Key Points

• European Defense Stocks Slide as Peace Prospects Build: European equities edged higher, but defense names fell as Trump-Zelenskyy talks raised hopes for security guarantees and renewed peace negotiations.
• Trump Administration Weighs 10% Equity Stake in Intel: Washington is considering converting $10.9 billion in CHIPS Act grants into equity, potentially making the U.S. government Intel’s largest shareholder.
• OpenAI CEO Flags AI Market Bubble Amid Surging Valuations: Sam Altman warned of overheated investor sentiment in AI even as OpenAI pursues a $500 billion valuation, highlighting risks of inflated expectations.
• China’s EV Makers Boost Overseas Investment Amid Tariffs and Competition: Chinese automakers invested more abroad than at home for the first time, expanding factories in Brazil and Europe to counter tariffs and domestic pressures.

European Defense Stocks Slide as Peace Prospects Build

European equities opened slightly higher Tuesday, but defense names underperformed as investors digested progress from U.S.-Ukraine talks in Washington. The Stoxx 600 rose 0.1%, while the Stoxx Europe Aerospace and Defense index fell 0.4%, with Renk down 3.6%, Saab off 3.3%, and Leonardo losing 2.9%. Markets responded to comments from President Trump signaling that peace negotiations could proceed without a ceasefire, alongside forthcoming security guarantees for Ukraine. Broader sentiment was tempered as investors looked to this week’s Jackson Hole symposium for guidance on Federal Reserve policy, with futures pricing an 83% chance of a September rate cut.

Trump Administration Weighs 10% Equity Stake in Intel

The Trump administration is considering converting part of Intel’s $10.9 billion in CHIPS Act grants into equity, potentially giving Washington a 10% stake worth about $10.4 billion and making it the company’s largest shareholder, according to Bloomberg. The plan underscores efforts to bolster U.S. leadership in semiconductor manufacturing and revive Intel’s competitiveness amid struggles in advanced chipmaking and AI. While still under discussion, the prospect highlights Washington’s push to build national champions in strategic industries. Intel shares, which rallied 9% last week on government stake speculation, rebounded after SoftBank announced a separate $2 billion investment.

OpenAI CEO Flags AI Market Bubble Amid Surging Valuations

OpenAI CEO Sam Altman cautioned that investor enthusiasm around artificial intelligence has reached bubble-like levels, even as he reaffirmed AI’s transformative significance. His comments come as OpenAI pursues a $6 billion stock sale valuing the firm at roughly $500 billion, underscoring frothy sentiment across the sector. Altman also warned that U.S. policymakers may be underestimating China’s rapid AI progress. While some analysts agree parts of the market show “froth,” others argue AI’s long-term potential is being underestimated. The debate reflects growing tension between near-term valuation risks and structural growth opportunities driving capital into AI-linked assets.

China’s EV Makers Boost Overseas Investment Amid Tariffs and Competition

Chinese electric vehicle companies are channeling more capital into overseas factories than domestic ones for the first time, according to Rhodium Group, as they seek to counter rising tariffs and intensifying competition at home. Roughly 74% of foreign spending in 2024 targeted battery plants, with assembly capacity abroad also expanding quickly. Projects in Brazil and Europe highlight efforts to secure local market access, though completion rates for overseas investments remain low at just 25%. While global expansion supports sales growth—BYD’s overseas deliveries already exceed 2024 totals—regulatory pushback and Beijing’s concerns over technology leakage pose structural risks.

Conclusion

European equities showed resilience despite defense sector weakness as peace prospects in Ukraine gained traction. In the U.S., potential government equity in Intel underscores Washington’s focus on securing critical technology leadership, while SoftBank’s investment highlights private sector confidence. At the same time, OpenAI’s Altman warned of an AI valuation bubble, urging caution even amid transformative potential. Meanwhile, China’s EV makers are accelerating global expansion to offset tariffs and domestic headwinds. Markets continue to be shaped by a convergence of geopolitical, technological, and structural industry shifts. Together, these developments reinforce the need for investors to remain selective and adaptive.

Investment Insights

• Peace negotiations in Ukraine: Could ease geopolitical risk premiums, weighing on defense stocks but supporting broader European equities.
• U.S. government stake in Intel: Signals strategic support for domestic chipmaking, benefiting U.S. semiconductor supply chains but raising questions on state-market dynamics.
• AI valuations remain stretched: Investors should distinguish between market leaders with durable advantages and speculative plays vulnerable to correction.
• Chinese EV makers’ overseas expansion: Highlights global growth opportunities but also regulatory and execution risks, favoring firms with diversified geographic footprints and proven ability to complete projects abroad.

Economic Calendar

Date	Event	Why It Matters
Aug 19–21, 2025	Fed Chair Powell Speech at Jackson Hole	Highly anticipated signals on Fed’s monetary outlook and potential September rate cut.
Aug 20, 2025	Release of Fed July Meeting Minutes	Insight into policymakers’ inflation outlook and policy divergence ahead of Powell’s speech.
Aug 19–22, 2025	Major Retail Earnings (Walmart, Target, Home Depot, Lowe’s)	Key indicators of consumer sentiment heading into back-to-school season.
This Week	Initial Jobless Claims	Labor market health check amid inflation pressures and Fed policy uncertainty.