1. Impact of Trump tariffs, car manufacturing edition.
Ahead of Trump’s self-imposed August 1 deadline to slap even higher tariffs on trading partners, the US has signed a flurry of trade deals with the EU, Japan and South Korea that have brought down the tariff rate on cars to 15 per cent. Yet as of Friday, Mexico and Canada, which have highly integrated automotive supply chains with the US through a 2020 USMCA trade agreement, have not reached new deals with Trump. That means cars produced in those two countries would have a higher overall tariff of 27.5 per cent than those built in Japan, the EU or South Korea. Antonio Filosa, the new CEO of Stellantis, which owns the Fiat, Jeep and Opel brands, pointed out to investors that 8mn of the 16mn vehicles sold in the US each year are built at plants in Mexico and Canada using many components from US suppliers. Meanwhile, he added that the other 4mn units that come from Europe and Asia have “virtually zero US content”...Car parts from Mexico and Canada, for example, that comply with the rules of the USMCA trade agreement created under the first Trump administration in 2020 are tariff-free, while non-compliant vehicles will face a maximum tariff of 25 per cent. Complete vehicles compliant with the USMCA will have the 25 per cent tariff applied only to their non-US parts content. The administration is also offering those that assemble their vehicles in the US small rebates — up to 3.75 per cent of the retail value of the car for the next year — to offset the cost of the levies. When all of these factors are applied, the average tariff cost per vehicle for cars imported from the EU, South Korea or Japan would be around $5,600 — higher than the $4,900 for vehicles imported from Canada and Mexico, according to Erin Keating, executive analyst at Cox Automotive, a car services and data group.
Updated primer on Trump tariffs.
2. Future of India's IT sector job hiring?
Between 2021 and 2025, average bench size (workers on payroll but not assigned to any billable projects) has shrunk from 15–20% to less than 10%, according to data from Teamlease. Meanwhile time on the bench has reduced from 45–60 days to 35–45. Companies are also moving from bulk hiring to an on-tap model—which means they’re hiring only the bare minimum required for current projects.
This is coupled with salary stagnation.
3. Indian youth's civil services obsession in a graphic.
In the decade up to FY23, the latest year for which data is available, the number of applicants for the preliminary exam more than doubled, to 1.1 million. But the number of applicants fighting for each vacancy almost tripled. The surge is startling, especially when the ranks of new college graduates only expanded 40% in roughly the same period.
4. Lenskart is going global. Will it be the first global Indian consumer brand?
The company now operates 656 stores outside India, which together pull in around 40% of its total revenue. Its footprint is sprawling, including 28 subsidiaries, two joint ventures, and three associate companies spanning 14 countries... It wants to be the Essilorluxottica of the east, the company behind eyewear giants like Ray-Ban and Oakley, but with the agility of a digital-first, vertically integrated brand... What gave Lenskart a unique edge was partnering with or acquiring local players. Instead of spending millions building ground-up...Since setting foot abroad in 2019, the company has acquired Japanese eyewear brand Owndays, and made strategic investments in San Francisco-based immersive product visualisation startup Metadome, Israel-based 6Over6 that develops AI-powered solutions for the optical industry, and France’s Le Petit Lunetier. It has even set up a joint venture Bao Feng Framekart in China to manufacture frames... Late in July, the Indian multinational eyewear company acquired an 80% stake in Spanish fashion-eyewear brand Meller for Rs 407 crore... Lenskart’s entry into Paris that year with a 29% stake in French eyewear brand Le Petit Lunetier.
But it still has some way to go before it can compete with global leaders.
And fortunately, it's making India its manufacturing hub.
The company currently runs two manufacturing facilities in India—in Gurugram, Haryana and Bhiwadi, Rajasthan—with a third plant in the works in Telangana. Apart from this, it also has plants in Singapore, the UAE, and China (through a JV). It’s also building a greenfield manufacturing facility with an investment of Rs 1,500 crore to expand frame production at its Bhiwadi unit. Together, this means that a majority of Lenskart’s global manufacturing happens in India. Apart from the obvious cost savings of such an arrangement, it brings production close to the teams that design and engineer the eyeglasses—leading to improved delivery times and tight quality control.
