➡️ Did someone forward you this email? If you would like to receive this information directly, every morning before the markets open in New York, sign up here.
ONE BIG THING
China’s AI labs are challenging American ones—and beating them on cost
In mid-July, online sleuths who obsessively track the internet for signs of new AI models started to whisper about the latest offering from Moonshot AI, the Beijing-based artificial intelligence startup behind the Kimi large language model: Something big was coming. Moonshot AI’s latest model didn’t just live up to the hype—it raised the stakes, Fortune’s Nicholas Gordon reports.
On July 16, Moonshot debuted Kimi K3, the largest open-source model ever released, and promised it could perform close to the level of Anthropic’s Fable 5—perhaps the most powerful publicly available model on the market today—at a fraction of the cost.
Kimi K3 blew up the timeline: Chinese AI is now cheap enough and good enough that even U.S. startups and Fortune 500 companies are quietly plugging the models into their operations to rein in spiraling AI budgets. It’s a remarkable closing of the gap that China achieved despite Washington imposing export controls to choke off China’s access to the world’s most advanced chips.
THE MARKETS
Stocks are up as Chinese chipmaker CXMT sets new market cap record
- S&P 500 futures were up 0.95% this morning. The index rose 0.05% in its last session.
- In Europe, the Stoxx 600 was up 0.68% in early trading, and the U.K.’s FTSE 100 was up 0.44% before lunch.
- Asia: South Korea’s KOSPI was up 0.97%. Japan’s Nikkei 225 was up 0.5%. India’s Nifty 50 was up 1%. China’s CSI 300 was up 1.15%.
- Brent crude was $89 per barrel this morning, down from a high over $100 last week.
- Bitcoin was at $65K.
Shares in chipmaker CXMT soared on their stock market debut in China today, closing up 465.82% and—at $484 billion—briefly making the company the largest by market cap in China. CXMT competes with Micron, SK Hynix, and Samsung, and is a supplier to Apple.
As stocks climb ever higher, bullish sentiment declines. This chart from Bespoke Investment Group shows “bullish sentiment among individual investors … hit its lowest level of the year this week, dropping 15.3 percentage points down to just 29.6% for the biggest weekly drop” since 2021.
MORE FROM FORTUNE
The U.S. government invested $27 billion in corporate stakes. Good luck finding them – Eva Roytburg
Amazon and Microsoft are spending $400 billion on AI—and investors are low on patience – Amanda Gerut
McKinsey: Global households got $40 trillion richer in 2025 as the paper wealth economy swelled to $1.8 quadrillion – Nick Lichtenberg
AI and the ‘skinny hamburger, fat bun’ problem — why the future of work needs to look more like a pizza – Nick Lichtenberg
China is using the steel playbook on AI — and America’s tech billionaires are standing in the blast zone – Nick Lichtenberg
Money usually wins elections. Billionaires have already poured $433 million into the 2026 midterms—and 80% of it is going to Republicans – Sydney Lake
New York City women are making up to $30,000 per month by renting out their closets to strangers – Sarah Glodek
THE FED
There’s a chance—just a chance—the Fed will hike interest rates on Wednesday
The CME Fedwatch index shows that interest rate traders have become far less sure that U.S. Federal Reserve Chairman Kevin Warsh will keep rates on hold when the FOMC meets on Wednesday. Back in May, speculators thought there was a 99% certainty that the base interest rate would stay at the 3.5% level. Today, only 62% think that. Moreover, 33% think it will move up.
Jessica Rindels at Goldman Sachs counted five members of the FOMC who have made remarks suggesting they are prepared to raise rates since the last meeting, in a note dated July 24.
“Our base case is that the Fed will stay on hold at 3.5-3.75% in July. But the spike in oil prices has made it a close call,” Bank of America’s Aditya Bhave said in an email. ”Chair Warsh faces a difficult choice. Not hiking could challenge the Fed’s credibility on inflation. But raising rates would go against his framework of looking through supply shocks. We think July is Warsh’s call as he has enough votes either way. He has strategic incentives to hike soon.”
