2026-07-01 ATS briefing¶

AI investment and semiconductor prices¶

The FRED Blog notes a sudden 19% spike in US semiconductor producer prices between January and May 2026, after years of near-flat movement. The puzzle is timing: the AI investment boom is already well underway, with data centre construction and related capital spending hitting record shares of total business investment by late 2025. So why did chip prices only jump now?

The answer points to a lag in the material chain. Early-stage AI infrastructure spending goes on land, buildings, cooling, power — physical plant, not processors. Semiconductor price pressure only emerges later, when data centres are ready to be equipped and firms discover which inputs are genuinely scarce. Recent earnings suggest demand is now hitting a wider range of chip producers, not just the advanced AI processor makers.

There is also an inventory story. After the pandemic cycle, semiconductor markets were working through excess stockpiles. Once those buffers were exhausted and data centre orders firmed up, the price signal finally broke through.

What this reveals is a structural tension in the AI build-out. Capital is being thrown at infrastructure at a pace not seen since the postwar period, but the supply side of the semiconductor industry cannot instantly scale to meet it. The price spike is not a blip — it is the system registering a real bottleneck. If this persists, it will raise the cost of the entire AI investment wave, potentially compressing the profit expectations that are driving it. That is a contradiction worth watching: the very boom that is supposed to restore dynamism to US capitalism may be generating its own internal drag.

Baltic Dry Index Halts 6-Day Decline¶

Source: Hellenic Shipping News

The Baltic Dry Index’s modest 0.4% rise after a six-day slide is less a signal of recovery and more a snapshot of volatility within a single, brutal contradiction. The index logged a 25% quarterly gain, yet dropped 22% in the same month. That is not a market finding its level; it is one lurching between extremes.

The capesize and panamax segments — hauling iron ore, coal, and grain — drove the uptick. These are the vessels that move the basic inputs of industrial production. Their sensitivity reflects real, if erratic, demand from steel mills and power plants. But the supramax index, covering smaller, more flexible cargoes, edged down. The divergence suggests the bounce is concentrated in bulk commodity flows, not broad trade activity.

What matters here is the underlying dynamic. Freight rates are not simply responding to supply and demand in shipping capacity. They are being whipped by the overaccumulation of capital in the broader economy — excess productive capacity chasing insufficient outlets. When a quarterly gain of 25% can be wiped out in a month, it points to an economy where investment decisions are made on credit and expectation, not realised demand. The real movement of goods is being overwhelmed by the speculative movement of capital.

For the hosts: this is a weathervane for the real economy, not a headline. When freight indices swing this violently, it signals that the material foundations of trade are unstable. That instability will eventually hit balance sheets, then employment, then politics. The question is whether the next swing is up or down — and how far.

Sanctions, uncertainty and the shadow fleet¶

Source: Hellenic Shipping News

The central contradiction laid bare here is that Western sanctions on Russian oil are now punishing the very actors they were meant to reward. The price cap mechanism was sold as a surgical tool: cut Moscow’s revenues while keeping global energy markets stable. In practice, it has produced a regulatory fog that penalises compliant shipowners and hands market share to the shadow fleet.

As Siiri Duddington makes clear, compliance with the price cap offers no protection. You can follow every rule and still be sanctioned simply for operating in a sector deemed strategically significant to Russia. This is not a bug — it reflects a deeper logic where political signalling overrides legal clarity. The result is a bifurcated market. On one side, legitimate operators face mounting due diligence costs, reputational risk, and legal uncertainty. On the other, the shadow fleet — opaque, uninsured, unaccountable — thrives precisely because it operates outside these constraints.

Tim Wilkins of INTERTANKO puts it bluntly: legislation has made life harder for the compliant owner, not the shadow fleet. This is a textbook case of regulation producing the opposite of its stated intent. The fragmentation between US, UK, and EU regimes only compounds the problem, forcing industry bodies to fill the regulatory vacuum themselves.

What this reveals is a sanctions regime that has become an end in itself — a political performance detached from operational reality. The continued flow of Russian oil suggests market forces are resilient. But for the legitimate shipping sector, the burden is growing. And as Duddington notes, if sanctions no longer change behaviour but merely redistribute risk, their original purpose is lost.

