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THE HEADLINES

 

BOY THAT ESCALATED QUICKLY

Trade talks between the US and China are going about as well as discussions between Elon Musk and anyone caught ordering extra guac when the whole factory orders Chipotle on Tesla’s dime.

State-run media in the People’s Republic reported that Beijing may restrict the export of rare earth metals, the elemental equivalent of the McRib, to the US. The Communist *throws up in mouth a little bit* publication went so far as to say “don’t say I didn’t warn you.”

For context, in the Chinese language, that phrase is typically reserved for officials to warn rivals that they are about to come at them like a spider monkey. Exhibit A: the threat was used in 1978 before China invaded Vietnam. Everybody. Remain. Calm.

Why is this a big deal?

Oh, you mean besides China’s not-so-subtle threats? Because the US relies on China for 80% of its rare earth metals which are used to manufacture everything from batteries and smartphones to fighter jets.

And markets noticed

It isn’t lost on the masters of the universe, and a lot of stupid people with Scottrade accounts, that China is about to escalate this trade war to DEFCON 1. Markets got pummelled on the news, recovering slightly over the course of the day, but the Dow still closed down more than 220 points.

And the 10-year Treasury note yield fell to 2.26% while the inversion between the 3-month Treasury bill and the 10-year note widened to its largest gap since the financial crisis. You may remember from ‘Treasury Bills For Dummies’ that a yield curve inversion could be a sign that a recession is on the way.

 

SOCIALLY IRRESPONSIBLE

Social Finance, or SoFi as it’s known to those of us that owe six figures to Sallie Mae, just closed a half billion dollar funding round. The round was led by Qatar. Yes, the country.

Qatar isn’t a stranger to throwing around its sovereign wealth money. The middle eastern nation, best-known for its airline and questionable human rights record in the lead up to the 2022 World Cup, has more than $12B in assets spread across its investments which includes stakes in companies like Hello Fresh, FlipKart, and Uber.

SoFi’s valuation will remain the same, at around $4.3B.The student loan refinancers had previously drawn interest from heavy hitters like Peter Thiel and SoftBank to the tune of more than $1.9B.

What do we do now?

If you’re SoFi, you take your new $500M and invest it in growth and build on a member base which is already 500k strong. Oh, you also invest in naming rights for an NFL stadium. Not sure this is what Qatar had in mind.

The fintech startup is close to a deal for the naming rights to the new home of the LA Rams and Chargers in a deal worth $20M a year, for the next 20 years. If either team actually stays in LA for that long, that is. SoFi’s CEO, Anthony Noto, has gotten into bed with the NFL before as the mastermind behind deals with the league during his time at Twitter.

 

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IN OTHER NEWS

• “Oh behave” – Austin Powers and Dara Khosrowshahi, probably. As of yesterday, Uber will start to kick riders off of the app if they have a history of misbehaving and have a subpar rating. But fear not, scum of the earth, you’ll receive tips on how to be a better rider and have chances to redeem yourself before getting the boot. Also, we can all agree that “naughty Uber passengers” is definitely going to become a thing on adult entertainment sites, right?

 

• Elon Musk emailed his employees stating that demand is strong, but production could use some work. In an effort to catch up on deliveries, he’ll hold a call every other day with American, Asian, and European teams to determine what efforts need to be accelerated. Because nothing screams efficiency like more meetings.

 

• Abercrombie’s (yes, it still exists) stock fell 25% yesterday. The preferred clothing brand of teenagers circa 2004 is closing three of its flagship stores (yes, it has flagship stores). In addition to the closures, the company will downsize and redesign 85 locations, as the company has found that all 27 of its remaining customers reportedly enjoy shopping in smaller spaces.

 

• Blackstone sold off more than $1B worth of its shares of Invitation Home. The private equity group invested in the home landlord company, which was created in the wake of the financial crisis, betting that people would rent the American dream that they could no longer afford. How heartwarming.

 

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