The world’s largest bank (by market capitalization) and the world’s largest asset manager (by, well, assets managed) faced markets with their latest earnings reports Tuesday.

While banking giant JPMorgan bested analysts’ expectations, its shares inched down 0.7%. A narrow miss by money manager BlackRock proved even more concerning to investors, as a selloff sent its shares tumbling 6%. Don’t open that retail trading app so fast, though — the ultimate takeaway from the earnings among many analysts was that the economy is, despite (gestures to the mountain of geopolitical and tariff uncertainty), doing pretty well.

The Constant Consumer

The downside of BlackRock’s second quarter was that it took in less money from clients than expected. Long-term net inflows fell 9.8% year-over-year to $46 billion in the second quarter. The cause, however, was one single institutional client in Asia, which BlackRock didn’t name, that withdrew a whopping $52 billion from a low-fee index fund. Analysts at Edward Jones noted whispers of “potentially more outflows from this client coming in future quarters.”

The firm still managed to rake in $68 billion in net flows, driven by cash-management accounts and money-market funds. Assets under management rose to a record $12.5 trillion, and revenue jumped 13% to $5.42 billion — a morning shave-close miss as analysts expected $5.46 billion (The Daily Upside doesn’t normally even print second decimal figures). CEO Larry Fink told CNBC the market was overlooking the fact that BlackRock “front-loaded” expenses, including for its $12 billion acquisition of HPS Investment Partners, and called the stock’s rough day “just Wall Street, hedge funds, going in and out of the market, and that’s fine.”

At JPMorgan, results were unreservedly positive, topped by trading revenue climbing 15% to $8.9 billion in the second quarter as the trading desk dined out on market volatility. Especially promising were investment banking fees, which climbed 7% to $2.5 billion as growth in mergers and acquisitions offset concerns about a protracted dealmaking chill. The lender’s $45.7 billion in revenue topped analysts’ $44 billion average estimate, and JPMorgan boosted its annual net interest income forecast, a key profitability measure, by roughly $1 billion to $95.5 billion. On top of that, the lender and other banks variously reported that the backbone of the US economy — consumers — has remained solid:

• Revenue at JPMorgan’s Consumer and Community Banking division rose 6% year-over-year to $18.8 billion, and net income rose 23% to roughly $5.2 billion. Credit and debit card spending rose 7% year-over-year, and the charge-off rate for cards, a key metric for consumer stress that measures how much debt is written off, fell to 3.4% from 3.6% in the first quarter. “The consumer basically seems to be fine,” JPMorgan Chief Financial Officer Jeremy Barnum said on a call with analysts.
• Citigroup, which also reported earnings Tuesday, saw revenue from branded cards rise 11% to $2.8 billion. Wells Fargo CEO Charles Scharf noted, as his bank reported earnings, that “consumer delinquencies continued to improve from a year ago, and commercial credit performance continued to be relatively strong.”

The I Word: Like JPMorgan, Citi beat expectations, but unlike its rival, its shares rose (to the highest since 2008, in fact) after the announcement of a buyback plan. Wells Fargo, which not only bested profit estimates but also earned approval to increase assets beyond $1.95 trillion after seven years of Federal Reserve-imposed stasis, saw its shares drop 5.5%. The simplest explanation for the downward pull on BlackRock, JPMorgan and Wells Fargo is inflation, which rose to an annual rate of 2.7% in the Bureau of Labor Statistics’ latest update on Tuesday. The prices of appliances, furniture and toys — products typically manufactured abroad — all rose, suggesting the impact of tariffs is starting to show. According to the Yale Budget Lab, consumers in the US currently face an 18.7% tariff rate, the highest since 1933.

The only way for the US to stay ahead of China in the Great AI Race? Keep selling AI-powering chips to China.

That may sound like a 2025 Trade War take on the Vietnam War era’s famous “we need to destroy this village to save it,” but it’s something Nvidia CEO Jensen Huang seems to believe. And now, apparently, so does the White House, which agreed late Monday to remove certain export restrictions on chips from Nvidia (and industry peers) headed into the Middle Kingdom. Shares of Nvidia soared on the news Tuesday, as Huang prepared to make a personal trip to Beijing, with some fun new toys in tow.

