A.I. adoption leads to disruptions of the labor force, what’s going to happen to financial services?” And I actually think our customers will be more interested in financial services because they’ll have to rely on investing to make up for the potential labor force disruptions. So that’s why we care about making sure everyone can invest, and also about private market access, because a lot of these A.I. companies are private. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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