Utah-UK connection, Japan and the bond market, 3 days work in Luxembourg = 160 in India, Mixue is bigger McDonald's, BRICS Meets
47th Edition
Greetings folks and a warm welcome to the 47th Edition of Friday Finance,
Beyoncé turned 45 last week and marked it by selling a wooden box for $948.01. The price is not arbitrary, it is her birthday, September 4 1981, written as a number. The Bey Keeper Collector’s Box is limited to 500 units, made of pine with a green velvet lining, a faux alligator-skin strap and a numbered brass plate, and it is designed to hold your Beyoncé vinyl records. It does not come with any. Her fans, who are collectively known as the Hive and are being sold what is essentially a beekeeper’s crate, called it a disgusting display of greed, and several pointed out the price could have been $94.81 instead. Jay-Z just got another problem. Let's get right to it.
TL;DR: A map of each US state's top export partner looks like a picture of economic relationships. It is not. Utah sends 48% of its exports to Britain because two refineries ship gold to London. South Carolina's top market is Germany because of one BMW plant. The Census Bureau records exports by where a shipment started, not where the goods were made.
A map doing the rounds this week shows each American state’s largest export destination, using Census Bureau data for 2025. Canada is first for 25 states and Mexico for 12, which covers 37 of the 50 and surprises nobody. The interesting part is the remainder. New York’s largest export market is Switzerland at 34.7%. Oregon and Washington send most to China, New Hampshire and South Carolina to Germany, Alaska to South Korea, Hawaii to Australia, Indiana to Italy. Utah, improbably, sends 48.1% of everything it exports to the United Kingdom, which is $10.8 billion of goods. Utah’s largest manufacturing export category is primary metals, at $11.0 billion, a figure so close to the British total that the two are effectively the same thing. It is gold.
The state produced about 145,000 troy ounces of gold in 2022, and imported 2.2 million troy ounces worth nearly $3 billion in 2023, roughly fifteen times as much. It refines the difference in two facilities, Asahi’s plant in West Valley City and Rio Tinto’s Kennecott operation in Magna, each employing fewer than 250 people, and ships the bars to London because London Bullion Market Association accreditation is what makes them tradable there. So half of Utah’s exports are metal passing through on the way to a vault. Statistics Canada notes the identical distortion in Canadian figures, where the UK ranks second at 9.2% almost entirely on precious metals, and drops below the EU and China once you strip them out. South Carolina’s German relationship is simpler still: one BMW plant in Spartanburg, opened in 1994, which has been the largest automotive exporter in the United States by value every year since 2014, shipping close to 200,000 vehicles worth about $9 billion last year through the Port of Charleston.
The Census Bureau records state exports by origin of movement, meaning where a shipment began its journey out of the country, not where the goods were made and not where they will be used. Which is why Washington DC appears on the map at all, with Saudi Arabia as its top destination at 41%. The District manufactures essentially nothing, and its monthly goods exports ran between $163 million and $562 million through late 2025 before hitting $2.2 billion in January, roughly thirteen times the previous month. That is not an economy, it is one or two very large shipments. There is a second problem with reading the map, which its own authors flag: North Dakota sends 80.6% of its exports to Canada, the highest single-partner dependence in the dataset, while Louisiana’s top destination takes 7.4% and Florida’s takes 7.7%. So long story short, I wanted to illustrate trade concentration means that tariff wars have an outsized impact at the state level.
TL;DR: The Treasury's buyback yesterday failed to fill its own order book, taking $5.19B against a $6B target, and yields hit the day's highs after the result. There are two popular explanations for the global bond selloff, fiscal decay and AI capital demand, and India appears to disprove the second. Neither explains Japan, whose 10-year yield just passed 3% for the first time since 1996.
The US Treasury tried to buy its own long-dated debt yesterday and could not find enough sellers. The operation took $5.19 billion against a $6 billion target, and American yields reached their highs of the day after the result was announced. The 30-year closed near 5.35%, the 10-year at 4.91%, its highest since 2023, and the Treasury separately auctioned $22 billion of 30-year debt at 5.308%, the highest yield at a sale since 2001. That last number carries a nuance worth keeping: the higher yield drew strong demand. The market will lend to the United States all day long, it simply wants quarter-century prices to do it. An intervention that cannot fill its own order book at its own bid is not price support, it is a public demonstration of the problem, and it is the second time in a month we have watched this manoeuvre fail inside 24 hours.
