California Bill Aims to Punish Companies for Not Censoring Speech

Welcome back!

Here’s your must-read news this morning:

• Trump tours Fed renovation site

• AI chips smuggled into China

• California's censorship bill

I’ve got all the details for you, so let’s dive in.

— Josh

MARKETS

💰 Trump, Powell Spar Over Pricey Fed Renovation During Visit

The Scoop: President Donald Trump visited Federal Reserve headquarters Thursday for a tense face-to-face meeting with Chairman Jerome Powell, publicly confronting him over ballooning renovation costs and interest rate policies.

The Details:

• During the headquarters tour, Trump said the "luxurious" renovations would cost $3.1 billion, up from previous $2.7 billion estimates, prompting Powell to shake his head.

• Powell interjected "I'm not aware of that, Mr. President" when Trump cited the higher figure, leading to Trump handing him a paper from his coat pocket as proof of the cost overruns.

• Reporters questioned Trump directly in front of Powell about whether he would fire a project manager for cost overruns, with the president responding "I'd fire him." 

• Trump insisted there was "no tension" in their private discussions and said he didn't want to "be personal," focusing instead on wanting the renovations completed efficiently.

What's Next: The public confrontation highlights Trump's growing frustration with Fed independence and sets up potential ongoing battles over monetary policy and institutional oversight. Despite the criticism, Trump reiterated that he has no plans to remove Powell.

Markets Roundup

🏦 Economy & Policy

• ⭐ Editor’s Pick: Trump is pushing for a major economic deal with China, encouraging purchases of U.S. technology and easing chip export bans, as trade talks loom. (WSJ)

• State Farm will raise Illinois homeowners' insurance rates by 27.2% starting August 15, impacting 1.5 million policyholders, citing rising repair costs. (FBN)

• The Trump administration is holding firm on 50% steel tariffs, rebuffing the European Union’s efforts to secure reductions in a trade deal. (TG)

• Brazilian Vice President Geraldo Alckmin describes hour-long talks with U.S. Commerce Secretary Howard Lutnick as "good" and "fruitful," signaling Brazil's readiness to negotiate. (RTS)

📈 Stock Market

• ⭐ Editor’s Pick: Intel's second-quarter revenue of $12.86 billion surpassed Wall Street's $11.92 billion estimate, despite a 10-cent-per-share loss. (CNBC)

• LVMH reported €39.8 billion ($46.78 billion) in first-half 2025 revenue, down from €42 billion ($49.37 billion), with net profit falling 22% to €5.7 billion ($6.7 billion) due to softer Asian demand. (WWD)

• Volkswagen slashed its 2025 outlook after a 33% drop in first-half operating profit and negative automotive division cash flow, projecting flat revenue, a 4-5% operating margin, and €1-3 billion ($1.17 billion-$3.52 billion) in net cash flow. (WSJ)

• LG Electronics’ second-quarter profit fell 3.1% to 609.70 billion won ($444.1 million), beating estimates, but revenue dropped 4.4% to 20.735 trillion won ($14.93 billion) and operating profit slid 47% to 639.40 billion won ($460 million). (CB)

🏢 Industry

• ⭐ Editor’s Pick: FCC approves $8 billion Paramount-Skydance merger, enabling David Ellison’s control of CBS, Paramount Pictures, and Nickelodeon. (CNBC)

• Union Pacific in advanced talks to acquire Norfolk Southern, aiming to create a $200 billion transcontinental railroad giant, pending regulatory approval. (RTS)

• Astronomer’s Chief People Officer Kristin Cabot resigns after a viral video showed her embracing CEO Andy Byron at a Coldplay concert. (YN)

• LVMH CEO Bernard Arnault announced plans to open a second Texas factory by 2027, expanding the luxury group's U.S. manufacturing presence. (WSJ)

💵 Energy & Commodities

• ⭐ Editor’s Pick: The Palisades Nuclear Plant on Lake Michigan moved closer to becoming the first decommissioned U.S. nuclear facility to restart, with federal regulators approving all licensing actions. (WNDU)

