Introduction
In August 2025, the global political and economic landscape was volatile, with a confluence of major events garnering widespread attention. From the Trump-Putin summit in Alaska on the Ukraine war, to European leaders gathering at the White House to discuss the prospects for peace, to the potential bursting of the artificial intelligence (AI) bubble, the monetary policy shift at the Jackson Hole conference, and the United States' new industrial policy toward Intel, these events not only shaped the current economic and geopolitical landscape but also laid the groundwork for future developments. This article, combining the latest data and various perspectives, will provide an in-depth analysis of the background, impact, and future trends of these events, striving to present a clear global picture for readers through fluent writing, vivid language, and sharp perspectives. 1. The Ukrainian War: A Tortuous Path to Peace 1. The Trump-Putin Summit and Multilateral Talks at the White House On August 16, US President Trump and Russian President Vladimir Putin held a highly anticipated summit in Alaska to discuss the Ukrainian war, which has lasted for over three years. The meeting was seen as a potential "first step" toward ending the conflict, although no concrete agreement was reached. Trump called the talks "extremely productive" and quickly arranged for Ukrainian President Volodymyr Zelensky and European leaders to fly to Washington on August 18 for multilateral talks. The White House meeting brought together a host of prominent figures, including French President Emmanuel Macron, German Chancellor Angela Merz, British Prime Minister Lars Starmer, Italian Prime Minister Meloni, Finnish President Stubb, European Commission President Ursula von der Leyen, and NATO Secretary General Mark Rutte. Such a large gathering of European leaders at the White House is extremely rare in recent decades and underscores the urgency of the Ukraine issue for global security. The atmosphere of the meeting stood in stark contrast to the tense standoff during Volodymyr Zelensky's visit to the US in February. Trump and Zelensky displayed cordial interaction, even joking about Zelensky's attire (which had changed from military fatigues to suits). Zelensky repeatedly expressed his gratitude for Trump's peace efforts, attempting to repair previous frictions caused by US aid. European leaders, on the other hand, explicitly supported Ukraine's "iron security guarantees," opposed any territorial concessions, and called for a ceasefire pending further negotiations. 2. Prospects for Peace and Challenges: Following the meeting, Trump announced via Truth Social that he had spoken with Putin and planned to arrange a bilateral meeting between Putin and Zelensky, followed by a three-way meeting involving Trump himself. German Chancellor Merz revealed that Putin had agreed to meet with Zelensky within the next two weeks, although the specific time and location had not yet been determined. However, the road to peace is not smooth. During the talks, Trump downplayed the need for a ceasefire, stating that "a peace agreement can be reached amidst fighting." This contradicts the position of European leaders such as Merz and Macron, who insist a ceasefire is a prerequisite for further negotiations. Furthermore, Russia continues to demand that Ukraine withdraw from parts of the Donetsk and Luhansk regions and opposes Ukraine's NATO membership. Trump has also made it clear that Ukraine will not become a NATO member, but that European countries will assume primary security responsibilities, with the United States providing "coordinated" participation. 3. Economic and Market Impact From an economic perspective, the ongoing war in Ukraine is putting pressure on global energy and food markets. However, Trump appears unwilling to impose secondary sanctions on Russia, alleviating market concerns about further economic turmoil. Global oil and natural gas prices have remained relatively stable since the summit, with Brent crude oil stabilizing around $75 per barrel, reflecting the market's low expectations for geopolitical risks. However, if peace talks collapse, energy prices could once again become a catalyst for global inflation.
II. Artificial Intelligence Bubble: The Gap Between Overestimated Expectations and Reality
1. Signs of Cooling in the AI Enthusiasm
The investment boom in artificial intelligence (AI) sparked widespread discussion in 2025, but market concerns about an AI bubble intensified this week. An MIT study revealed that 95% of enterprise AI application projects fail to generate a return on investment, highlighting the disconnect between technology implementation and commercial value. Furthermore, the emergence of nearly 500 AI unicorns (startups valued at over US$1 billion) worldwide has further exacerbated concerns about a bubble. In a recent interview, Sam Altman, the "godfather" of AI, admitted that AI may be in a bubble and that many investors could face losses, but the technology itself still has enormous long-term potential. This frank statement caused market turmoil, with tech stocks falling for four consecutive days at the beginning of this week, and AI-related companies, such as Nvidia, in particular, came under pressure. 2. Information Dissemination and Market Reaction As Marcus Weekly pointed out, information takes time to disseminate in the market. While risks in the AI sector have been discussed for weeks by industry insiders, such as the potential for Chinese AI company Deepseek to launch a more efficient model that could undermine demand for Nvidia chips, this information has only recently gained widespread attention, leading to market volatility. Similar to the 2000 dot-com bubble, the current AI boom has led many investors to hold overly high expectations for short-term returns from the technology. Barron's explicitly warned of the dot-com bubble in 2000, yet the market continued to rise for several months before collapsing. Similarly, the AI bubble may continue to inflate, but as more negative data becomes available, market sentiment may gradually shift towards caution. 3. Future Outlook Although AI investment may face adjustments in the short term, the technology's long-term potential cannot be ignored. AI holds broad application prospects in fields such as healthcare, logistics, and education, but companies require more precise implementation strategies to achieve sustainable business value. Investors should be wary of short-term speculation and instead focus on AI companies with clear profit models and practical application scenarios. III. Jackson Hole Conference: A Turning Point in Monetary Policy 1. Powell's Unexpected Turn in His Speech At the Jackson Hole conference on August 22, Federal Reserve Chairman Powell explicitly stated that the Fed would cut interest rates in September, exceeding market expectations. Previously, the market had priced in a 90% probability of a September rate cut, but Powell's clear statement further solidified this expectation, leading to a sharp market reaction: the US dollar index plummeted, gold and Bitcoin prices soared, and the S&P 500 and Nasdaq rose 1.2% and 1.5%, respectively. In his speech, Powell acknowledged downside risks to the labor market. Revisions to employment data over the past few months show an average monthly increase of only 37,000 jobs, far below expectations. Furthermore, inflation has largely stagnated at around 3% over the past year, failing to approach the 2% target. The upcoming tariffs could further push up prices and increase the risk of runaway inflation expectations. 