Europe Goes Its Own Way¶

Source: Foreign Affairs

The Foreign Affairs piece presents Europe’s rearmament and strategic reorientation as a belated but genuine awakening. The numbers are striking: 77 percent of Europeans now see Russia as a direct existential threat, while only 11 percent view the United States as an ally. Support for collective EU defence borrowing, buying European military hardware, and even reinstating conscription has shifted from fringe to mainstream in key states.

This is not simply a response to Trump’s humiliation diplomacy, though the article rightly notes his administration’s contempt for Europe. The deeper driver is the collapse of the post-Cold War bargain: wealth without military strength, protection without obligation. That arrangement depended on American hegemony being both willing and able to guarantee European security. With Russia’s war in Ukraine and Washington’s evident unreliability, the bargain is broken.

What the article underplays is the economic logic beneath the geopolitical shift. European defence spending is set to nearly double in Germany alone, reaching $172 billion by 2029. This is not just about deterrence — it is about absorbing overaccumulated capital into state-backed military production. The startups mentioned — Helsing, Stark Defense, Quantum Frontline — are not merely responding to threat perceptions; they are vehicles for channelling surplus into a sector that promises guaranteed state demand.

The contradiction is that this rearmament occurs within the straitjacket of the EU’s fiscal rules and Germany’s debt brake. Collective borrowing for defence is now politically thinkable, but only because the alternative — strategic irrelevance — is worse for European capital. Whether this produces a genuine European strategic autonomy or merely a more militarised subordination to NATO’s command structure remains an open question. For now, the class content is clear: workers will pay for this reordering through austerity repackaged as security.

Worse Than an Axis¶

Source: Foreign Affairs

Worse Than an Axis¶

Thomas Wright's argument in Foreign Affairs is worth taking seriously, not because it reveals anything new about the alignment of US adversaries, but because it inadvertently exposes the limits of liberal strategic thinking.

Wright correctly identifies that the cooperation between China, Russia, Iran, and North Korea has deepened since 2022, moving beyond transactional exchanges into something more durable. Russia's invasion of Ukraine created the conditions: Moscow needed weapons, and its partners needed technology. North Korea got satellite and air defence assistance in exchange for artillery and troops. Iran got joint drone production. China got Russian submarine and missile technology. This is not an alliance in the formal sense, but it functions.

The interesting contradiction here is that Wright's analysis is both accurate and strategically useless for its intended audience. He tells Washington that it "will not be able to break apart this alignment" and should instead try to "limit its effectiveness." But he offers no mechanism for doing so, because the structural driver of this alignment is not ideology or even shared enmity toward the US. It is the simple fact that each of these states faces sanctions and containment from the American-led order, and cooperation reduces the cost of that pressure.

What Wright cannot say, because it would undermine the entire framework of his article, is that this alignment is a direct product of US strategy. The attempt to isolate Russia after 2022 pushed Moscow into China's arms. The attempt to contain China pushed Beijing toward Russia and Iran. The attempt to strangle North Korea pushed Pyongyang toward anyone who could help. The more the US tightens the screws, the more it compels its adversaries to coordinate.

For revolutionary politics, the implication is straightforward. This is not a stable bloc—it contains real contradictions, particularly between China and Russia over Central Asia and between Iran and Russia over energy markets. But it is a symptom of a multipolar world taking shape through crisis, not design. The inter-imperialist rivalry that Marxists have long predicted is not arriving as a clean split between two camps, but as this messy, bilateral, functional network of states that hate each other slightly less than they hate Washington.

Extreme Weather Will Upend U.S.-China Competition¶

Source: Foreign Affairs

China is investing heavily in climate adaptation; the United States is not. That, in essence, is the argument Alice Hill and Mengye Zhu make in Foreign Affairs, and the asymmetry they describe is stark. Beijing has spent a decade building a national adaptation framework, from sponge cities and resilient power grids to the world’s largest water diversion project. Washington, by contrast, has treated climate adaptation as an afterthought, leaving its infrastructure, supply chains, and insurance markets increasingly exposed to intensifying extreme weather.

