FinCEN announced Monday that it fined a UBS wealth management subsidiary $125 million for breaking money laundering rules from 2019 to 2023. It's the highest penalty ever imposed on a US broker-dealer and follows a case in 2018 when UBS was fined $14.5 million. FinCEN said the company never honored a pledge to fix its anti-money laundering protocols and failed to monitor some 50,000 foreign currency wires worth over $10 billion combined.

In resolving the latest case, UBS admitted it "willfully violated" the Bank Secrecy Act, America's primary anti-money laundering law. One client, FinCEN said, was linked to a Kremlin-affiliated oligarch suspected of embezzling money for politicians. UBS agreed to appoint an independent consultant to review its anti-money laundering practices and identify deficiencies, especially regarding cartels, possible narcotics trafficking, Iran, Russia and Venezuela.

The bitcoin market has plenty of reasons to freak out — the Coldcard hack, anemic institutional demand, rising real Treasury yields, and a still-unresolved regulatory environment — yet panic is nowhere to be found. Bitcoin's 30-day implied volatility index, BVIV, has dropped to 36%, its lowest level since May 31 and down sharply from highs near 60% in early June. A market that shrugs off bad news is often considered a bullish signal, poised for a notable upswing.

Still, the data is not uniformly encouraging. U.S. spot bitcoin ETFs posted $61.53 million in outflows last week, snapping a three-week streak of tepid inflows. USDT's market cap has fallen to its lowest level since October and USDC is also in a downtrend — both classical signals of tightening liquidity and subdued risk appetite. Real yields on longer-duration Treasuries have risen to their highest since 2008, denting the case for risk assets. Against that, Bitfinex analysts note that approximately 155,000 BTC moved into the $62,000–$65,000 cost-basis range, suggesting sellers at those levels are being absorbed — a development that could keep BTC range-bound until a stronger catalyst emerges. BTC is trading back near $64,000 today.

Crypto asset manager Hashdex is set to close and liquidate its $14.7 million spot bitcoin ETF (DEFI), in what appears to be the first liquidation of a U.S. spot bitcoin offering. Hashdex cited an evaluation of assets under management, liquidity, operating costs, and investor interest. The closure reflects a broader trend: U.S. spot bitcoin ETF inflows have dwindled as investors chased better returns from AI-related investments, with the funds posting net outflows in each of the past three months. BlackRock's iShares Future AI & Tech ETF gained 39% through July while the crypto market fell roughly 36%.

DEFI's final day of trading will be Aug. 17, after which it will liquidate and distribute cash proceeds to shareholders. The closure does not signal the end of the broader market: BlackRock's IBIT holds $47.08 billion, Fidelity's FBTC another $9.95 billion in cumulative inflows, and the total U.S. spot bitcoin ETF market holds $77.6 billion in net assets. Hashdex itself remains in the U.S. ETF market with more than $200 million across its remaining products.

Key sectors of the economy that spent years squeezed by high interest rates are gaining momentum. For years, manufacturing and construction were among the clearest signs that the Federal Reserve's tightening campaign — reversed only somewhat at the end of last year — was weighing on the economy.

Now, manufacturing and construction are early sources of job growth, helped by an AI investment boom that has so far been unconstrained by still-high borrowing costs. "The private labor market has rebounded in 2026 due to a resurgence of the highly cyclical manufacturing sector ... while a robust buildout of data centers has propelled construction employment," Troy Ludtka, senior economist at SMBC, wrote in a note yesterday.

The manufacturing sector has expanded for seven straight months after contracting for much of the past two years, according to the Institute for Supply Management's monthly factory survey. The group said yesterday that its employment gauge climbed into expansion territory for the first time in nearly three years. The report also showed manufacturing output growing at the fastest rate since late 2021. Manufacturing payrolls have stabilized this year after a roughly 300,000 job decline between early 2023 and late 2025.

Nonresidential construction employment has climbed to a record high this year, adding about 15,000 jobs in the first six months of 2026 — one of its strongest first-half gains in years. The commercial side of the industry accounted for virtually all of construction's net employment growth, as residential building construction shed about 10,000 jobs over the same period.

That hiring surge has coincided with the historic buildout of AI infrastructure. Private data center construction spending reached an annualized $68 billion in June — a record rate of spending — the Census Bureau said yesterday.

The U.S. labor market remained on a solid trajectory in June, as employers cut back on the number of job postings but increased their rate of hiring. The number of job openings fell 178,000 in June, to 7.36 million. The rate of job openings edged down as well, to 4.4% from 4.5%.

Employers hired 96,000 more people in June than in May, pushing the hiring rate up a tick. The rate of people losing their jobs — both from voluntary quits and involuntary layoffs and separations — was unchanged at low levels. Consistent with the evident strength in some interest-sensitive sectors, the sharpest increases in the hiring rate were in construction (from 3.4% to 3.9%) and durable goods manufacturing (2.2% to 2.7%).

