Xi's busy week; US-China London talks; Rare earths; Huawei and Nvidia; Auto involution; Consumption

Summary of today’s Essential Eight:

1. Day one of US-China talks in London - The teams met for seven hours, and there are no reports of any deal yet. I expect any deal that come from this round of talks will include the US walking back the recent controls on exports related to COMAC’s commercial airplane program, the ones related to industrial commodities, including for ethane and nuclear-related goods and EDA software. Do not be surprised if the US team also agrees to give Nvidia permission to sell its forthcoming B40 chip into China. But given how much leverage the PRC has over rare earth-related exports, would those concessions from the Trump Administration be enough?

2. Some rare earth magnets exports resume - In an apparent amazing coincidence, soon after the Trump-Xi call the overburdened export controls bureaucrats were able to break through their massive backlog and issue licenses to US firms...The PRC has shown it can dial up or down rare earths-related export controls at its …