New York stocks fall for third straight day… Trump: "South Korea's $350 billion investment in the U.S. is up front" [Morning Briefing]

◆ New York stocks close lower for third straight day

The three major U.S. stock indexes closed lower for a third consecutive day. The final estimate of U.S. Q2 gross domestic product (GDP) improved sharply, reducing hopes for rate cuts, and investors responded by seeking safety. On the 25th local time, the Dow closed at 45,947.32, down 173.96 points (0.38%) from the previous close. The S&P 500 fell 33.25 points (0.50%) to 6,604.72, and the Nasdaq fell 113.16 points (0.50%) to close at 22,384.70.

U.S. Q2 GDP posted a 'surprise' increase, the largest in about two years. According to the U.S. Commerce Department, the final Q2 GDP growth rate on a seasonally adjusted basis was an annualized 3.8%. Compared with the final Q1 growth rate of -0.6%, it rebounded sharply even accounting for base effects. It was the highest growth rate since 4.7% in Q3 2023 and exceeded market expectations and the preliminary estimate of 3.3%. The revival in economic growth drew attention particularly because it was driven by an increase in consumer spending along with a drop in imports. That consumption, which accounts for two-thirds of the U.S. economy, recovering suggests the U.S. economy is returning to a normal trajectory despite tariff uncertainties.

◆ Trump: "South Korea's $350 billion investment in the U.S. is up front"

President Donald Trump reiterated that, under a Korea-U.S. trade agreement, South Korea would invest $350 billion in the United States (about 490 trillion won) and said, "That is up front (up front)." After signing an executive order at the White House on the 25th local time related to a TikTok agreement, President Trump said, "We were never treated properly by other countries, but now we are doing well. We've never done this well," and added the comment. He continued, "Because of tariffs and trade agreements, in one case we secured $950 billion, amounts that were not paid at all before," and said, "As you know, we get $550 billion from Japan and $350 billion from Korea. That is up front."

The $950 billion appears to refer to the European Union (EU) case. Trump's remarks came amid a stalemate between the two countries over the $350 billion investment package, the biggest point of contention in Korea-U.S. trade talks. In particular, calling the $350 billion 'up front' seemed to emphasize that it is a precondition for tariff reductions for Korea. Earlier, in the trade negotiations concluded on July 30, the U.S. agreed to lower mutual tariffs and auto tariffs imposed on South Korea from 25% to 15% in exchange for South Korea implementing about $350 billion in investment toward the U.S. However, the two sides have yet to narrow differences over how to structure and implement the U.S.-directed investment package.

◆ President Lee: "Geopolitical risks will be definitively resolved… Major structural reform of the Korean market"

Visiting the United States, President Lee Jae-myung said on the 25th local time, "It is true that there have been obstacles for foreign investors to invest in Korea, but now everything will change," and asked investors to "take an interest in the Republic of Korea market undergoing major structural reform." At the 'Korea Investment Summit' held at the New York Stock Exchange that day, President Lee said, "Although the Korean stock market has been hitting record highs day after day, it is undervalued due to several causes," and added, "The new government plans to implement several measures to address this."

President Lee first noted, "Korea has been undervalued due to instability caused by the military standoff between the North and South," and said, "We will definitively resolve such geopolitical risks." He detailed the background for proposing North Korea-U.S. talks on denuclearization to President Donald Trump. President Lee said he told President Trump that "it appears North Korea has already secured the nuclear weapons necessary to preserve its regime, and the development of intercontinental ballistic missiles (ICBMs) capable of carrying nuclear bombs to reach the U.S. is only missing atmospheric re-entry technology," adding, "If left unchecked, the number of nuclear bombs could increase by about 15–20 per year." He went on, "The worrisome point is that North Korea is highly likely to export these to other countries," and explained, "Stopping North Korea's production of nuclear warheads, ICBM development and export would yield significant security benefits. So I proposed to suspend in the short term, reduce in the medium term, and pursue denuclearization in the long term." President Lee also emphasized that, even considering Korea's defense capabilities, there is no reason for extreme concern about security on the Korean Peninsula.

◆ National Assembly to vote today after filibuster ends on the 'Abolition of the Prosecutor's Office' government organization bill

The National Assembly will vote on the government organization bill outlining the first government reorganization direction of the Lee administration at the plenary session on the 26th. The amendment abolishes the Prosecutor's Office and establishes the Serious Crime Investigation Office (SCIO) and the Public Prosecution Office to separate prosecution's investigative and prosecutorial functions. It also includes splitting the Ministry of Economy and Finance into the Ministry of Finance and Economy and the Planning and Budget Office, reorganizing the Ministry of Environment into the Ministry of Climate, Energy and Environment, and transferring energy-related duties to the climate ministry—excluding the nuclear power export sector within the existing Ministry of Trade, Industry and Energy. The People Power Party launched a filibuster (legitimate obstruction through unlimited debate) against the bill submitted to the plenary session the day before. However, the Democratic Party requested an end to debate at around 6:30 p.m. the previous day, and 24 hours later, a vote to end the filibuster is expected to be held at around 6:30 p.m. today. Given the Democratic Party's absolute majority in the National Assembly, the filibuster is expected to end this afternoon and the government organization bill is likely to pass the plenary session.

◆ Jeon Yu-seong dies as pneumothorax worsens

Comedian Jeon Yu-seong, known as the 'godfather of comedy' for his distinctive wit and character, died on the 25th at the age of 76 as his pneumothorax symptoms worsened. According to the Korea Broadcasting Comedians Association, Jeon Yu-seong passed away at around 9:05 p.m. that day as his pneumothorax symptoms deteriorated. He had previously suffered from pneumonia and had also struggled with long-term effects of COVID-19. Recently he underwent surgery to remove part of a lung due to a pneumothorax, but his condition worsened and he was hospitalized. His recent gaunt appearance had been shared on social media, raising health concerns, and he had planned to participate in a side event at last month's Busan Comedy Festival but withdrew at the last minute due to ill health. The deceased had stated in life that he did not want life-sustaining treatment and reportedly discussed funeral arrangements with close associates.

Born in Seoul in 1949, he began his career as a comedy writer and, not limiting himself to broadcast entertainment programs, showcased various stage performances based on his inventive ideas. In the early 1980s, finding the expressions 'comedian' or 'comic' used at the time to be dull and outdated, Jeon coined the neologism 'gagman' by combining 'gag' and 'man.' He retired from broadcasting in 2007 and moved to Namwon, Jeonbuk in 2018 to spend his later years. He married singer Jin Mi-ryeong in 1993 and later announced their divorce around 2011. He is survived by a daughter, Ms. Jebi. The funeral will be held with honors for a comedian.

◆ Up to 60㎜ of rain in the south and Jeju until tomorrow… Large temperature swings, take care of your health

On Friday the 26th, the central region will be mostly clear, while rain will fall in the southern regions and Jeju Island and continue into the following day. Expected rainfall over the next two days through the 27th is 10–60㎜ for Jeju Island, 10–50㎜ for the southern coast of South Jeolla, 5–40㎜ for Gwangju and the rest of South Jeolla (excluding the southern coast), and 5–20㎜ for the western southern coast of South Gyeongsang. As of 5 a.m. that day, temperatures were Seoul 18.4°C, Incheon 19.2°C, Suwon 16.7°C, Chuncheon 16.3°C, Gangneung 19.5°C, Cheongju 19.2°C, Daejeon 18.7°C, Jeonju 20.7°C, Gwangju 22.0°C, Jeju 25.6°C, Daegu 21.0°C, Busan 22.8°C, Ulsan 21.0°C, Changwon 22.1°C. Daytime highs are forecast at 25–29°C. The temperature difference between day and night may be around 10°C in central inland areas, so be careful with health management. Fine dust concentrations are expected to be in the 'good' to 'moderate' range across all regions due to favorable atmospheric dispersion.

Kim Ye-rang, Hankyung.com reporter yesrang@hankyung.com