There are two popular explanations. The gloomy one is that investors have lost patience with deficits and with political pressure on central banks. The cheerful one, which the Treasury secretary has been making, is that the AI build-out needs enormous capital now, so governments are competing with the private sector and yields reflect faster expected growth. The Economist proposed a neat test this week: look at India. American ten-year yields are up 0.67 points this year and Indian ten-year yields only 0.37 points, to 7%, leaving the spread near historic lows, and yet India is where the capital scramble should be fiercest, with GDP up 7.8% last quarter, private investment up nearly 12%, and new project announcements led by data centres and nuclear plants up 27%. The economy doing the most building is feeling the least pressure. India has some claim to have earned that calm, with inflation averaging 4.6% in the decade since the Reserve Bank adopted a target against 8.1% before. It also has a bond market almost nobody can leave, since only about 3% of Indian government securities are foreign-owned and the domestic institutions holding the rest cannot move capital abroad.
On September 1 the Japanese ten-year yield passed 3% for the first time since 1996. For thirty years Japan was the floor beneath global long rates and the world’s cheapest source of duration, and when the floor rises, every long bond is repriced against it and Japanese capital has a reason to come home. Japan owes more than 200% of its GDP and spends over a quarter of its budget servicing it. What makes any single-country explanation hard to sustain is the synchronisation: in the same fortnight, thirty-year gilts hit 5.89%, the highest since 1998, French thirty-years reached 4.5% for the first time since 2009, German ten-years hit their highest since 2011, and Japanese thirty-years set a record. Five countries with five different fiscal positions, all at multi-decade highs at once. Oil is doing the rest of the work, with Brent closing at $107.63 yesterday and producer prices rising 0.4% in August on fuel costs. The Financial Times ran a column this week headlined that America is losing its captive creditors, which is precisely what India still has.
TL;DR: Apple raised the iPhone 18 Pro to $1,199 on Wednesday, $100 more than last year, because AI data centres have driven up memory costs. Analysts expected $200-300, so the new CEO absorbed the difference. The same $100 costs an American about three hours of work and an Indian about fifteen working days.
Apple launched the iPhone 18 Pro on Wednesday at $1,199 and the Pro Max at $1,299, each $100 more than last year, alongside its first foldable, the iPhone Duo, at $1,999. The reason is memory. The build-out of AI data centres has diverted DRAM and NAND production and roughly doubled the cost of consumer memory, a squeeze Tim Cook, then still chief executive, described as a hundred-year flood that made price rises across the lineup unavoidable. Apple had already raised Mac and iPad prices in June. Samsung has put $100 on the base Galaxy S26 and up to $200 on its foldables, and analysts do not expect relief until late 2027. After two years of treating the AI build-out as a story about capital expenditure and data-centre debt, it has arrived on a shelf. Apple describes the new A20 Pro chip as purpose-built for AI, so the phone costs more because of AI and the thing you are buying is AI.
What makes the launch more interesting is how modest the increase was, and who made it. John Ternus became Apple’s chief executive on September 1, with Cook moving to executive chairman, so this was Ternus’s first keynote eight days into the job. TrendForce had modelled a rise of 10 to 20%. JP Morgan expected $100 to $200. Jeff Pu at GF Securities expected $200 to $300 and downgraded Apple to hold on the strength of it. Apple came in at $100, about 9%, below the bottom of the range. A company that calls its cost increases unavoidable and then passes through less than half of what the market assumed has chosen margin compression over volume risk, and the decision was taken by a hardware engineer who ran the iPhone programme for years and knows exactly what the parts cost. Apple also quietly removed the cheap option from the season, since for the first time the standard iPhone 18 and the 18e have been pushed to spring 2027, so every new iPhone this autumn starts at $1,199.
Tenscope’s affordability index measures how many eight-hour workdays an average worker needs to buy an iPhone 17 Pro across 33 countries, and the spread is enormous: three days in Luxembourg and Switzerland, four in the United States, five in Canada, Germany and Australia, seven in Britain, 77 in Brazil, 101 in the Philippines and 160 in India, which is roughly eight months of working days and about 53 times the Luxembourg figure. The global average is 26 days. Run this week’s increase through those numbers and the same $100 costs an American worker about three hours and an Indian worker about fifteen working days. Two caveats are worth stating: the index uses the US price as its basis even though Indian retail prices are higher after duties, so the Indian figure is probably understated, and it uses gross rather than net income in places. Apple now assembles premium iPhones in India, and India is still the least affordable market on the list.