July ISM Manufacturing printed 55.6%, best since May 2022. GDPNow's Q3 estimate extended from 5.0% to 6.2% rather than retracing, the real economy score moved from -0.08 to +0.07, and the stress score dropped to its floor at +0.00 with the macro buffer at full strength at +0.50.

The headline allocation posture of the Milk Road Macro Index is at -0.16, CAUTION, 75% exposure. The indicator has been holding at CAUTION a lot lately despite the strongest cross-pillar growth alignment in weeks. The two pillars, the economy and the market, now seem to agree on growth, but the index remains in CAUTION status.

Europe's biggest blockchain conference, European Blockchain Convention, is back in Barcelona on September 16-17. Milk Road readers get 15% off tickets with code "MILKRO_15".

SpaceX posted its first earnings as a public company Tuesday — Q2 revenue of $7.8 billion beating the $6.9 billion consensus, adjusted EBITDA nearly tripling to $3.5 billion, and net loss narrowing to $541 million from $1 billion a year earlier. The bitcoin footnote is notable: SpaceX held onto its 18,712 BTC through the quarter but the value of those holdings fell from $1.64 billion to $1.10 billion as bitcoin dropped 33%. SPCX fell 6% after-hours despite closing the regular session up nearly 10%, with the stock's first major insider unlock — 912 million shares — arriving August 6.

The Senate has yet to take up the CLARITY Act as negotiators wait for the White House to respond to a toughened ethics provision — a rewrite sent over a week ago that still hasn't received an answer. Simultaneously, Senators Warren and Blumenthal asked SEC Chair Atkins to investigate Trump's $TRUMP memecoin, citing $3.8 billion in investor losses against Trump's own $636 million gain. The SEC has already declared memecoins outside its jurisdiction. Thune is pushing to begin the Senate floor vote this week, but without 60 yes votes in hand, the bill risks a fatal defeat heading into summer recess.

Nasdaq CME Crypto Index futures are now live and available to trade 24 hours a day, seven days a week, combining Nasdaq's expertise in indexing with CME's liquid, transparent and CFTC-regulated marketplace. The contracts provide exposure to bitcoin, ether, XRP, Solana, Cardano, Stellar, Chainlink and Bitcoin Cash within a single, financially settled transaction.

SpaceX beat revenue expectations and reduced its losses in its first quarter as a publicly traded company, delivering sharp increases in all three of its divisions: space, connectivity and AI. Revenue soared 92%, to $7.81 billion, in the period ended June 30, compared with a year earlier, topping expectations of $6.9 billion. This included $4.29 billion in connectivity (Starlink), up 66%; $2.56 billion in AI revenue (xAI and Grok subscriptions), up 247%; and $962 million in space revenue, up 29%. SpaceX spent $15.8 billion building AI infrastructure in the quarter.

Amazon founder and former CEO Jeff Bezos disclosed he is preparing to sell 15 million shares valued at just over $4 billion. Amazon stock slipped 2.3% following the disclosure.

Caterpillar reported 72% growth in its power generation business driven by "very strong demand" for generators and turbines used in data centers. Its construction segment benefited too from data center construction. It all helped Caterpillar top $20 billion in quarterly revenue for the first time in its history.

McDonald's CEO Chris Kempczinski told analysts that about a third of its franchisee system didn't follow the recommended pricing guidance for the chain's "$3 everyday affordable price" menu launched in April. He said the program gives franchisees wide latitude to set prices on individual items, and some restaurants saw that as an opportunity to charge more — choosing immediate margins over the long-term traffic benefits that lower prices may have delivered. McDonald's plans to "educate" those franchisees on the big picture and intends to make pricing execution part of its business review process.

Wayfair reported its strongest U.S. growth since the pandemic in Q2, as the online furniture company continues to take market share from legacy brick-and-mortar retailers.

Polymarket is in early talks with prospective investors to raise about $1 billion, with the prediction markets platform seeking a valuation north of $20 billion.

If artificial intelligence defines this century, history may remember us less for building the internet than for filling it with words. Reddit makes about $150 million a year selling posts to AI labs. Stack Overflow, launched as a way for humans to teach humans how to code, has had its biggest impact teaching AIs how to code instead. Wikipedia sells its publicly available data to AI labs and will likely be remembered more for educating language models than for educating humans.

Bitcoin has donated much of its most valuable infrastructure to AI acceleration. Bitdeer announced a deal to provide Anthropic with 121 megawatts of computing power from a data center previously used for bitcoin mining. Dozens of others have done the same. AI has been moving into emptied bitcoin mining data centers like a growing hermit crab moves into an abandoned shell. A data center can be repurposed from mining bitcoin to training AIs in about a year, whereas building one from scratch might take that long just to get planning permission. Additionally, "the biggest neoclouds are almost all ex-crypto talent."

