The Photo That Should Worry Washington

Last week, Chinese President Xi Jinping, Russian President Vladimir Putin, and Indian Prime Minister Narendra Modi were photographed together at the Shanghai Cooperation Organisation (SCO) summit. It was Modi’s first trip to China in seven years, and the two leaders struck a notably cooperative tone: Xi urged China and India to be partners, not rivals, and Modi said there was an “atmosphere of peace and stability" between the two countries. 

The meeting came just days after Trump’s new tariffs on India took effect, hiking duties on some exports to 50% in retaliation for India’s continued purchases of Russian oil.

Later in the week, China staged a military parade to commemorate the 80th anniversary of the end of World War II. Xi stood side by side with Putin as they watched the display.

Energy has always been the currency of power, and at this summit it was the central economic story.

For decades, the U.S. wielded “oil diplomacy,” securing alliances and influence by guaranteeing energy supplies. That strategy hasn’t disappeared — it’s just no longer America’s to run. 

Today, China and Russia are executing the same playbook more effectively. China now produces twice as much energy as the U.S., while India and Russia hold the third and fourth spots. Moscow is winning loyalty by selling discounted oil and gas, and Beijing is expanding its influence through massive investments in renewable energy.

Beijing already produces over 80% of the world’s solar panels, wind turbines, and storage batteries — and it’s using that dominance to build energy infrastructure across Asia. This year alone, China has poured a record $10 billion into overseas clean energy projects under the Belt and Road Initiative.

Yet, hydrocarbons remain a cornerstone of global energy supply. At the summit, China and Russia agreed on a new pipeline that could send up to 50 billion cubic meters of gas to China annually, and last year, India became the largest buyer of Russian oil.

The SCO summit marked a turning point, showcasing how oil, gas, and renewables are stitching a new network of alliances … while Washington stands on the sidelines.

If I typed into ChatGPT: How can I elegantly undermine America’s supremacy and prosperity for the next 10, 20, 30 years based on the actions of the next 3 ½ years and make them very difficult to reverse? I don’t think it could come up with a better strategy than RFK Jr. bringing back measles and rubella for a reunion tour, having Peter Navarro come up with an economic plan for tariffs, and then having Trump with his sycophant Rubio decide, yeah, let’s alienate all of our allies. 

What we don’t realize are the second-order effects here. Taiwan should be scared sh*tless about that photograph of Modi, Putin, and Xi because one of the things that kept Taiwan safe is that China had to allocate a lot of its military resources to its borders with Russia and India. Now, they can focus more military resources in the south should they decide to invade Taiwan.

What’s so upsetting about this is it didn’t need to be this way.

The fate of the U.S. stock market has never rested on fewer shoulders. The S&P 500’s 10 largest companies, Nvidia, Microsoft, Apple, Amazon, Alphabet, Meta, Broadcom, Tesla, Berkshire Hathaway, and JPMorgan Chase, make up a record 40% of the index’s value. Between 1880 and 2010, the top 10 stocks comprised an average of 24% of the index.

Investors are now worrying that the market’s dependence on a handful of mega-cap stocks could leave it exposed to a prolonged downturn.

The largest stocks are growing more than 4x faster than the rest of the market. In Q2, the Magnificent Seven posted 27% year-over-year earnings growth, compared with just 6% for the other 493 companies. 

That momentum explains why they’ve powered more than 50% of the S&P’s gains since the market bottomed in April.

That growth — fueled by record AI spending — isn’t lifting all boats. It’s concentrating wealth among the few who own most of the market: the ultrawealthy. The richest 10% of Americans control 87% of U.S. stocks, meaning the gains flow almost entirely to them.

As a result, both the economy and the markets are increasingly tethered to the fortunes of the top 10%.

Our prosperity is balancing on a single leg of the stool: a handful of companies, and a handful of households. 

As prosperity concentrates in the hands of a minority, the majority are getting left behind. The consequences are profound: The American Dream — the belief that hard work leads to getting ahead — is eroding. A new Wall Street Journal–NORC poll found that nearly 70% say the American Dream no longer holds true, the highest level of skepticism since the Great Recession.

Nassim Taleb wrote the book Antifragile: Things That Gain from Disorder. He explained that some industries are robust, or antifragile. The fast-food industry is robust. Any one fast-food company could go out of business, and you could still get your Chipotle or your Cava. 

Our economy is becoming less and less robust, as it’s becoming way too concentrated, not only on a small number of stocks, but quite frankly, on AI. AI has become the litmus test for what the market is gonna do. 