It has some serious competitive advantages.
The real moat is vertical integration, according to the senior analyst from Crisil. Lenskart controls everything from manufacturing, to omni-channel delivery, to customer support. This is the perfect leverage, bolstering its pricing power, agility in product launches, and consistency across markets, added the analyst. It also helps that prescription glasses are Lenskart’s bread and butter, comprising 80% of its revenue. As anyone who wears them knows, these aren’t impulse buys; they’re healthcare essentials. Which means margins are healthy, replacements are predictable, and customer loyalty is high.
5. Milan's property boom has brought in its wake allegations of corruption in the real estate sector. The transformation has been spectacular.
Two decades ago the drab suburban district north-east of central Milan — once characterised by railway yards and factories making Pirelli tyres and Breda steel — was so desolate and plagued with crime that regular Milanese would never think to visit. Today it is the city’s most exclusive neighbourhood, home to global bankers and billionaires. Its curved and gleaming UniCredit tower was designed by the late architect César Pelli, renowned for Kuala Lumpur’s Petronas towers. Nearby is the Bosco Verticale, a pair of skyscrapers where apartments sell for up to €25mn to private equity executives, footballers and Middle Eastern investors. The glitzy Porta Nuova district was masterminded in large part by one man: Manfredi Catella, who led the Italian arm of US property asset manager Hines, then acquired the former Hines division through his family’s real estate vehicle Coima in 2015, building up the district with backing from Qatar’s sovereign wealth fund.
Its origins are less than a decade old.
In 2015 Milan hosted the Universal Exposition, seizing the chance to demonstrate that the once provincial and austere financial capital of Italy was morphing into a vibrant global city, thanks in large part to the 340,000-square-metre urban regeneration plan. Since the Expo, whose director-general was Sala, the city’s property market has attracted €30bn in investment and thousands of wealthy international residents, lured to Italy by generous tax breaks. Since 2016 Italy has offered new residents a flat-tax charge on unlimited overseas income, a fee that rose from an annual €100,000 to €200,000 last year. The country has enticed wealthy expats who deserted the UK after its Labour government last year scrapped the popular “non-dom” regime, which offered residents whose permanent home was abroad up to 15 years without paying tax on money held overseas. Expats were drawn to Milan for its convenient location at the foot of the Alps and its dolce vita lifestyle. New London-style members’ clubs, such as Casa Cipriani and The Wilde, housed in Santo Versace’s old mansion, and lavish restaurants launched to cater for the new arrivals, who poured money into its real estate market. Milan is due to hold the Winter Olympics next year; Coima teamed up with Prada Holding, controlled by the fashion family, to build the Olympic Village at the Scalo di Porta Romana, a former railway yard across from Prada’s suburban headquarters.
The breakneck pace of property development has exposed a corrupt nexus between politicians, local officials, and real estate developers.
This week Milanese prosecutors called Catella’s dream into question. They demanded he be placed under house arrest alongside five other people — including a city councillor — involved in the city’s redevelopment. Another 15 individuals, including mayor Giuseppe Sala, are under investigation as part of a sprawling probe into Milan’s rapid real estate expansion... prosecutors allege the Coima boss bribed public officials to obtain fast-tracked building permits that overlooked rules governing the height of buildings and their impact on the landscape. The investigation “uncovered a system whose purpose is to facilitate the issuance of illegal building permits for the realisation of highly speculative real estate transactions”, the document said.
See also this.
6. This is a stunning fact about the scale of data centre investments and its impact on the economy.
Spending on data centres means the firms (Alphabet, Meta and Microsoft) possess property and equipment (accounting-speak for hard assets) worth more than 60% of their equity book value, up from 20% over the same period. Add the capital expenditure of these firms during the past year to that of Amazon and Oracle, two more tech giants, and the sum is greater than the outlay of all America’s listed industrial companies combined. Jason Thomas of Carlyle, an investment firm, estimates that the spending boom was responsible for a third of America’s economic growth during the most recent quarter. This year companies will spend $400bn on the infrastructure needed to run artificial-intelligence (AI) models. Predictions of the eventual bill are uniformly enormous. Analysts at Morgan Stanley reckon $2.9trn will be spent on data centres and related infrastructure by the end of 2028; consultants at McKinsey put it at $6.7trn by 2030...
