Recap | 19 August 2025
- Edward von der Schmidt
- 1 day ago
- 3 min read
Europe leads efforts to define and formalize security guarantees for Ukraine as US evaluates support options.
Technology stocks sink equity indices as chipmakers and AI-related names languish.
US explores conversion of grants into equity at Intel and others.
New Zealand and Indonesia's central banks cut, China and Sweden's hold Wednesday ahead of Fed minutes release.
Facts in print. Thoughts in italics.
EDWARD VON DER SCHMIDT
Headlines
Security Guarantees:
European countries led Tuesday's charge to begin formalizing security guarantees for a post-war Ukraine. Although President Trump characterized NATO membership and a return of Crimea as "impossible" before ruling out the presence of American troops on the ground, US air support and intelligence assistance remained on the table. The Pentagon is evaluating support options in addition to weapons procurement. Following Tuesday's meeting of the 'Coalition of the Willing', a virtual meeting of NATO military leaders on Wednesday is expected to include General Dan Caine, Chairman of the Joint Chiefs of Staff.
Around the World
India-China:
Indian Prime Minister Modi spoke to "steady progress" in diplomacy with China after meeting with Chinese Foreign Minister Wang Yi, who referred to a "steady development track" in the wake of bilateral talks. The countries agreed to resume direct flights for the first time since 2020 and to deepen commercial ties. (AP, Reuters)
US-China:
Treasury Secretary Bessent supported the status quo with China in an interview on Fox. (Via Bloomberg)
The US has little appetite to revisit an escalatory trade war with China, a complete reversal from April's brinksmanship.
Gaza:
Officials in Israel weighed a mediated ceasefire proposal ahead of a Security Cabinet meeting on Thursday as the country looked to call up tens of thousands of reservists. With respect to ending the war, neither Hamas nor the Netanyahu government's demands have changed materially. (AP, Bloomberg)
Syria-Israel:
Syria's foreign minister met with an Israeli delegation as the countries seek to deescalate tensions and revisit the ceasefire provisions of a 1974 agreement. (AP)
Macro
Big Tech's Big Losses:
Technology sector stocks including Nvidia (-3.5%) and Palantir Technologies (-9.4%) led Tuesday's equity index declines that saw the S&P 500 (-0.6%) and Nasdaq (-1.5%) fall. Notably, 70% of the S&P 500 actually rallied, pointing to the disproportionate weight of technology behemoths. (AP)
Central Banking (Wednesday):
The Reserve Bank of New Zealand cut its Official Cash Rate 25bp to 3.00% amid stalling growth. (Reuters)
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China's central bank left its 1y (3.0%) and 5y (3.5%) Loan Prime Rates unchanged. (Reuters)
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Bank Indonesia unexpectedly cut policy rates 25bp to 5%. (Bloomberg)
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Sweden's Riksbank held its policy rate steady at 2% while flagging the possibility of additional easing by the end of the year.
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Despite expectations for slowing growth, ECB President Lagarde spoke to resilient trade and less-than-feared effective tariff rates.
Cyber
Jacquard Loom(ing):
A recent Reuters/Ipsos poll that closed on Monday showed that 71% of respondents were concerned that AI would put "too many people out of work permanently". 77% believed that AI could be used to foment political discord and 66% were worried that AI could supplant personal relationships. (Reuters)
Chip Nationalization:
Commerce Secretary Lutnick confirmed that the US is exploring the conversion of federal grants into non-voting equity stakes in Intel and other chipmakers. (CNBC via AP)
The US has a strategic interest in developing domestic chip fabrication and may wield its ownership to influence corporate policy. The state-corporate nexus will continue to tighten for all things compute.
Chip Diplomacy?
Nvidia is reportedly developing a more advanced chip than the H20 for Chinese markets that will use its Blackwell architecture. (Reuters)