News of the weeks summary - 09/11/2025
Tech giants lose $1.2T in market value
The spectacular rise of artificial intelligence has hit a sharp pause this week, as U.S. technology stocks linked to the AI boom lost over $1.2T in market value. Companies such as Nvidia, Meta, Amazon, Microsoft, and Alphabet all suffered steep declines, dragging the Nasdaq down 4.6 percent in its worst week since the 2018 trade war selloff. The sudden retreat reflects growing investor unease over sky-high valuations and heavy borrowing across the sector.
In recent quarters, the leading tech companies have invested aggressively in AI infrastructure, spending $112 billion in the third quarter alone. These “capital expenditures,” or long-term investments in physical and technological assets, are increasingly financed by debt. That pattern is drawing comparisons to the dot-com bubble of the early 2000s, when enthusiasm for internet-related ventures fueled massive but unsustainable spending. Investors now fear that a similar dynamic is unfolding around AI, where huge sums are being poured into data centers and chips before clear profits have materialized.
Nvidia, the poster child of the AI boom and the world’s most valuable company, lost almost $500 billion in market capitalization just a week after surpassing the $5 trillion mark. Such a steep loss underscores how sensitive investor sentiment has become to even modest changes in confidence. Meanwhile, concerns deepened following reports that OpenAI, the maker of ChatGPT, might seek financial backing from the U.S. government, a signal that private funding could be stretched thin.
The sell-off also comes amid signs of weakening momentum in the broader U.S. economy. Consumer confidence, as measured by the University of Michigan, has fallen to its lowest level in three years, reflecting public unease over persistent inflation and slowing job growth. These indicators matter because when households feel less confident, they tend to spend less, which can slow overall economic activity.
Tesla shareholders approve $1 Trillion pay package for Musk
Elon Musk has cemented his control over Tesla after shareholders overwhelmingly approved his $1 trillion pay package, one of the largest in corporate history. The vote, backed by 75 percent of investors, gives Musk the potential to earn a vast stock award if he meets a series of extraordinarily ambitious goals, among them multiplying Tesla’s valuation sixfold to $8.5 trillion and boosting annual profits 24-fold to $400 billion. In exchange, he will receive no salary or bonus over the next decade, only these performance-based rewards.
The decision marks a turning point for Tesla after months of intense debate over Musk’s leadership and influence. Despite objections from some major investors who raised concerns about governance and “key person risk”, the danger of over-reliance on one individual, shareholders ultimately prioritized Musk’s vision for Tesla’s future. For many, his track record of transforming the company into the world’s most valuable carmaker outweighed concerns about his increasingly sprawling commitments across his other companies (SpaceX, xAI, and social media platform X).
Tesla’s future now rests on whether Musk can deliver on his bold promises. Achieving the targets required for the full payout would mean transforming Tesla from a car company into a diversified AI and robotics powerhouse, a leap that would rival the scale of Apple in market value. Musk hinted that Tesla could expand its AI chip production by partnering with semiconductor giants such as Intel, Samsung, or TSMC, or even by building its own massive chip factory.
Milei resists pressure to float the Peso
Argentine president Javier Milei has dismissed investor demands to allow the peso to float freely, choosing instead to maintain a managed exchange rate within gradually widening bands against the U.S. dollar. The decision reflects his preference for stability over rapid liberalization, even as international investors urge him to capitalize on renewed confidence following his midterm election victory.
In foreign exchange policy, a “floating currency” means its value is determined by market forces, so how much demand and supply exist for it, rather than by government intervention. By contrast, Argentina’s current “managed float” keeps the peso trading within a preset range, with authorities stepping in to prevent sharp fluctuations. Critics say this approach has led to an overvalued currency, making exports less competitive. Milei disagrees, arguing that it helps contain volatility in a country long plagued by boom-and-bust cycles.
The president’s stance comes amid closer cooperation with Washington, which intervened to support Argentina’s currency before the elections. The U.S. Treasury reportedly spent around $2 billion buying pesos and set up a $20 billion credit line to stabilize Argentina’s markets, underscoring the Biden administration’s (and now Trump’s) strategic interest in keeping Buenos Aires aligned with the United States. Treasury Secretary Scott Bessent called the peso “undervalued,” a position Milei seized on to defend his policy and attack local economists who advocate a free float.
At home, Milei’s economic agenda remains highly ambitious. He has pledged to deepen market reforms, including major tax and labor overhauls, in order to revive growth after a sharp slowdown caused by spending cuts and high interest rates. His goal is to reduce public spending from 42 to 25 percent of GDP and simplify the tax system by eliminating 20 levies, which he says would return $500 billion to citizens by 2031. Labor reform, he argues, would help formalize employment for millions of Argentines currently working off the books.
Milei claims these changes could lift annual growth to as much as 10 percent within a year, a target most economists view as optimistic. For now, inflation, once above 200 percent annually, has eased under his government, but tighter fiscal policy has also curbed credit and weakened household spending. The president insists the pain is temporary and that Argentina could return to international capital markets by 2026 with U.S. support, avoiding another debt default.
Prolonged U.S. shutdown threatens economic growth
The United States is facing mounting economic and logistical strain as the federal government shutdown, currently the longest in the nation’s history, enters its 40th day, with top officials warning of severe disruptions to air travel and a possible contraction in GDP if the stalemate continues.
Treasury Secretary Scott Bessent cautioned that the economic fallout would worsen the longer the shutdown persists. He warned that disruptions to air traffic control operations and food aid distribution could ripple across supply chains, leading to cancelled flights, shortages of goods, and financial distress for millions of low-income Americans. The shutdown has already left hundreds of thousands of federal workers unpaid and delayed food stamp assistance for roughly 40 million people.
White House economic adviser Kevin Hassett warned that the shutdown could push the U.S. economy into negative growth in the fourth quarter. Thanksgiving and the following Black Friday shopping weekend are crucial for retail sales, and reduced travel and consumer spending during this period could weaken overall economic output. In other words, if people travel and spend less, the broader economy, heavily dependent on consumption, suffers.
The political impasse in Washington shows little sign of easing. Republican leaders have proposed a temporary funding measure to reopen government operations, while Democrats refuse to agree unless the administration reverses planned cuts to healthcare credits under the Affordable Care Act, or “Obamacare.”
With critical public services grinding to a halt and the aviation system under growing strain, economists warn that the shutdown’s effects could soon extend beyond inconvenience into measurable economic damage. A prolonged closure risks undermining consumer confidence, slowing trade, and delivering the first quarterly economic contraction in years, an outcome that could test both the administration’s resolve and the resilience of the U.S. economy.