China Just Broke A Trade Surplus Record

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Hello, readers – happy Tuesday! Today, we’ll be covering the Warner Bros. Succession episode, updates from Gaza, China’s record trade surplus, an quake in Japan, the costs of Trump’s tariffs, Jasmine Crockett’s Senate push, and Australia’s social media clampdown.

“My life amounts to no more than one drop in a limitless ocean. Yet what is any ocean, but a multitude of drops?” ― David Mitchell, Cloud Atlas

The War For Warner Bros.

Last Friday, Netflix bid $83 billion to purchase Warner Brothers Discovery. The merger would put the streaming giant in control of one of Hollywood’s biggest movie studios (which owns the movie rights to Harry Potter, the DC Universe, and other top franchises), as well as HBO Max, the second-biggest streaming service on the market (behind Netflix). The Netflix offer valued the company at $27.75 per share, and would spin off the media giant’s cable channels (CNN, TNT, Cartoon Network, and others) into a separate entity.

That offer has been met by pushback from two strange bedfellows. The first is Hollywood – the film industry is worried that Netflix will cut down Warner Bros’ theatrical releases at a time when movies are struggling to turn a profit, as the company has historically avoided massive movie rollouts. The second is antitrust groups – together, Netflix and HBO Max currently control one-third of today’s streaming market, and the two combining forces could give them disproportionate control over the growing industry. 

But all of those concerns were put on hold on Monday, when Larry Ellison’s Paramount Global put in its own offer for Warner Brothers Discovery. The Paramount deal circumvents the Warner Bros. board, instead offering stockholders $30 per share. The deal also won’t require the company to spin off its cable subsidiaries, meaning it’s worth $108 billion in total. Warner Bros. Discovery says it plans to respond to the Paramount offer within 10 days, but the board is likely sticking with the Netflix deal. Hostile takeovers like Paramount’s are relatively unheard of at this scale, meaning this should be fun to watch unfold over the next days and weeks.

A New Line In Gaza

Yesterday, IDF chief Eyal Zamir told Israeli soldiers that the “yellow line” currently dividing the Gaza Strip is Israel’s “new border” with the Palestinian enclave. “The ‘yellow line’ is a new border line, serving as a forward defensive line for our communities and a line of operational activity,” Zamir told Israeli soldiers in Gaza. “We have operational control over extensive parts of the Gaza Strip and we will remain on those defence lines.” His statements directly contradict the terms of the ceasefire agreement approved by Israel and Hamas in October, which states that “Israel will not occupy or annex Gaza.”

Speaking of that ceasefire agreement, Israeli Prime Minister Benjamin Netanyahu announced yesterday that his country is ready to move into the second phase of the peace process outlined in the plan. The first phase of the plan will (supposedly) be complete once Hamas hands over all of its Israeli hostages. Currently, the group is searching for the body of the final hostage, an Israeli police sergeant – once his body is discovered, Israel is supposed to withdraw its forces from Gaza and hand power over to a transitional government backed by an international peacekeeping force.

However, we’re far from that actually happening. Hamas has strongly resisted fully disarming and handing power to international forces, though a senior official has indicated that the group might be open to “freezing or storing” its weapons. It’s also unclear when that peacekeeping force might be established; Trump has stated that the U.S.’s phase two plans will be announced “pretty soon,” but Israeli officials’ next meeting with Washington is scheduled for December 29, meaning we likely won’t see any progress in Gaza until next year.

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That’s Yuan Big Trade Surplus

• For the first time ever, China’s trade surplus – the difference between its exports and imports – has surpassed $1 trillion. And that’s only taking into account the first 11 months of the year. According to data from November, Chinese exports are up 5.9% year-over-year, while imports rose 1.9% last month. Those numbers beat predictions from Western economists, who forecast that exports would rise 3.8% and imports would grow 3.0%.

• What prompted the record-breaking trade surplus? Trump’s tariffs. After the White House slapped steep tariffs on Chinese imports, Beijing quickly built up its exports to Europe, Australia, and Southeast Asia. Compared to last November, Chinese exports to the U.S. have dropped 29%, while exports to the E.U. and Australia have ballooned 14.8% and 35.8%, respectively. Exports that saw growth include rare earth minerals, electronic machinery, and semiconductors; imports are down in part due to the country’s ongoing property crisis, which has decreased demand for construction materials such as copper. 

• What does this all mean? It looks like the economies of China and the U.S. are slowly decreasing their reliance on one another and are instead turning to other markets like Europe and Asia to make up the difference. That could lead to knock-on effects in those economies as they adjust to the new reality.

Big Quake, Small Wave

• Last night, a magnitude 7.5 earthquake shook northeastern Japan, injuring over 20 people and sparking a small tsunami that reached a peak height of 70 centimeters. The earthquake’s epicenter was roughly 50 miles off the coast of Aomori prefecture in the Pacific Ocean. Evacuation orders were issued for roughly 90,000 people, but the orders were downgraded to advisories soon after the tremors. 

• Over 2,700 homes were left without power following the earthquake, though nuclear power plants in the area affected by the quake were luckily unaffected. While this quake – which was powerful enough to knock over heavy furniture – caused little major damage, authorities are warning that another even stronger earthquake might occur over the next few days. “Reconfirm your daily earthquake preparedness, such as ensuring that you secure furniture, and prepare to evacuate immediately if you feel shaking,” warned Japanese Prime Minister Sanae Takaichi.

