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Today’s agenda: Alaska summit; UK non-dom exodus fears; French borrowing costs; US consumers; and Zelenskyy’s darkest hour.
Good morning. We begin with an exclusive story on Chinese artificial intelligence company DeepSeek, which has delayed the release of its new model after failing to train it using Huawei’s chips.
What we know: DeepSeek encountered persistent technical issues during its R2 training process using Ascend chips, prompting it to use Nvidia chips for training and Huawei’s for inference, according to three people familiar with the matter. The start-up was encouraged by Chinese authorities to adopt Huawei’s Ascend processor rather than use Nvidia’s systems after releasing its R1 model in January, the people said.
Why it matters: The difficulties, which forced DeepSeek to push back the model’s targeted launch from May, show how Chinese chips still lag behind their US rivals for the critical task of model training and highlight the challenges facing Beijing’s drive to be technologically self-sufficient.
The Financial Times this week reported that Beijing has demanded that Chinese tech companies justify their orders of Nvidia’s H20, in a move to encourage them to adopt domestic chips. But industry insiders have said the Chinese chips suffer from stability issues, slower inter-chip connectivity and inferior software compared with Nvidia products. More on DeepSeek’s stumble.
Here’s what else we’re keeping tabs on today:
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Economic data: The UK and EU have preliminary second-quarter GDP estimates. The UK also releases trade figures for June. France publishes CPI inflation rate for July.
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Trade disputes: China’s preliminary 75.8 per cent duty on Canadian canola seed goes into effect, in an escalation of trade tensions between Beijing and Ottawa that has pushed down futures prices on fears of a supply glut.
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Marshall Islands: The Pacific island nation makes its football debut with its first international match in the US state of Arkansas today.
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Results: Admiral, Applied Materials, Aviva, Carlsberg, Deere & Co, Hapag-Lloyd, RWE, Savills, Standard Bank, Swiss Re and Thyssenkrupp report earnings. See our Week Ahead newsletter for the full list.
Five more top stories
1. Donald Trump promised “very severe consequences” for Russia if its leader Vladimir Putin refused to agree to end the war with Ukraine at tomorrow’s summit in Alaska. The US president issued the threat after holding talks with European leaders that alleviated concerns about territorial concessions. Read the rundown of yesterday’s meeting.
2. Fears of a non-dom exodus from the UK have been allayed by initial tax data, which suggests that total numbers leaving the country are in line with — or even below — official forecasts. The findings will be a relief to UK chancellor Rachel Reeves after a series of surveys suggested her tax policies had prompted huge numbers of wealthy individuals to flee the country.
3. A top Federal Reserve official has warned rate-setters against “lurching” towards new cuts before inflation is under control, even as traders grow certain that the US central bank will lower borrowing costs in September. The hawkish tone from Austan Goolsbee came as markets began pricing in a 25 basis-point cut.
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Fed chair race: Trump said he has narrowed his list of contenders to head the central bank to “three or four” candidates and left the door open to naming a shadow successor before Jay Powell departs.
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Dispatch from Cincinnati: In the Ohio hometown of big US companies and vice-president JD Vance, consumers are shrugging off anxiety on tariffs.
4. France’s long-term borrowing costs are closing in on Italy’s for the first time since the global financial crisis, as nervous bond investors put the EU’s second-biggest economy on a level with a country that has been one of its most troubled borrowers. Yields on 10-year French government bonds have jumped above 3 per cent over the past year. Read what the convergence means.
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UBS headcount: The Swiss lender is on track to miss an internal target to cut its workforce to 85,000 by the time it completes its integration of Credit Suisse next year.
5. Exclusive: Four Boston Consulting Group staff quit the team advising on a new aid system for Gaza in the early stages of the work, raising concerns about the project months before it spiralled into a reputational crisis for the firm. Read the full report.
The Big Read
Diminished at home by a political crisis, Volodymyr Zelenskyy is trying to shape this week’s Alaska summit between Trump and Putin. Confined outside the room where his country’s fate will be decided while losses on the frontline pile up, Ukraine’s president is facing his darkest hour yet.
We’re also reading . . .
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‘Money mules’: The UK’s financial regulator is alarmed by a sharp rise in the number of people letting criminals use their bank accounts to launder funds.
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PIF writedown: Saudi Arabia’s sovereign wealth fund has cut $8bn from the value of its holdings in the kingdom’s gigaprojects.
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The battle of Orgreave: John Gapper was at a decisive confrontation of the 1984-85 miners’ strike in the UK. Here’s what he saw.
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Fur parents: With fewer children and grandchildren to fawn over, Italians are channelling more of their emotional energy to pets, writes Amy Kazmin.
Chart of the day
Google, Amazon, Microsoft and Meta will spend more than $400bn on data centres in 2026 — on top of more than $350bn this year. But that is just a fraction of the spending required to build the data centres needed to power the artificial intelligence era: one of the biggest movements of capital in modern history. So who else is joining to cash in on the $3tn AI building boom?
Take a break from the news . . .
It’s getting hotter — and that’s forced Robert Armstrong to make the case for a professional faux pas: wearing shorts in the office.
