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I'm NFL linebacker TJ Watt and this is my personal best. YPB by Abercrombie is the activewear I'm always wearing. That's why I reached out to co design their latest drop. I worked with designers to create high performance activewear that holds up to my toughest workouts. Shop YPB by Abercrombie in store, online and in the app because your personal best is greater than any.
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Plugging the Nvidia Gap we report on Alibaba's new Chinese made AI chip Plus prepare for sticker shock as higher prices are coming for household staples and why markets have kept calm and carried on in the face of Trump's move to remake the Fed.
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The people he's proposing, or at least the people who are leading candidates to replace Jay Powell as the chairman, are actually perfect mainstream candidates that could have been picked by any Republican president without the markets reacting at all.
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It's Friday, August 29th. I'm Azhar Sukri for the Wall Street Journal. Here is the AM edition of what's news, the top headlines and business stories moving your world. Today, we are exclusively reporting that China's biggest cloud computing company, Alibaba, has developed a new chip for a broad range artificial intelligence tasks. As we were discussing yesterday, Nvidia has run into regulatory hurdles to selling its products in China, leaving a gap in that market, one that Alibaba is looking to fill. Asia Business editor Peter Landers told us more about how China is building up its arsenal of homegrown technology and the limitations it still faces.
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This chip is going to be made in China, unlike some of the earlier chips that Alibaba made for its own use that were made by Taiwan Semiconductor Manufacturing. We don't know yet whether they'll be able to get sufficient supply from their Chinese manufacturer. Another company called Metax, more of a startup that has just announced a new chip. They are using a less advanced technology to manufacture the chips with the hope that they'll be able to use more capacity. If you're going for the most advanced, what they call 7 nanometer chips, the most advanced that China can make at the moment, you run into more capacity limitations. If you can use somewhat older technology, the manufacturers might be able to make more and do it more quickly.
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Now, after a batch of fresh earnings this week, we're starting to see how President Trump's trade policy is trickling down to Americans wallets. Companies including Hormel Foods and Ace Hardware said they're raising prices, while Walmart, Target and Best Buy said they've already passed some tariff related costs on to shoppers. More price hikes may be on the way as many companies have up until now sold stock bought when tariffs were lower, absorbed the levies or negotiated with suppliers to share the burden. Adding to this are tightening supplies of commodities which have pushed up the prices of stable grocery items like beef, pork, vegetables and nuts. However, some retailers such as Dick's Sporting Goods and Dollar General have recently reported higher quarterly sales as that price increases haven't slowed consumers purchases so far. When President Trump announced he was removing Fed board member Lisa Cook this week, many of our Journal colleagues, including Europe finance editor Alex Frangos, who joined us on the podcast a few days ago, characterised the move as his boldest step yet in efforts to control the central bank. But the market's reaction was muted at best. To help us understand why that might, my colleague Daniel Bark spoke to Journal senior markets columnist James Macintosh.
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My basic issue here is that you should be very concerned about the independence of the Fed. It really, really matters. But that the markets, I think, are broadly right in having not much of a reaction to the attempted firing of Cook. The basics here are what did we really learn and how much control would Trump really get? So what we really learned was not very much. We don't know if and when she'll actually go because this is going to be a legal fight. We didn't learn anything new about Trump's approach to the Fed, which is that yes, he's aggressive and would like to have more control over it. And then in terms of what Trump actually wants, while he says nasty stuff and he says some things that would be really, really extreme for market like wanting a 3 percentage point cut in rates which would surely spark inflation. He says these things, but the people he's proposing, or at least the people who are leading candidates to replace Jay Powell as the chairman, are actually perfectly mainstream candidates that could have been picked by any Republican president without the markets reacting at all, there's no sign that he really is attempting this sort of worst case takeover of the Fed. And even if he is, he'd probably be able to do that in May anyway when Powell leaves as chairman.
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Still isn't there a worry as two of the candidates the president appointed in his first term voted to cut rates at the last meeting?
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Well, that's not a good look and my interpretation, and of course we don't know the details of this, my rough interpretation is that they're much more sympathetic to the President and that they are both hoping that they might get appointed as chairman, and so voting for the cut helps them in their campaign to become chairman. But in terms of the actual cut, would it have been outrageous? Well, frankly no. Markets are now very strongly pricing that there'll be a cut at the next meeting after Powell dropped some hints that that will happen in his Jackson Hole speech. And it's hardly that big a deal to do a 25 basis point cut in one month rather than at the next meeting. The big deal is if the Fed is filled with clowns who are incapable of running a sensible monetary policy and just do exactly what the President wants. But it looks like the Fed is switching to be dovish anyway without Trump. And we should remember here that Powell himself was appointed by Trump and Powell is now, of course, the centre of the President's hatred.
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Journal senior Markets columnist James McIntosh. James, thanks for this.
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Thank you.
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Coming up with the humanitarian situation in Gaza getting worse, the Journal's Anat Peled tells us what it's like for the thousands of Palestinians who need to leave the enclave for medical treatment. That and more after the break.
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2.
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Seriously, it's $15 a month.