• Trump administration reinstated Chevron’s license to resume oil production in Venezuela, reversing earlier revocation, with no royalties expected to flow to Maduro’s regime. (BBG)

• EU solar market faces first decline in a decade, with 2025 installations projected at 64.2 GW, a 1.4% drop from 2024. (SPE)

• Trump announced that Australia will accept U.S. beef after years of bans. (X)

🌕 Crypto

• ⭐ Editor’s Pick: Crypto inflows soared to $60 billion over 12 months, surpassing private equity, according to a JPMorgan Chase report. (CD)

• Kalshi integrated Elon Musk’s AI bot Grok into its prediction market UI, providing AI-driven odds analysis. (X)

• Christie's International Real Estate launched a crypto-only division, offering $1 billion in luxury properties exclusively for crypto bids. (NYT)

• Michael Saylor's Strategy expanded its Stretch preferred offering to $2 billion from $500 million to finance additional Bitcoin buys, pricing shares at $90 with a 9% cumulative dividend. (BBG)
  

TECH

💻 Nvidia’s AI Chips Worth $1 Billion Smuggled to China After Trump’s Ban

The Scoop: Despite President Donald Trump’s export controls, over $1 billion in Nvidia’s advanced B200 chips, critical for AI development, were smuggled into China in the three months following the ban, exposing significant loopholes in U.S. restrictions aimed at curbing China’s access to cutting-edge technology.

The Details:

• The Financial Times reported that Chinese suppliers sold Nvidia’s B200 chips, banned for exceeding U.S. performance thresholds, to data center operators supporting China-based tech firms as recently as May.

• Evidence from sales contracts, company filings, and insider interviews confirmed smuggling operations in Guangdong, Zhejiang, and Anhui provinces, involving B200, H100, and H200 chips.

• A Chinese data center operator claimed export controls only create “inefficiency” and profit opportunities for middlemen, not barriers to acquiring Nvidia’s chips.

• Trump recently reversed a ban on Nvidia’s less-powerful H20 chips, allowing their sale to China, following earlier restrictions imposed under the Biden administration.

What’s Next: The smuggling revelation highlights challenges in enforcing U.S. export controls as China seeks to bolster its AI capabilities. Expect increased scrutiny of supply chains and potential tightening of regulations, though middlemen may continue exploiting gray markets.

Tech Roundup

🧠 AI

• ⭐ Editor’s Pick: OpenAI is set to launch GPT-5 in August, promising enhanced coding and reasoning capabilities, blending traditional and advanced model attributes. (AX)

• Walmart introduced plans for AI-driven "super agents" to enhance customer shopping and optimize operations, strengthening its competitive edge against rival retailers. (RTS)

• Spotify faces criticism for publishing AI-generated songs imitating deceased artists like Kurt Cobain and Amy Winehouse without permission. (404)

• Google introduced AI-powered virtual try-on feature, allowing users to digitally test clothing fits. (TC)

🤖 Hardware & Robotics

• ⭐ Editor’s Pick: The Cleveland Clinic performed the first-ever robotic heart valve replacement through a small neck cut, marking a surgical breakthrough. (IE)

• ByteDance, TikTok's parent company, showcases an AI-driven robotic system designed to perform household tasks like hanging clothes and cleaning tables. (SCMP)

• Richtech Robotics’ ADAM robot serves space-themed cocktails at Kennedy Space Center’s Legacy of Launch 75th Anniversary event. (RR)

• Seattle Seahawks deployed GPS-powered Turf Tank robot to precisely paint practice field lines at Virginia Mason Athletic Center for 2025 training camp. (MNW)

🚀 Defense & Space

• ⭐ Editor’s Pick: An Israeli F-16I navigator shared rare insights about striking Iran, conducting long-range combat missions, and supporting operations in the Gaza conflict. (TWZ)

• Chinese engineers claimed a breakthrough in stealth aircraft design with a new software platform, demonstrating significant improvements on the U.S. Navy’s X-47B drone. (IE)

• The U.S. is developing mobile nuclear bomb storage vaults, enabling rapid deployment of B61-12 warheads to remote global locations. (TWZ)

