Starbucks’ China Reboot

CNBC says nearly 30 private-equity shops are sniffing around Starbucks’ China arm. They’d scoop up roughly 70%, valuing the business anywhere from $5 billion to a frothy $10 billion, while Starbucks keeps a “meaningful” 30% stake.

Quick Pour

• Bidders in line: Centurium (Luckin backer), Hillhouse, Carlyle, KKR.

• Footprint: ~7,700 cafés—Starbucks’ biggest market after the U.S.

• Same-store sales: Flat in Q1 after four straight quarterly drops.

• Market share: 14% in 2024 vs. 34% in 2019—local rivals are gulping it down.

McDonald’s sold 52% of its China ops for $2.1 billion in 2017, kept skin in the game, and let a JV handle menus and real estate. Starbucks appears to want that “asset-light, local-fast” formula—just scaled for premium coffee.

TD Cowen calls the $10B whisper “a latte too frothy,” tagging fair value at $5–7B unless a buyer turbo-charges openings to ~15% CAGR and squeezes margins back toward 20%.

Pentagon Throws $400M at MP Materials

America just put real money where its mouth is on critical minerals. The Department of Defense is plunking $400 million into MP Materials—America’s lone rare-earth miner—via convertible preferred stock, instantly becoming MP’s biggest shareholder (≈15%). In return, MP will build a “10X” magnet plant and lock the Pentagon into a decade-long, $110/kg price floor and 100% magnet offtake.

New facility will crank out 10,000 MT/yr of NdFeB magnets by 2028—enough for jets, subs, and a boatload of EV motors. JPMorgan + Goldman are fronting $1 B in debt to get it built.

DoD guarantees every magnet has a buyer and pins NdPr at $110/kg for 10 years. That insulates MP’s cash flow from commodity whiplash.

China still mines ~70 % and processes ~90 % of the world’s rare earths, giving Beijing a chokehold on everything from F-35s to Teslas. After China flirted with export curbs during tariff skirmishes, Washington’s patience snapped. The Pentagon’s equity + price-floor combo basically says: We’ll pay up now so we’re not hostage later. 

Analysts are calling the structure “transformational”—guaranteed demand plus floor pricing derisks MP’s Stage II separation ramp and juiced-up magnet output. Even after Thursday’s pop, bulls see room: the DoD stake signals Uncle Sam may bankroll more of the value chain, from ore to rotor. Bears point to execution risk (permit gridlock isn’t going away), but the incentive math just changed.

NUMBER OF THE WEEK: $200M FOR ONE AI ENGINEER

Mark Zuckerberg just wrote a check that would make an NBA general manager blush. Bloomberg reports he lured Ruoming Pang—Apple’s former head of AI models—over to Meta with a compensation package north of 200 million dollars spread over several years. Apple didn’t even try to match it, which makes sense when you realize Pang’s potential haul would eclipse Tim Cook’s pay and much of the Fortune 500’s C-suite.

Zuckerberg’s willing to pay that premium because Meta’s frustrated with playing catch-up on artificial intelligence. He’s building a “super-intelligence” team from scratch and, one by one, is prying loose crown-jewel researchers from rivals. The perks are dazzling: healthy cash, fat signing bonuses, and stock grants that balloon if Meta’s share price keeps climbing. Some recruits have reportedly been dangled up-front bonuses as high as $100 million—a figure OpenAI’s Sam Altman actually called out on a podcast last month.

This week Meta also quietly spent about $3.5 billion to grab almost 3% of EssilorLuxottica, the Ray-Ban and Oakley parent. That investment deepens a partnership to pump out AI-powered smart glasses so Meta can control the hardware channel instead of relying forever on somebody else’s phone.

GOOGLE IN, OPENAI OUT: WINDSURF

Remember that $3 billion headline about OpenAI scooping up Windsurf, the outfit behind Codeium? It’s officially dead. The talks fizzled when Microsoft—OpenAI’s mega-backer—balked at how the IP would be shared, and the exclusivity window quietly expired. Google pounced. Late Friday it agreed to pay roughly $2.4 billion to license some of Windsurf’s tech and, more importantly, to hire CEO Varun Mohan, co-founder Douglas Chen, and a slice of the R&D brain-trust straight into DeepMind. Windsurf keeps operating as a standalone company; Google gets a non-exclusive license but no equity.

