JPMorgan Chase has ended its lending relationship with Situational Awareness, the AI-focused hedge fund run by former OpenAI researcher Leopold Aschenbrenner, after large losses on concentrated bets tied to AI infrastructure. The fund had to sell most of its public equities to Ken Griffin's Citadel during a broad selloff in global chip stocks. It managed as much as $45 billion at its peak. Goldman Sachs, Citigroup and Bank of America remain brokers. The episode shows how quickly leverage can turn an AI conviction into a forced sale.
US consumer prices rose 3.4% in the 12 months to August and 0.4% from July, the Bureau of Labor Statistics reported, matching forecasts but keeping inflation well above the Federal Reserve's 2% target. Core prices, which exclude food and energy, rose 2.4% on the year. After the report, traders using CME FedWatch put the odds of a quarter-point hike at the September 16 meeting near 90%, up from about 70%. EY-Parthenon switched its call from a hold to a 25 basis point hike that would lift the funds rate to 3.75%-4%. It would be the first increase since 2023.
Oil prices moved above $100 a barrel as fighting in the Middle East widened, with Bloomberg reporting crude topping $109 at one point. Global bond yields jumped to multi-year highs and stocks in the United States and Europe slumped on Thursday as investors priced in a longer conflict and faster inflation. The dollar also gained as money moved toward safer assets. Companies continued to spend on AI capacity: Microsoft plans to build data-center capacity to about 38 gigawatts by 2032, more than triple its current footprint. Electric vehicle demand rose for a sixth straight month in August, led by Europe, according to Benchmark Mineral Intelligence.
China is putting 360 billion yuan, about $53.6 billion, into eight state-owned banks and insurance companies to strengthen its financial system as growth slows. The injection is led by the finance ministry and was announced by state news agency Xinhua. The Global Times said the capital will give institutions more resources to channel into credit for the real economy and strengthen their ability to withstand external shocks. The money gives the eight groups more room to absorb losses and keep lending, as banks face narrowing margins and rising bad loans tied to property and local government debt. Analysts say the funds may ease short-term pressure but will not on their own revive credit demand.
Global oil prices topped $100 a barrel this week for the first time since July, after U.S. forces destroyed five Iranian tankers carrying crude oil. U.S. Central Command said the strikes were a response to two attempts to hit a U.S. Navy warship with ballistic missiles in as many days. Iran has vowed retaliation, and the White House has threatened a stronger response. Crude is up more than 12% over the past month as the standoff around the Strait of Hormuz, a waterway that carries about one-fifth of the world's oil, keeps traders on edge. Analysts say shipping insurance costs are climbing, and higher energy prices now complicate the inflation picture for central banks as consumers face rising fuel costs.
Canada's counter-tariffs on American goods took effect at 12:01 a.m. on September 8, covering more than 700 US products worth about US$19.9 billion. Ottawa set rates of 15, 25 and 50 percent to match, dollar for dollar, the tariffs Washington placed on Canadian goods under Section 338 and Section 232 of US trade law. The move responds to a 50 percent US levy on about CA$20 billion of Canadian exports. Prime Minister Mark Carney said retaliation was unavoidable, while US Trade Representative Jamieson Greer said no new talks are planned. The measures hit US steel, dairy, electronics and other sectors, and end the arrangement that had exempted most cross-border trade from tariffs.
After-tax wage growth for lower-income US households reached 4.7 percent in August, outpacing the 3.5 percent recorded by higher-income households, according to the Bank of America Institute's monthly employment report. The figures flip the long-standing "K shape" of the recovery, in which high earners pulled ahead while lower earners lagged. Overall hiring cooled during the month, with estimated payroll growth slowing to 1.5 percent year over year from 1.8 percent in July. Bank of America economists said the data still points to a broadly resilient labor market, even as momentum fades, and separate institute data showed small-business hiring strengthening over the summer.
Volkswagen Group said Thursday that its supervisory board had approved a sweeping transformation plan that could remove about 50,000 jobs, including management positions, as Europe's largest automaker fights Chinese competition and trade costs. The company said its German factories can build about 500,000 more vehicles a year than it can sell and that it will cut roughly half of its vehicle offerings. Volkswagen did not say when the cuts would happen or how they would be spread across brands such as Audi, Porsche and Lamborghini. Employment in Germany has already fallen from about 275,000 in 2023 to 254,000 at the end of June. The plan is the company's biggest cost overhaul in years.
Canada's economy lost 42,000 jobs in August and the unemployment rate held at 6.4 percent, Statistics Canada reported Friday. Young workers aged 15 to 24 accounted for 19,000 of the losses as the summer hiring season ended. Economists called the report disappointing but said it was too soon to raise alarms, pointing to trade tension with the United States as a drag on hiring. The student jobless rate averaged 15.9 percent from May to August, two points lower than a year earlier. The figures contrast sharply with the United States, which added 162,000 jobs in August with unemployment at 4.1 percent. Analysts said the weak data cools any talk of interest rate increases by the Bank of Canada.
US employers added 162,000 jobs in August, a much stronger gain than forecasters expected and a clear rebound after weak hiring in July, the Labor Department reported Friday. The unemployment rate held steady at 4.1 percent. Economists surveyed by Bloomberg had expected only about 55,000 new jobs, and the government raised its counts for June and July by a combined 55,000. Hiring was concentrated in healthcare and hospitality, with factories and construction also adding workers. After the report, investors raised the odds of a September rate increase to about 60 percent. Many economists say next week's inflation report will matter more for the Federal Reserve's decision.