"The Pulse" -- #125 / U.S. - China Relations

Recruiting Timeline:

Banking:

Where We’re At:

• SA 2027: No new updates here. 2 banks are actively recruiting for SA 2027

• FT 2026: D.C. Advisory opened its app this week. 66 firms are actively recruiting for FT 2026  

• If you need some interview support or just need a place to vent, check out our Coaching Program: Coaching for banking, consulting, and buyside recruiting | The Pulse. 95%+ of those coached for the summer 2026 recruiting season received offers!

New SA 2027 Applications:

• None

New FT 2026 Applications:

• D.C. Advisory: Boutique advisory (FT 2026)

See below to gain access to our premium database, updated weekly, which houses the application processes for over 300+ banks/consulting/buyside firms! Gain an edge over everyone else by not having to spend countless hours tracking applications and deadlines.

Consulting:

Where We’re At:

• This process is ~75% complete. Boutique firms will continue to release applications into the new year.

SA 2026 released apps:

• None

SA 2027 released apps:

• None

FT 2026 released apps:

• DIA Associates - Junior Analyst (FT 2026)

Buyside:

Where We’re At:

• SA 2027: Irvine Company opened its app this week. There are currently 8 buyside firms actively recruiting for SA 2027

New SA 2027 released apps:

• Irvine Company: L/S Equities (SA 2027)

The database is updated weekly and contains 300+ Investment Banking and Consulting internships/full-time positions along with:

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Market Update: 

U.S. - China Relations

Last week, there was some unexpected drama between the world’s two largest economies.

China’s Ministry of Commerce dropped something called Announcement No. 62 of 2025. Sounds boring, but it’s actually a huge deal. It basically says that from now on, any company that wants to export something from China that contains even a trace of rare earth minerals needs government approval, and they have to explain exactly what the materials will be used for.

Why’s that a big deal? Because these rare earths are the backbone of modern tech. They go into everything: iPhones, EV batteries, wind turbines, fighter jets, radar systems, and solar panels. China doesn’t just have the biggest supply, it dominates the global processing of these minerals, controlling roughly 70% of the world’s capacity. So when China tightens the tap, everyone from Silicon Valley to the Pentagon starts sweating.

The timing wasn’t random, either. This move landed right as trade tensions between China and the U.S. were cooling down a bit. Both sides agreed on a sort of truce back in May. But with this announcement, China wanted to remind everyone who really holds the supply chain power.

In response, Trump immediately threatened to slap a 100% tariff on Chinese imports and hinted at new export restrictions on key software that China depends on. Scott Bessent (the Treasury Secretary) had some strong words, saying China had “pointed a bazooka at the supply chains and the industrial base of the entire free world.” Meanwhile, the Chinese government accused the U.S. of overreacting and creating panic, insisting that legitimate civilian exports would still get approved.

China and the U.S. also added new port fees on each other’s ships this week, which was kind of the icing on the cake.

Following the drama, markets had pretty strong reactions:

• Chinese and Hong Kong markets tanked right after the announcement. The CSI 300 dropped about 1.8%, Shanghai’s main index fell 1.3%, and the Hang Seng lost around 3.5%. Chinese tech stocks were hit hardest, down more than 4%.

• U.S. markets dipped at first, with the S&P down 2.7% and the NASDAQ down 3.5% (investors hate uncertainty), but then bounced back when Trump slightly softened his tone a few days later. 

• Safe-haven assets like gold shot up to new record highs as investors looked for cover.

• And outside China, rare-earth and mining companies surged, especially in Australia and Canada, since investors suddenly realized non-Chinese producers might become way more valuable.

These mineral restrictions are essentially just creating a supply shock. Rare earths aren’t a major money-maker for China (less than 0.1% of its economy), but their strategic value is enormous. By controlling exports, China is basically holding a key that can slow or stop major parts of the global tech and defense industries.

President Xi Jinping and Trump are set to meet later this month, and these restrictions give China major leverage heading into those talks.

All of these moves have markets jittery and companies rethinking their supply chains.

Disclosure: Nothing written here is financial advice or should be used for investment decisions.

Cost of Equity

Today we are covering the cost of equity. A critical component of the WACC equation with much more theory than science backing its properties.

The cost of equity is a fascinating financial formula. It's 3 parts art, 0 parts precision!

Formula:

risk-free rate + Beta * (Expected Market Return - risk-free rate) = Cost of Equity

This formula is used to place a quantitative value on the cost of issuing shares or making decisions that could impact the equity value of a company.

The components:

-Risk-Free Rate: This is typically the yield on the U.S. 10yr T-Bond

Why?

Because U.S. debt is considered to be the least risky government debt in the world. The USD is still the world's reserve currency and the U.S. government has a great track record of fulfilling its debt obligations.

We use the 10yr because most situations that apply the cost of equity include an investment with a roughly 10-year horizon. In theory, you'd adjust the duration given the length of the investment. In practice, that never happens.

-Beta: This is a measure of a company's volatility compared to the overall market. The market has a Beta of 1.0. The higher the Beta, the more volatile the business

-Expected Market Return: This is purely art. Usually 7 -10%. This is literally the 'expected return of the total market'

The lower the risk-free rate, the lower you can adjust the expected market return. Today, I'd argue most are factoring in an expected market return in the 9-12% range to properly adjust for higher relative yields.

Confused? Don't worry! The theory here and the rationale behind the inputs don't really matter for an interview setting.

What you need to know is that the cost of equity is a rough proxy for the equity hurdle required for a business to make an investment.

Also, you need to know how changes in different components would affect the ending calculation *--this is just algebra, nothing special.

This is because it's a component of WACC--we wrote about WACC last week here: "The Pulse" -- #124 / Off-Balance Sheet Financing

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“The Pulse” #125