The authors frame this as a matter of great-power competition. The country that adapts better will preserve its economic and technological base; the one that does not will see its power erode. This is true as far as it goes, but it misses the deeper dynamic. The real competition is not between the US and China. It is between the imperative of capital accumulation and the physical limits of the planet.

Both states are trying to manage the consequences of a crisis their own productive systems have created. China’s adaptation spending is impressive, but it is a defensive measure — an attempt to shield the circuits of capital from disruption without challenging the logic that generates the disruption in the first place. The US, meanwhile, is so paralysed by internal contradictions — between fossil capital, state capacity, and electoral politics — that it cannot even mount a coherent defence.

What this reveals is not which superpower will win, but that the capitalist state, even at its most capable, can only react to the symptoms of ecological breakdown, not its cause. The question for revolutionaries is whether this reactive management can hold, or whether the gap between what is needed and what the system can deliver will widen into a crisis that no amount of state planning can contain.

‘They will attack me if I stay’: immigrants in South Africa flee for safety amid violence and anti-foreigner protests¶

Source: The Guardian

The anti-foreigner protests in South Africa are not simply a case of spontaneous bigotry. They are the political expression of a society where the state has failed to deliver on the basic promise of wage-labour and housing for its own population. With official unemployment above 30% and vast informal settlements, the ruling class has no strategy for accumulation that absorbs the surplus population. Instead, the state channels popular anger toward a visible scapegoat: the migrant worker.

The article reveals a brutal irony. Employers benefit from a flexible, vulnerable workforce willing to accept lower wages. The state benefits from a reserve army of labour that disciplines domestic workers. Yet when the social pressure boils over, it is the state that leads the crackdown — arresting 50,000 undocumented migrants since January — while capital faces no sanction. The government’s response is not to prosecute those who exploit migrant labour, but to accelerate deportations. This is administrative violence dressed as law and order.

What is striking is the absence of class solidarity. The protesters chant “They must go” while pointing at homeless camps. The logic is zero-sum: fewer migrants means more jobs for “us”. This is the politics of scarcity, not of working-class unity. The state encourages this fragmentation because a united multi-national working class would pose a real threat.

The tragedy is that many of those fleeing — like Jackson Makungwa, separated from his South African partner and infant son — are not temporary labourers but people with deep roots. The state’s immigration system is deliberately dysfunctional, creating illegality where legal status should exist. This is not a failure of policy; it is a feature of a system that needs disposable people.

For revolutionary politics, the lesson is clear. Anti-immigrant sentiment will continue to rise wherever the left fails to offer a genuine alternative: one that targets capital, not other workers.

Peru’s Keiko Fujimori wins presidential election, in latest victory for Latin American right¶

Source: The Guardian

Peru’s presidential election has been decided by a razor-thin margin, with Keiko Fujimori finally securing the office on her fourth attempt. The result is being framed as another win for a resurgent Latin American right, but the material picture is more contradictory than that headline suggests.

Fujimori’s victory rests on a platform of “order and hope” — a promise to restore stability to a country that has burned through eight presidents in a decade. Rising crime, extortion gangs, and contract killings provided the terrain for her campaign. She offered the strong hand of her father Alberto, whose authoritarian rule crushed Maoist insurgency and tamed hyperinflation before collapsing into corruption and crimes against humanity.

The narrowness of the win — fewer than 50,000 votes out of 18 million — reveals a deeply fractured society. Left-wing candidate Roberto Sanchez led at one point and has refused to concede, alleging irregularities in the overseas vote. This is not the clean sweep of a resurgent right; it is a contested, unstable outcome in a country where political institutions have already proven brittle.

Fujimori’s brand is both asset and liability. It gives her a loyal base and deep networks, but also blocks her from millions who remember her father’s rule. Her party, Fuerza Popular, is itself blamed for much of the instability through its congressional manoeuvring. The contradiction is plain: the candidate of order is also a product of the disorder.

For the left, the lesson is not simply that the right is resurgent. It is that a left candidate could run this close in a country where the Fujimori machine has deep roots — but could not close the deal. The question of what programme and organisation could actually break the cycle of instability remains open.