🔔 Opening Bell: China Retail Sales Jump While Industrial Growth Slows
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On Friday, the S&P 500 closed at 5,976.97, down 0.39%, while the NASDAQ was down 0.21%, closing at 19,406.83. The Dow Jones Industrial Average closed the session at 42,197.79, down 1%.
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Headlines
China Retail Sales Jump While Industrial Growth Slows on Trade War Turmoil
China's economic indicators showed a mixed picture as retail sales demonstrated unexpected resilience while industrial output faced headwinds from ongoing trade tensions. The retail sector posted significant growth, indicating strong domestic consumption despite global economic pressures, with sales figures exceeding market expectations.
However, the manufacturing sector showed signs of strain as industrial production growth decelerated, reflecting the impact of trade war uncertainties and global supply chain disruptions. The contrast between robust consumer spending and slowing industrial activity highlights the complex challenges facing China's economy as it navigates through international trade tensions while attempting to maintain stable domestic growth.
Taiwan Places Export Controls on Huawei and SMIC
Taiwan has implemented significant export controls targeting Chinese tech giants Huawei and SMIC, marking a crucial development in the ongoing technological competition between nations. The International Trade Administration of Taiwan has added these companies, along with their subsidiaries, to a list of entities designated as strategic high-tech commodities, requiring Taiwanese businesses to obtain government approval before engaging in any shipments to these companies.
The implications of this decision are far-reaching, particularly for China's AI semiconductor development ambitions. The restrictions will limit access to Taiwan's advanced plant construction technologies, materials, and equipment, potentially creating significant obstacles for both companies' technological advancement. As stated by the trade administration, "On June 10, we added some 601 entities from Russia, Pakistan, Iran, Myanmar, and mainland China, including Huawei and SMIC, to the entity list to combat arms proliferation and address other national security concerns."
China Refuses to Approve Exports of Rare Earth Metals Used in U.S. Weapon Systems
China has tightened its grip on the global supply of critical rare earth metals, particularly samarium, which is essential for U.S. and allied military production, including fighter jets and missiles. The situation has become more pressing as Western nations attempt to replenish weapons inventories depleted by support for Ukraine and Israel. During recent London negotiations, Chinese officials strategically linked the approval of military-grade rare earth exports to U.S. restrictions on advanced AI chip exports to China.
While Beijing has offered to expedite civilian-use export licenses through a limited "green channel" for trusted U.S. firms, military-use materials remain blocked. As noted by Ryan Hass of Brookings: "The Trump administration is learning it can't secure another one-sided trade deal, as China is increasingly assertive." This standoff highlights China's willingness to leverage its rare earth monopoly, especially in refining and processing, as a geopolitical tool, creating a significant strategic vulnerability for Western nations.
Trump Administration Offers Details on U.S. Steel Control, but Union Raises Concerns
The White House has revealed additional details about the "golden share" arrangement in Nippon Steel's planned acquisition of U.S. Steel, giving President Trump significant control over the company's operations. Under the terms, presidential approval would be required for major decisions, including relocating headquarters from Pittsburgh, changing the company name, transferring production overseas, or shuttering factories. Commerce Secretary Howard Lutnick highlighted that the deal includes $14 billion in planned investments, with lawmakers indicating the total value could reach $28 billion, including a new electric arc furnace. However, the United Steelworkers union expressed disappointment in Trump's reversal of his initial opposition to the deal, raising concerns about unclear transaction terms and the upcoming labor agreement expiration in September 2026. "Neither the government nor the companies have publicly identified what all the terms of the proposed transaction are," the union stated in their letter.
U.S. Pushes Vietnam to Decouple from Chinese Tech
The United States is pressuring Vietnam to reduce its reliance on Chinese technology in products assembled for export, especially as tariff negotiations approach a critical July 8 deadline. American tech giants like Apple, Samsung, Meta, and Google manufacture goods in Vietnam using components heavily sourced from China. Washington’s goal is to decouple from Chinese high-tech supply chains and encourage Vietnam to develop a more independent industrial base. However, Vietnamese firms caution that such a transition would require time and significant technological upgrades. While Hanoi shows willingness to adapt, abrupt changes risk harming both economic stability and diplomatic ties with China, a major investor and trade partner.
Talks between the two nations have progressed but remain unresolved on key issues, including misleading "Made in Vietnam" labels on Chinese-origin goods. The U.S. has not yet proposed specific caps on Chinese content but continues to stress the importance of reducing dependency. With Vietnam still 15–20 years behind China in terms of supply chain development, industry experts highlight the challenges of rapid decoupling. A potential visit by Vietnam’s Communist Party chief To Lam to the U.S. may help advance negotiations, but no date has been confirmed.
Boeing Trims Projection for 20-Year Jet Demand
Boeing has released its 20-year demand forecast for commercial airliners, projecting a requirement for 43,600 new aircraft through 2044, slightly down from last year's estimate of 43,975 deliveries. The forecast, unveiled ahead of the Paris Airshow, demonstrates the aviation industry's continued growth trajectory despite current market challenges. The projection includes approximately 33,300 single-aisle airliners, 7,800 widebody jets, 955 factory-built freighters, and 1,545 regional jets.
In a notable adjustment, Boeing has revised several key growth metrics downward, including passenger traffic growth from 4.7% to 4.2% and global economic growth from 2.6% to 2.3%. Despite these modifications, Boeing Vice President of Commercial Marketing Darren Hulst remains optimistic about long-term demand, stating, "I think we need to point back to the perspective that the last 20, 40, 60 years have given us in terms of the value of air cargo, and the fact that it's roughly a 4% growth market through all this time."
