The Weekly BluRB — October 13th, 2025

It’s Midterm Season at Cal, and the Economy is more Uncertain than our Grades

Intro:

Welcome to the Weekly BluRB, a newsletter catered to students and professionals to get the latest news and insights on global markets. Get prepared for the week by reading four weekly stories circulating around equity markets, macro trends, geopolitics, and new business developments. And the best part: we’ll give you an informed view about where we think prices, policy, and trends are going in the near future. The content in these writings is for informational purposes only and does not constitute financial or investing advice.

US Equities: A Wild Week for the Markets — By: Henry Wang

Trump Bombshell

Things were going fairly well, and it seemed like the two largest superpowers in the world were getting along. Both sides were compromising, and tariff threats were being reduced rapidly. But this Friday, President Trump declared that starting November 1, the U.S. will impose a 100% tariff on Chinese imports (in addition to existing tariffs). He framed it as a response to China’s export restrictions on rare earths and critical materials. Markets panicked. The S&P 500 took a hit, with reports of a 2.7% drop on the announcement.

Figure 1: US Stocks Plunge on Trump’s latest Tariff Threat

Volatility and fear roared back. The VIX jumped sharply up 31.83%, reaching its highest level since June, as investors scrambled to price in policy risk and global instability. Meanwhile, bond markets moved in the “flight-to-safety” playbook. Treasuries rallied (i.e. bond prices rose, yields fell), pushing yields across maturities to their lowest levels in weeks. The 10-year yield dipped down toward ~4.06%, as investors rushed into the risk-off Treasuries to escape equity risk. 

Adding Fuel to the Fire

The shutdown amplifies the unknowns already baked into markets from tariff risk. With government data pipelines paused, investors are “flying blind”, relying on private surveys, incomplete indicators, and company filings. Each delayed jobs report or inflation print injects more guesswork into the system, pushing traders to overreact and become ever more sensitive to even minor headlines. Tariffs affect both inflation and growth; however, without adequate trade or price data, investors can’t quantify the net impact. Consequently, markets begin to price in sentiment rather than fundamentals, with speculation replacing analysis. Suppose a resolution is not met quickly in Congress, and tariff uncertainty continues to persist. In that case, market efficiency will be substantially eroded, causing higher volatility, wider bid-ask spreads, and distorted asset valuations as prices increasingly depend on emotions and rumor rather than hard data.

AI Valuations: XAI, OpenAI & the $500B Question

In recent days, OpenAI reportedly closed a share transaction, implicitly valuing it at $500 billion. That valuation rippled across AI-adjacent names, giving fresh wind to the tech rally despite the macro headwinds.

Elon Musk’s AI venture xAI is reportedly securing a $20 billion funding package, structured through a special-purpose vehicle to purchase and lease Nvidia GPUs to the company. The financing, which supports the build-out of xAI’s massive “Colossus 2” data center, underscores how the global scramble for computing power is reshaping AI economics — where access to chips now matters as much as algorithms. The Colossus 2 facility, located near Memphis, is designed to house upwards of 200,000 NVIDIA GPUs, powered partly by on-site natural gas turbines to offset regional grid limitations. Musk’s deal blurs the line between fundraising and infrastructure financing, signaling that in today’s AI arms race, the winners will be defined not just by intelligence but by hardware. This comes as the success of modern AI systems increasingly depends more on who controls the infrastructure rather than the most intelligent algorithms. In essence, the intelligence (the AI models) can only advance as fast as the hardware (the computer) allows, rendering hardware supremacy the new foundation of AI leadership.

TLDR: Markets were thrown into chaos this week as Trump’s surprise 100% tariff on Chinese imports reignited trade-war fears, sending the VIX surging and investors fleeing into Treasuries. The ongoing government shutdown deepened uncertainty, while in tech, OpenAI’s $500B valuation and Musk’s $20B xAI raise reminded everyone that the AI race is still running full speed.

Global Macro: Can’t we all just be Friends? — By: Faith Spalding

China: Tariff Tensions (How many times have we written this phrase?)

