TheChek News Flow

Traders bet on interest rate cuts from Jay Powell’s successor at the Fed

Donald Trump’s criticism of central bank chair has fuelled expectations of a dovish shift once he leaves in May next year

Traders are increasing their bets on US interest rate cuts after Jay Powell leaves the Federal Reserve next year, as the central bank chief faces a barrage of criticism from Donald Trump for moving too slowly in lowering borrowing costs.

Markets are anticipating at least five quarter-point cuts by the end of next year, according to futures pricing, compared with four at most a month ago. The change in expectations is partly down to rate-setters tempering their view on the inflationary effects of tariffs. But analysts say it also reflects the president’s constant haranguing of Powell as “Mr Too Late”, which has fanned expectations he will appoint a more dovish successor.

“The more notable shift over the past month is in cuts priced for the middle of next year, as the market seems to increasingly anticipate ongoing easing once the next Fed chair is in place,” wrote Matthew Raskin, head of US rates research at Deutsche Bank in a recent note to clients.

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Trump said in a post on Truth Social on Wednesday that he had narrowed his search for the next Fed chair to “three or four people”. He added: “I mean [Powell] goes out pretty soon, fortunately, because I think he’s terrible.”

Treasury secretary Scott Bessent and Kevin Warsh, who served as a Fed governor during the 2008 financial crisis, are widely believed to be among front runners for the job. Fed governor Christopher Waller, who this week endorsed a rate cut as soon as July, is also under consideration.

“I think that the prevailing market wisdom is that whoever replaces Powell is going to be more dovish. It doesn’t mean that they will be non-responsive to the realities of the economy, but they may be more amenable to [lowering rates],” said Ian Lyngen, head of US rates strategy at BMO Capital Markets.

While candidates such as Warsh have historically been more hawkish than dovish, Lyngen said that might change in the current environment.

He said: “Trump has been extremely critical of Powell. The people who are under consideration are currently auditioning for the job. To look at prior performance and map it to future performance is not right in this instance.”

Expectations have mounted in recent months that the Fed may appoint a “shadow chair” in advance of the end of Powell’s term who could signal a more dovish direction on rates. The White House said a decision on Powell’s replacement was not “imminent”.

Comments from Fed policymakers have also stoked expectations of faster cuts. Governor Michelle Bowman joined Waller this week in saying she supports cutting rates as soon as July, citing lower-than-expected inflation.

The two- and five-year Treasury yields, which are sensitive to rate expectations, reached two-month lows this week as investors priced in the possibility of more rate cuts in the medium-term.

But Powell has pushed back against the possibility of a July cut and has not reacted to Trump’s repeated demands, largely because of inflation risks. At a speech in Congress on Tuesday, Powell said that cuts were off the table until the autumn, as the central bank was expecting to see the effects of Trump’s tariffs on prices in June and July.

Consumer price inflation accelerated slightly in May to a rate of 2.4 per cent, though the rise was smaller than economists had predicted.

Cybersecurity firms are warning that the prolific hacking group known as Scattered Spider is now targeting airlines and the transportation sector.

Executives from Google’s cybersecurity unit Mandiant and Palo Alto Networks’ security research division Unit 42 say they have observed cyberattacks targeting the aviation industry resembling Scattered Spider.

Scattered Spider is a collective of mostly English-speaking hackers, typically teenagers and young adults, who are financially motivated to steal and extort sensitive data from company networks. The hackers are also known for their deception tactics, which often rely on social engineering, phishing, and sometimes threats of violence toward company help desks and call centers to gain access to their networks.

The warning comes as at least two airlines have reported intrusions this month.

Hawaiian Airlines said late Thursday that it was working to secure its systems following a cyberattack. Canada’s second largest airline, WestJet, reported a cyberattack on June 13 that remains ongoing and unresolved. Media reports have linked the WestJet incident to Scattered Spider.

This fresh wave of Scattered Spider attacks comes soon after the cybercriminal gang targeted the U.K. retail sector and the insurance industry. The hackers have previously broken into hotel chains, casinos, and technology giants.

OpenAI, one of the world’s biggest customers of Nvidia artificial intelligence chips, recently began renting Google’s AI chips to power ChatGPT and other products, the first time it has used non-Nvidia chips in a meaningful way, according to a person who is involved in the arrangement.

The move reflects OpenAI’s broader shift away from relying on Microsoft data centers and could boost Google’s tensor processing units as a cheaper alternative to Nvidia’s graphics processing units, which dominate the AI chip market.

