U.S.-China Clash Over Tech

🌐 Export controls took center stage in U.S.-China trade talks, with both nations wrestling over access to rare-earth and advanced tech components.

June 09, 2025

Silver banana goes to





In this issue of the peel:

  • 📉 Lululemon tumbled 19.8% after slashing its full-year earnings forecast, citing cautious U.S. consumers, sluggish comps, and tariff-induced margin pressure.

  • 🌏 Japan’s economy shrank 0.2% in Q1, edging closer to recession, as weak capital expenditure and falling exports offset resilient domestic consumption.

  • 🌐 Export controls took center stage in U.S.-China trade talks, with both nations wrestling over access to rare-earth and advanced tech components.

Market Snapshot

Banana Bits

Is This Company the Tesla for Cars?

Most car factories like Ford or Tesla reportedly build one car per minute. Isn’t it time we do that for houses?

BOXABL believes they have the technology to disrupt a massive and outdated trillion dollar building construction market by bringing assembly line automation to the home industry.

Since securing its initial prototype order from SpaceX and a subsequent project order of 156 homes from the Department of Defense, BOXABL has made substantial strides in streamlining its manufacturing and order process. BOXABL is now delivering to developers and consumers. And they just reserved the ticker symbol BXBL on Nasdaq*

BOXABL has raised over $200M from over 50,000 investors since 2020. They recently achieved a significant milestone: raising over 50% of their Reg A+ funding limit! But the round is closing in June on all platforms, so it’s time to take action.

Disclosure: This is a paid advertisement for BOXABL’s Regulation A offering. Please read the offering circular here. This is a message from BOXABL

*Reserving a Nasdaq ticker does not guarantee a future listing on Nasdaq or indicate that BOXABL meets any of Nasdaq's listing criteria to do so.

Macro Monkey Says

U.S. and China Clash on Controls

In the latest round of U.S.-China trade discussions held in London, export controls have emerged as the primary focus, overshadowing traditional tariff debates. 

The United States is urging China to fulfill its previous commitments to expedite the export of rare-earth minerals, essential components in various high-tech industries. Conversely, China is advocating for the removal of U.S. restrictions on critical items, including jet engines and semiconductor manufacturing software.

This shift in focus underscores the strategic importance both nations place on controlling the flow of advanced technologies and materials. The U.S. has expressed concerns over China's delays in issuing export licenses for rare-earth products, which have prompted retaliatory measures, including the suspension of certain export licenses and warnings against Chinese firms such as Huawei. 

The inclusion of U.S. Commerce Secretary Howard Lutnick in the negotiations signals a willingness to engage in discussions over export controls. However, there remains skepticism about whether national security-related controls can be effectively leveraged for trade agreements. The outcome of these talks is poised to have significant implications for global supply chains, particularly in industries reliant on rare-earth minerals and advanced technologies. 

As the two countries work through the fine print, global markets are holding their breath—because these talks won’t just stay local; they’ll echo worldwide.

The Takeaway?

High-level U.S.-China trade talks in London are focusing on export controls, particularly those related to rare-earth minerals and advanced technologies. The U.S. aims to pressure China to expedite rare-earth exports, while China seeks the lifting of U.S. restrictions on items like jet engines and chip-making software. 

These negotiations are crucial as both nations navigate a complex web of economic and national security interests, with outcomes that could have a significant impact on global industries dependent on these vital resources.

Career Corner

Question

"How would you value a cow?".

I could DCF, precedents, and comps this, but how do you justify to the interviewer that you choose one methodology over another (or do you mention that you would use an array of valuation methodologies to produce a range)?

You could DCF a cow with beef as the terminal value and milk as the future cash flows, but how would you actually wrap up the answer cleanly to the interviewer?

Answer

Any of these answers will work; explain and weigh the pros and cons, and then pick one. The question is designed to test your thinking, and if you fumble with a slightly out-there question, not looking for one specific answer out of the three.

Additionally, it's a good opportunity to showcase a little personality and humor, given the prompt
 A way to differentiate yourself from other candidates is the way you talk about the methods, which can clue that you’re “in on the joke.”

There’s a trope about MF PE modeling that they get so granular, they perform DCFs to determine the amount of coffee offices should order. This type of question in the abstract has a similar flavor.

Head Mentor, WSO Academy

What's Ripe

QXO (QXO) 13.4%

  • QXO shares surged 13.4% on Friday after Wolfe Research initiated coverage with an “Outperform” rating and a bullish $44 price target, over 150% above the prior day’s close. 

