The U.S. auto industry's connections to China are becoming more problematic — financially, politically or both — prompting potentially seismic shifts in corporate strategy.

Why it matters: Washington is applying bipartisan scrutiny to automakers that use Chinese technology or have Chinese shareholders.

The latest: Tesla is reportedly considering a sale of its China business ahead of a potential merger with SpaceX, WSJ reported today.

• It's unclear whether the U.S. would tolerate SpaceX, a major defense contractor, owning a significant Chinese operation — and whether China would tolerate an automaker with local operations having close ties to an American military contractor.
• As a result, "Tesla advisers have discussed possible options for a separation, including a spinoff, sale or closure" of its Chinese business, WSJ wrote.

What they're saying: "This has never even come up in a discussion ever," Elon Musk, CEO of Tesla and SpaceX, said on X of the spinoff report. "Absurdly fake news."

The intrigue: Tesla has invested heavily in China, having built two major factories in Shanghai and pursuing authorization to run its self-driving vehicle technology there.

• But competitors like Chinese EV maker BYD have become a serious threat to the company's market share in China.

Multiple foreign automakers, meanwhile, have come under policy pressure in the U.S. due to their ties to China.

• Federal regulators recently banned Volvo electric vehicle spinoff Polestar — which is owned by Chinese automaker Geely — from selling new vehicles in the U.S. The ban stems from a Biden administration rule blocking the sale of vehicles that use "connected" technology originating in China.
• German automaker Mercedes-Benz is concerned about a bipartisan bill in Congress that could ban it from selling vehicles in the U.S. since it has major Chinese shareholders.

💭 Nathan's thought bubble: With the Chinese automotive market becoming increasingly competitive, foreign automakers may find it to be more trouble than it's worth.

Oil giants ExxonMobil and Chevron reaped massive profits in the second quarter.

Why it matters: The Iran war cut off petroleum shipments in the Strait of Hormuz, sending prices skyward and filling up Big Oil's coffers.

Zoom in: ExxonMobil's earnings more than doubled to $14.5 billion in the second quarter, compared with a year earlier.

• Chevron's profit more than quadrupled to $12.1 billion.

What they're saying: "There are constituencies around the world who are having a very good crisis, and the oil producers are one of them," Patrick Galey, fossil fuels lead at Global Witness, a nonprofit organization that investigates environmental issues, told AP.

Yes, but: Refinery maintenance issues contributed to a missed profit forecast for Exxon, whose shares closed down 0.97% today.

💉Increased interest in Botox drove higher sales for drug giant AbbVie, which is dealing with declining sales of its aging inflammatory condition treatment Humira. (Bloomberg)

🗽The state of New York sued Kalshi over running what the state called an "illegal gambling operation" and requested restitution for users and massive fines. Kalshi called it "political theater." (CNBC)

🎶 Universal Music Group shares slumped after the company fell short of expectations on subscription revenue growth, raising fears of a streaming slowdown and AI-made songs. (FT)

This weekend's box office could rank as one of the biggest of all-time, according to Rentrak analyst Paul Dergarabedian.

🎬 State of play: With "Spider-Man: Brand New Day" poised to go gangbusters, and "The Odyssey" still going strong, