China Seizes Control Over Supply Chain

You can’t get past politics. And History (capital H) doesn’t end.

It wasn’t that long ago when serious people talked about the End of History and the triumph of globalization.

Now, I actually think Francis Fukuyama’s The End of History and the Last Man is underrated… and he may even be proven correct in the long run…

But way too many people, especially the so-called “experts,” took the wrong lesson.

The premise was that everyone would simply channel their passions for conquest and domination into capitalism.

Yet the governments of the world didn’t see it that way – especially Russia and China.

President Vladimir Putin of Russia continued his quest to rebuild his country as a great power – launching a war that few expected in Ukraine.

From an economic perspective, it didn’t make much sense, especially considering the sanctions that resulted. But from his perspective, it made perfect sense.

And then of course there is China – which has developed a stranglehold on the rare earth elements that are going to be increasingly important in clean energy and semiconductor production.

In a recent interview with CNBC, U.S. Trade Representative Katherine Tai said that China had a “dominant position” in the market that allowed it to “turn on the faucet and turn off the faucet” when it comes to supply.

Companies like MP Materials (MP) could be increasingly important as the United States seeks to protect its own supply chain and cut China out of emerging high-tech markets.

Now, MP is down more than 45% this YTD, but in this overpriced market, it may be keeping an eye on.

The geopolitical competition between China and the United States is not going away anytime soon.

Neither is great power competition.

Hopefully we won’t be returning to the major wars of the past.. but the prospects for a borderless, globalized future look far more distant than they did even a decade ago.

History doesn’t end.

All we can do is keep pace with it.

Get what’s yours.

Jeff Bishop

WORD ON THE STREET

Evergrande Plunges As Trading Resumes – The crisis in the Chinese real estate market is about to begin. China Evergrande Group began trading in Hong Kong again for the first time since March 2022 – and promptly plunged about 87%. It’s far from the only Chinese real estate company facing a potentially catastrophic debt crisis.

Trump Raises $7 Million On Mug Shot – On Friday alone, the Donald Trump campaign brought in $4.18 million, as outraged supporters gave to ‘45’s re-election fight as his mug shot was made public. The mug shot, featuring a scowling Trump, has been gleefully adopted by MAGA supporters, who have given the campaign more than $7 million since Thursday.

Strike Looming For Big 3? – Here we go again. The Big 3 Detroit automakers – General Motors, Ford, and Stellantis – could be facing a strike if they can’t reach a deal with United Auto Workers. The membership authorized a potential strike with about 97% of the vote – putting major pressure on company leaders to cut a deal fast.

Rite Aid Faces Bankruptcy – Rite Aid is reportedly facing bankruptcy, and a flurry of lawsuits about the opioid epidemic could be to blame. While the company itself refused comment, the Wall Street Journal reported the move is being considered as the company buckles under state lawsuits blaming it for drug overdoses.

HOT SPOTS: What’s Going on in Geopolitics

Russia Scrambles To Contain Ukraine Offensive – Russian reinforcements are on the way to the Zaporizhzhia Oblast, a critical region under heavy pressure by a Ukrainian offensive. The 76th Guards Air Assault Division, considered one of Russia’s best formations, is being trusted with the task of containing Kyiv’s counteroffensive. The stakes are high – if Ukraine can’t show results, Western aid could dry up.

Russia Scrambles To Contain Ukraine Offensive – Russian reinforcements are on the way to the Zaporizhzhia Oblast, a critical region under heavy pressure by a Ukrainian offensive. The 76th Guards Air Assault Division, considered one of Russia’s best formations, is being trusted with the task of containing Kyiv’s counteroffensive. The stakes are high – if Ukraine can’t show results, Western aid could dry up.

North Korea Loosens Border Controls – On the unlikely chance you are a North Korean eager to return home, good news – the Hermit Kingdom is letting its citizens return home. Of course, there will still be a medical quarantine and “proper medical observation,” but this is about as open as North Korea gets. North Korean residents who have been staying in China and Russia since COVID-19 are expected to begin returning soon.

CUTTING EDGE: What‘s Happening In Tech

Soccer Star Faces Arrest Over Crypto Scandal – (Now if only we can charge Matt Damon for that terrible crypto ad). Ronaldinho Gaucho, a major soccer star in Brazil, faces potential prison over a crypto fraud investigation. The player failed to appear before Congress – he has another chance on August 31. If he skips it again, he may be forced to testify by law enforcement.

EU Enforces New Rules On US Tech – The “regulatory superpower” that is the European Union has begun enforcing the Digital Services Act, which imposes sweeping controls on targeted advertising and content moderation. Companies with more than 45 million EU users will also have to confront issues like misinformation and human rights. In other words, the government gets to tell them what they are allowed to put up.

Klaviyo Going Public – Klaviyo, a marketing automation company, has filed to go public on the New York Stock Exchange with the ticker KVYO. Revenue for the company was about $321 million in the first half of the year. With Arm and Instacart also filing for IPOs, the tech IPO market is showing signs of life again.

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China Seizes Control Over Supply Chain

WORD ON THE STREET

HOT SPOTS: What’s Going on in Geopolitics

CUTTING EDGE: What‘s Happening In Tech

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