MARKET WRAPS
STOCKS: Stocks fell amid fears that artificial-intelligence companies will slow development of the emerging technology.
TREASURYS: Treasury yields fell but the yield on the 10-year note crossed the 5% level intraday for the first time since 2023 due to energy inflation concerns.
FOREX: The U.S. dollar rose against rivals ahead of the Federal Reserve's meeting.
COMMODITIES: Oil futures rose after an East-West Saudi pipeline that's a key alternative to the Strait of Hormuz was shut down due to an attack.
HEADLINES
Trump Says AI Doesn't Need More Guardrails And Calls Safety Fears a Hoax
President Trump pushed back on the need for tighter federal
regulations on artificial intelligence and dismissed safety concerns as a
hoax that would leave the industry in financial ruin and hand China a
competitive edge.
The president's forceful messaging on AI comes as industry leaders
sound increasingly urgent warnings about the need for regulation to guard
against potential dangers from their own technology, while public
backlash builds to the construction of the data centers needed to power
it.
"The only control or 'guardrails' that AI needs is a STRONG AND SMART
(High IQ!) PRESIDENT, and the U.S.A. has that, in spades!" Trump wrote on
Truth Social on Monday. "There is a SICK conspiracy going on against AI
and Data Centers, and the only one that is happy about it is China."
Microsoft Sets Limits for AI Models as Altman Details Control Risks
Microsoft has published a provisional code of conduct that it aims to
apply when training new artificial-intelligence models, the latest
company to discuss limits on advanced AI systems as OpenAI's chief
executive warned companies risk losing control of their AI systems.
Mustafa Suleyman, the CEO of Microsoft AI, told CNBC Monday that the
company had been working for months on the new guidance, which includes
principles it describes as "humanist AI," but chose to publish it now
given the current debate around AI.
Microsoft's AI models must not consider requests related to weapons
manufacturing, produce violent or sexually explicit content or help with
the procurement of dangerous substances, according to the code. AI models
shouldn't be built to imitate consciousness and shouldn't be entitled to
rights, the code said.
Chip Stocks Tumble After AI Leaders Call for Slowdown in Development
U.S. chip stocks followed European and Asian peers lower after leaders
of the world's biggest artificial-intelligence companies called for the
industry to slow development of the technology for safety reasons.
Anthropic Chief Executive Dario Amodei, writing in a weekend essay,
said the AI industry should avoid a race to the bottom and take the
necessary time to ensure frontier models were being developed
responsibly.
In an interview with Fortune, Sam Altman said OpenAI likely wouldn't
go public this year given all the safety concerns. "I actually think
that, given everything happening with safety, right now would be an
ill-advised moment to go public, and we don't feel pressure on that."
Abbott Agrees to $385 Million Settlement in Baby Formula Case
Abbott Laboratories has agreed to pay $385 million to settle
allegations related to its management of a baby formula facility where
deadly bacteria was suspected of causing infant deaths, the Justice
Department said Monday.
The settlement is a more lenient outcome than some prosecutors had
advocated for, believing they had evidence to criminally charge Abbott
under a law that has been used to pursue other businesses for selling
contaminated foods, the Journal previously reported. But senior Justice
Department officials believed criminal charges would have been heavy
handed and closed the probe.
They opted instead for the civil settlement, which claws back money
the company earned from selling formula through federally funded
nutrition programs.
TD Bank Mobilizes More than $108 Billion Commitment to Fuel Canada's
Infrastructure
Toronto-Dominion Bank has launched a commitment of 150 billion
Canadian dollars (US$108.14 billion) to accelerate Canada's industrial
and infrastructure buildout.
The five-year pledge will deploy capital through new lending,
underwriting and advisory activities. It comes alongside research from TD
Economics estimating that overall Canadian nation-building capital
investments across 300 major projects could reach between C$1 trillion to
C$1.7 trillion by 2035.
TD's commitments target five key sectors in what the bank sees as
poised to enter an investment supercycle: energy, critical minerals,
defense and aerospace, digital infrastructure and artificial
intelligence, and infrastructure, including major trade and transport
corridors.
Dell's DFO-Led Consortium Taking Baldwin Group Private for Enterprise
Value of $7.7 Billion
Dell Chief Executive Michael Dell's DFO Management, along with
Sequence Holdings, is taking insurance brokerage Baldwin Group private in
a cash deal with an enterprise value of $7.7 billion.
Under the deal, Baldwin Group's shareholders will receive $32.50 a
share in cash, which represents a premium of about 88% to the unaffected
closing price on June 17, the day before media reports that the company
was exploring a take-private deal.
Shares of Baldwin Group were recently up 6.9% at $31.69 in premarket
trading Monday.
Bank of America CEO Sparks Bank Stock Selloff With One Small Word
Shares of Bank of America turned sharply lower on Monday after the
bank's chief executive, Brian Moynihan, said quarterly sales and trading
revenue would be "flat" relative to a year ago.
"It'll be one of the better third quarters we've ever had-but it'll be
relatively flat to last year, because last year was a big recovery from
the second quarter," Moynihan said at a conference held by Barclays,
referencing Wall Street's big trading hauls in 2025.
Investment banking fees, meanwhile, are set to decline about 10% from
a year ago, he said. Bank of America and its banking competitors will
report third-quarter earnings results in mid-October.
TALKING POINT Mark Walter's Financial Empire Was Fueled by Retirement Savers
Rick Phillips has been buying annuities for about a decade, paying upfront sums for the peace of mind of fixed returns.
Now, the Los Angeles-area resident said he is swearing off the policies.
The insurer backing one of his contracts, Clear Spring Life and Annuity, revealed this summer that federal prosecutors are scrutinizing its investment disclosures. Soon after, the company's billionaire owner, Mark Walter, struck a deal to sell his controlling stake in the Los Angeles Lakers. That left Phillips worried that Walter's insurance business was on shaky ground.
"The risk-reward isn't there anymore," said Phillips, a retired investment banker.
Phillips is one of hundreds of thousands of Americans whose savings have fueled Walter's vast business empire, which includes the Los Angeles Dodgers. Walter's biggest insurer, Delaware Life, collected $10 billion in individual annuity premiums last year. Group 1001, the parent company of Walter's insurers, ranks among the 10 biggest sellers of fixed and fixed-indexed annuities, according to ratings firm AM Best.
Wall Street investment titans such as Apollo and KKR that sell private equity and private credit have increasingly tapped into insurance money to supercharge their lending, in many cases acquiring life insurers outright. Regulators require insurers to disclose when they make investments with their parent companies, known as "affiliated" deals. In Walter's case, the probe focuses on $20 billion of investments by Delaware Life and Clear Spring that weren't properly marked as affiliated.
A representative for Walter's conglomerate, TWG Global, has said the company is proud of the business it built and "confident these matters will be resolved favorably."
--Heather Gillers, The Wall Street Journal
Expected Major Events for Tuesday 04:30/JPN: Jul Tertiary Industry Index
04:30/JPN: Jul Revised Retail Sales
06:00/GER: Aug WPI
06:00/UK: Aug UK monthly unemployment figures
06:45/FRA: Aug CPI
08:00/ITA: Jul Foreign Trade EU
09:05/GER: Sep ZEW Indicator of Economic Sentiment
12:30/CAN: Jul Wholesale trade
12:30/US: Sep Empire State Manufacturing Survey