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US weighs AI model restrictions as Chinese open-source share hits 80%
Edgen Stock·Jul 31 2026, 06:23Share to
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[1] Now America Builds a ‘Great Firewall’ (https://www.wsj.com/opinion/now-america-build ...)[2] Chicago News - Chicago Tribune (https://www.chicagotribune.com/news/ ...)[3] China fires back as US targets Moonshot AI over Kimi K3 Anthropic Fable theft claim (https://www.msn.com/en-us/news/technology/chi ...)[4] From Silicon Valley to DC, the tech world is suddenly obsessed with one concept in AI: Distillation (https://www.cnbc.com/2026/07/25/hat-is-distil ...)[5] US Threatens Sanctions Over Alleged Chinese AI Model Distillation (https://www.techrepublic.com/article/news-us- ...)
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Jul 31 2026, 07:48
Citadel buys $45B AI fund's stock book after 4x-leverage blowup
**A 4x-leveraged bet on AGI infrastructure collapsed in 24 hours, and Ken Griffin's Citadel was there to buy the wreckage at a discount.** Citadel bought the liquidated $45 billion AI fund's stock book at a 20-50 percent discount, pocketing an estimated $3-4 billion. "This is the most dramatic forced unwind since LTCM," said Martin Shkreli, former hedge fund manager and financial commentator, in a podcast interview. The fund, Situational Awareness LP, ran 4x leverage that pushed gross market value to $120 billion. A 25 percent drop in public AI stocks cut net equity from $35 billion to $5 billion, prompting prime brokers Goldman Sachs, Bank of America and JPMorgan Chase to seize the portfolio. The unwind marks a clearing event for the AI trade, with the Nasdaq-100 down 10 percent from its June peak and chip stocks jumping 6.7 percent the day after Microsoft's strong earnings. ## The Power Thesis That Became a Mining Bet Aschenbrenner, fired from OpenAI's Superalignment team in April 2024, published the essay series "Situational Awareness" in June 2024 arguing AGI by 2027 was "strikingly plausible" and that power, not chips, would be the bottleneck. He built the fund on that idea. Its first 13F filing, covering December 2024, listed six power and chip holdings worth $254.8 million — none crypto. That changed fast. The latest filing lists 29 holdings worth $5.52 billion, with Bitcoin miners and their data center arms making up $1.38 billion. Core Scientific was the largest at $418.7 million, followed by IREN at $328.6 million and Applied Digital at $278 million. Cipher Mining, Riot Platforms, Hut 8, WhiteFiber, Bitdeer, CleanSpark and Bitfarms made up the rest. The mining share went from nothing to a quarter of the disclosed book in a year. Miners own power, land and cooling, which is why they became AI powerhouses — but no mining company knew it shared its shareholder base with a fund facing margin calls. ## Did Citadel Engineer the Collapse? A theory spread that Citadel Securities' macro strategist Frank Flight, who called for a rate hike on July 27, helped trigger the selloff so a Griffin firm could buy cheap. Four facts undercut it: Citadel Securities and Citadel are separate firms; PGIM and Wrightson ICAP also called for a hike; the fear predated the note, tied to oil prices after US-Iran clashes; and the Fed held rates steady anyway, with three of 12 voting members dissenting — the first time since September 2016 that three officials dissented in the same direction. ## The Leverage Lesson Shkreli traced the collapse to overbetting. He cited the Kelly criterion, which says even a trader with a 60-40 edge goes to zero if position size runs two to ten times the optimal level. The fund's 4x leverage meant a 25 percent drawdown erased 80 percent of net equity. The fund is not dead — it still holds private stakes including Anthropic, which filed confidential IPO paperwork on June 1. But the public book is gone, and Shkreli said other AI funds running similar leveraged trades face 30-40 percent losses as buyers dispose of the positions. Aschenbrenner told investors to add money on July 24, days before the unwind — he got the direction right but no longer owned the stocks. This article is for informational purposes only and does not constitute investment advice.
