Editor-in-Chief Atul Singh and FOI Senior Partner Glenn Carle, a retired CIA officer who now advises companies, governments and organizations on geopolitical risk, recap the most important developments of the month.

American stocks, economics and politics

Elon Musk’s much-hyped company SpaceX’s massive initial public offering (IPO) dominated the news for days. This IPO is not a marker of just success in business but captures how the market itself is eroding dramatically. Regulators rewrote rules to make exceptions for SpaceX. Elon Musk, the SpaceX CEO, is clearly proving that he can defy or bend the rules. The IPO is setting a precedent that may shift the free market from the public domain into a private affair for billionaires.

Global business leader Usama Malik compares SpaceX to other stocks on the markets: “At the offering’s $1.75 trillion floor, roughly 94 times trailing revenue. The most expensive stock in the S&P 500, Palantir, trades at 67 times sales. Meta went public, growing 88% a year at 28 times revenue; Google, growing 240%, went out at ten. Value SpaceX’s three segments at twice what their public rivals command — a deliberately ‘soft ball’ exercise — and you reach about $1 trillion. The remaining three-quarters of a trillion dollars rests on one device: a ‘total addressable market’ of $28.5 trillion, nearly the size of the entire US economy, of which $22.7 trillion is filed under ‘enterprise AI,’ about 30 times the size of the enterprise software market that actually exists.”

The SpaceX IPO shows that the US economy is increasingly reliant on technology and rich people, while consumer industries and poorer people are falling behind. The Financial Times reports that a data center boom is going on even as traditional consumer goods companies are struggling, hobbled by insurgent rivals and flat population growth.

Note that the surging stock market has boosted the upper class’s wealth. This is what Moody’s Analytics Chief Economist, Mark Zandi, told Bloomberg. Upper class spending has driven economic growth, which is vulnerable to a market crash. In contrast, the lower half of earners have barely seen wage growth for a year. Data shows that 37% of Americans could not cover an unexpected $400 expense from cash or savings, up from 32% in 2021.

Given such economic circumstances, it is unsurprising that leftwing challengers in New York ousted two House Democrats in the primary on June 23. This is a major victory for Mayor Zohran Mamdani and his faction of the party. Representative Dan Goldman lost in a landslide defeat to former New York city council member Brad Lander, who told supporters that their movement could “vanquish Trump’s fascism.” Meanwhile, Representative Adriano Espaillat narrowly lost to Darializa Avila Chevalier, a pro-Gaza activist who has not held any political office. State Legislator Claire Valdez, another Mamdani ally who rallied last week with him and Vermont Senator Bernie Sanders, easily won an open seat over Brooklyn’s borough president. At her victory party, Valdez called for “Solidarity forever, abolish ICE, free Palestine, organize your union and join [Democratic Socialists of America].”

Indian protests, Chinese pharmaceuticals and Norway considering rejoining EU

An Indian political movement that began as satire attracted thousands of supporters in a protest on June 20, reflecting real frustration among the country’s youth. Recent Boston University graduate Abhijeet Dipke started the Cockroach Janata Party (janata means people) after Indian Chief Justice Surya Kant compared young unemployed Indians to cockroaches. Anger swelled in May after a medical school entrance exam was voided over a leak, setting millions back in their careers. The New Delhi protesters were “disillusioned with the institutions of the republic itself” amid a tough job market and rising costs, per Scroll.

Even as India is embroiled in a hot mess, China’s spectacular ascendance in biotech is raising alarm bells among some Western lawmakers and investors. American drug manufacturer Eli Lilly entered into its latest agreement with Chinese drugmaker Haisco Pharmaceutical Group on June 1. The licensing deals have raised concerns that the US could rely too heavily on Chinese biotech firms, making the industry susceptible to weaponization in a future conflict between the superpowers. “Biotech is just the latest battleground,” one investor commented. China’s advantage in pharma is not unlike its dominant electric vehicle sector. According to ChinaTalk, “process expertise, cost efficiency, labor and talent, and deep integration into global supply chains” make Chinese biotech formidable.

On June 1, Norwegian Minister of Foreign Affairs Espen Barth Eide stated that Norway is reconsidering joining the EU. He cited a shift from a “benign world” to a “crazy world” as the reason. Norwegians voted twice, in 1972 and 1994, to remain separate from the bloc. However, the nation joined the single market, which makes it subject to EU trade agreements without any negotiating power.

Tariff wars with Washington and NATO’s growing divisions make EU membership more appealing per Eide. The EU would benefit from admitting Europe’s largest oil and gas producer. It is already looking to add new members: Iceland will hold a referendum in August, and nine other European countries are candidates, including Ukraine. The bloc opposes a British return, however.

American push for quantum computing

Back in the US, the Trump administration is investing $2 billion in nine quantum computing companies, a major bet on the nascent technology becoming commercially viable. In return, the US government will receive some equity, as it acts increasingly more like a sovereign wealth fund. The Wall Street Journal reports that the government recently backed a rare-earths magnet maker and a mining company. Quantum, like fusion power, self-driving cars and AI, is a technology that skeptics joke is 30 years off and always will be. But like those industries — especially AI — it looks to have turned a corner, with the remaining obstacles being ones of scale and engineering rather than theoretical breakthroughs.

State capitalism seems to be taking root in the US. Refilling America’s dwindling cache of munitions took center stage at the White House as US President Donald Trump gathered defense companies to talk about juicing production. On June 22, Trump said, “We’re really in a big strong economic push to do the weapons” and added that auto companies with “excess capacity” would help produce missiles.

The meeting followed one from March with defense contractors and included similar participants. The Iran War has eroded stockpiles of expensive weapons that take months to assemble. The Pentagon declined to provide details about the meeting itself, but the Pentagon’s chief spokesman, Richard Sean Parnell, stated that the military “has everything it needs to execute at the time and place of the President’s choosing.” Meanwhile, Congress sought to bar defense contractors from executing stock buybacks or paying dividends without Pentagon approval, an extension of a January executive order. This shows how the US is now tempering capitalism in the defence space, planting the seeds of a new system.

[Lee Thompson-Kolar edited this piece.]

The views expressed in this article/video are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.