Sponsored by
In today’s post:
🚩SpaceX Tied With Russia. Why?
⚠️ The September AI Cliff
🗡 China's Revenge List Is Out
Free TikTok Shop Starter Guide
For a limited time, get our TikTok Shop starter resource folder, including a case study showing how we scaled from $0 to $90K/month in 90 days.
You’ll also get our creator approval guide plus a sample P&L to better understand channel profitability.
🚩SpaceX Tied With Russia. Why?
Days before its big IPO, SpaceX got slapped with MSCI's worst possible ESG rating: a CCC.
That's the bottom of the barrel. The basement of the basement.
How bad? It puts Elon's rocket company on par with Russia after it invaded Ukraine in 2022.
Yes, really.
MSCI handed down the verdict on June 11, saying SpaceX trails its peers on environmental, social, and governance risks. Too many red flags, not enough management of them.
Why should you care?
Because ESG scores quietly decide who gets to buy your stock.
They shape portfolio rules, index inclusion, and access to the big institutional money.
A score this ugly could scare off sustainability funds and crank up the scrutiny once shares hit the market.
The breakdown isn't pretty:
Controversies: 1 out of 10 (read: serious ongoing problems)
Governance: 3.2 out of 10 (read: who's actually in charge here?)
Critics keep circling the same drain: concentrated insider control, weak shareholder rights, possible conflicts of interest, and a board that may not be all that independent.
One analyst from Edhec Climate Institute said the ratings line up neatly with SpaceX's own IPO filings. Governance, he warned, is the big worry for public-market buyers.
Sound familiar?
It should. In 2022, Tesla got booted from the S&P 500 ESG Index. Musk's response? He called ESG a political scam and moved on.
Here's the twist.
Index providers are rolling out the red carpet anyway.
MSCI has already greenlit fast-track rules that could shove SpaceX into major benchmarks quicker than a normal IPO.
So the same agency calling SpaceX a governance mess might also funnel index-fund cash straight into it.
Make it make sense.
Is ESG scoring actually useful, or just political theatre? 🚩
TL;DR
SpaceX got MSCI's lowest ESG rating, a CCC, just before its IPO.
That score ties it with Russia post-Ukraine invasion.
It scored 1/10 on controversies and 3.2/10 on governance.
Main worries: insider control, weak shareholder rights, shaky board independence.
Musk has history here. Tesla got cut from the S&P ESG Index in 2022.
Despite the rating, MSCI's fast-track rules could still pump index money into the stock.
Business news in 5 minutes flat. Morning Brew breaks down markets, tech, and the economy — clearly, quickly, and with serious personality. 100% free. Join 4M+ Readers.
Everyone's still licking their wounds over the China tech wreck. Smart money is backing up the truck.
There's a $200 billion hyperscaler down -44.3% from its highs that just posted its 11th straight quarter of triple-digit AI revenue growth — now running at a $5.3 billion annual clip.
Not a fading legacy player. The same company building its own AI chips, where over 60% of compute capacity already serves outside customers.
For context, the market is pricing this thing at a 0.35x PEG ratio. The sector median is 1.45x. That's not just cheap. It’s a "the market thinks it's broken" kind of cheap.
It isn't broken. It's sitting on a $75.5 billion cash pile and outspending nearly everyone on the exact capabilities that win the next decade.
Our analysis puts base-case upside at +79.4%… and the bull case at more than double from here.
There's a clear buy zone forming. Miss it, and you're watching the rebound from the sidelines. Again.
In today's Premium deep dive, we reveal the name and break down:
The exact price levels we're waiting for before we add
The valuation framework behind our two price targets
The one risk that could keep this stock ugly for longer than you'd like
What to watch as the losses unwind into FY27
⚠️ The September AI Cliff
Dan Niles thinks the AI trade is about to hit a pothole.
The founder of Niles Investment Management has a simple piece of advice: stop chasing the companies spending the AI billions, and start watching where those billions actually land.
In plain English? Follow the chips, not the spenders.
The scoreboard backs him up.
The five big AI spenders (Amazon, Alphabet, Microsoft, Oracle, Meta) are down about 6% this year.