2. Adjustments to the Monetary Policy Framework The Federal Reserve reviews its monetary policy framework every five years, and the 2025 adjustments will represent a significant revision to the 2020 policy. In 2020, the Federal Reserve introduced the Flexible Average Inflation Target (FAIT), allowing for overshoots when inflation falls below 2% to compensate for periods of low inflation. However, high inflation following the COVID-19 pandemic has exposed the limitations of this framework. Powell's candid admission of policy mistakes in 2020 demonstrates his humility and reflectiveness as a policymaker. The new framework returns to tradition, eliminating the asymmetric inflation target, reemphasizing a strict 2% target, and reinstating the practice of preemptively raising interest rates when unemployment is too low. This adjustment reflects the Fed's renewed understanding of the high-inflation environment and aims to avoid a wage-price spiral or a destabilization of inflation expectations. 3. Market and Political Pressures Powell's decision to cut interest rates is likely influenced by multiple forces, including doves within the FOMC (such as Waller) and external political pressure. Trump's public criticism of the Fed and his potential intervention in monetary policy (such as the mortgage controversy with Fed Governor Lisa Cook) further complicate the policy environment. If Trump appoints additional FOMC members in the future, the Fed's independence could be challenged. IV. U.S. Industrial Policy: The Strategic Significance of Intel's Equity Stake 1. Background of the Government's Investment in Intel In August, the U.S. government announced the passage of the CHIPS Act, injecting capital into Intel and acquiring a 10% non-voting stake. This initiative aims to support the localization of the U.S. semiconductor industry and reduce reliance on overseas supply chains. Intel, a pillar of the U.S. semiconductor industry, has missed the mobile chip and GPU market boom in recent years, resulting in a sluggish stock price and a market capitalization decline of nearly 60% from its 2020 peak. The government's move represents more than just financial support; it represents a strategic move. Trump emphasized that this investment is not a simple subsidy, but rather a form of low-priced stock purchase to ensure taxpayer benefits. Intel shares trade at approximately $24, and the government's purchase price is significantly below the market price, demonstrating its commercial acumen in the negotiations. 2. Market Reaction and Controversy The market reaction to the government's stake in Intel was unexpectedly positive, with Intel's stock price rising nearly 8% following the announcement. Investors believe that the government's endorsement reduces Intel's risk of bankruptcy, effectively providing a safety net. However, the government's stake has also sparked controversy. Critics worry that this could lead to inefficient resource allocation and even lay the groundwork for future corruption. Historically, government-controlled enterprises have often been used as political tools in some countries, undermining market efficiency. 3. Future Directions of Industrial Policy Intel's investment is just the beginning of a transformation in US industrial policy. In recent years, the US has increased support for key industries, including rare earths, steel, and semiconductors, through the CHIPS Act and the Inflation Reduction Act. The government has clearly prioritized national security over economic efficiency, and this trend is likely to expand to cover more strategic industries in the future. However, government intervention in a market-based economy requires a careful balance to avoid distorting the competitive environment. V. Comprehensive Commentary and Outlook 1. The Intertwining of Geopolitics and Economics Peace negotiations in the Ukrainian war are not only a geopolitical game but also have profound implications for global economic stability. Trump's "art of the deal" demonstrates flexibility in diplomacy, but his ambiguous stance on a ceasefire may prolong uncertainty. European leaders' unity provides strong support for Ukraine, but reaching a peace agreement still requires Russia's cooperation. A potential meeting between Putin and Zelenskyy will be a key turning point in the coming weeks. 2. The AI Bubble's Rational Return The discussion of the AI bubble reminds us that technology booms are often accompanied by irrational exuberance. Investors should learn from the lessons of the dot-com bubble and focus on practical applications of technology rather than blindly chasing valuations. In the long run, AI will play a vital role in the global economy, but in the short term, we should be wary of the risk of a market correction. 3. Cautious Balancing of Monetary Policy Powell's decision to cut interest rates reflects the Fed's difficult trade-off between employment, inflation, and policy restrictiveness. The new framework's return to tradition demonstrates its adaptation to a high-inflation environment, but rising political pressure could undermine the Fed's independence. The market's overreaction to the rate cut may have overestimated its short-term impact, and investors should closely monitor data from September onward. 4. Strategic Transformation of Industrial Policy The US investment in Intel signals a shift in industrial policy toward strategic intervention. While the government's role in key industries is growing, caution must be exercised against the inefficiency and corruption risks associated with excessive intervention. Going forward, US industrial policy may further focus on supply chain security and technological independence, adding new variables to the global competitive landscape. Conclusion: Global events in August 2025 demonstrated the complex interweaving of geopolitics, economic policy, and technological innovation. The prospect of peace in the Ukrainian war, the potential bursting of the AI bubble, adjustments to monetary policy, and transformations in industrial policy together outline an era brimming with opportunities and challenges. Facing the future, we must adopt a rational and forward-looking perspective, examining the balance between short-term fluctuations and long-term trends to better navigate uncertainty.
Kikyo
Weatherly
Anais
Catherine