Trump warns against ‘hostile’ trade pact with Canada as an ‘associate member’ of the E.U.

ONE BIG THING

Salesforce’s Benioff warns AI industry: Regulate yourselves or get sued

Marc Benioff strode down Mission Street Tuesday afternoon toward Salesforce Tower, where he was set to host a private dinner as part of a whirlwind of events during the company’s annual Dreamforce conference. Some pedestrians stopped to take photos of the 6-foot-5 CEO, surprised he had taken to the streets. One person congratulated him on his keynote address earlier in the day; several bodyguards surrounded Benioff as he walked.

Along the way, Benioff, still wearing the pinstripe suit and burgundy tie from the keynote, waved off concerns that AI could wipe out humanity, a topic that has been front of mind in Silicon Valley circles during the past week after Anthropic researcher Jacob Coxon quit over such worries. But Benioff, in an interview with Fortune, also said companies should be held accountable for risks they create, and he compared current AI issues to early mistakes made in social media.

“We know we have to hold companies responsible for their products and their technology before people are hurt,” Benioff said, while citing the Hawaiian concept of personal responsibility—kuleana—as essential for corporate ethics. AI companies should be prepared to be sued if they cause harm, he said, just like any other company that sells a product that damages consumers.

MORE FROM FORTUNE

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GM CEO Mary Barra says America has a ‘societal problem’ with skilled trades—and is putting $200 million behind training Gen Z to work with their hands – Preston Fore

Ryan Serhant says the American city isn’t dying—wealth is ‘multiplying,’ and buyers are flocking to Ohio, Alabama, and the Carolinas – Sydney Lake

The Fed unanimously agrees to hike interest rates for the first time since 2023, despite Trump’s call for the ‘lowest rates’ in the world – Eva Roytburg

Warsh says AI’s hyperscalers are part of why your borrowing costs are rising: ‘The competition for capital is real’ – Eva Roytburg

Exclusive: Inside the room where Nancy Pelosi and Mike Pence shared an emotional embrace in front of America’s leadership class – Nick Lichtenberg and Eva Roytburg

The MLB and its Dominican pipeline are selling false promises and shady contracts to children as young as 11 – Joshua Hong

America’s bedrot era: How the dopamine recession created the ‘couch economy’ – Catherina Gioino

CAN-EU BELIEVE IT?

Europe has found a new way to annoy Trump: A ‘hostile’ trade pact with Canada

The European Union—which “was formed in order to screw the United States,” according to President Trump—has found a new way to screw America: By offering associate membership of the EU to Canada, in order to increase tariff-free trade between the two blocs. At least that is the way Trump sees it.

“I think it’s laughable … Canada has been a terrible trade partner,” Trump said yesterday. “If I think it’s at all a hostile act, I will put very serious tariffs or stop trading with Europe on many things.”

In theory, an EU-Canada trade pact would compete with the U.S. for trade, with the winners being those countries with the lowest trade barriers—so you can see why the president is annoyed by it.

It’s also a sign that America’s friends are rediscovering the fact that they are also friends with each other, and that as the U.S. goes through a period of chaos, it might be easier to beef up the rest of the Western alliance. 

In the East, that is what Asia has already done. Since Trump introduced his tariffs, China’s exports have increased by 25% year-on-year, a record high.

Reality check: The EU would likely negotiate a new trade deal on an industry-by-industry or product-by-product basis. The effect of that on the U.S. economy might be symbolically bruising but economically minimal. 

And Europe’s diplomats are already raising bureaucratic quibbles, starting with the fact that there is no such thing as “associate membership” of the EU As the FT reported:

• “We cannot decide on something that does not exist,” quipped one diplomat. A second said the idea would probably “die” in negotiations with member states. “It’s classic [European Commission President Ursula von der Leyen],” noted a third. “Promise first, get approval later.”

COMMODITIES

Watch out, Sam. There’s a price war going on in AI.

Investors in OpenAI—currently discussing a fundraising round that would value the company at $1.2 trillion—might want to read a recent note from Edison Lee and his colleagues at Jefferies: AI is becoming a commodified business engaged in a race-to-the-bottom price war, he argues.

Four new models appeared in Artificial Analysis’ September list of the most intelligent models, he notes. The models are from Singapore, Korea, the UAE, and China. “All four had only limited capital raise[s],” he said in a note. “One of the newly ranked models, Apodex 1.1, listed a blended API price of US$0.3 per token, the fifth-cheapest model among the top 15 on the AA list.”

The average price discount between Chinese and American models now sits at 80%, Lee wrote. 

INEQUALITY

Why we’re serving ourselves a smaller and smaller slice of the national economic pie

This is probably the most depressing chart in all of economics: It shows the share of national income going to labor in long-term decline, in danger of sinking below 50%. The U.S. is close to a situation where a majority of the money sloshing around in the economy ends up with capital, and therefore capital’s owners. It’s the inequality problem in a single chart.

Abhay Duggirala of Goldman Sachs dug into this recently to find out why the gains from growth aren’t going to the people whose work creates it. The good news is that not all of the decline is real. More people are using corporate shells to pay themselves for tax reasons; technology assets are depreciating at a faster rate, which makes it look like they’re sucking up more money than they actually are; and high-income earners are increasingly being compensated with stock, which isn’t captured in the income numbers, he wrote in a research note.

