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Chapter 1: What is the main topic discussed in this episode?
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Pro's number one most trusted app, based on August 2025 proprietary survey. global stocks sink on fresh investor concerns about a potential AI bubble.
The South Korean market down 8% today. That is a reflection really of what investors expect about AI globally because these South Korean chip companies are serving a global market.
Plus, the latest from Tel Aviv as Israel and Iran exchange fire for the first time in months. And an aviation trade group warns that a number of airlines may not survive the high energy prices brought on by fighting in the Middle East. It's Monday, June 8th.
I'm Luke Vargas for The Wall Street Journal, and here is the AM edition of What's News, the top headlines and business stories moving your world today. Global markets are sliding today following Friday's Wall Street rout that saw the Nasdaq fall by more than 4%.
Today, Japan's Nikkei was dragged lower by electronics and metal stocks, while trading of South Korea's Kospi Index was halted twice in order to reduce volatility after it briefly fell more than 8% thanks to big declines by chipmakers Samsung and SK Hynix. Peter Landers is The Wall Street Journal's Asia business, finance and economics editor and joins me now from Singapore.
Peter, help make sense of what has set this off. There was, of course, a stronger than expected jobs report back on Friday that could play some role in it, leading people to believe the Fed. might be raising rates this year.
And then two days before, on Wednesday afternoon, we had chipmaker Broadcom release earnings, saying that revenues were up, but it held its guidance for 2027 flat, which evidently sparked concerns that chip demand may not be trickling through to higher profit margins. Is that enough to get us to where we are now?
I think there's extraordinary sensitivity in the markets as to whether there is an AI bubble or not and how fast AI is going to keep growing. We know it's growing super fast and companies like NVIDIA or TSMC, SK Hynix, all of these companies that are connected to the AI boom. are seeing extraordinary rises in sales and profits. So that's great.
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Chapter 2: Why are global stocks sinking amid AI concerns?
And again, anything that affects those growth forecasts really has the market on edge.
Something potentially like Wednesday's U.S. inflation report or on the AI narrative, what's bigger than SpaceX's IPO coming up on Friday?
Right, and the IPO on Friday certainly will be a barometer of how much investors think this field is going to grow in coming years because right now SpaceX doesn't have the kind of revenues that a company like Apple or Amazon does, nothing like that, nothing close to that. If you buy into a trillion dollar plus valuation for SpaceX, you are expecting amazing growth to continue for a long time.
And it may well do that. And I think the IPO will be a test of what investors expect.
Chapter 3: What impact does the South Korean market have on global investor sentiment?
That's the journal's Peter Landers. And to round out a busy week, the European Central Bank is set to announce its next rate decision on Thursday with a hike likely. And back in the U.S., the University of Michigan's preliminary June consumer survey is due out on Friday. In other markets news, seven major oil producers led by Saudi Arabia have agreed to boost output for a fourth straight month.
Although some of the world's largest tankers have begun traversing the Strait of Hormuz in recent weeks, the production increase is seen as largely symbolic until flows through the waterway return to pre-war levels.
And the trade group representing major global airlines is forecasting that some may not be able to weather disruptions caused by higher fuel prices that have halved the industry's profitability. Willie Walsh is the director general of the International Air Transport Association.
If you were a small airline, weak balance sheet, you weren't able to hedge, you would have been hit by a very significant increase in the fuel bill. And quite honestly, there are some airlines out there that unfortunately will not survive through this period.
The group also said that ticket prices will inevitably have to rise, but said its research suggests that travelers are expecting that. Israel and Iran have exchanged fire in a tumultuous resumption of violence that's testing President Trump's fragile Middle East ceasefire.
The attacks and counterattacks mark the first time that Iran and Israel have targeted each other since the deal brokered by the U.S. went into force in early April. Correspondent Dov Lieber is in Tel Aviv and is across developments. Dov, what exactly happened overnight and into this morning?
Well, during the day yesterday, Israel struck Beirut for the first time since Iran had threatened to strike Israel directly if Israel strikes Beirut. And Iran fired 10 to 11 missiles at Israel overnight in four different waves of attacks. Iran said that those attacks targeted military sites, especially air bases inside of Israel.
And in response, Israel also struck several different areas in central and western Iran. including a petrochemical plant, which is an important target for Israel because petrochemicals are important for the Iranian economy.
OK, thanks for sketching out kind of the chain reaction here. It's very helpful. But we should know that President Trump, speaking yesterday, told Fox News and Axios that he was pressing Israel to stand down in response to this. And it seems like instead, Prime Minister Netanyahu has gone his own way here.
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Chapter 4: How does the latest jobs report influence market expectations?
So we have two countries and two leaders meeting in Pyongyang, trying to resolve their differences. And we will see if Xi has sway with it. Kim. We know he does have sway with Kim. The question is how much. Xi's meeting with Kim Jong-un comes amid surprisingly strong momentum for the North Korean economy.
The regime there doesn't release official economic data, though our reporting found that Pyongyang completed major construction projects, had a surge in activity at oil facilities, and saw a tripling of its nighttime brightness over the last five years. Tim says it's part of Kim's efforts to build a self-reliant economy.
North Korea is subject to some of the most powerful sweeping sanctions we've ever seen placed on an individual country for the better part of a decade. And this blocks North Korea's access to the global financial markets. So this survivability gives Kim Jong-un a strong hand.
A strong hand not only to refuse to sit down, at least so far with President Trump during his second term, but it also gives him currency with Xi Jinping. China should have absolute sway over North Korea.
But because of North Korea's diversity in how it makes money, who it's friends with, that now gives some more balance to a Pyongyang-Beijing relationship that has often been fraught over the decades.
Back in Washington, a top Senate Democrat is introducing a bill to restrict how the Pentagon uses artificial intelligence. We're exclusively reporting that the proposal from California's Adam Schiff would ensure that a human is involved when the Pentagon uses AI and weapons and would protect against the technology's use for domestic surveillance.
It's the latest in a flood of proposals that offer a preview of what tech companies can expect if Democrats win back control of Congress. The Trump administration is unlikely to back the measure. And Apple's Worldwide Developers Conference kicks off today with the big reveal expected to be a revamped chat GPT-like Siri built on Google's Gemini technology.
Apple is considered years behind some of its rivals in the AI race, but columnist Rolf Winkler said its formidable tech assets could help it to catch up quickly.
As far behind as Apple is in AI, there's an argument that is made by Wall Street analysts, and they say, you know what? Apple could still win this, right? At least when it comes to consumer AI. Why? Because we all still use iPhones. If OpenAI wants to reach people with ChatGPT, it has to go through Apple. All of these companies long-term still today have to go through Apple.
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Chapter 5: What are the implications of a potential AI bubble?
Our supervising producer is Sandra Kilhoff. And I'm Luke Vargas for The Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening.
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