Since 2023 Alphabet, Meta and Microsoft have divided $800bn of operating cashflows roughly evenly between capex and shareholder returns. This goldilocks capital allocation, which combines a building boom with a trip to the bank, is unprecedented even among their own ranks. Amazon’s shareholders are paying for huge capex bills but have been starved of returns; Apple investors have benefited from vast share buy-backs but are worried that the company’s lack of investment means it is falling behind on AI. But capex is growing faster than cashflows. Morgan Stanley’s calculations indicate a $1.5trn “financing gap” between the two over the next three years. It could be bigger if advances in the technology escalate spending further and kill existing cash cows. Conversely, if companies are slower to adopt AI than consumers, big tech will struggle to earn a quick return on its investment; shareholders might then demand a greater portion of their earnings to compensate for this sluggish growth.
But this capex boom is increasingly being funded by credit, not from banks, but from private equity investors in the form of private credit.
During the first half of the year investment-grade borrowing by tech firms was 70% higher than in the first six months of 2024. In April Alphabet issued bonds for the first time since 2020. Microsoft has reduced its cash pile but its finance leases—a type of debt mostly related to data centres—nearly tripled since 2023, to $46bn (a further $93bn of such liabilities are not yet on its balance-sheet). Meta is in talks to borrow around $30bn from private-credit lenders including Apollo, Brookfield and Carlyle. The market for debt securities backed by borrowing related to data centres, where liabilities are pooled and sliced up in a way similar to mortgage bonds, has grown from almost nothing in 2018 to around $50bn today...CoreWeave, an ai cloud firm, has borrowed liberally from private-credit funds and bond investors to buy chips from Nvidia. Fluidstack, another cloud-computing startup, is also borrowing heavily, using its chips as collateral. SoftBank, a Japanese firm, is financing its share of a giant partnership with Openai, the maker of Chatgpt, with debt... After raising $5bn of debt earlier this year xai, Mr Musk’s own startup, is reportedly borrowing $12bn to buy chips... Private-equity firms are refashioning themselves as lenders to the real economy... Data centres produce large amounts of debt. This sits easily on the huge balance-sheets managed by these outfits, which are often funded by life-insurance policies... For some it is also a warning sign. Lenders may find themselves taking technology risk, as well as the default and interest-rate risks to which they are accustomed... Capex booms frequently lead to overbuilding, which leads to bankruptcies when returns fall. Equity investors can weather such a crash. The sorts of leveraged investors, such as banks and life insurers, who hold highly rated debt they believe to be safe, cannot.
7. Nepal is on the fast track of EV adoption.
Over the past year, electric vehicles accounted for 76 percent of all passenger vehicles and half of the light commercial vehicles sold in Nepal. Five years ago, that number was essentially zero. The E.V. market share in Nepal is now behind only those of a few countries, including Norway, Singapore and Ethiopia. The average for all countries was 20 percent in 2024. The swift turnover is the result of government policies aimed at leveraging Nepal’s wealth of hydropower, easing dependence on imported fossil fuels and clearing the smog. It has been fed by an intense push from Nepal’s biggest neighbor, China, the world’s dominant manufacturer of battery-powered vehicles.
8. India's consumption class captured in a graphic.
Only a tiny proportion of the market demand is for branded eggs. This share is 70% in developed countries.
9. One more illustration of how DJT is being inexplicably soft on China at the cost of its own allies.
“China — not India — is the largest buyer of Russian oil. In 2024, China imported $62.6 billion worth of Russian oil, compared to India’s $52.7 billion. But Mr Trump appears unwilling to criticise China, perhaps because of geopolitical calculations, and instead targets India unfairly,” think tank GTRI said.
10. Edward Luce is spot on about Trump being the "last China dove in Washington" and, unfortunately, "his is the only voice that counts".