TL;DR: The largest fast-food chain in the world by outlets is a Chinese drinks company with about 60,000 locations against McDonald's 43,000, and it has just moved into pubs. Franchise fees are 2.4% of its revenue. Almost everything else comes from selling ingredients and equipment to franchisees who must buy from it. It is a wholesaler, not a restaurant company.
The largest fast-food chain in the world by number of outlets is not McDonald’s. It is Mixue Bingcheng, a Chinese tea and cold-drinks company founded as a shaved ice stall in Zhengzhou in 1997, which now runs about 60,000 locations against McDonald’s roughly 43,000, opened around 40 a day through 2025, and has never put a store in the United States. Its latest move is into pubs. Fulujia, which translates as Lucky Deer, has opened more than 3,200 mini-bars across China since 2021, making it the largest bar chain on earth, and nearly two thirds of them have opened since Mixue bought control last October. A pint costs as little as 5.9 yuan, about 87 cents, and it costs the same in a first-tier city as in a border town 2,000km from the brewery.
The reason that price holds everywhere is that franchisees pay nothing for freight. Mixue absorbs it, shipping beer out of Henan province to whoever is running a bar in the far south-west, which is why the company is usually described as a logistics operation that happens to sell drinks. What is less well understood is where the money comes from. Mixue’s own filings show franchise fees made up just 2.4% of revenue in the first three quarters of 2024. Almost everything else is the sale of ingredients, packaging and equipment to franchisees who are required to buy from the company. McDonald’s built its fortune as a landlord, collecting rent and royalties from its operators. Mixue does not want a share of your takings, it wants to be your only supplier, and with more than 99% of its stores franchised, what looks like the world’s biggest restaurant network is a wholesaler with 60,000 captive accounts.
A Fulujia franchisee pays about 60,000 yuan for beer pumps and branding and owes no royalties for three years, which sounds generous until you remember royalties are a rounding error in the model. Giving them away costs almost nothing, speeds up openings, and every new bar is another wholesale customer. It is worth being clear about what this does not mean, though. Mixue has roughly 1.4 times McDonald’s store count and revenue that still trails Starbucks, Tim Hortons and the owner of Dunkin’, because it made about $2.6 billion in the first nine months of 2024 selling four-yuan lemonade and ice cream from 15 cents. Store count is a measure of distribution rather than money. The model also depends on absorbing freight across a domestic network, which is the part that does not travel.
TL;DR: BRICS leaders meet in New Delhi this weekend representing about 40% of the world economy at purchasing power parity, more than the G7. At market exchange rates they are 26% and the G7 is 45%. Everything the bloc says it wants to do happens at market rates. China is about 64% of its combined output, which explains most of the internal politics.
BRICS leaders meet in New Delhi this weekend representing, by the most-quoted measure, about 40% of the world economy against the G7’s 29%. That figure is calculated at purchasing power parity, which adjusts for what money actually buys in each country. Measured at market exchange rates, the same eleven countries in the same IMF dataset account for about 26% of world output, and the G7 for about 45%. Both numbers are correct and they point in opposite directions. The distinction matters more here than almost anywhere, because purchasing power parity describes what an economy can produce and consume at home, and every ambition the bloc discusses, an alternative payments rail, a development bank, a smaller role for the dollar, is transacted at market rates.
China is roughly 64% of the bloc’s combined output at market rates, which makes the reported argument over whether Beijing is a participant or the de facto leader less a debate about intentions than a description of a shareholder register. The group has no permanent secretariat, a chair that rotates annually and decisions taken by consensus, and one member carries nearly two thirds of the economic weight. Its bank tells a similar story: the New Development Bank, founded in 2015 as an embryonic rival to the World Bank, has approved $43 billion of lending in eleven years, against almost $600 billion from the World Bank globally. What has genuinely worked is trade rather than architecture. Goods trade between members has risen more than thirteenfold since 2003, intra-BRICS exports reached $1.2 trillion last year, and just over half of Russia’s foreign trade now runs through core BRICS partners, roughly double the pre-war share.