• Starlink experienced a 2.5-hour global outage Thursday, impacting millions across 130 countries. (IND)

💰 Venture Capital & Deals

• ⭐ Editor’s Pick: Venture capitalist Elad Gil is raising a $1.5 billion fund, potentially expanding to $2 billion based on investor demand, marking one of the largest solo GP fundraising efforts to date. (TI)

• Cognition, developer of the AI coding assistant Devin, is negotiating a $300 million-plus funding round at a $10 billion valuation, more than doubling its $4 billion valuation from March. (FOR)

• Armada secured $131 million to scale mobile and relocatable AI data centers, with Founders Fund and Lux Capital among returning investors. (DD)

• Trunk Tools secured $40 million Series B, led by Insight Partners, to advance its AI-powered construction project management platform. (SA)

FREEDOM

🤐 California Bill Seeks to Punish Social Media Companies for Not Censoring Speech

The Scoop: California’s Senate Bill 771, now under review in the state Assembly, threatens to curb free speech on social media by holding large platforms liable for user content deemed to violate state civil rights laws, with fines up to $1 million for “knowing” violations and $500,000 for reckless ones, potentially chilling online expression, according to Reason.

The Details:

• Passed by the Senate in May, S.B. 771 targets social media companies with over $100 million in annual profits, penalizing algorithms that “relay content” like hate speech.

• Critics, including Shoshana Weissmann of the R Street Institute, argue the bill effectively punishes platforms for protected user speech under the First Amendment, as it holds companies liable for any algorithm-driven content display, even basic ones like chronological feeds.

• The bill’s vague “knowingly” standard could implicate routine platform operations, creating legal uncertainty for companies.

• Section 230 of the Communications Decency Act, which shields platforms from liability for user content, poses a significant legal hurdle for enforcement.

What’s Next: S.B. 771 faces likely legal challenges over First Amendment and Section 230 conflicts, with critics warning it could push platforms to over-moderate user content to avoid hefty fines. If passed, the bill may reshape online discourse in California, potentially driving extreme speech to smaller, unregulated platforms while testing the boundaries of state authority over digital speech.

Freedom Roundup

🏛️ Policy

• ⭐ Editor’s Pick: Trump officially signed the $9 billion rescissions package into law, cutting funding for foreign aid and NPR. (FOX)

• Agriculture Secretary Brooke Rollins announced a USDA reorganization, relocating most Washington-area staff to Salt Lake City, Fort Collins, Indianapolis, Kansas City, and Raleigh. (POL)

• The Trump administration seeks Supreme Court approval to cut NIH grants linked to gender identity and DEI, challenging a lower court's order to reinstate $783 million in funding. (CBS)

• Trump’s EPA plans to repeal vehicle emission standards for light, medium, and heavy-duty vehicles after rescinding the 2009 greenhouse gas endangerment finding. (RTS)

💬 Free Speech & Woke Overreach

• ⭐ Editor’s Pick: Consumers’ Research launched a campaign targeting DISH Network, criticizing its promotion of DEI, climate activism, and transgender ideology to children. (BN)

• A Christian photographer won a free speech case, securing $225,000 and protection from New York state laws forcing her to photograph same-sex weddings against her beliefs. (DC)

• Marathon Petroleum faces backlash over DEI program offering $10,000 hiring bonuses for racial minorities, with critics arguing it prioritizes ideology over safety and merit. (CJ)

• California Attorney General Rob Bonta (D) faces a lawsuit from pro-life group Culture of Life Family Services, accused of stifling free speech by targeting Abortion Pill Reversal information. (LN)

That's a wrap! You're officially caught up on all things tech, markets and freedom. Subscribe to CAPITAL below.

Feel free to reply to this email with any questions and/or comments.

DISCLAIMER: The CAPITAL newsletter is for informational purposes only and does not constitute financial, investment, or professional advice. Readers should conduct their own research and consult a qualified financial advisor before making investment decisions. The CAPITAL newsletter and its owner and operator, Josh Caplan, are not liable for any loss or damage resulting from reliance on this information. The CAPITAL newsletter is solely owned and independently operated by Josh Caplan, separate from any employer affiliations.