More Mixed Nuts

• How Japan Built a Rare-Earth Supply Chain Without China (NYT, $)

• Ukraine prepares new peace plan as Zelensky rules out giving up land (BBC)

• The U.S. Gave Mexico a List of Russian Spies. Mexico Let Them Stay. (NYT, $) 

• 200,000 additional children under 5 will die this year — thanks to aid cuts (Vox) 

• Cambodia vows fierce fight against Thailand in escalating border conflict (AP)

• Powerful wave in Tenerife leaves four swimmers dead after being swept out of ocean pool (Guardian)

Trump Pays For His Tariffs

• How much have Trump’s tariffs cost the U.S. economy? It’s hard to give a real numerical answer to that question yet, but we got a sneak preview yesterday. During a White House press event yesterday, the president announced plans to roll out a $12 billion bailout for farmers impacted by his tariff-induced trade war with China. “We love our farmers,” Trump said. “And, as you know, the farmers like me.”

• So far this year, the U.S. has collected roughly $257 billion in tariff revenues – of that, $167 billion was generated by Trump’s second-term tariff policies. Meanwhile, according to a senior research economist at North Dakota State University, farmers will likely lose between $35 billion and $43 billion this fall thanks to two factors. First, buyers from China are purchasing crops from Brazilian and Argentine farmers in retaliation to Trump’s tariffs on China; second, the prices of goods needed to complete the harvest (tractor parts, fertilizer, etc) are rising due to Trump’s tariffs on imports from China. 

• “This assistance will clearly benefit some farmers now,” said Senator Amy Klobuchar, the top Democrat on the agriculture committee, “But a one-time payment is not a long-term fix — only restoring these markets can do that.”

Crockett Takes Off For The Senate

• Texas Democratic Rep. Jasmine Crockett is making a push for the Senate. Yesterday, Crockett announced her plans to run for the Senate seat currently held by Republican John Cornyn in next year’s midterm elections. Alongside Crockett’s announcement,  former Rep. Colin Allred (who was planning to campaign for Cornyn’s seat) announced that he would be ending his Senate campaign in favor of making a push for the House instead.

• Crockett is a prominent House Democrat, and has made a splash on social media for her straightforward speeches and willingness to clash with Republicans. In order to win the Senate seat, she’ll first need to defeat Democratic state Rep. James Talarico in Texas’ Democratic primary; if that happens, she’ll face off with the winner of the GOP primary in November. Although Texas Democrats haven’t won a single statewide race in Texas in over 30 years, Texas Republicans have already fired off a volley of shots at Crockett in order to get ahead of that November matchup – Texas Attorney General Ken Paxton (one of the GOP candidates) nicknamed her “Crazy Crockett,” while the incumbent Cornyn described her as “radical, theatrical and ineffective.”

More Nuts In America

• US park service to offer free entry on Trump’s birthday but revokes it for MLK Day and Juneteenth (Guardian)

• Trump to issue order creating national AI rule (Reuters)

• Bullets in Luigi Mangione’s bag convinced police that he was UnitedHealthcare CEO killing suspect (AP)

• FBI agents sue after being fired for kneeling during racial justice protest (NPR)

• US civic health rating downgraded after year of ‘restrictive‘ Trump actions (Guardian)

• A Frustrated Congress Pushes the Pentagon to Produce Its Boat Strike Orders (NYT, $)

Cracking Down In The Land Down Under

• Tomorrow, Australia is set to implement a world-first social media ban, which will see children under the age of 16 blocked from using all major social media platforms. The ban will affect teens on Facebook, Instagram, Kick, Reddit, Snapchat, Threads, TikTok, Twitch, X, and YouTube – each of those platforms has hundreds of thousands of under-16 users in Australia.

• The ban will force social media companies to figure out the bans themselves – they’ll have to deactivate younger users’ accounts with the help of age-predicting algorithms and age-verification services. However, kids will still be able to access platforms like YouTube or Reddit without their accounts. Regulators say this will shield them from algorithms and push notifications, some of the most addicting mechanisms deployed by social media platforms.

• Meanwhile, a recent study of over 8,300 U.S. children has suggested that social media use might lead to “increased inattention symptoms” in kids aged 10 to 14. “Our study suggests that it is specifically social media that affects children’s ability to concentrate,” said one of the study’s authors. “Social media entails constant distractions in the form of messages and notifications, and the mere thought of whether a message has arrived can act as a mental distraction. This affects the ability to stay focused and could explain the association.”

More Loose Nuts

• Dr. Oz Tells His Federal Employees to Eat Less (Wired, $)

• Japan is facing a dementia crisis – can technology help? (BBC) 

• A first look at Google’s Project Aura glasses built with Xreal (Verge)

• Don’t use ‘admin’: UK’s top 20 most-used passwords revealed as scams soar (Guardian) 

• The Biggest Snubs and Surprises of the 2026 Golden Globe Nominations (Vulture) 

• Rock star: Sasha DiGiulian on making history with a ‘crazy, audacious’ climb of El Capitán (Guardian)

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