11. Worker attrition in manufacturing jobs.
Long-distance migration is not easy, especially if it involves moving from an informal and flexible work environment to the strict discipline of factories. Attrition is alarmingly high, with over half of contract workers leaving within a year, according to staffing firm Teamlease; about a tenth of labourers drop off within the first three months of joining, it added... India had about 68.5 million manufacturing jobs in 2022-23, according to household survey estimates analyzed by Data For India... The reasons for high factory attrition are complex and manifold. Factory owners have heard it all: frustration over long hours, strict factory operating procedures, homesickness, inability to adjust to a new state’s cuisine, long commutes, and poor accommodation, especially on the outskirts, where factories are located. Sometimes, workers don’t have the money to survive the first month before their salaries hit their bank accounts.
12. The Warren Buffet premium enjoyed by Berkshire Hathway stock.
Buffett is in the home stretch of a six-decade tour de force atop Berkshire, transforming a struggling textile mill into a financial conglomerate spanning sectors from insurance to natural gas pipelines. His returns, built on a buy-and-hold, value-driven strategy since he took over Berkshire in 1965, have outperformed the benchmark S&P 500 by more than 5mn percentage points.
The premium is now at the risk of disappearing as Buffet prepares to stand down, dragging down Berkshire shares in recent weeks.
13. Russian exports to EU.
14. Janan Ganesh feels that we are at "peak Trump".
In all likelihood, this summer is Trump’s peak. Life for the US president goes downhill from here. For one thing, inflation is going to rise. To an extent, it already has. If prices haven’t gone up faster and earlier, that is because some businesses stocked up on inventory from abroad before the tariffs set in. Others chose to absorb the increase in costs for a while rather than pass it on to customers. Neither of these cushions will be there for long... Other things being equal, tariffs on this scale should lead to higher prices over time... public sentiment is about to edge left again, especially if Trump overdoes the deportations and the crusade against universities. It is not that Christian nationalists are going to convert to the teachings of Michel Foucault. Rather, voters in the middle who gave Trump a reluctant go might decide, “This is too much”, and tilt the other way... The right’s moment of cultural leadership, in which Sydney Sweeney can make a conservative-coded advertisement for some jeans, and perhaps some genes, is likely fleeting.
15. India's Russian oil imports problem might become a general petroleum trade problem.
India buys about 90 per cent of its crude oil from overseas and has been the biggest market for Russian seaborne crude since 2023, according to ship tracking data compiled by Kpler. India imports about 5mn barrels of oil a day, of which 2mn come from Russia. “Where would India find 2mn barrels a day of crude just like that?,” said Sumit Ritolia, a lead Kpler analyst... A sudden halt of Indian purchases of Russian oil could also affect global markets. Premasish Das, head of analysis of oil markets in Asia at S&P Global Commodity Insights, said if India suddenly turned to other suppliers, it would create “a significant tightness into the market”, potentially pushing the price of crude to more than $80 a barrel, from current levels of about $67.
See this as Trump imposes an additional 25% tariffs on India. Interesting that the standout second largest buyer of Russian crude, China, gets away with nothing.
16. Amidst the sacking of its Director by President Trump, the US BLS is facing several serious technical challenges. For one there's the increasing share of prices data is not directly observed.
A rising number of prices collated as part of the CPI report are no longer directly observed by the BLS’s field staff. This has lifted the proportion of data points in which the value of an item in one city is used to estimate another to 35 per cent in June, from 10 per cent at the start of 2025.
Then there's the issue of shrinking budgets and workforce.
These issues have come at a time when the BLS is facing a funding crunch, with a Department of Labor document showing the agency is facing an 8 per cent budget cut next year. It will also have to do its job with more than 150 fewer staff, according to the projections, bringing the total to about 1,850. Former and current staff say the workforce reduction is likely to worsen data standards and delays. The Quarterly Census of Employment and Wages, a vast and detailed survey of the US labour market, is already being published with longer lag times. Labour-intensive data collection, in particular, has become harder as the BLS’s workforce shrinks.
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