I had dinner with a friend from Apollo, and he said, built into valuations of these AI companies is an assumption that they will be able to cut costs or grow their revenues through the use of AI by $1 trillion in the next 24 to 36 months. I don’t see how AI is gonna create a trillion dollars in new revenues for these companies, but I can see how it might cut $1 trillion in expenses.

In order for these valuations to be justified, one of two things needs to happen. Either the valuations need to come down, or these technologies need to show a trillion dollars in efficiencies across their client base. Assuming an average wage of $100,000, that’s a destruction of 10 million jobs.

So we’re either going to see a massive destruction in the value of these companies, which will infect all U.S. stocks and entire global markets. Or, we’re going to see a fairly massive destruction, short term, in employment across certain industries.

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The Trump family’s crypto empire just added another token to its collection — and this one came with a $500 million payday. Last week, World Liberty Financial, a crypto venture tied to the Trumps, launched its flagship token, WLFI. The token briefly spiked 300% before plunging 48% in 24 hours. But the market flop didn’t stop the Trumps from cashing out.

The family reportedly controls ~20 billion WLFI tokens, giving them about $5 billion in paper wealth at current prices (with most tokens still locked). But the real money came from an elaborate financing loop: WLFI raised $750 million from outside investors via ALT5 Sigma — a crypto treasury firm led by a Trump insider — and then used that cash to buy its own token. The end result? Trump-linked entities pocketed $500 million from selling tokens to themselves with other people’s money.

That’s not all. Eric and Don Jr. also took American Bitcoin, their crypto mining firm, public last week via a reverse merger — retaining 98% control. Add that to holdings in $TRUMP coin, $MELANIA, and NFTs, and crypto now makes up 73% of Trump’s $16 billion net worth.

Call it genius or call it grift — either way, the Trump name keeps turning attention into cash.

The people who claimed to be draining the swamp are now the ones swimming in it. The brilliance, if you want to call it that, of the WLFI token and the broader Trump crypto ecosystem is that it is all so convoluted no one can follow it. The wallets are anonymous. The token lockups are unclear. The transactions are circular. Even reporters are left saying, we think this is what happened, but we cannot be sure. That is exactly the point.

When everything is murky, you can deny. You can say, that was not our wallet, or we have not sold anything — even if hundreds of millions have already moved through affiliated entities. Retail investors lose, and the grift moves on. 

Google stock soared 12% last week on news that the company will get to keep Chrome, its most valuable asset. U.S. District Judge Amit Mehta’s order follows his ruling last year that Google illegally monopolized the search market for more than a decade. 

Google must share parts of its search index and user data with rivals and end exclusive contracts with Apple, Samsung, and others — but it can still pay to be the default on their devices. In other words, the deals can continue.

That’s a huge relief not only for Google but also for Apple, which pockets $20 billion a year from Google to remain the iPhone’s default search engine. Those payments made up 21% of Apple’s Services revenue last year. Apple’s stock rose nearly 4% on the ruling.

In sum … not much will change in the world of search.

The remedy of this quote, unquote monopoly finding was to slap Google on the wrist. It’s as if my 15-year-old came home and I found out that he’d been doing meth and knocking over 7-Eleven stores and I said, that’s it, we’re punishing you. You can’t be on Snap for the next 10 minutes.

For more on the Google antitrust ruling, watch Ed’s interview with Jonathan Kanter, former assistant attorney general for the Antitrust Division of the DOJ.

The Prof G team hit the U.S. Open last week (photographic proof below). Beyond Naomi Osaka’s bedazzled outfit and $100 caviar-topped chicken nuggets, what stood out was the scramble for the Honey Deuce — the tournament’s signature melon-ball cocktail. It would not be a stretch to suggest that the drink has helped push average ticket prices up more than 70% since 2019. 

A decade ago, young people throwing bows for access to alcohol wouldn’t have warranted analysis. Now it does. Today, only 50% of 18- to 34-year-olds now say they drink — down from over 70% in the early 2000s. 

Alcohol companies are suffering — Diageo, Constellation Brands, Anheuser-Busch InBev, Coors, and the Boston Beer Company are collectively down 12% over the past three years. The S&P 500 has risen 66% over the same time period. 

The U.S. Open has become one of the few annual rituals where New York’s tony young professionals trade cold plunges and marathon training for vodka and Chambord.

The U.S. Open and its Honey Deuces prove that, in 2025, alcohol is most compelling in the context of an occasion, not habit. The most effective marketing isn’t “drink more,” it’s “don’t miss the moment.” For alcohol brands, that means securing access to a live event, and offering a signature beverage designed to create an Instagrammable experience.

We’re piloting a new podcast, hosted by Alice Han and James Kynge. Together they explore the forces shaping modern China — from the economy and business to technology, politics, society, and national security. Give it a listen here.