Beijing is retaliating. As we reported above, tensions seemed to be de-escalating between the US and China. Instead, it seems that US tariff antics have “poked the bear” for simply too long. Last Thursday, China tightened export controls for rare minerals ahead of an expected meeting between Chinese President Xi Jinping and President Trump. Chinese Ministry of Commerce “Notice 2025 No. 61” increases export controls for five rare earth metals: holmium, erbium, thulium, europium and ytterbium. The mandate doesn’t just extend to rare metals and magnets; it applies to devices that incorporate the materials, as well as refinement tools themselves. Following Xi’s firm stance, President Trump immediately responded with a threat of 100% tariffs on all Chinese exports last Friday.

But why all the drama?

China dominates the rare metals industry, accounting for roughly 70% of rare earth mining, 90% of separation and processing, and 93% of magnet manufacturing. Export restrictions were already placed on rare earth metals by the Chinese government in April, but last week’s notice has sent a number of industries scrambling. Under Beijing’s new policy, foreign companies would be required to obtain permission to export materials and magnets that contain any amount of rare earth metals. Rare metals are a crucial part of the semiconductor supply chain: from iPhones to datacenters, chips are an integral part of most major technologies.

 As reported by Bloomberg, these export curbs may lead to long delays in shipments for ASML Holding NV — one of the the only manufacturers that produces advanced semiconductors. These new measures also threaten the AI boom; AI datacenters have generated a non-stop demand for high-quality chips as big tech companies continue purchasing large amounts of premium semiconductors to maintain growth. According to the Wall Street Journal, former White House AI policy advisor Dean Ball posits that if the new rules are implemented aggressively enough, they could spark a recession in the US due the newfound importance of AI capital spending in the economy.

China has made itself clear: they’re not messing around. The Ministry of Commerce emphasized this in an online statement last Sunday, writing, “We do not want a tariff war but we are not afraid of one.” This weekend, President Trump attempted to reassure investors via Truth Social, “Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment.” While the President coined the new policy a “bad moment”, Beijing’s retaliation must be seen as far more consequential: China’s been hitting us where it hurts, and the blows aren’t just directed at rare metals exports. Since May, China has boycott investment in American soybeans, the largest US agricultural export. In 2024, China purchased over $12.6 billion worth of soybeans, and now these sales are pratically at net zero. American farmers are hurting, facing steep losses that could potentially lead to farm bankruptcies nationwide. The White House’s tariff strategy has ultimately reshaped the global trade system, without any return for average Americans. The global economy cannot behave normally as more and more risk is introduced into world markets. We should have thus anticipated high-level retaliation level from our rival superpower, and now, China doesn’t want to budge. While US markets and London’s benchmark FTSE edged higher Monday, indicating that President Trump’s statements may have softened the blow, the blame game continued throughout the weekend. With working-level talks held this Monday between Beijing and Washington, let’s hope that renewed tensions avoid halting months of trade negotiations.

India: Trade Talks Everywhere

This week, we’re not quite writing about a breakthrough between President Trump and Indian Prime Minister Narendra Modi. India has been paving paths for strategic partnership elsewhere, particularly in Europe. Last weekend, Prime Minister Narendra Modi and British Prime Minister Keir Starmer met in Mumbai to discuss July’s trade deal between the United Kingdom and India, hailing it as ‘”transformative”. The initial agreement between the two countries slashed tariffs on English gin and Scottish whisky exports to India, and on Indian food and spices shipped to England. According to the Associated Press, Prime Minister Starmer hailed the agreement as “the biggest and most economically significant trade deal” that Britain has made since Brexit. Further pledges from the two countries include pledges for investment in AI, aerospace, and dairy products. 

But India isn’t just focused on Britain; negotiations have been revamped on the Free Trade Agreement (FTA) between the EU and India. As tariff turbulence continues to rock the global economy, both sides seem determined to finally move forward with the deal after years of stagnancy. First spotlighted at the 2006 India-EU summit with negotiations the following year, the FTA covers an ambitious range of sustainable development, trade, and investment measures. Unfortunately, negotiations ultimately failed in 2013, (after 15 rounds), as Indian protectionism directly clashed with EU demands for increased open market access. 

