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TSMC, the world’s biggest producer of advanced chips, is brushing off concerns about an AI bubble. The go-to chipmaker for Nvidia and Apple is raising its full-year revenue forecast as it rides a wave of spending on AI infrastructure. “Our conviction in the AI megatrend is strengthening,” CEO C.C. Wei told an earnings call.
TSMC’s outlook is even more remarkable given that U.S. sanctions mean China is off limits. Earlier in the week ASML, for which TSMC is a major customer, said it too expected to benefit from the AI boom even with a significant drop in demand from China.
The bullish industry comments tie in nicely with the theme of this week’s Reuters Econ World podcast. We are looking at the debate around a potential AI bubble and the implications for the global economy. Listen here.
The AI investment boom is helping the global economy navigate tariff shocks but there is still plenty of room for nasty surprises. Beijing’s move to tighten export controls for rare earths and other critical minerals ups the ante ahead of an expected meeting of U.S. President Donald Trump and Chinese leader Xi Jinping later this month. Treasury Secretary Scott Bessent has floated the idea of the U.S. extending a pause of import duties on Chinese goods if Beijing halts its plans. That would suggest China’s critical minerals gamble may pay off but as columnist Clyde Russell points out, it’s a risky card to play.
China is the big variable in the world of luxury goods. LVMH shares had their best day in over two decades this week following signs of improved demand in China, driving a wider sector rally that added nearly $80 billion to European luxury stocks' valuations.
Chinese nationals account for around a third of global luxury sales at LVMH as well as for the sector as a whole and while LVMH’s results were reassuring, they don’t mean the boom times are back. LVMH’s own initiatives, such as a ship-shaped Louis Vuitton boutique in Shanghai helped, and the company warned that economic uncertainty and unfavourable exchange rates would continue to affect its business in the fourth quarter.
Wall Street banks expect the good times to keep rolling as equity markets surge and the wider economy holds up. But the bankruptcies of U.S. auto parts supplier First Brands and car dealership Tricolor have prompted some soul searching. Jamie Dimon, the head of JPMorgan, was typically colourful in his warnings in the wake of the twin collapses, telling analysts, “I probably shouldn’t say this, but when you see one cockroach, there are probably more.” Time and credit conditions will tell.
French Prime Minister Sebastien Lecornu survived two no-confidence votes in parliament, winning crucial backing from the Socialist Party thanks to his pledge to suspend President Emmanuel Macron’s contested pension reform. It marks the collapse of Macron's reformist push to modernise France - and perhaps even the end of Macronism itself, nearly two years before he is due to step down.
Could a wealth tax be next on the cards for France? The Socialists now want a tax on billionaires in the 2026 budget. Lecornu has publicly opposed the tax, but in an address to parliament this week said he would ask for an exceptional levy on large fortunes.
Over in the UK, meanwhile, finance minister Rachel Reeves has said higher taxes on the wealthy will be part of the story of her November 26 budget. Reeves has previously said she did not think a standalone wealth tax was needed. But in a Guardian interview she said concerns raised last year when she levied taxes designed to raise money from private schools and wealthy individuals had proved to be overblown.
You can hear all about the pros and cons of wealth taxes here.
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