Meta Introduces Advertising to WhatsApp in Push for New Revenues
Meta is making a significant strategic shift by introducing advertisements to WhatsApp, marking a major change in the messaging app's business model. The company plans to implement ads in Status (WhatsApp's version of Stories) and potentially in other areas of the app, representing a departure from its previous ad-free approach. This move is part of Meta's broader strategy to maximize revenue across its messaging platforms.
The decision comes as Meta seeks to capitalize on WhatsApp's massive user base of over 2 billion people worldwide. Meta's Head of WhatsApp, Will Cathcart, has emphasized that the advertising implementation will be thoughtful and non-intrusive, stating, "We want to do this in a way that doesn't feel disruptive to the product." The company is particularly focusing on business messaging features and exploring ways for businesses to reach potential customers through the platform while maintaining user privacy and experience.
Popular Home Goods Chain At Home Files for Bankruptcy Amid Tariff Challenges
At Home, a prominent home goods retailer operating 260 stores across 40 US states, has entered Chapter 11 bankruptcy proceedings, facing approximately $2 billion in debt. The company's restructuring plan includes securing $200 million in new funding to maintain operations while navigating through the bankruptcy process. The filing comes as the retailer grapples with significant challenges, including increased tariffs on imports from China and a noticeable decline in consumer discretionary spending.
CEO Brad Weston emphasized the company's struggles, stating, "We are operating against the backdrop of an increasingly dynamic and rapidly evolving trade environment as we navigate the impact of tariffs." The bankruptcy filing will result in new ownership and a strengthened balance sheet, though the company has indicated potential store closures, with approximately 20 locations expected to shut down. Industry analysts, including Neil Saunders from GlobalData, point to the company's extensive debt burden and weak market differentiation as key factors in its downfall, particularly when competing against established rivals like Ikea and Wayfair.
Google Reportedly Plans to Cut Ties with Scale AI
In a significant shift within the AI industry landscape, Google is reportedly planning to terminate its $200 million partnership with Scale AI, a move that appears to be influenced by Meta's recent substantial investment in the company. The decision comes as other tech giants, including Microsoft and OpenAI, are also reconsidering their relationships with the data annotation company.
Scale AI, which provides specialized data annotation services for AI model training and counts self-driving car companies and the U.S. government among its clients, faces this challenge following Meta's $14.3 billion investment for a 49% stake. A Scale spokesperson maintained a positive outlook, stating that "Scale's business remains strong, and it will continue to operate as an independent company that safeguards its customers' data," though the company declined to comment specifically on its relationship with Google.
Metaplanet Overtakes Coinbase, Becomes No. 9 Bitcoin Holder
Japanese company Metaplanet has solidified its position as a major player in the Bitcoin market by increasing its holdings to 10,000 BTC, surpassing Coinbase's 9,267 BTC to become the ninth-largest Bitcoin holder among publicly traded companies. The company's latest acquisition of 1,112 BTC for $117.2 million, at an average price of $105,435 per bitcoin, brings their total investment to approximately $947 million.
The company's commitment to Bitcoin is further demonstrated by its impressive Bitcoin yield performance across recent quarters, with figures ranging from 41.7% to 309.8%. CEO Simon Gerovich announced the milestone purchase, which was partially funded through a $210 million zero-percent ordinary bond issuance. The market has responded positively to Metaplanet's aggressive Bitcoin strategy, with the company's shares closing 26% higher at 1,895 yen on Monday. "As of June 16, Metaplanet's cumulative bitcoin investment stands at roughly $947 million, with an average acquisition cost of $94,697 per BTC," stated the company's report.
Credit Scores Decline for Millions as US Student Loan Collections Restart
The resumption of student loan collections has led to significant credit score declines for millions of Americans, with 2.2 million borrowers seeing drops of 100 points and an additional 1 million experiencing drops of 150 points or more in the first quarter of 2025, according to the Federal Reserve Bank of New York. The impact comes after the end of pandemic-era payment pauses, with about 1 in 4 people with student loan accounts now more than 90 days behind on payments. The credit score declines are affecting borrowers' ability to obtain loans, credit cards, and housing at manageable rates, with some borrowers reporting they haven't received proper notification of payment requirements. "They said I now have to pay $358 per month," said Kat Hanchon, a 33-year-old marketing professional whose credit score dropped 57 points. "I'm not going to be able to pay that... But I'm not unusual in the world we're living in right now."
IBM Is Building a Large-Scale Quantum Computer
IBM has unveiled an ambitious roadmap for quantum computing, culminating in the development of IBM Starling by 2029. This groundbreaking quantum computer promises to be 20,000 times more powerful than current quantum systems, capable of executing 100 million quantum operations using 200 logical qubits.
The journey to Starling includes several milestone systems, starting with IBM Quantum Loon this year, followed by Kookaburra in 2026, and Cockatoo in 2027. Each system will test and demonstrate crucial components of quantum architecture. As Arvind Krishna, Chairman and CEO of IBM, states, Starling will "solve real-world challenges and unlock immense possibilities for business," particularly in fields like drug development, materials discovery, and chemistry. The roadmap extends beyond Starling to Blue Jay, expected after 2033, which aims to scale up to an impressive 1 billion gates and 2,000 logical qubits.
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