From the Fed Personnel Drama to the Intel Nationalization Shift: A Summary of Last Week's Markets
The U.S. market in the final week of August 2025 was "superficially calm," with both the S&P 500 and NASDAQ at record highs. However, beneath the surface, tensions in policy, regulation, industrial structure, demand sources (AI and power), and geopolitics (trade with China) are occurring simultaneously. The three main topics symbolizing this week are "The Trump Administration vs. the Fed," "The U.S. Government's 10% Stake in Intel," and "The Corporate Logo Issue Caught in the Culture Wars." Furthermore, we will analyze NVIDIA's earnings, the winners and losers among sectors/sub-sectors year-to-date, and the expectations versus reality surrounding Tesla—all through a single perspective.
1. President Trump vs. the Fed: The Boundary Between "For Cause" Removal and Independence
1-1. Overview of the Case: Notice of Removal for Governor Lisa Cook
FHFA Director Bill Pi accused Federal Reserve Governor Lisa Cook of improper acquisition allegations and referred the matter to the Department of Justice. In response, President Trump announced her removal based on the "for cause" clause. Cook immediately filed a lawsuit, claiming the action was illegal.
1-2. Legal Issues: How Far Does "For Cause" Extend?
The Federal Reserve Act provides for the President's removal of officials "for cause," but the strict definition of the clause is ambiguous. Generally, "breach of trust, neglect of duty, or confirmed illegal acts" are considered the criteria. The argument in the input text is clear—"accusations and referrals are 'neither a guilty verdict nor an indictment.' At this point, 'just cause for removal' is difficult to establish."
"An accusation is not an indictment. ...In my opinion, at least an indictment or a conviction would be necessary."
1-3. The Scope of the Supreme Court: The Exceptional Nature of Independent Agencies
In recent years, the Supreme Court has shown a tendency to rule that "restrictions on the President's removal power are unconstitutional" in cases like the CFPB, but there is a sense that the exceptional nature of the Fed is being recognized. If the general principle were applied to the Fed, allowing for "removal at any time," the Fed's independence would institutionally collapse. The administration also understands this political backlash and has not openly stepped into that territory—it is reasonable to read this as a move of "pressure" for now.
1-4. Implications for the Market
The erosion of independence increases the risk of political intervention in interest rate decisions and could amplify volatility in long-term interest rates and the dollar. The focus going forward is on: 1) the direction of judicial decisions, 2) White House rhetoric (whether they explicitly state respect for independence), and 3) the market's re-evaluation of the "institutional premium."
2. U.S. Government to Acquire 10% Stake in Intel—Semiconductor Support Becomes "Industrial Policy"
2-1. What is Unusual About This?
The government is acquiring a 10% stake in Intel in exchange for CHIPS Act funding. Since the GM bailout during the auto crisis, equity involvement in manufacturing has been rare. The Secretary of Commerce mentioned an "expansion of similar schemes." The shift from subsidies to capital participation is close to a design where the state shares both risks and upside.
2-2. Normative Risks: Change of Administration and Misuse
The concern in the input text is sharp: "Even under a Democratic administration, similar frameworks could be used to influence corporate decision-making for policy purposes (environment, labor, local production for local consumption, etc.)." As industrial policy advances, political risks to the cost of capital and distortions in discipline are more likely to occur.
2-3. Implications for the Market
Short-term: A tailwind for the supply chain due to accelerated infrastructure and equipment investment.
Medium-term: Government involvement could restrict management freedom as conditional capital.
Long-term: The deepening interdependence of "national security x semiconductors" hedges against China risk, but it also leads to overlapping investments and inefficiencies in the global supply chain.
3. This Week's Earnings Highlights: NVIDIA's "Small Miss" Doesn't End the Story
EPS: $15 (Previous year $0.68)
Revenue: $46.7B (+56% YoY / slightly beat market expectation of $46.1B)
Data Center Revenue: $41.1B (+56% / a "near miss" of the $41.3B forecast)
Although the stock price fell by around 3% in after-hours trading, the underlying trend of "56% growth" is what matters. The market tends to price in a "perfect beat," but AI demand continues to expand. On the other hand, the resolution of supply constraints, the speed of GPU generation shifts, and inventory cycles can always act as headwinds.
