🤝⛏️ US/China Relations Improving?
Happy Sunday,
I hope you are all well.
This week’s headlines point to big shifts in the global economy. US job growth is slowing but wage growth is picking up. China may be easing trade tensions by issuing rare earth export licenses to major US automakers. And Meta is reportedly eyeing a $10 billion investment in Scale AI, signaling a new phase in the AI arms race.
We break down what these moves mean, what to watch next, and how they could impact the markets going forward.
- Humphrey & Rickie
Market Report
US Jobs Report Points to Gradual Moderation in Labor Market
In May, the US job market showed signs of a gradual slowdown as nonfarm payrolls increased by a modest 139,000, slightly better than economists' expectations.
This datapoint, however, was accompanied by significant downward revisions of 95,000 for the prior two months, indicating a more cautious hiring approach by employers.
While the unemployment rate remained steady at 4.2%, wage growth picked up, with average hourly earnings rising 0.4% from the previous month. The report presented a mixed picture, with job gains concentrated in service sectors like healthcare and leisure, while manufacturing payrolls saw their largest drop of the year, a potential consequence of ongoing trade tariff concerns.
Economists suggest that employers are hesitant to lay off workers amidst economic uncertainty stemming from trade policies and proposed government spending cuts.
China Issues Rare Earth Licenses to Suppliers of Top US Automakers
In a sign of potential easing in trade tensions, China granted temporary, six-month export licenses to the rare-earth suppliers of top US automakers General Motors, Ford, and Stellantis.
This move comes after Beijing's decision in April to restrict exports of rare earths and related magnets, which are critical for electric vehicles and other advanced technologies, causing significant supply chain disruptions.
The restrictions had already impacted production, with Ford temporarily halting its Explorer SUV line in May due to a shortage.
The export curbs are widely seen as a point of leverage for Beijing in its ongoing trade dispute with the US under President Donald Trump, as China produces about 90% of the world's rare earths.
While it’s still unclear what quantities or specific materials the new licenses cover, the decision came after a phone call between President Trump and Chinese President Xi Jinping aimed at resolving trade differences.
Meta in Talks for Scale AI Investment That Could Top $10 Billion
Meta Platforms is reportedly in discussions for a multibillion-dollar investment in the artificial intelligence startup Scale AI, a deal that could value the data-labeling company at over $10 billion.
This financing would be one of the largest for a private company and marks a significant strategic shift for Meta, which has historically relied on in-house research for its AI development.
Scale AI, which was last valued at approximately $14 billion in 2024, is a crucial player in the AI boom, providing the service of labeling and organizing data used to train machine-learning models for clients like Microsoft and OpenAI.
The investment would deepen an existing relationship, as Meta and Scale already share an interest in defense technology and are collaborating on "Defense Llama," a version of Meta's language model intended for military applications.
Forecast Ahead
Big Number
Overcome the Sunday Scaries
🎉 Want to see what I invest in?
I just launched my brand new paid Whop community, Critical Wealth. Join to see:
✅ My Portfolio + Buys & Sells
✅ Access to exclusive videos (2 per month not seen on YouTube)
✅ Investing Questions Answered
✅ Membership in a community of like minded investors
If you’re looking for an engaged community, I’m building one of the best communities in personal finance and investing, and for less than a dollar a day you can support the channel and get access to a private community with other like minded investors.
In Case You Missed It