Bob Gelfond proposes funding AI capex with compute-backed money that could be held anonymously on a blockchain, with full disclosure of outstanding issuance and issuers likely offering a "staking yield" to maintain purchasing power — two things that are best done on blockchains. For blockchains to be remembered as more than another investing mania, they could enable this original form of money backed by computing power.

SpaceX reported better than expected revenue of $7.8 billion, up 92% year over year, in its first post-IPO earnings. Shares fell 6.6% in after-hours trading when investors saw how much the company led by Elon Musk is spending on AI capabilities. While SpaceX's net loss narrowed to $541 million from $1 billion a year ago, AI spending more than doubled to $15.8 billion from $7.7 billion in the first quarter. The connectivity unit, home to its highly profitable Starlink satellite internet service, will poach customers from major wireless operators. Executives said the company "definitely intend[s] to build out terrestrial components" to its network, noting that spectrum purchased from EchoStar last year already has some.

The S&P 500 hit a record high as investors parsed signals from the White House that a deal to open the Strait of Hormuz was imminent. The index rose 1.8% yesterday, notching a new all-time closing high of 7,736.52. Wayfair soared after it said that consumers are buying a lot of bed frames and decorative trays again following a post-pandemic slowdown.

The S&P 500 just hit a new record high after the index closed at a new all-time high yesterday, with S&P 500 futures in the green this morning. Investors sent stocks back to record highs amid optimism about the AI buildout and progress on the Strait of Hormuz deal. High stock prices are critical to keeping funds flowing to the AI buildout. Some analysts and investors had worried that the markets were beginning to deflate, as the S&P 500 failed to advance in June or July. In the last four sessions, stocks have jumped almost 6%, led by massive gains from tech giants after Microsoft, Amazon and Alphabet each reported their quarterly results. The S&P 500 rose 1.8% yesterday, notching a new all-time closing high of 7,736.52. Tech shares led the way, with Palantir Technologies soaring 29.5% after its second-quarter results showed strong sales of its AI software platform to corporate clients.

Tech shares led the way yesterday, as retail favorite Palantir Technologies soared 29.5% after its second-quarter results showed strong sales of its AI software platform to corporate clients. Palantir's ability to profitably sell AI services appeared to help reinvigorate the AI trade, with semiconductor stocks and makers of other IT hardware that data centers need jumping. American producers of components called transceivers — used to connect fiber optic cables that carry data — also rose after reports that the Trump administration was considering banning similar products from Chinese competitors on security grounds.

The revival of tech momentum adds to the strength of so-called "cyclical" sectors of the stock market — such as industrial companies, financial firms and energy stocks — that have largely kept the S&P 500 from falling too much throughout the recent soft patch. Energy shares — the benchmark index's biggest riser so far this year, up more than 30% — have of course been lifted by the Iran-related surge in oil prices. Industrial stocks have also risen amid growing proof that cash from the AI boom — driven by an expectation of almost $800 billion of capital expenditures by hyperscalers this year, according to FactSet data — is working its way deep into the industrial tissue of the U.S. economy. The S&P 500 industrials are up 20% year to date. If there at year end, it would be the best performance for the industrial sector since 2019.

SpaceX is down in the pre-market session after posting better-than-expected revenue results yesterday in its first quarterly report as a public company. The scale of Elon Musk's capital spending plans seemed to unnerve investors.

The AI stocks of the highly leveraged hedge fund Situational Awareness that were scooped up at a discount by Citadel proved to be a boon for Ken Griffin's firm. Its flagship fund surged nearly 6% in July.

The $120 million hardware wallet hack that began July 30 and is still ongoing has produced an unexpected side effect: a sharp spike in bitcoin network activity. The number of unconfirmed transactions waiting in bitcoin's mempool hit 89,031 on Tuesday — the highest since February 2025 — as holders rattled by the Coldcard exploit rushed to shuffle their coins to exchanges and fresh wallets. Santiment data shows active addresses climbed to a three-month high of 712,000 and whale transactions reached a five-month high of 61,800. Higher network activity is generally constructive for valuations, but so far bitcoin has neither rallied nor dropped materially and remains boxed in the $62,000–$65,000 range it has held since May. The Clarity Act remains the most immediate policy binary: the Senate has a three-day window before its August 10 recess, with passage-by-year-end odds now at just 23% on Polymarket — down from roughly 75% in mid-May. The longer-duration macro headwind identified by Bitfinex is the 10-year real yield, now at 2.41% — nine basis points below the 2.5% threshold above which the exchange says bitcoin has never traded, meaning there is no price history above that line. If the real yield clears 2.5% and holds, Bitfinex says the macro tailwind for bitcoin is gone.