  • Analyst Trevor Allinson praised QXO’s aggressive M&A strategy, especially its recent $11 billion acquisition of Beacon Roofing Supply. 

  • With ambitions to grow revenue from $10 billion to $50 billion and compound EBITDA at 35% annually, investors clearly took notice. 

NuScale Power Corp (SMR) 10.7% 

  • NuScale Power jumped 10.7% on Friday, after the U.S. Nuclear Regulatory Commission approved its new 77-megawatt small modular reactor design. This milestone enables NuScale to advance its plans to deliver zero-emission energy to an increasing number of industrial and AI-powered data center clients. 

  • Investors cheered the regulatory green light, seeing it as a major step toward revenue acceleration in the green energy infrastructure space. 

What's Rotten

Lululemon Athletica (LULU) 19.8%

  • Lululemon plunged 19.8% after slashing its full-year earnings forecast despite beating Q1 expectations. EPS landed at $2.60 vs. $2.58 expected, and revenue rose 7% to $2.37 billion, but net income slipped. 

  • CEO Calvin McDonald flagged cautious U.S. shoppers, and CFO Meghan Frank warned of tariff pressures that will drag full-year margins down 110bps. A mere 1% growth in comparable sales, dragged by a 2% Americas decline, sparked deeper investor concern.

Docusign (DOCU) 19.0%

  • DocuSign tumbled 18.9% following its Q1 earnings report, which showed slowing growth and tightening margins. While revenue grew 9% to $709.6 million—beating estimates—it wasn’t enough to offset muted billings guidance for Q2. Management pointed to a more “measured” enterprise spending environment and increased competition. 

  • With digital agreement trends normalizing post-COVID, investors are questioning whether DocuSign can reaccelerate growth without significant reinvestment or a strategic pivot. 

Thought Banana

Japan’s Economy on Thin Ice

Japan's economic landscape is showing signs of strain, with revised data indicating a 0.2% annualized contraction in Q1 2025. This marks a slight improvement from the previously estimated 0.7% decline, primarily due to better-than-expected private consumption figures, notably in the restaurant and gaming sectors. 

Despite this, the economy remains on shaky ground. External demand has been a significant drag, subtracting 0.8 percentage points from GDP, while capital expenditure has been revised down to 1.1% from 1.4%. These figures underscore the challenges Japan faces amid global economic headwinds.

Compounding these issues are the recent U.S. tariffs on Japanese exports, including automobiles, which have introduced additional uncertainty into the market. Bank of Japan Governor Kazuo Ueda has expressed confidence in the economy's resilience, citing strong corporate profits and a tight labor market as buffers. 

However, he also acknowledged that these tariffs could deter exports and investment, potentially impacting wage growth and inflation. 

As Japan understands these complexities, the central bank's upcoming policy decisions will be closely watched. While the current data may not prompt immediate action, the ongoing trade tensions and their potential impact on economic momentum could influence future monetary policy. Investors and policymakers alike will need to remain vigilant as the situation unfolds.

Japanese Exports - Twelve Months to April 2025

The Takeaway?

Japan's economy contracted by an annualized 0.2% in Q1 2025, a slight improvement from the initial estimate of a 0.7% decline, thanks to a modest uptick in private consumption. 

However, with external demand subtracting 0.8 percentage points from GDP and capital expenditure revised down to 1.1%, concerns about a technical recession loom. The Bank of Japan remains cautious, focusing on the potential impacts of U.S. tariffs and global economic uncertainties on future growth prospects.

The Big Question: Will the Bank of Japan stick to optimism, or are trade tensions about to force its hand?

Banana Brain Teaser

Previous

The present ratio of students to teachers at a certain school is 30:1. If the student enrollment were to be increased by 50 students and the number of teachers were to be increased by 5, the ratio of students to teachers would then be 25:1. What is the present number of teachers?

Answer: 15

Today

In order to complete a reading assignment on time, Terry planned to read 90 pages per day. However, she read only 75 pages per day at first, leaving 690 pages to be read during the last 6 days before the assignment was to be completed. How many days in all did Terry have to complete the assignment on time?

Send your guesses to [email protected]

❝

Diversification is protection against ignorance.

Warren Buffett

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Happy Investing,
Chris, Vyom, Ankit, Mithun, Colin & Patrick