"Spook Spook" - China-US Trade
Wednesday, June 11th, 2025
World Events — How America and China Spooked Each Other
Economists
Officials from America and China met for the latest round of trade talks starting June 9th at Lancaster House, a neoclassical mansion near Buckingham Palace, commissioned in 1825 by the "Grand Old" Duke of York—a fitting setting for the ongoing trade war’s escalations and climbdowns. The modest aim of the talks was for America to restore the truce it believed it had secured a month ago in Geneva, particularly pressing China to ease controls on rare-earth exports and the magnets they contain—critical to industries like carmaking and defense. U.S. Commerce Secretary Howard Lutnick described the discussions as “going well…we’re spending lots of time together,” but even if a peace is brokered, the relationship has changed: not all the water spilled can be returned to the pot. China’s recent moves—matching U.S. tariffs, imposing targeted export restrictions, and weathering a drop in U.S. exports while boosting shipments elsewhere—have demonstrated both defiance and a willingness to use its dominance in rare earths as a potent economic weapon.Meanwhile, America’s own efforts to counter China’s chokehold face long lead times and limited short-term options, leaving both superpowers in a state of uneasy interdependence, each mobilizing and demobilizing economic tools to keep the other in check—a pattern as old as the Duke of York’s legendary marches up and down the hill.
Tech — Meta to Invest in Scale AI
FT
Meta’s planned $15 billion investment in Scale AI, which would grant the Facebook parent company a 49% stake in the data-labeling startup and value Scale AI at roughly $28 billion, marks one of the biggest deals in artificial intelligence as Meta seeks to catch up with rivals like OpenAI, Google, and Anthropic. This move is part of a broader strategy to establish a new “superintelligence” lab led by Scale AI’s co-founder, Alexandr Wang, who is set to join Meta along with top researchers, as the tech giant reorganizes its AI efforts after underwhelming results from its latest large language model, Llama 4. Scale AI’s core business—providing high-quality, manually labeled data crucial for training advanced AI models—will bolster Meta’s capabilities, while the investment highlights the intensifying race among Big Tech companies to secure top talent and technology in pursuit of artificial general intelligence, despite regulatory scrutiny and shifting internal priorities.
Market — Canada’s Market in “Suspended Animation’
Bloomberg
Canada’s economy is currently in a state of “suspended animation,” with major new investments largely on hold as uncertainty over trade policy and global economic pressures weigh on business confidence, according to Canadian Imperial Bank of Commerce (CIBC) CEO Victor Dodig. Although Dodig does not consider the situation a crisis, he emphasizes that the economy needs lower interest rates, pro-growth policies, and greater certainty on trade to recover, with forecasts indicating further weakening in the year ahead—including GDP contractions in the middle quarters—before modest growth returns by year-end. Dodig also highlights the need for urgent policy changes such as lowering internal trade barriers, attracting more risk capital through tax reform, and addressing housing affordability by incentivizing new construction and offering tax breaks for young homebuyers, warning that without decisive action, the current stagnation could evolve into a more serious crisis.
Culture — Amidst Japan’s Economic Boom, Global Banks Are Luring Talents
Bloomberg
Japan’s financial sector is experiencing an intense talent war as global banks scramble to hire in one of the world’s tightest labor markets, with recruiters resorting to aggressive tactics like lengthy persuasion sessions, lavish dinners, and even parties for former employees to lure them back. The surge in demand for bankers and traders is driven by a unique convergence of factors: a rebounding Japanese market, a weaker yen, low borrowing costs, rising foreign investment, and government efforts to shift household savings into equities. As a result, wages for finance professionals are rising sharply—up 15% for fixed-income traders in 2024 and 10% annually for investment bankers—while top traders are being offered multimillion-dollar guarantees. However, the limited talent pool, cultural barriers, and a shift among young graduates toward startups and consulting over traditional finance roles have made hiring even more challenging, forcing firms to rethink their recruitment strategies and workplace culture to attract and retain the next generation of talent in Tokyo’s rapidly evolving financial hub.
The Daily Spark
Surveys show that the top three risks for CEOs are geopolitical instability, trade and tariffs, and legal and regulatory uncertainty, see chart below.
Song Recommendation — Party 4 u (Charlie xcx)
Quote of the Day
“What Is Love? I have met in the streets a very poor young man who was in love. His hat was old, his coat worn, the water passed through his shoes and the stars through his soul” ― Victor Hugo , Les Misérables