4. The Essence of Year-to-Date Sector Markets: Utilities, Semiconductors, and "AI-Chosen" Software
4-1. Sector Map (Summary)
Outperform: Communication Services, Industrials, Information Technology, Financials, Materials
Defensive Laggards: Consumer Staples, REITs, Healthcare
Exception: Utilities (usually defensive) are at the top, Consumer Discretionary (cyclical) is sluggish
The redefinition of the utilities sector is the most symbolic. Due to the rapid surge in power demand from AI data centers, utilities with excellent power portfolios and locations have become "growth stocks." There is significant room for development in nuclear power, gas turbines, high-voltage transmission, and energy storage.
4-2. Sub-sector Winners: Semiconductors, Industrials, Banks, Media
Semiconductors (+31%): NVIDIA/Broadcom/Micron, etc. Center of AI computing capital
Industrials (+21%): GE Vernova (power generation), GE Aerospace (aviation), etc. Capital investment cycle
Banks (+20%): Recession fears receding, leading to improved credit cost outlook
Media & Entertainment (+18%): Netflix, TKO, Live Nation, etc. Content and experiences
4-3. Sub-sector Landmines: Traditional Software & Consulting
Software/Services (+14%) is a "crack" hidden by the average. While Palantir and Oracle are rising, iconic stocks like Salesforce, Adobe, and ServiceNow are in a downward trend. The reason is clear—
"AI is dramatically lowering software development costs, eroding the 'moats' of SaaS."
Similarly, consultants like Gartner and Accenture are being hit directly by AI-driven operational substitution. Furthermore, the reduction in public contracts is a headwind, leading to a compound discount.
4-4. The REIT Twist: Data Centers are Growing but Stocks are Weak
Data center REITs (EQIX, DLR) have valuations wavering in a tug-of-war between cash flow and CAPEX. The REIT-specific structure where "growth investment equals dilution and pressure on distribution capacity" suppresses stock prices between expectations of AI benefits and financial constraints.
5. The Tesla Conundrum: Brand, Product, and the "Reality of Autonomous Driving"
5-1. Demand and Product Cycles
July sales in Europe were down 40%, and tax credits in the U.S. have been reduced. Delays in model refreshes are taking a toll. As 2022 EPS drops from $4.7 to a 2025 forecast of $1.74 (a 60% decline), the stock's "resilience" is often explained by faith in the narrative.
5-2. The Pragmatism of Robotaxis
“Waymo is more robust at this stage. Tesla is ‘lightweight’ with its camera-centric approach, while Waymo uses ‘belt and suspenders’ like LiDAR.”
Waymo is ahead in terms of fully driverless operational volume and geographical coverage. Until Tesla demonstrates equivalent performance in urban areas, “AV monetization” remains in the realm of hypothesis.
5-3. Investor Checklist
A clear roadmap for product refreshes
Quantitative updates on FSD safety, operational scope, and regulatory approval
Quarterly trends in gross margins, inventory turnover, and discounting
6. The “Culture Front” and Corporate Risk: What the Cracker Barrel Logo Controversy Reveals
A logo refresh by a long-standing brand was caught in a social media “context war” and reverted to its original state in the short term. Even if the market capitalization is small, brand assets impact IR, recruitment, and customer lifetime value. In an era of cultural debate, corporate communications must understand that “design equals symbolic politics.”
7. Macro Foundations: The “Greatest Uncertainty” of Relations with China
While tariff shocks and recession fears intensified mid-year, the market recovered due to strong earnings and the “search for a landing point for tariffs.” Nevertheless, if trade relations with China deteriorate again, we will see a resurgence of (1) margin degradation due to difficulty in passing on costs, (2) supply chain restructuring costs, and (3) secondary effects of retaliatory tariffs.
8. Summary: AI Pushes Up and AI Cuts Away—Move to the “Side That Gets Chosen”
Policy x Institutions: Fed independence is an institutional premium for the market. Depending on judicial decisions, interest rate and currency volatility will be re-evaluated.
Industrial Policy: Investment in Intel is a new phase where the state participates in the upside. However, pricing in political risk is also necessary.
The AI Wave: Semiconductors, power, and some software are winners due to the direct link between capital intensity and demand. In contrast, “intermediate processes susceptible to AI replacement” (traditional SaaS and general consulting) are seeing momentum slow down.
Infrastructure and Power: For data centers, power supply, grid connectivity, and location determine success or failure. Utilities are becoming growth stocks.
Individual Companies: NVIDIA’s “narrative continues even if it isn’t perfect.” Tesla is entering a second act where its ability to implement products and AVs will be tested.
Finally, the essence in one sentence: AI does not push the market up "broadly," but rather "selectively" redistributes value. For both investments and businesses, continuing to shift positions toward the "side chosen by AI" will be the greatest strategy for the second half of 2025.