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3.
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No big contracts.
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4.
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Three month plan $15 per month equivalent required. New customer offer first three months only, then full price plan options available, taxes and fees extra. See mint mobile.com.
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After almost two years of fighting in Gaza, it remains incredibly difficult for people to leave the enclave. According to an Israeli military official, more than 34,000 Gazans have been evacuated since the start of the war. Many of them were medical evacuees and their escorts, along with others who hold dual citizenship. The World Health organization says almost 15,000 others need to be allowed out for medical reasons. Earlier this month, Journal reporter Anat Peled visited the Karim Shalom border crossing between Israel and Gaza and managed to speak with people being evacuated for treatment in Jordan. Our Kate Bullivant asked her about the families she met.
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So one of the families that I spoke to was Rana Abu Marshoud and her 8 year old daughter Iman, who had been injured by debris from an Israeli airstrike that hit near their home. And Iman was seriously injured. You know, when I met her, she was smiling sadly, in a wheelchair. Her mom said that she wants to just be able to walk like other children. But one of the painful things that Rana was telling us about is that when Rana learned that she had been approved for evacuation from Gaza, after months of waiting for this approval, it also came with a very difficult choice. Her husband and four other children would have to stay behind. And, you know, she described parting in tears and said that she was torn between those two worlds Now. And this is the story of many Gazans that are trying to get evacuated. And often they face these painful family separations.
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So, Anat, are there other reasons why it's so difficult for people to get out of the enclave? You mentioned the long wait, for example.
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This is a process that families that we spoke to said took several months because it involves multiple bureaucratic steps and approvals. So that means a referral from a doctor, Gaza, a green light by the Gaza Health Ministry, authorization from a host country, and security screening by Israel's internal security service to rule out affiliations to Hamas. One of the main bottlenecks, according to both WHO and Israel has been finding enough receiving countries for the patients. The country that has taken in the highest number of medical evacuees, a few thousands, has been Egypt, followed by other Arab countries. But according to WHO, the European Union has only received 280 patients. That's patients alone, not their escorts. And the US has only received 28 that were evacuated through the WHO. And the US recently paused issuing visitor visas for medically evacuated Gazans. I should say that some countries are wary of accepting Palestinians despite Israeli requests because they're fearful it might be viewed as helping the emptying out of the population in Gaza, something that far right Israeli lawmakers have advocated for. They've also advocated rebuilding Jewish settlements there.
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And with evacuations being a complex and time consuming process for the reasons you've just outlined, are there any other solutions here?
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Yeah. One is that Israel closed off access to the possibility of treatment inside Israel or in East Jerusalem and the west bank, which was possible before the war. According to WHO, 50 to 100 people left Gaza every day for treatment in those areas. So if that was reopened, we could see more Gazans being able to get treatment. Another thing is that when Israel, you know, invaded Rafah, an area in southern Gaza in May 2024, it basically meant that the Rafah crossing where most of the medical evacuees were leaving through, was closed. And now they go through a crossing to Israel instead of Egypt. And that has also slowed the pace of evacuations.
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That was the Journal's Anat Peled. Anat, thanks so much for your time.
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Thanks for having me.
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And finally, Netflix has released hundreds of straight to streaming movies over the past decade, yet none managed to capture the pop culture zeitgeist like big screen blockbusters such as Barbie and Wicked did. Until K pop. Demon Hunters, the animated movie featuring a Korean girl band battling invaders from the underworld, has become the most watched Netflix original film of all time. The singalong version became the streaming platform's first box office hit last weekend. The Wall Street Journal's reporter Ben Fritz covers the entertainment industry from Los Angeles and told us about the movie's unexpected success.
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At first, I think Netflix and the producers of Sony Pictures Animation thought it would only appeal to K pop fans and to anime fans, and that would have been perfectly fine for them. But then it caught on with the broader market and kids, especially girls, just sort of see this trio of K pop stars as real heroes who they can look up to, and they love singing along to these songs.
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Now that was a clip of fans singing along to one of the songs in the movie during a screening you just heard, courtesy of Ali Mostel. Though if you're a parent, it's likely something similar has been happening in your living room for a few weeks already. Ben says the order in which the film was released could be a lesson for the future.
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What's interesting is that traditionally the movies that impact culture the most have been in theaters first before they go on to streaming. Except, you know, every rule in Hollywood's meant to be broken in this case because it's an original film that a lot of people, I think didn't know they would like until they tried it. The fact that it was on Netflix probably played to its advantage because if you're a Netflix subscriber, you can try it for free. And then if you like it and you're into it, you can rewatch it over and over again for no additional cost. So I think for a movie that's so risky that it's a little bit of a hard sell to convince people that they want to try it, being on streaming might actually be an advantage rather than going into theaters first.
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And that's it for what's news for this Friday morning. Today's show was produced by Kate Bullivant and Daniel Bark. We have additional help from Roya Shahidi. Our supervising producer was was Christina Rorker. I'm Azhar Sukri for the Wall Street Journal. We'll be back tonight with a new show. Until then, have a great weekend, and thanks for listening.