China Services Growth Picks Up With Economy Pressured by Tariffs
The Caixin China services purchasing managers' index rose to 51.9, versus 51.4 in February, according to a statement from Caixin and S&P Global on Thursday. The median forecast of economists surveyed by Bloomberg was 51.5. Any reading above 50 suggests expansion.
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The Hill
an hour ago
- The Hill
Tech companies building massive AI data centers should pay to power them
The projected growth in artificial intelligence and its unprecedented demand for electricity to power enormous data centers present a serious challenge to the financial and technical capacity of the U.S. utility system. Appreciation for the sheer magnitude of that challenge has gotten lost as forecast after forecast projects massive growth in electric demand over the coming decade. The idea of building a data center that will draw 1 gigawatt of power or more, an amount sufficient to serve over 875,000 homes, is in the plans of so many data center developers and so routinely discussed that it no longer seems extraordinary. The challenge, when viewed in the aggregate, may be overwhelming. A recent Wood Mackenzie report identified 64 gigawatts of confirmed data center related power projects currently on the books with another 132 gigawatts potentially to be developed. 64 gigawatts are enough to power 56 million homes — more than twice the population of the 15 largest cities in America. The U.S. electric utility system is struggling to meet the projected energy needs of the AI industry. The problem is that many utilities do not have the financial and organizational resources to build new generating and transmission facilities at the scale and on the data center developers' desired timeline. The public policy question now on the table is who should pay for and bear the risk for these massive mega-energy projects. Will it be the AI developers such as Amazon, Microsoft, Meta and Alphabet — whose combined market value is seven times that of the entire S&P 500 Utility Sector — or the residential and other customers of local electric utilities? The process to answer this and related questions is underway in the hallways of the U.S. Congress, at the Federal Energy Regulatory Commission and other federal agencies, in tariff proceedings before state regulatory authorities and in public debate at the national, state and local levels. Whether they are developed at the federal, state or local level, the following values and objectives should form the core of public policy in this area: Data centers developers that require massive amounts of electric power (e.g. above 500MW or another specified level) should be required to pay for building new generating and transmission facilities. The State of Texas recently enacted legislation that requires data centers and other new large users to fund the infrastructure necessary to serve their needs. Although it is customary to spread the cost of new facilities across the user base of a utility, the demands that data center developers are placing on utility systems across the country are sufficiently extraordinary to justify allocating the costs of new facilities to those developers. Moreover, data center developers have the financial resources to cover those costs and incorporate them into the rates charged to users of their AI services. The developers of large data centers should bear the risk associated with new utility-built generating and transmission facilities, not the utility. As an example of such a policy, the Public Utility Commission of Ohio just approved a compromise proposed by American Electric Power of Ohio that would require data centers with loads greater than 1 gigawatt and mobile data centers over 25 megawatts to commit to 10-year electric service contracts and pay minimum demand charges based on 85 percent of their contract capacity, up from 60 percent under the utility's current general service tariff. Another option included in the Texas legislation requires significant up-front payments early in the planning process and mandates that data center developers disclose where they may have simultaneously placed demands for power. It is not unusual for data center requests for service to be withdrawn once they decide on the best location and package of incentives. Data center developers have the financial capacity and ability to manage this risk, utilities do not. Generating facilities that are co-located at large data centers should be integrated with the local utility electric grid, with appropriate cost allocation. Although a few projects have examined the option of a co-located power generation 'island' fully independent of the grid, most projects intend to interconnect with the grid system for back-up power and related purposes. Properly managed, this interconnection could be advantageous for both the data center and the utility system, provided that costs are appropriately allocated across the system. The U.S. government should continue to support the development of nuclear technology, including small modular reactors. U.S. utilities do not have the financial resources to assume the risk of building new nuclear-powered generating facilities. The emergence of a new set of customers, data center developers with enormous needs for electric power and deep pockets, changes the equation. The U.S. government has provided billions of dollars of support for new nuclear technologies and should continue to do so for the purpose of bringing their costs down. The U.S. government should continue to support energy efficiency improvements at data centers. Data centers use massive amounts of power for running servers, cooling systems, storage systems, networking equipment, backup systems, security systems and lighting. The National Renewable Energy Laboratory has developed a 'handbook' of measures that data centers can implement to reduce energy usage and achieve savings. In addition, there now are strong market forces to develop new super-efficient chips that will lower the unit costs of training and using AI models. The U.S. government should help accelerate the development of these chips given their leverage on U.S. electricity demand. The stakes in this public policy debate over our energy future could not be higher. If we get these policies right, AI has the potential to remake the U.S. economy and the energy infrastructure of this country. If we get it wrong, the push to build new generating and transmission facilities to provide gigawatts of power has the potential to overwhelm the financial and operational capacity our electric utility system, impose burdensome rate increases on homeowners and businesses, undercut efforts to reduce the use of fossil fuels to meet climate-related goals and compromise the reliability of our electricity grid for years to come. David M. Klaus is a consultant on energy issues who served as deputy undersecretary of the U.S. Department of Energy during the Obama administration and as a political appointee to two other Democratic presidents. Mark MacCarthy is the author of 'Regulating Digital Industries' (Brookings, 2023), an adjunct professor at Georgetown University's Communication, Culture & Technology Program, a nonresident senior fellow at the Institute for Technology Law and Policy at Georgetown Law and a nonresident senior fellow at the Brookings Institution.