But 60% of the 7 percentage point decline in labor’s share since the 1990s is real, Duggirala says. Massively valued companies like SpaceX and Apple dwarf labor’s share of national value. Companies employ fewer workers due to automation. And labor’s weakening bargaining power—declining union membership, and so on—has all meant that workers take a smaller piece of the pie.

“If these structural trends continue, for example because AI is likely to automate many additional tasks, the labor share will likely continue to decline,” Duggirala said.

THE MARKETS

Global stocks mixed in reaction to unexpectedly hawkish Fed meeting

Global markets staged a mixed reaction to yesterday’s interest rate hike from the U.S. Federal Reserve. Europe is up this morning after Japan’s Nikkei rose 0.33%, but China’s main index lost 0.45%. U.S. futures are solidly up this morning before the open in New York, after the S&P 500 gave up 0.45% yesterday. That could be read as an indication that traders are now done reacting to Fed Chair Kevin Warsh’s unexpectedly hawkish meeting—which saw a unanimous FOMC vote to raise rates, and 16 of its 18 members projected a further hike down the road.

As Goldman Sachs’ David Mericle noted this morning: “Chairman Warsh described the hike as having ‘removed a dose of accommodation’ three times.” The forward guidance—which Warsh claims to have scrapped—could not be clearer.

• S&P 500 futures were up 0.81% this morning. The index lost 0.45% yesterday and is now down 2.5% over the last month. 
• In Europe, the Stoxx 600 was up 0.5% in early trading and the U.K.’s FTSE 100 was up 0.56% before lunch.
• Asia: South Korea’s KOSPI was down 0.04%. Japan’s Nikkei 225 was up 0.33%. India’s Nifty 50 was up 0.33%. China’s CSI 300 was down 0.45%. 
• Brent crude was $104 per barrel this morning after touching $107 yesterday.
• Bitcoin was at $76,538.

Yardeni trims outlook for stocks based on plague of ‘abnormal’ events

Ed Yardeni and Elias Griepentrog of Yardeni Research lowered their outlook for the S&P 500 yesterday, saying that the odds of a bearish outcome for the market had risen to 30%. They still have a year-end price target of 7,900. But they’re a little gloomier now that the risk premium on the 10-year Treasury is flirting with going above 5%.

“We’ve said it before, and will say it again: We will worry about a debt crisis when the bond market worries about a debt crisis,” they told clients. “We’ve argued that the ‘normal’ range for this yield should be 4.00% to 5.00%. North of this range reflects a recent combination of ‘abnormal’ developments, including the attack on the Saudi east-west oil pipeline, the Houthi advances toward the Bab al-Mandab Strait, the Treasury’s recent lame attempts to tamp down yields, and the Trump administration’s deficit-bloating fiscal policies (including $5,000 for every adult U.S. citizen if the Republicans hold onto both their congressional majorities).”

CHART OF THE DAY

Gold is physically moving to London

You may remember that the DNB, the central bank of the Netherlands, recently moved 78 tonnes of gold from New York to London, citing “increasing geopolitical unrest.” As this chart from the London Bullion Market Association shows, the Dutch are not alone. Banks and investors have been steadily moving physical gold into London vaults ever since the beginning of 2025.

At the end of August, London’s vaults held 9,632 tonnes of gold (up 1.03% from the previous month), valued at $1.4 trillion (309.6 million troy ounces). That equates to approximately 770,571 gold bars.

NUMBER OF THE DAY

$40.2 billion

The value of Taiwan’s export orders to the U.S. in July, a record. This strongly suggests the AI trade is in robust health, Piper Sandler said in a recent note.

“Tech exports from Taiwan, Korea, and China remain red hot—as are U.S. tech imports. Monthly tech revenues are still surging, but at the cost of rapid hardware inflation,” they told clients.

THE FRONT PAGES TODAY

Barclays hit by staff backlash over return-to-office rules – FT

Putin braces for election stress test as Russians ‘feel the pain’ of struggling economy – CNBC

Trump to hold Iran talks with Gulf leaders next week – Axios

Russia’s Attacks on Europe Are Getting More Brazen and More Dangerous – Bloomberg

OpenAI Discloses Six New Incidents of ‘Concerning’ A.I. Behavior – NYT

Paramount is ‘deadly serious’ about leaving Hollywood as fight erupts over $111B merger – NY Post

ONE MORE THING

The U.K. monitored Elon Musk as a potential national security threat

In the week before the SpaceX IPO, Elon Musk posted, reposted, or replied to 93 X statements about U.K. politics, many of them in support of a formerly obscure right-wing politician, Rupert Lowe, the leader of Restore Britain, an anti-immigration party.

Musk’s inflammatory posts about Britain and immigration have been blamed by many for fanning anti-immigrant riots in Liverpool and Belfast. Musk’s influence has become so powerful that the U.K. government is now monitoring him in case he becomes a national security threat, the WSJ reported.

“There was clear evidence of multiple occasions where Musk has manipulated information and influenced British politics,” Andy Pryce told the paper. Pryce formerly ran a counter-disinformation unit at the U.K. Foreign Office. Musk “helped stoke acts of violence in the U.K.,” he said.

• Here’s the key paragraph from the WSJ: “U.K. officials have monitored Musk’s posts, alongside those of other X users, for national-security risks, according to people familiar with the matter, but decided not to take any formal action. Officials also mapped his output to see whether foreign state actors, such as Russia, were engaging with the posts and further amplifying them. The results of that inquiry couldn’t be learned.”