🚀 Trump continues pressure to move chip manufacturing to US

Market Overview
Read time 1.4 minutes

Year To Date Performances:

1. Pressure from President Donald Trump to shift semiconductor manufacturing to the U.S. is squeezing margins at TSMC, even as the chipmaker reported a 77.4% surge in second-quarter profit driven by the ongoing AI boom. Following a recent $100 billion announcement that brought its total U.S. commitment to $200 billion, TSMC projects that ramping up American facilities will dilute its gross margins by 2% to 4% over the coming years due to production costs being 20% to 50% higher than in Taiwan. However, analysts note that TSMC's massive financial buffer, including a record 67.7% gross margin, and near-monopoly on advanced nodes allow it to absorb these headwinds and pass costs to clients like Nvidia and Apple through planned price hikes of up to 10% in 2027.

2. Despite average 30-year fixed mortgage rates rising to 6.69%, their highest level since last August, homebuyers are trickling back into the market to capitalize on growing housing inventory, reduced competition, and increased seller price cuts. According to the Mortgage Bankers Association, overall mortgage demand ticked up 1.9% last week, driven by a 6% increase in home purchase applications, even as higher borrowing costs and surging oil prices continue to suppress refinancing activity.

3. Global crude oil prices jumped nearly 4% on Wednesday, with Brent crude reaching $94.36 per barrel and West Texas Intermediate climbing to $87.33, following an 11th consecutive night of U.S. military strikes against Iranian infrastructure. The military campaign targeted Iranian military operations centers, drone storage, and maritime assets aimed at degrading Tehran's ability to threaten shipping in the Strait of Hormuz, a vital chokepoint through which roughly a fifth of global oil transits. Speaking at the ASEAN Foreign Ministers' meeting, U.S. Secretary of State Marco Rubio affirmed that American forces will continue protecting commercial navigation and open waters, accusing Iran of violating recent bilateral commitments regarding the strait while emphasizing that Washington remains open to diplomatic resolution if Tehran negotiates in good faith. Coupled with additional supply disruptions at Russia's CPC terminal in the Black Sea, rising energy prices have reignited global stagflation fears and driven financial markets to price in a higher probability of Federal Reserve interest rate hikes in the coming months.

   Headlines

   1. Prediction market companies are spending significant amounts on the mid-term elections in an effort to influence their regulation.

   2. Wistron shares were up yesterday after opening its Texas superchip plant, which will supply Nvidia.