Yet as the US has upended the global trade system with President Trump’s aggressive and wide-ranging tariffs, both India and the EU were spurred into action this February to revamp the landmark agreement. This time, forward-motion on the FTA has been comparatively aggressive; 13 talks this year alone preceeded negotiations in Brussels last week, and in February both European Commission President Ursula von der Leyen and Indian Prime Minister Modi publicly committed to concluding the FTA by year’s end. This comes at a crucial time for India after the country earned itself a massive 50% tariff penalty on most Indian exports to the US. Purchasing Russian crude oil may have been an ill-fated idea, but these massive levies threaten to increase India’s trade deficit and decrease GDP growth. 

One thing we’re all hoping for is tangible progress; talks between Washington and New Delhi are set to take place this week, and both sides are aiming to sign the first tranche of a long-delayed trade deal. To curb American concerns over Russian oil purchases, New Delhi plans to pledge to import US energy and gas. Hopefully, renewed momentum on all pending deals will work in India’s favor and finalize agreements with both Washington and the EU as soon as possible. This week, we’ll see if progress is off pause.

Story of the Week: AstraZeneca’s Manifest Destiny? — By: Lucy Cox

Last week was a big week for AstraZeneca, a Cambridge-based pharmaceutical and biotech company (that brought you one version of the Covid-19 vaccine). As part of a wider project to invest $50 billion into manufacturing and R&D in the United States, AstraZeneca announced this past Thursday they would be constructing a new manufacturing facility in Charlottesville, Virginia, totaling to a $4.5 billion investment. The Virginia plant is slated to develop and manufacture a litany of medicines and products, including those addressing weight management (an increasingly popular product for Americans), as well as metabolic and cancer technologies. The new facility is expected to bring an estimated 600 highly skilled jobs and around 3,000 construction related jobs to the area, providing a shot-in-the-arm to the Virginia job market and the wider American economy.

In addition to the new investments in building form, President Trump announced a historic agreement with AstraZeneca this past Friday to lower drug prices for Americans. This comes a week after President Trump struck a similar deal with Pfizer. Both agreements will force the companies to sell drugs to Medicaid recipients at a lower value similar to the price they sell them for in wealthy European countries (who sell these products at a price of about three times lower). The deal with AstraZeneca, Trump administration officials acknowledged, is a product of various tariff threats made by President Trump on imported drugs, which were in part made in order to achieve deals like this one, as well as increase overall investment in America by drug companies like AstraZeneca. The agreements with AstraZeneca and Pfizer exempt both companies from any tariffs imposed by the Trump administration for at least three years.

Figure 2: US Drug Prices Sky-High in International Comparison

These revelations highlight the company’s fracturing relationship with its home country and its growing affinity for the American market. As the most valuable listed firm in Britain, AstraZeneca has long been a crown jewel in the British economy. However, recent moves by Sir Pascal Soriot, the firm’s French-born Australian CEO, have indicated the company could be altering its national affiliations. He is reported to have been hosting private discussions about changing AstraZeneca’s primary listing to New York, along with making public statements regarding AstraZeneca being “a very American company” and that he needed to see “access and a reason to invest” coming from Britain. The investment announcements, private meetings, and public statements could all be a negotiating tactic in order to get better deals from the British government, especially on the prices their National Health Service pays for AstraZeneca drugs. But Soriot and AstraZeneca’s actions have aligned with a general distaste for the British market. For example, in 2021, Soriot picked Ireland over Britain for a £320 million factory, citing “discouraging” taxes in Britain.

While last week was a big news week for AstraZeneca in America, signs are pointing to even more involvement for the company in the United States, with less involvement in Britain. AstraZeneca employs more people in the United States than anywhere else, with the company predicting more than half of revenues coming from America by 2030. In addition to expanding their presence in American markets, expect the company to have increasing influence in American politics, as AstraZeneca joined the Pharmaceutical Research and Manufacturers of America (PhRMA), the largest drug lobby in America, in April 2025. With increasing investments in America and around the world, AstraZeneca has put Britain between a rock and a hard place. If it agrees to buy AstraZeneca’s drugs at higher prices, it risks putting further strain on an already-flailing NHS. But if they reject the requests, the British run the risk of driving out their most valuable company. For now, AstraZeneca is looking increasingly optimistic toward the US market.