The Takeaway

• OpenAI hopes Google’s TPUs can help lower its costs

• The move is part of OpenAI’s effort to diversify from Microsoft and Nvidia

• The OpenAI-Google cloud pact may be straining Google’s servers

The deal also shows how Google’s longtime strategy of developing technology or businesses in nearly all software and hardware related to AI may be paying off.

OpenAI hopes the TPUs, which it rents through Google Cloud, can help lower the cost of inference computing, a term that refers to running AI on servers after the AI has been fully developed, this person said.

OpenAI’s computing needs are rising fast: ChatGPT likely has more than 25 million paying subscribers, up from 15 million at the start of the year, and hundreds of millions of people use it for free every week.

OpenAI primarily rents Nvidia server chips through Microsoft and Oracle to develop or train its models and to power ChatGPT. OpenAI spent more than $4 billion to use such servers last year, split nearly evenly between training and inference, and has projected that it will spend nearly $14 billion on AI chip servers in 2025.

Google, which competes fiercely with OpenAI in developing AI models, isn’t renting out its most powerful TPUs to its rival, according to a Google Cloud employee. That suggests that for now, Google is reserving the stronger TPUs primarily for its own AI teams to develop Gemini models. It also isn’t clear whether OpenAI wants to use TPUs for training AI.

Other firms that rent TPUs from Google cloud include Apple, Safe Superintelligence and Cohere, in part because some employees of those firms previously worked at Google and are familiar with how TPUs work.

Meta Platforms, which like OpenAI is one of the world’s biggest customers of AI chips, also recently considered using TPUs, according to a person with direct knowledge of the discussion. Meta says it isn’t using them.

Google Cloud also rents out Nvidia-powered servers to its customers, and it still generates significantly more from doing so than from renting out TPUs, as Nvidia chips are an industry standard and developers have more experience using the specialized software that controls those chips. Google previously placed more than $10 billion of orders for Nvidia’s state-of-the-art Blackwell server chips and began making them available to select customers in February.

Google began working on its TPUs around 10 years ago and, starting in 2017, made them available to cloud customers interested in training their own AI models.

OpenAI first turned to Google Cloud earlier this year, after its ChatGPT image-generating tool went viral, taxing the inference servers it was using from Microsoft.

But the deal is now straining Google Cloud’s own data center capacity.

In recent weeks, Google approached other cloud providers, which primarily rent out Nvidia GPUs, to ask whether they would also install TPUs in their data centers for the benefit of an unnamed Google Cloud customer, according to several people with direct knowledge. Google recently held discussions with CoreWeave about leasing space for TPUs in its data centers, for instance.

While no company can match the performance of Nvidia chips for training AI, a never-ending list of companies have been developing inference chips to lessen their reliance on Nvidia and, hopefully, lower their costs in the long run.

It’s unclear whether any agreements materialized.

To date, Google has made TPUs available only through its own facilities.

Jacinda Mein, a Google Cloud spokesperson, confirmed that Google was “looking for space and power” outside Google data centers “to meet the short-term needs of a single Google Cloud customer.”

“These discussions in no way change our strategy,” she said, referring to its preference to keep TPUs in its own data centers. An OpenAI spokesperson declined to comment.

Challenging Nvidia

While no company can match the performance of Nvidia chips for training AI, a never-ending list of companies have been developing inference chips to lessen their reliance on Nvidia and, hopefully, lower their costs in the long run.

Other major cloud providers such as Amazon and Microsoft, as well as big AI developers like OpenAI and Meta, have kicked off efforts to develop their own inference chips, with varying degrees of success.

Cloud providers have struggled to score big customers for their Nvidia-chip alternatives without also offering financial incentives. For instance, Anthropic uses Amazon’s and Google’s AI chips, but it has also received several billions of dollars in funding from each firm. It’s not clear whether Google is providing OpenAI with discounts or credits as an incentive to use TPUs.

OpenAI’s Google chip deal could be a setback for Microsoft, OpenAI’s closest partner and early backer. Microsoft has poured a significant amount of money into developing an AI chip it hoped OpenAI would use. Microsoft has run into problems while developing its AI chip and recently delayed the timeline for releasing the next version, meaning it likely will not be competitive with Nvidia’s chips by the time it is done.

Reuters earlier reported on OpenAI signing a deal to rent cloud servers from Google.