Arthur Hayes thinks most investors have the AI trade misfiled. In a new essay, the Maelstrom co-founder and BitMEX founder argues the ongoing data-center buildout is a credit story like 2008 — not an earnings story like the 2000 dot-com bust. Hyperscalers are borrowing against data centers stuffed with AI infrastructure to fund ever-larger buildouts, creating feedback loops that could collapse if sentiment shifts.

SpaceX reported better than expected revenue of $7.8 billion, up 92% year over year, in its first post-IPO earnings Tuesday. Shares fell 6.6% in after-hours trading when investors saw how much the company led by Elon Musk is spending on AI capabilities. While SpaceX's net loss narrowed to $541 million from $1 billion a year ago, AI spending more than doubled to $15.8 billion from $7.7 billion in the first quarter. The immediate path to profitability doesn't go through the moon or Mars. It starts with AT&T, Verizon and T-Mobile. Executives said SpaceX's connectivity unit, home to its highly profitable Starlink satellite internet service, will poach customers from the major wireless operators. In what could make it a full-fledged competing carrier, President Gwynne Shotwell added the company "definitely intend[s] to build out terrestrial components" to its network, noting that spectrum purchased from EchoStar last year already has some.

The S&P 500 just closed at its highest level on record. It added a staggering $1.2 trillion in market cap in a single session. This marks the 27th time in history the Dow surged 1,000 points. Twenty-five of those historical moves happened under President Trump.

We are witnessing a historic momentum shift across global equity markets. Many traders are desperately trying to short this relentless rally. Our desk strongly disagrees with that contrarian positioning. We are clearly in the middle of a massive blow-off top. The underlying components of the domestic economy remain exceptionally strong.

Treasury Secretary Scott Bessent noted that small business formations are heavily accelerating. This proves the current expansion is much broader than a crowded tech trade. The macro trading environment has fundamentally shifted in the last forty-eight hours.

Private employment data suggests that the labor market might be tighter than the headline hiring numbers alone suggest, with worker pay accelerating alongside lackluster jobs growth.

Why it matters: Employers are pulling back on hiring as they navigate an uncertain economic outlook, but supply constraints continue to limit the pool of available workers in some industries.

• That's helping speed up pay growth — a boon for workers in industries like construction and health care, where employers are still competing for scarce labor.
• But the labor market is becoming increasingly uneven: While employers in some sectors are paying up to attract workers, others are more cautious about hiring as they contend with geopolitical uncertainty, tariffs and a more reluctant consumer.

By the numbers: Private employers added just 44,000 jobs in July, down from 95,000 in June and the weakest monthly gain since January, according to ADP.

• But annual pay growth for workers who changed jobs accelerated to 7%, the fastest pace since August 2025, while pay for workers who stayed put held steady at 4.4%.
• Construction added just 1,000 jobs in July, but pay for construction workers changing jobs is at a record high, reflecting strong demand from AI-related data center construction and a limited supply of experienced workers.
• Education and health services led all industries with 36,000 new jobs last month.

Situational awareness: The U.S. services sector continued to expand in July, with the Institute for Supply Management's Purchasing Managers' Index inching up 0.1 percentage point, to 54.1%.

• But companies signaled a pullback in hiring, and price pressures hit their highest level since April 2023.

The Bank of America Institute said its payroll gauge, based on customer deposit account data, accelerated to 2% year-over-year in July from 1.7% in June, with hiring strongest among lower-income workers.

After-tax wage growth for lower-income households accelerated to 5.2% last month, surpassing pay growth of higher-income households for the first time since late 2024.

"This is a convergence, but it's an upward convergence," Bank of America Institute senior economist David Tinsley told reporters. "It's not that everything is leveling down — it seems to be more of a leveling up in the data right now."

Tinsley said that the data points to "some evidence of tightening overall" in the labor market, as labor supply remains constrained and employers continue to compete for workers.

The sell-off in bonds has made it more expensive to buy a house.

Driving the news: The average rate on a 30-year fixed-rate mortgage rose to 6.81% last week, the Mortgage Bankers Association said, the highest in a year. Mortgage applications fell 2.9%.

• It reflects a surge in global bond yields.
• Longer-term rates moved higher after Federal Reserve chairman Kevin Warsh offered little guidance as to whether or when the Fed may raise rates to combat elevated inflation.
• That has particularly cut into refinancing activity, with the Refinance Index falling 1.9%.

Yes, but: Bond yields and mortgage rates have both eased some this week amid a de-escalation of the Iran war.

• Mortgage News Daily put the 30-year rate at 6.75% yesterday, down from 6.82% at the start of the week.