"I see your tariffs and raise you a rare earth metals shortage" ...

Start your day with the Opening Bell powered by The Water Coolest. The Water Coolest is the preferred bathroom stall reading material of finance professionals. Sign up for the free daily newsletter.

BOY THAT ESCALATED QUICKLY

Trade talks between the US and China are going about as well as discussions between Elon Musk and anyone caught ordering extra guac when the whole factory orders Chipotle on Tesla’s dime.

State-run media in the People’s Republic reported that Beijing may restrict the export of rare earth metals, the elemental equivalent of the McRib, to the US. The Communist *throws up in mouth a little bit* publication went so far as to say “don’t say I didn’t warn you.” 

For context, in the Chinese language, that phrase is typically reserved for officials to warn rivals that they are about to come at them like a spider monkey. Exhibit A: the threat was used in 1978 before China invaded Vietnam. Everybody. Remain. Calm. 

Why is this a big deal?

Oh, you mean besides China's not-so-subtle threats? Because the US relies on China for 80% of its rare earth metals which are used to manufacture everything from batteries and smartphones to fighter jets.

And markets noticed

It isn’t lost on the masters of the universe, and a lot of stupid people with Scottrade accounts, that China is about to escalate this trade war to DEFCON 1. Markets got pummelled on the news, recovering slightly over the course of the day, but the Dow still closed down more than 220 points.

And the 10-year Treasury note yield fell to 2.26% while the inversion between the 3-month Treasury bill and the 10-year note widened to its largest gap since the financial crisis. You may remember from 'Treasury Bills For Dummies' that a yield curve inversion could be a sign that a recession is on the way. 

China ready to hit back at U.S. with rare earths - newspapers [Reuters]

IN OTHER NEWS

- SoFi wants to spend its new funding on naming an NFL stadium [CNBC]

- Uber can now ban your sorry ass from its app [Bloomberg]

- Elon Musk needs someone to review his emails now too apparently [Bloomberg]

Related