Germany just became the latest country to move against DeepSeek over mounting data privacy concerns. Here’s why this keeps happening.

As you probably guessed, it’s a China thing

When DeepSeek took the world by storm earlier this year, it wasn’t long before it found itself in the crosshairs of governments in the West.

First, because users quickly learned that its models were heavily moderated, skirting answering questions that could cast China and its government in a bad light.

Second, and more critically, DeepSeek’s own privacy policy confirms that the app stores user prompts, uploaded files, and other personal data on servers in China, where authorities have sweeping access under the country’s national intelligence laws.

That’s raised red flags globally. Italy was one of the first to remove DeepSeek from local app stores. South Korea did it too. In the Netherlands, it was banned on government devices. Belgium recommended public officials steer clear, and Spain’s leading consumer group has formally called for an investigation.

Meanwhile, in the U.S., lawmakers are reportedly drafting legislation that would basically prohibit federal agencies from using any AI developed in China. One senator floated the idea of jailing those who use it.

Germany joins the list

This week, Germany’s top data protection regulator formally asked Apple and Google to remove Chinese startup DeepSeek from their app stores, citing concerns over the illegal transfer of personal data to China.

In a statement issued Friday (via Reuters), Meike Kamp, Berlin’s federal commissioner for data protection and freedom of information, said DeepSeek failed to provide sufficient guarantees that user data is protected under standards equivalent to those in the EU:

“DeepSeek has not been able to provide my agency with convincing evidence that German users’ data is protected in China to a level equivalent to that in the European Union.”

Kamp’s office had previously asked DeepSeek to meet EU data transfer requirements or pull the app voluntarily. It didn’t.

While it is worth noting that while DeepSeek’s local, open-source models are relatively easy to fine-tune or detangle from their original China-centric biases, that’s not the case for the app or website, both of which run a hosted version controlled entirely by the company.

As for the takedown request, Google told Reuters it’s currently reviewing it. Apple hasn’t commented, but we’ve reached out and will update this post if we hear back.

The 10 Highest-Yielding Dividend Aristocrats

It’s well known that higher-yielding stocks can be value traps.

While those yields can be alluring, they can also signal an impending dividend cut and underlying weakness in a company’s operations.

Consider the S&P 500 Dividend Aristocrats Index. Its 69 members have paid out a higher dividend for at least 25 straight years, a sign of long-term consistency and quality—despite any shorter-term setbacks.

“When you look at the dividend aristocrats, what they are is the best screen for quality,” says Jenny Van Leeuwen Harrington, CEO of Gilman Hill Asset Management.

The index’s yield was recently at around 2.2%, but there are some constituents at much higher levels.

Barron’s compiled a list of 10 of the highest-yielding aristocrats, including Franklin Resources, which recently yielded 5.6%; Amcor, 5.6%; Realty Income, 5.5%; T. Rowe Price Group, 5.4%; and Stanley Black & Decker, 5.1%.

Rounding out the list are Eversource Energy, 4.8%; Target, 4.7%; Chevron, 4.7%; Federal Realty Investment Trust, 4.6%; and J.M. Smucker, 4.4%.

High yields can reflect poor stock performance, and that has been the case for some of these companies. One concern is that a juicy yield could be erased by the share’s price decline.

Case in point: Shares of retailer Target slid nearly 30% this year through June 23. As Barron’s pointed out in March, the chain has been “fighting not just for growth but also for its place in a hotly competitive U.S. retail market dominated by innovative, well-capitalized giants such as Walmart” and others.

A consolation for Target investors is that the company recently announced that it would boost its quarterly payout by nearly 2% to $1.14 a share from $1.12. It said it was on track to increase its annual dividend for the 54th straight year. A yield of nearly 5% provides some downside protection as investors wait for Target’s performance to improve.



One potential source of comfort for investors looking at these particular higher-yielders is that not too many companies get kicked out of the aristocrats index due to dividend cuts.

But companies do get booted sometimes. Examples in recent years include Walgreens Boots Alliance and VF Corp., which both slashed their payouts.

Another laggard this year is money manager T. Rowe Price. Its shares have fallen by about 15%, including dividends. But another asset manager, Franklin Resources, which recently yielded 5.5%, has returned about 15%.

Other solid stock performances this year have come from Realty Income, a real estate investment trust that has returned about 12%; Eversource Energy, up 13%; and Chevron. The global energy giant has returned about 4% in 2025.