Inside Google the new arrivals will work on “agentic coding,” folding their tools into Gemini’s bid to write and refactor code without babysitting. It’s classic Silicon Valley acquihire theater: pay up for the people, hand the investors some liquidity, dodge the antitrust spotlight that comes with a full buyout, and move on. The method isn’t new—Google did something similar with Character.AI last year, and Microsoft’s deal for Inflection AI followed the same script—but the price tag underscores how rabid the talent war has become.

For OpenAI, it’s a miss at a delicate moment. The company is racing GitHub Copilot, Gemini Code Assist, and Amazon’s Q to dominate AI-powered software development, yet Microsoft’s contractual claws mean any future deal must thread a tight IP needle. Meanwhile Meta, Anthropic, and now Google are writing blank checks to lock up top researchers, leaving every founder in the space with at least one “call us before you sign” DM.

So Windsurf lives on—minus its founder—but its best tricks now have front-row seats inside Google’s labs. The next time Gemini autocompletes half your pull request, remember: it might be Windsurf under the hood, and a tug-of-war in Mountain View is the reason why.

F1’s Off-Track Drama Is Suddenly Louder Than the Engines

Formula 1 hasn’t turned a wheel in anger this week, yet the sport is buzzing. First, Apple—still riding the momentum of its Brad Pitt hit F1: The Movie (nearly $300 million in box office after ten days)—has opened talks to nab the U.S. broadcast rights when ESPN’s deal lapses next year. If Cupertino writes the check, every Grand Prix from Austin to Abu Dhabi could end up on the same platform that already owns Friday-night baseball and MLS.

That blockbuster is also a surprise marketing coup for Expensify. The expense-software outfit paid to plaster its logo over Pitt’s fictional APX GP car, the pit wall, even the hero’s race suit. Viewers who came for the downforce left wondering, “Wait—what’s Expensify?” The company swears the cameo is delivering fresh sales leads, but it’s a high-stakes bet: spend like a title sponsor without a real-world podium to show for it.

Meanwhile, real paddock politics just eclipsed Hollywood fiction. Red Bull stunned everyone by dismissing Christian Horner after two decades and eight drivers’ championships. Racing Bulls boss Laurent Mekies steps up, and the gossip mill immediately shifted to Max Verstappen’s future: does a new boss keep the champ in red and blue, or open a lane to Mercedes? For now, Verstappen’s camp is “waiting for an explanation,” and the timing—mid-season, days after Silverstone—has only deepened the mystery.

Strap in—the formation lap for 2026 is already underway.

Musk World: One Empire, Two Very Different Stories

This week, SpaceX kicked off a new insider share sale that would value the company at around $400 billion—up $50 billion since December. Investors seem willing to pay the premium: Starlink has hit 6 million subscribers, the Pentagon continues to book Falcon 9 launches, and budget fights at the top won’t likely slow down NASA’s moon contracts. On top of that, SpaceX has reportedly committed $2 billion of its own cash to xAI, giving it a sizable equity stake in Elon Musk’s two-year-old AI startup and tightening the connection between Starlink data, in-house chips, and large-model training.

Meanwhile, xAI is eyeing a $170–200 billion valuation in its next funding round—10 times what investors paid just over a year ago. The main pitch is Grok 4, a new model that recently topped research benchmarks like Humanity’s Last Exam and ARC-AGI-2, beating out Google’s Gemini 2.5 Pro and OpenAI’s latest o3 release. It’s also available in a $300-a-month “Heavy” tier. That said, Grok also spent part of the week generating antisemitic content and quoting Musk tweets as gospel, which led moderators to take it offline. Still, the Saudi PIF is reportedly showing interest in the round.

Also this week, Linda Yaccarino resigned as CEO of X, just two days after Grok’s meltdown—ending a two-year run trying to win advertisers back to the platform. Her thank-you note was polite, but market read it as: “I’m done putting out fires I didn’t start.”

As for Tesla, it’s still a lightning rod in the public markets. The stock is down about 35% from last year’s highs—not because investors doubt Musk or Tesla’s future, but because Musk’s “America Party” talk and ongoing feud with Donald Trump have added new political risk to an already competitive market, along with chatter about his positioning inside the company. Still, Tesla’s margin profile, FSD data lead, and upcoming Model Y launch in India keep a floor under the story.

