What’s going on here?

Global shipping troubles and threats of fresh tariffs are casting new doubts over whether inflation will keep its cool.

What does this mean?

A string of attacks by militants off the Horn of Africa has ships zigzagging around, adding weeks to their trips and causing the worst traffic jam at the Port of Singapore since the pandemic crisis. This Red Sea ruckus has jacked up freight costs and insurance bills, and that’s sent the price of a 40-foot container up nearly 300% in the past year. And although trade is still crossing oceans, the problems could swell up and spill over into land-based logistics. Already, US producer prices and UK inflation rose more than expected in June. That’s leaving some wrinkles in the back-to-school and holiday shopping seasons, with the added worry of higher tariffs on Chinese goods threatening to cause further crumples.

Why should I care?

Zooming out: On fairer shores.

We’re not quite at pandemic levels of bad, but these disruptions aren’t nothing – and importers are warning that higher costs will soon hit folks in the wallet. That’s a strong case for moving production closer to home. Some European companies have already been feeling the pinch: electronics store Curry’s reported soaring shipping costs that hurt its bottom line. To make matters worse, the International Monetary Fund has warned that new tariffs and trade barriers from the US and Europe could drive inflation up everywhere, forcing central banks to keep interest rates at their current, economy-stifling levels.

The bigger picture: Let’s talk politics.

With half the world’s population set to elect new leaders this year, change may be a-coming to lots of places. And big spending is often the key to winning political support. But with government debt and deficits sky-high in the US and Europe, leaders might find it hard to make changes within their budgets. And that could add fuel to the inflation fire, forcing interest rates higher for longer.

What’s going on here?

Taiwan-based chipmaker TSMC flashed a winning hand and doubled down with a glittering full-year forecast, as the AI boom continues.

What does this mean?

TSMC reported profit of $7.6 billion in its latest quarter – a 36% jump from the period before, and better than its own glowing expectations. The firm also upped its full-year forecast, betting on revenue growth of over 25%. Some of the improvement along its bottom line is thanks to higher prices on TSMC’s advanced chips – a cost bump that customers appear to be more than willing to pay. To be fair, there aren’t many options: the company makes more than 90% of the world’s most advanced chips, slinging them left, right, and center to the likes of Apple, Tesla, Nvidia, and the US military.

Why should I care?

Zooming in: The chip dip.

US threats of new restrictions on exports to China and potential tariffs have had traders running scared this week, leading to an AI stock dip. But TSMC’s results – and the fact that it doesn’t expect to meet the market’s staggering demand until 2025 (at the earliest) – may have slammed things back into perspective. What’s more, TSMC said it’s continuing with plans to build three big semiconductor factories in Arizona by 2028. And those chips, made in the good ole USA, wouldn’t be subject to tariffs.

The bigger picture: Next big things.

The good times might keep on rolling for TSMC and AI kingpins like Nvidia – at least for now. But investors can be fickle: when they see a better, less risky opportunity come along, they’ll generally try their hand. The Magnificent Seven and other AI-linked stocks have been running the tables for a while now – but if other stocks get on a hot streak, that’ll shift folks’ attention.