IRAN
Peace talks resume as U.S. and Iran suspend deadlocked conflict
The U.S. suspended its attacks on Iran for a second straight night to give peace talks a chance, according to U.S. Ambassador to the UN Mike Waltz. He denied that it was because the U.S. is running down its missile stocks. Iran has also paused its strikes.
The talks are focused on whether Iran is willing to permit a certain number of ships to transit the Strait of Hormuz via the southern route close to Oman, which is controlled by the U.S. Navy.
- “The top U.S. military commander in the Middle East, Adm. Brad Cooper, recommended stopping the bombing campaign around the Strait of Hormuz because it has reached the limit of its effectiveness, according to two sources with knowledge of his position,” Axios reports. Although the war has significantly degraded Iran’s ability to harass shipping, Centcom has not taken out the remaining 20% of sites it identified as targets for bombing.
There is a “debate” inside the White House about how many missiles the U.S. has left and when they should be used, the WSJ reports.
President Trump spent hours last night posting AI-generated memes about himself on Truth Social, many of them depicting him bombing Iranian ships.
CHART OF THE DAY
Data from Asia suggests AI is replacing, not creating, new jobs
AI is not creating new tech jobs, according to data from Oxford Economics, and in fact employment in the tech sector has declined as a share of the total job market in some countries where AI’s contribution to the economy has increased. The data comes with caveats: It only reflects what is happening in selected Asian countries, such as Taiwan and Singapore, where tech jobs make up no more than 8% of total jobs.
Nonetheless, “The high-tech employment share has remained broadly unchanged across most Asian economies since the AI boom started and has declined in countries where its contribution to the economy has increased, such as Malaysia and Singapore. This suggests higher production has been met primarily through rising capital inputs and productivity gains rather than additional hiring,” analyst Alexandra Hermann Prasad said in a note.
NUMBER OF THE DAY
$10 million
Members of Gen-Z think they will need a salary approaching $700,000 and a net worth near $10 million to experience “financial success,” according to this chart (below) from Deutsche Bank.
“Some theories suggest the ease of ‘aspirational connections’ and ‘dream scrolling’ on social media has fueled sky-high expectations for Gen-Z. In fact, one survey shows that Gen-Z thinks they need twice as much wealth and triple the annual salary as the previous generation to achieve ‘financial success’,” analysts Luke Templeman and Galina Pozdnyakova said in a recent paper.
Note the column on the far right—which reflects reality:
THE FRONT PAGES TODAY
Meet the Woman Who Stands to Inherit Much of Jeffrey Epstein’s Fortune – NYT
China memory chipmaker CXMT skyrockets 500% in blockbuster Shanghai debut – CNBC
Prosecutors call for Barclays protesters to be sentenced under UK terror laws – FT
Fed Faces Growing Pressure to Hike Rates as Price Risks Rebound – Bloomberg
Nvidia in Talks With OpenAI to Guarantee $250 Billion Financing for Data Center – WSJ
Netflix exec goes ballistic after being fired for stunning ‘trust exercise’ confession at retreat: suit – NYT
ONE MORE THING
College-educated women are ‘skimming’ off the highest-earning men without degrees
The ratio of college-educated men to college-educated women has fallen from 1.8 to 0.8 over the decades, and there are now 1.6 million more women than men enrolled in four-year colleges nationwide, according to a study by economists Clara Chambers of Yale, Benjamin Goldman of Cornell, and Joseph Winkelmann of Harvard.
At the same time, the share of marriages in which the wife has a four-year degree and the husband doesn’t has quadrupled, from 2.3% of all women in the 1930 birth cohort to 9.6% in the modern era. Crucially, they’re marrying the highest earners without college degrees.
That pattern matches what Institute for Family Studies researchers have called “skimming” — college-educated women aren’t rejecting non-college men wholesale, but they disproportionately end up with the most economically stable ones, leaving less-stable non-college men further behind in the marriage market.