Autonomy, American-style, just hit the gas. 

Autonomy keeps rolling out of the lab and into real streets. Waymo just opened its service to Phoenix teenagers—14- to 17-year-olds can now hail a driverless ride on their own while mom and dad watch the trip live in the app. The company’s Chrysler Pacificas and Jaguar I-Paces are also popping up far from the desert: mapping runs are under way in both New York City and Philadelphia as Waymo scouts its next full commercial zones.

On the other side of the autonomy rivalry, Tesla is hustling to turn its Austin pilot into something that looks like a network. Elon Musk says the geofence around the Texas capital widens this weekend, and he’s already talking up San Francisco Bay Area service “in a month or two”—if regulators bite. To grease the skids elsewhere, Tesla has asked Arizona’s DOT to certify its robotaxis for the Phoenix metro, putting the carmaker on a collision course with Waymo in the desert that’s been the industry’s favorite proving ground.

The road map has now stretched well beyond U.S. borders: Tesla opens its first showroom in Mumbai, India on July 15 and expects to hand over imported Model Y SUVs by late August. India isn’t getting robotaxis—yet—but it will give the company a fresh pool of data, a foothold in the world’s 3rd-largest auto market.

Elon Musk also confirmed that Grok 4—xAI’s newly released model that just topped several industry benchmarks—will ship as an in-car voice assistant “next week at the latest.”

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Earnings season lift-off

Delta Air Lines beat expectations with $2.10 in Q2 EPS and, more importantly, did something investors have been waiting on all year: it reinstated full-year guidance. The company now expects $5.25–$6.25 in earnings and up to $4 billion in free cash flow—after pulling the outlook earlier this year during the spring tariff uncertainty. Management also pointed to stronger September bookings, a rebound in trans-Atlantic demand, and an industry finally cutting back capacity enough for domestic pricing to start recovering. Bookings have stabilized, premium cabin demand is still up 5% from last year, and Amex co-brand revenue is on track to hit $8 billion.

That reset matters beyond airlines—it sets the tone for the rest of earnings season. With consumer confidence still shaky and forecasting tough, Wall Street will be watching to see if other companies feel confident enough to follow Delta’s lead and start giving guidance again. Those that stay quiet—or guide lower—could end up looking hesitant compared to Delta’s “we’re back” signal.

Now the baton passes to Wall Street’s other traffic controllers: the big banks. JPMorgan, Citigroup, and Wells Fargo report Tuesday, followed by Bank of America, Goldman Sachs, and Morgan Stanley on Wednesday.

Traders are coming off a stretch of tariff-driven volatility that sparked record single-day Treasury volumes and a projected double-digit boost in markets revenue. JPMorgan is expected to pull in around $5.2 billion from FICC alone, while Goldman is eyeing a $3.7 billion equity-trading quarter. Executives will likely face questions about whether those gains are sustainable—and how they plan to deploy as much as $70 billion in capital that could be freed up if Washington eases leverage rules.

Week Ahead:

Big banks lead off earnings in a market still digesting tariff headlines and inflation risk. JPMorgan, Citi, and Wells Fargo kick things off Tuesday, followed by Goldman Sachs, Bank of America, and Morgan Stanley midweek.

On the data side, all eyes are on June CPI (Tues), PPI and Industrial Production (Wed), and Retail Sales (Thurs) for signs of inflation pressure. With the Fed’s next meeting set to wrap on July 30, this week’s prints could tilt sentiment on rate cuts—especially after Goolsbee flagged tariffs as a new inflation wildcard.

Internationally, China drops its Q2 GDP and retail sales data Tuesday, the UK and EZ report inflation midweek, and Japan wraps it with CPI on Friday.

Markets are likely to stay defensive as companies start to guide Q3 under the shadow of higher input costs and trade uncertainty. Look for management commentary to echo concerns already raised by Helen of Troy, ConAgra, and Levi’s on margin pressure from tariffs.

Investors will also be watching for any more moves from the White House after last week’s 30% tariff warning on EU and Mexico. With the deadline just two weeks away, the clock is ticking.

Should be an interesting week. I’ll be tracking it all on X (formerly Twitter): @wallstengine.