In Too DeepSeek

Nvidia has long viewed US export controls on its products as surmountable roadblocks. When the Biden administration imposed export restrictions on its top-flight chips in 2022, Nvidia responded by creating the slightly watered-down H800 chip to slip through the regulatory cracks. When rules were tightened again in 2023 to effectively ban the sale of that chip to China, Nvidia responded again, launching the H20 chip last year.

That chip, however, is widely believed to have been employed by ascendant Chinese AI firm DeepSeek, whose R1 model became the launch heard around the world earlier this year. So, in April, the Trump White House tightened the government’s regulatory grip once more, blocking the sale of the H20 chip to China. That sparked a public and private lobbying campaign by Huang and the company, arguing that access to China could be both good for US interests and bad for Chinese interests. The lobbying apparently worked: Nvidia said late Monday it got the green light to resume Chinese sales of the H20 chip.

Huang’s logic may sound paradoxical, but there’s actually something to it:

• While speaking to the press at the Computex technology show in Taipei in May, Huang said export controls have effectively supercharged the need for Chinese tech companies — and Huawei in particular — to innovate and build their own hardware.
• The result? Nvidia has seen its market share in the country dip from 95% to just 50% over the past four years as local firms fill in the gaps, Huang said at the conference. “Local companies are very determined, and export controls gave them the spirit, and government support accelerated their development,” he said. “Our competition is intense in China.”

Still, the infrastructure for chipmaking is vast, and China hasn’t completely caught up in every aspect. A report published on Monday from the Center for Security and Emerging Technology noted that despite “notable gains” by Chinese firms in equipment used in fabrication, “the first stage of chip manufacturing … lithography, the most complex tool category, remains a critical constraint.”

The White Whale: Of course, it’s not just patriotism motivating Nvidia. In its first-quarter earnings report in May, restrictions on the H20 chip resulted in $2.5 billion of missed sales, with another $8 billion likely to be missed in the second quarter. Still, the gap wasn’t enough to stop Nvidia’s share-price ascent. Last week, it became the first-ever company to close a trading day with a market cap of over $4 trillion. Shares rose another 4% on Tuesday, sending its market cap to about $4.17 trillion. With China back on the table, the betting is on as to how soon we’ll have our first $5 trillion company.

Qualifying for a mortgage because of your Dogecoin holdings may soon be moving from fantasy to reality. As “Crypto Week” sees pro-crypto legislation move through the US House of Representatives and bitcoin hits a new record, crypto backers are contemplating a government-sanctioned foray into the housing market.

Federal officials are pushing Fannie Mae and Freddie Mac to consider crypto holdings in their mortgage risk assessments, a change that’d put digital assets on similar footing with stocks and cash savings.

Shaky Foundations

Fannie Mae and Freddie Mac, which guarantee more than half of US mortgages, have been under government control since 2008 when the two organizations suffered heavy losses after backing risky loans that helped fuel a housing bubble, ultimately freezing credit markets and spurring a global financial crisis.

After their near-collapse, the two firms have been more risk-averse in their investments. Including crypto in the picture would signal a shift away from that ethos:

• Currently, potential homebuyers have to cash out their crypto and often wait months for their digital assets to meet banks’ “seasoning” guidelines. Alternatively, a handful of startups have emerged that offer bitcoin-backed mortgages, but they aren’t supported by Fannie and Freddie.
• The new rules could let homebuyers keep their crypto and use it to qualify for loans through mainstream banks, making digital assets a direct part of the housing market’s financial underpinning, a task for which critics say crypto is too volatile.

William Pulte, who heads the agency that regulates Fannie and Freddie, posted on X that the new directive is in line with President Trump’s vision to make the US “the crypto capital of the world.”

New Neighbors: The housing market could use more buyers. As of April, Redfin found that there were 34% more sellers than buyers looking for homes, and loosening the rules around crypto could roll out the welcome mat for long-term crypto HODLers. About 5% of home buyers said in May that they sold off crypto to help make a down payment, and that figure is likely higher in certain markets (ahem, San Francisco). But even as the government increasingly pushes crypto into the mainstream, concerns about its volatility and security could make it less welcome in a sector as fundamental to the US’s financial well-being as housing.