What’s going on here?

Elon Musk’s SpaceX is reportedly going all-in on… Elon Musk’s AI startup. The rocket-fueled firm is set to invest $2 billion into xAI – maker of the Grok chatbot.

What does this mean?

This fundraising effort will pull xAI even deeper into Musk’s orbit. It’s already merged with his social media platform X, and the tech is expected to show up across Musk’s various endeavors – in Tesla dashboards, Starlink satellites, and even humanoid robots. Using a more-established moneymaker to feed a cash-hungry newcomer is a vintage play for the CEO. Problem is, while SpaceX may be flying high right now, it’s pouring oodles of cash into Starship: a mega-rocket that mostly specializes in blowing up.

Why should I care?

For markets: SpaceX is taking “burn rate” literally.

Musk is clearly using SpaceX as a piggy bank for his other tech bets. To be fair, the private juggernaut does boast a $400 billion valuation and holds $3 billion in cash reserves. But with each exploding Starship, Musk’s play becomes riskier – for all firms involved. (Technically, the CEO is hitching his most successful business to a second-rate chatbot with a penchant for posting offensive content.) If the gamble pays off, though, Musk will own both the rocket and the AI riding on it – and that has some out-of-this-world potential.

Zooming out: Riding the money-go-round.

SpaceX funds xAI. Tesla uses Grok. xAI buys Tesla’s energy storage products. And it all happens without shareholder votes or earnings calls. This kind of connect-the-dots isn’t something that public companies can pull off very easily. But it’s a different ballgame when one person runs the show. At a time when lending is tough to come by and regulatory scrutiny is high, Musk’s closed-loop strategy might be on point.

What’s going on here?

The European Union’s relationship with the US is on the rocks, so it’s chatting up new (trade) partners – and bracing for a messy breakup.

What does this mean?

The US is threatening to slap a 30% tariff on European imports next month, unless the two regions can patch things up before then. But Europe’s policymakers won’t be taking it lying down. They’ve already hit pause on $24.5 billion worth of US goods by implementing retaliatory tariffs, and there’s a much tougher $84 billion list at the ready in case talks fall apart. The EU’s exploring its options in the meantime, deepening ties with other tariff-hit economies like Canada and Japan, as well as chasing new connections with India and Indonesia. But not everyone’s on the same page. Germany’s pushing to work things out with the US – and you can see why. Experts are warning that eurozone output could dip 1.2% by 2027 if the tariffs land, with carmakers, metals, and luxury goods hit the hardest.

Why should I care?

For markets: Cue the breakup songs.

Europe’s earnings have been rocky as it is – even before any potential new tariffs. Profit forecasts for the Stoxx 600 index have said goodbye to growth and hello to shrinkage, especially in the consumer goods, energy, and financial sectors. And the stronger euro isn’t helping matters: it’s making European exports pricier at the same time as global demand is weakening. Safe to say that investors are bracing for a letdown.

Zooming in: Get your tub of ice cream ready.

If a full-blown tariff hit plunges Europe’s fragile economy into a slowdown, the European Central Bank could be forced to cut interest rates again. See, even with tariffs pushing some prices up, economists think that the resulting weaker demand would drag the economy down overall – and inflation with it. That’s why some are now expecting interest rates to fall to 1% next year from 2% today.