Yahoo
2 hours ago
- Yahoo
KKR in talks to buy ST Telemedia Global Data Centres, Bloomberg News reports
(Reuters) -KKR is in talks to buy ST Telemedia Global Data Centres in a deal that could value the Asian digital infrastructure provider at more than $5 billion, Bloomberg News reported on Saturday, citing people familiar with the matter. Reuters could not immediately verify the report.
CNBC
2 hours ago
- CNBC
More stock market records, more trade deals, more trade talks — plus, lots of earnings
The S & P 500 rose every day this past week as trade deals, both in the works and announced, lent support to the market. The index heads into the final stretch of a strong July at record highs. For the week, the S & P 500 gained nearly 1.5%. The Nasdaq did not go wire to wire in the green this week, but it did rise 1%, closing at another record high. Ahead of the last trading day of the month on Thursday, the S & P 500 was up almost 3% for July, while the Nasdaq jumped 3.6%. The best session of the week came on Wednesday after President Donald Trump announced the night before what he called a "massive" trade agreement with Japan ahead of the Aug. 1 deadline. The deal settled on a 15% tariff on goods entering the United States from Japan, including automobiles. In exchange, Japan will invest $550 billion in America and open its market to more imports from the U.S. The trade focus now shifts to China and the European Union. Next week, Treasury Secretary Scott Bessent travels to Stockholm for talks with Chinese officials about extending the negotiating window for a trade deal. Regarding the EU, Trump said Friday he sees only a "50-50 chance" of a deal with the trading bloc. The president plans to meet with EU officials in Scotland on Sunday. .SPX .IXIC 5D mountain S & P 500 and Nasdaq 5-day performance The other big news of this past week was Trump's trip to the Federal Reserve on Thursday. He toured the central bank renovation site with Fed Chairman Jerome Powell. They spoke with reporters and had an uncomfortable moment over renovation costs. Trump signaled that he's no longer considering firing Powell. The president told reporters Friday that Powell and he had a "good meeting" about interest rates, and he believes the Fed will start cutting them. Powell has kept rates steady since December 2024, saying central bankers need more time to see how finalized tariffs will impact inflation. On the economy, the June existing home sales report was released on Wednesday, followed by June new home sales on Thursday. While sales of both were slower than expected, the reports diverged when it came to prices. The median price of a previously owned home sold in June was $435,300, up year over year and the 24th consecutive month of annual increases, according to the National Association of Realtors. However, government data showed the median sales price of new homes sold last month was $401,800 — below May and below year-ago levels. Watching housing price trends is important because it can give us signals on where shelter costs might be headed, which have been a key factor keeping overall inflation elevated. Second quarter earnings season has kicked into full gear, with results thus far coming in better than expected. According to FactSet, a third of the S & P 500 companies have already reported, with 80% of those delivering upside surprises to both sales and earnings expectations. Within the Club portfolio, we heard from Danaher, GE Vernova, Capital One, Honeywell, and Dover. Talk about a blowout. GE Vernova came into the quarterly print near all-time highs, setting a high bar of expectations, which it easily hopped over. The stock was rewarded with record highs and was our top performer of the week, with 12% gains. Shares have nearly doubled in 2025 versus the S & P 500's 8.6% advance this year. GE Vernova on Wednesday reported strong order growth and robust EBITDA margin expansion. EBITDA stands for earnings before interest, taxes, depreciation and amortization. Strong backlog growth also gives us confidence that end market demand remains healthy. "This era of accelerated electrification is driving unprecedented investments in reliable power, grid infrastructure, and decarbonization solutions," CEO Scott Strazik said on the post-earnings call. Danaher on Tuesday delivered a strong set of results, albeit against relatively low expectations. The company did outpace expectations on the top and bottom lines, thanks to strength in all key operating segments. While Chinese sales in biotechnology and life sciences grew, the positive numbers were overshadowed by sustained weakness in diagnostics due to the countries volume-based procurement program. The quarter was enough to spark a relief rally and keep us in the name. Danaher was our second-best performer this week, rising 8%. Despite a good week, the stock was still down 10.5% year to date. Capital One delivered a noisy quarter on Tuesday due to the Discover integration. While shares were among our losers this week, down 2.5%, they have been on a roll, up more than 19% year to date. We saw enough the quarter to reaffirm our view that there will be some serious long-term benefits resulting from the acquisition and its payment network. Capital One is one of only two banks in the world with their own credit card network, the other being American Express. We will look for the company to leverage that edge into earnings growth and for the stock to be rewarded for it with a higher multiple as the integration progresses and management executes on their game plan. We were surprised by Thursday's more than 4% stock drop on Dover 's earnings. In addition to a top and bottom-line beat, the company reported a record adjusted segment EBITDA margin, an acceleration in bookings that provides visibility into the future. It also outlined several growth and productivity investments to support long-term growth. Compounding the strong results, management raised its full-year outlook on both revenue growth and adjusted earnings per share. For the week, Dover lost about 1%. Like Dover, Honeywell stock was also dinged after it reported Thursday morning, despite the results coming in largely better than expected. Shares were our worst performer of the week, down 5.2%. While there was some weakness in aerospace and in segment margin performance, we were satisfied with the explanation provided by management on the call and believe the weakness provides a buying opportunity ahead of what we think will be a value-creating breakup into three separate operating companies. The split will start in the fourth quarter of this year, when management spins off the advanced materials business, and continue in 2026 with the separation of aerospace, which will leave the automation business as the third public company. In the week ahead, we will get seven more Club name earnings, including Amazon , Apple , Meta Platforms , and Microsoft . (See here for a full list of the stocks in Jim Cramer's Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
