The bulls are running wild on Wall Street. And they’re wearing red, white, and blue hard hats stamped with ‘Made in USA (With Government Assistance)’.

A curious pattern has emerged as speculative fever grips markets. The S&P 500 continues its relentless march upward. But something strange is happening.

The biggest stock gains of the past three months haven’t come from AI breakthroughs. They haven’t come from new products. They’ve come from government intervention.

Welcome to the new American capitalism. The invisible hand of the market has been replaced by Uncle Sam’s very visible thumb on the scales.

Trump swept into power promising free markets. He promised to cut red tape. Now, his White House has discovered state-directed capitalism.

And why not? Beijing has been doing it for decades. It’s worked well for them.

If you can’t beat ’em, join ’em. Just wrap yourself in the American flag and denounce socialism while you do it.

The Pentagon’s Rare Earth Bonanza

Take the rare earths sector. The Pentagon’s deal with MP Materials sent shockwaves through the industry.

In a move that would make Beijing’s industrial planners nod. The US government became MP Materials’ largest shareholder.

They also guaranteed a price floor of US$110 per kilogram for neodymium-praseodymium oxide (NdPr). The current market price? Just US$60.

This isn’t your grandfather’s capitalism. This is capitalism with Chinese characteristics.

The Pentagon committed US$400 million in direct investment and promised to buy MP’s entire output at inflated prices for a decade.

MP’s shares rocketed to record highs faster than you can say 五年计划 (five-year plan).

Industry veterans chittered anonymously. They fear angering their new government overlords. They complained the ‘high-cost’ operation copies the ‘Chinese model’ of state-backed industry.

A model America has spent years attacking for its market-distorting subsidies.

Now we’ve discovered market distortion can be profitable. You just need to be on the right side of it.

Drones Take Flight on Pentagon Wings

Why stop at rare earths? Defense Secretary Pete Hegseth announced plans to ‘unleash U.S. military drone dominance‘ last week. Drone makers soared higher than their products.

Kratos Defense surged 12% in one day. Its year-to-date gains hit 96%.

Australian-listed DroneShield followed suit. Government largesse creates powerful updrafts.

The Pentagon’s approach was simple. Remove regulations that stopped the military from buying drones en masse.

Treat drones like disposable ammo instead of assets. Then approve hundreds of American products to build and buy.

It’s industrial policy dressed as national security. Beijing has run this playbook for years.

‘Modern battlefield innovation demands a new procurement strategy,’ the memo proclaimed.

This roughly translates to: ‘We’re going to buy a lot of stuff from American companies, and their shareholders are going to love it.’

For a visual metaphor, you can watch Pete announce the ‘unleashing of US military drone dominance’ while being handed the memo…by a Chinese drone.

Graphite Gets the Golden Touch

Not to be outdone, the Commerce Department joined the party. They hit Chinese graphite imports with a 93.5% tariff.

Combined with existing duties, Chinese graphite suppliers face 160% total tariffs. It’s a ‘keep out’ sign written in regulatory ink.

Yes, these are a response to the manipulation China has already wrought over graphite markets. But now the US and Australia are copying their playbook. We’re intervening in our own way.

Australian graphite producer Syrah Resources shares have risen 44% in just days, and they’re still climbing.

The company was struggling with operational problems. It had defaulted on loans. Now it’s suddenly one of the few non-Chinese suppliers left. Chinese competition has been regulated out of existence.

Source: TradingView

This is what winning looks like in the new American economy: not by out-innovating or out-competing. But by copying China’s playbook and kneecapping competition while stimulating your own companies. Sun Tzu would be proud.

The Presidential Production Czar

Trump’s personal control of US Steel might be the best example yet.

After approving the merger with Nippon Steel, Trump gained veto power with the so-called ‘golden share‘ deal.

United Steelworkers President David McCall said Trump ‘has assumed a startling degree of personal power over a corporation.’

That’s control over production levels. Control over wage decisions. He controls facility closures. He controls board positions. It doesn’t stop there.

It’s a level of direct government control over a private company that would make Soviet central planners blush.

We used to have words for this arrangement. Several words. None were ‘free market capitalism.’

The New Now

Forget fundamental analysis. Forget disruptive innovation.

The money is in regulatory arbitrage. It’s in government favouritism.

Why bet on the best technology? Bet on the best lobbyists instead.

Why do you need competitive advantages when you can have legislative ones?

One fund manager recently said (inspiration for this article):

‘We used to study earnings reports. Now we study the Congressional Record and Pentagon procurement announcements. The returns are much better.’

Welcome to American capitalism’s brave new world. The market is free to do exactly what government tells it.

Beijing must be watching with amusement. Maybe admiration too.

America lectured about market liberalisation for decades. Now we’ve discovered that state intervention works great. Especially if you own the right stocks.

The bulls are in control. But they dance to Washington’s tune, not Wall Street’s.

And for those investors smart enough to follow the government’s lead rather than fight it, the profits are as real as the irony is rich.

For example, last week in Congress passed three major crypto bills — the largest of which was the famed ‘GENIUS Act’.

The implications of these bills are absolutely massive for those investors who are watching.

Click here to learn about the window of opportunity that’s just opened up.

Regards,

Charlie Ormond,
Editor, Alpha Tech Trader and Altucher’s Early-Stage Crypto Investor

By Murray Dawes, Monday, 21 July 2025

Source: Tradingview

The S&P/ASX 200 [ASX:XJO] was up 118 points to a new all-time high on Friday. Today it is down 100 points as I write this at 11am.

Sharp reversals like this can be a warning sign that the rally is running out of puff.

I am always wary when a market breaks out above a former resistance level. Amateur traders are trained to see it as a breakout that should be bought.

But in my experience a false break is the more likely outcome.

In the chart above I show you the daily chart of the S&P/ASX 200 since late last year.

I have pointed out two previous occasions where a new all-time high was created just before a wave of selling hit (The false breaks in the chart above).

We are in a similar situation right now.

Traders are trying to work out whether this breakout will be the real deal, which could lead to a melt-up in prices.

Friday’s price action would have convinced many that the breakout was confirmed, and more upside was on the way.

If that whole rally is negated today and we see follow through selling this week, we may be in the early stages of a false break of the high created in February.

Watch out below if that is the case.

Think of it like lines in the sand being set up for us.

A rally above last weeks high will look very positive from here.

Further selling pressure could set off a chain reaction that sees the S&P/ASX 200 fall in a similar way to what we saw on the last two occasions.

Regards,

Murray Dawes,
Editor, Retirement Trader and Fat Tail Microcaps