Elsewhere, J.M. Smucker is off by about 10%, Federal Realty Investment Trust has slid by 12%, and Stanley Black & Decker has fallen by about 16%. Amcor, which makes packaging products, is down about 1%. The S&P 500 index has returned 3%.

Simeon Hyman, global investment strategist at ProShares, says that focusing on the highest-yielding aristocrats can make sense, though those securities tend to have a value tilt and are more cynical than other members of that index. “You have to walk carefully in the high-dividend-yielding space.” he says.

At the same time, Hyman adds, a long record “of dividend growth is absolutely a marker of quality across all of the constituents of the [dividend aristocrats] index.

The ProShares S&P 500 Dividend Aristocrats exchange-traded fund (ticker: NOBL) tracks the index. Some investors may prefer to invest in the entire aristocrat index as a way to diversify a portfolio.

Holtec International, a key player in the nuclear industry, plans to go public within several months, CEO Krishna Singh told Barron’s on Monday.

The IPO would almost certainly be the largest nuclear-energy offering in years, giving investors one of the few pure-play ways of buying into the industry. Unlike some other nuclear names, Holtec already produces substantial revenue from activities like decommissioning nuclear plants and handling nuclear waste. The company could be worth more than $10 billion.

Holtec is also on the verge of doing something never before attempted in America—bringing back a decommissioned nuclear plant. The company is restoring a reactor at the Palisades Nuclear Plant in Michigan, which had been shut down in 2022 for financial reasons. It has received hundreds of millions of dollars of support from the state of Michigan and the Department of Energy for the project.

In addition, Holtec plans to place another two small modular reactors, or SMRs, at the Michigan site, although it has not yet received federal or state approval to do so. Holtec is already building the equipment for those reactors in conjunction with Hyundai Engineering & Construction.

Singh founded Holtec, which is based in Camden, NJ, in 1986. For years, the company has made money by decommissioning existing nuclear plants, which involves carefully disassembling the plants and storing their used nuclear fuel. The company also builds containment units for spent fuel that are sold around the world. Its annual profits are upward of $500 million, according to a source familiar with the company’s results. Singh said he’s hoping to sell about 20% of the company’s equity to investors.

“It will be probably January, although my consultants said it will be April,” he said. “They’re conservative.”

Singh said he is discussing with the consultants if the company’s books are “up to snuff to be a public company.” A company spokesman said afterward that Singh was referring to the company’s software and reporting technology, not its financial controls.

Singh said the company will use proceeds from the equity sale to help it expand construction of small modular reactors. “The real driver for us is we are on our own calendar,” he said. “We’re going to be building, we think, in the next decade 10-20 small modular reactors at the same time.”

Assuming the company perfects the process of building them, each of those reactors could cost about $3 billion to construct. “The capital needed for that is enormous,” he said. Singh said he is open to Holtec operating the units themselves, or selling them to third parties.

Like other nuclear companies, Holtec has been talking to data center operators about buying nuclear power, he said.

Many of these ideas will take years to play out. The company has not yet licensed its design, and there are no SMRs currently operating in the United States.

Holtec’s market value would likely exceed the value of other nuclear developers, which still have relatively minimal amounts of revenue, if any at all. “It’s a more mature company with more revenue than others that have gone public,” said Seth Grae, CEO of nuclear fuel company Lightbridge.

Oklo, another reactor developer, is worth $8 billion, and microreactor company Nano Nuclear is worth $1.5 billion. Nuscale, the most valuable small-scale nuclear developer and the only one with a license from the Nuclear Regulatory Commission, is worth a little over $10 billion.

Shares of Oklo and Nuscale have soared more than 200% in the past year, as tech companies like Alphabet and Amazon have expressed interest in buying power from nuclear reactors for their AI data centers. Asked if Holtec ought to be worth more than those existing nuclear developers, Singh said, “In a fair market, I think we should be worth a whole lot more. We actually make things.”

Grae agreed that Holtec will probably be worth over $10 billion, and said that the company should see considerable appetite from investors. “They’re doing it at exactly the right moment,” he said. “There’s so much investor interest in nuclear.”

The timing will be even better if Holtec can successfully reopen Palisades. Singh said the project is likely to be operating in November, a few weeks after the company’s best-case-scenario date of October. A Holtec spokesman said the pushback on the date is because Holtec chose to do additional work on the project, and it keeps the company within its goal of completing the project in the fourth quarter.