Meanwhile, the semiconductor crowd ($SMH ( ▲ 1.37% ), $SOXX ( ▲ 2.43% ), $XSD ( ▲ 1.91% ) and friends) is actually green.
Funny how that works. The guys selling the shovels are doing better than the guys digging the hole.
So what changed?
A few months ago, companies were obsessed with "token maxing." Basically: get employees to use as much AI as humanly possible.
Now? The mood has flipped to "token minimization."
Why? Because someone finally checked the bill.
As Niles put it, you can't torch your whole AI budget in four months like Uber did and then act surprised on the earnings call.
And the spending arms race is getting expensive.
To fund all this, tech giants are raising mountains of debt and equity. SpaceX just dropped a $20B bond offering, joining Amazon, Google, Microsoft, Oracle and Meta in the borrowing spree.
When everyone's taking on debt to keep up, that's usually a sign the party's getting loud.
Here's the twist: Niles isn't even bullish on chips right now.
He's backing away from the hyperscalers and trimming his semiconductor bets, even though the sector's been on fire.
The semi index has doubled. His take? Time to get picky.
The real worry is September.
June quarter results should look great, because everyone was still token maxing.
But companies are now routing AI queries to cheaper open-source models, some costing as little as one-eighth the price.
So Niles asks the obvious question: if you're suddenly spending way less, what happens to your guidance?
That, he says, is the speed bump.
Niles says an AI "speed bump" hits in September. Your move?
TL;DR
Dan Niles warns of an AI trade "speed bump" coming when companies report and guide.
He says follow the chipmakers, not the big spenders, who are down ~6% YTD while semis are up.
Companies flipped from "token maxing" to "token minimization" once the bills arrived.
Huge capex is forcing giants to raise debt and equity, including SpaceX's new $20B bond.
Niles is trimming both hyperscalers and semiconductors, urging investors to be more selective.
The risk: cheaper open-source models could gut September guidance, even after a strong June quarter.
🗡 China's Revenge List Is Out
Remember that whole "let's be friends" summit in Shanghai last month? Yeah, about that.
China just slapped trade restrictions on dozens of U.S. companies on Monday. The reason? Washington added more Chinese firms to a Pentagon military blacklist.
Tit for tat. Welcome to global trade in 2026.
What China actually did:
China's Ministry of Commerce dropped 10 American industrial suppliers onto its export control list.
The headliners:
MP Materials and USA Rare Earth (the rare earth miners)
Teal Drones and Jaia Robotics (the drone guys)
Plus Aveox, Ball Aerospace, and Oshkosh Defense
These companies can no longer get dual-use items sourced from China.
For rare earth miners, that's a bit like banning a baker from buying flour.
Then came round two.
China's Finance Ministry blocked 46 more U.S. companies, mostly defense contractors, from bidding on government procurement deals.
The loophole? Locally registered, foreign-funded versions of those firms get a pass.
So the door isn't fully shut. It's just very, very narrow.
But why now?
The Pentagon recently expanded its 1260H blacklist, which targets Chinese tech firms it suspects are helping Beijing's military.
The new names on that list? Heavy hitters like Alibaba, Baidu, and EV maker BYD.
Naming your biggest companies "military risks" tends to ruffle a few feathers.
Washington is reportedly holding back on adding even bigger names to its blacklist.
AI startup DeepSeek, chipmaker CXMT, and 100+ other firms are sitting in limbo.
Why the hesitation? The Trump administration apparently doesn't want to pour gasoline on an already smoky relationship.
So everyone's playing chicken, and nobody wants to crash first.
TL;DR
China hit back at the U.S. with new trade restrictions after the Pentagon expanded its military blacklist.
10 American suppliers, including rare earth miners MP Materials and USA Rare Earth, got barred from China-sourced dual-use goods.
A separate move blocked 46 U.S. firms, mostly defense contractors, from Chinese government contracts.
The Pentagon's blacklist now includes giants like Alibaba, Baidu, and BYD.
Washington is reportedly delaying blacklisting DeepSeek, CXMT, and 100+ others to avoid escalation.
All of this lands less than a month after Trump and Xi shook hands on "better ties." Awkward.