Jul 31 2026, 07:46
French inflation rebounds to 2.4% as energy costs pressure ECB
French consumer prices rose 2.4% in July from a year earlier, up from 2.0% in June, according to EU-harmonized figures published Friday by France's statistics agency. Double-digit energy inflation continued to drive the headline number higher, while services prices also accelerated notably — a sign that higher oil-and-gas costs from the Iran war are feeding into the wider economy. The reading takes French inflation back above the European Central Bank's 2% target after it declined to that level in June. Inflation had hovered around or below 1% between early 2025 and the outbreak of hostilities on Feb. 28, when the closure of the Strait of Hormuz choked off about a fifth of global oil supply. The jump marks a sharp reversal from the disinflationary run that had allowed the ECB to hold rates steady through the spring. The ECB left its key interest rate on hold earlier this month, with most investors expecting a hike at its next meeting in September. The deposit facility stands at 2.00%, the main refinancing rate at 2.15% and the marginal lending facility at 2.40%, unchanged since April. Money markets have begun pricing in a quarter-point increase as energy costs climb. French data came a day after figures showed German inflation climbed to 2.8% in July, mostly on energy prices and the elapsing of a fuel tax-rebate program. Eurozone-wide inflation data is due at 0900 GMT. **Energy costs drive the rebound** The acceleration in services prices is the more worrying signal for policymakers, because it suggests the energy shock is spilling into domestically generated inflation rather than remaining confined to fuel and utility bills. Services inflation has been a key focus for the ECB as it weighed how persistent price pressures would prove, and the July reading points to broader pass-through of higher input costs across the economy. Oil markets remain volatile. Brent crude slid more than 2% to about $84 a barrel on July 28 as the U.S. and Iran agreed to pause hostilities, then jumped 3.8% to around $87 after Iran launched a surprise ballistic-missile attack on American forces in Jordan the following day. The swings show how fragile the path back to stable energy prices is, and the euro has struggled to find support as investors weigh the inflation outlook against the risk of further escalation. European government bond yields have tracked oil higher, with the transmission from energy to rates tightening financial conditions across the bloc. **What's at stake for the ECB** For the ECB, the twin data points from France and Germany complicate the calculus heading into September. With both of the bloc's largest economies printing inflation above target, the case for a quarter-point hike strengthens — even as the eurozone economy shows signs of strain. The last time French inflation ran this hot on an energy-driven surge, the ECB responded with successive rate moves to rein in price growth, a precedent that suggests policymakers will lean toward tightening rather than waiting for the shock to fade on its own. If energy prices keep climbing, headline inflation across the eurozone could push further above target, forcing the ECB to act. If the Middle East conflict de-escalates and oil retreats, policymakers may find room to hold. The eurozone-wide print due Friday will be the next data point investors watch, and it will likely determine whether the September meeting delivers a hike or another hold. This article is for informational purposes only and does not constitute investment advice.
Jul 31 2026, 07:39
ByteDance's Seedance 2.5 doubles video generation to 30 seconds
**ByteDance's Seedance 2.5 doubles single-run video generation to 30 seconds, moving AI video from clip-making toward industrial production.** ByteDance's Seedance 2.5 doubles single-run video generation to 30 seconds and accepts up to 50 reference assets, pushing AI video from short clips toward industrial production across manufacturing and robotics. "Video generation is shifting from generating content to understanding the world, and from assisting creativity to raising productivity," Wang Shuai, associate professor at Hong Kong University of Science and Technology, said. The model, released July 31, extends single-generation length to 30 seconds from 15 seconds in Seedance 2.0, which launched in February. It accepts up to 30 images, 10 video clips and 10 audio files per input, and adds white-model and green-screen reference tools for planning spatial structure and swapping scenes while keeping subjects unchanged. Timestamp controls let creators edit specific segments without breaking continuity, and the model natively supports more than 10 languages. ByteDance rolled the model out across Doubao, Jimeng and Kouzi, with API access to follow on Volcano Engine's Ark platform. Same-day partners include XCMG Group, XPeng Motors, Qiongche Intelligence, Weifen Zhifei and Lingchu Intelligence, spanning industrial training, automotive design and embodied-AI training data. ## From 15 Seconds to a Finished Scene The length jump is the headline change, but the structural shift matters more. Seedance 2.5 organizes multiple logically connected shots within a single 30-second run, letting a story move from setup through turning point to conclusion rather than extending one scene. Multi-round extension chains clips into several minutes of coherent content with consistent characters, scenes and audio. ByteDance's Seed team said the model still has room to improve physical plausibility in complex motion and stability in scenes with many interacting subjects. ## Industrial Buyers, Not Just Creators The commercial push targets production workflows. XCMG Group will use Seedance for industrial operation training and step-by-step process videos, cutting the cost of live filming and 3D animation. XPeng Motors integrated the model into its internal AI design platform for product visualization. In embodied AI, Qiongche Intelligence uses generated video to expand training data for robot models without collecting footage from physical machines, while Weifen Zhifei builds standardized datasets for obstacle avoidance, indoor navigation and target locking. In education, the Doubao Classroom feature in the Doubao Learning App turns textbook history and plots into animated demonstrations. In autonomous driving, the model can simulate low-frequency cases such as extreme weather and complex road conditions for system testing. The launch lands the same day MiniMax released its H3 multimodal model and M2.5 text model, intensifying competition in AI video generation. MiniMax H3 generates 2K video with native dual-channel audio for advertising, gaming and e-commerce. For investors, the question is whether AI video becomes a revenue line rather than a demo. ByteDance's API pricing on Volcano Engine is not yet disclosed, and the model's industrial value depends on how well it models physical-world rules — a capability Wang said determines whether video generation moves from creative output to data production and process replacement. XPeng, a listed partner, could see design-cycle savings, while rivals including MiniMax and Alibaba's Tongyi compete for the same enterprise budgets. This article is for informational purposes only and does not constitute investment advice.