Senior Indian officials have made clear there is no de-dollarisation agenda this year, partly out of a stated need to be sensitive to Washington, and the capital is notably short of the bunting that accompanied its G20 hosting three years ago. Iran and the UAE, both admitted in the expansion that Brazil and India opposed, are on opposing sides of a live war, and a foreign ministers’ meeting this year failed to agree a statement. Against that, the bloc has the better balance sheet, with government debt at about 78% of GDP against the G7’s 127%, and growth running at more than three times the pace. Jim O’Neill, who coined the acronym at Goldman Sachs in 2001 and says he never imagined a political club, offers the fairest scorecard: China and India have vastly outperformed his original projections, and Russia and Brazil have badly underperformed.
At the Republican midterm convention in Dallas on Wednesday, Donald Trump promised a $5,000 dividend to every adult American citizen, on the condition that Republicans hold both chambers in November. There are about 245.3 million adult citizens in the United States, according to the Census Bureau, so the arithmetic is straightforward: 245.3 million multiplied by $5,000 is $1.23 trillion. The projected federal deficit for this fiscal year is about $1.9 trillion, which makes the promise roughly 65% of a full year’s borrowing, paid out at once, and it exceeds the Pentagon’s entire budget request. Tariff revenue, the funding source the administration has pointed to, ran to about $195 billion in fiscal 2025. Within an hour of the speech the vice-president suggested wealthy Americans would not receive it, and a Republican congressman from Texas was among the first to ask how it would be paid for. It is the third such proposal since February 2025, after a DOGE dividend and a $2,000 tariff dividend, and neither of those produced a cheque for anyone.
“Not everything that counts can be counted.” — William Bruce Cameron
Have a fantastic weekend. I welcome feedback and please forward this if you see fit.
Many thanks,
Sam.
Market Snapshots
Note: oil ran the week and the bond market did the damage. Brent closed at $107.63 on Thursday and West Texas at $102.48, the highest for both since May, after the war with Iran stretched into a seventh month. Producer prices duly rose 0.4% in August on wholesale energy, and the chain from a strait to a freight bill to an inflation print to a yield played out in about four sessions. The Dow fell for a fourth consecutive day, its longest losing run since April, and the TSX dropped 400 points to close below 36,000 for a second session. The Treasury's attempt to steady the long end by buying back its own debt fell short of its target and yields rose anyway. Then on Friday morning the whole thing reversed, with the Dow up 500 points and crude giving back about 3% on reports that Gulf foreign ministers will meet their Iranian counterpart in Oman on Monday to discuss shipping through the strait. Both crude contracts are still on course for weekly gains near 8%. The Bank of Canada is unchanged at 2.25%, and Canadian banks and gold miners led Friday's rebound in Toronto.
1 USD = 1.382 CAD = 0.88 EUR = 0.75 GBP at Thursday spot.
Sources
Hello Magazine, The Blast, Yahoo Entertainment, Page Six, Beyoncé's official store (opener); Visual Capitalist, US Census Bureau, Office of the US Trade Representative, Kem C. Gardner Policy Institute, Statistics Canada, US Department of Commerce (state exports); The Economist, Financial Times, Bloomberg, CNBC, Reuters, Ampere, TD Securities (bonds); Apple Newsroom and apple.com, Washington Post, MacRumors, 9to5Mac, TrendForce, GF Securities, Tenscope affordability index via Visual Capitalist, Notebookcheck (Apple); The Economist, Reuters, CNN, CKGSB Knowledge, Mixue HKEX prospectus, Everbright Securities (Mixue); Financial Times, IMF World Economic Outlook, EY India, Business Standard, Business Today, UK House of Commons Library (BRICS); ABC News, Newsweek, Reuters, Euronews, Tax Foundation, Axios (closer); CNBC, BNN Bloomberg, Canadian Press, TheStreet, Trading Economics, Bank of Canada (market data).
Market data pulled Friday September 11, 2026 using September 10 closes, with Friday morning's reversal noted where relevant. Live items this edition: the BRICS summit runs September 12-13, so this is a preview rather than a report and the communiqué will land after publication; the $5,000 dividend has not been scored by the Congressional Budget Office and the $1.23 trillion figure is arithmetic on Census population data rather than an official estimate; Apple's Pro Max and foldable prices come from launch coverage while the $1,199 Pro price is confirmed on Apple's own site; the Tenscope and Picodi affordability indices use different methods and produce very different figures for India, so only one is used here; and the Treasury's next buyback operation will be the most diagnostic number in the bond story. Currency at Thursday spot rates.
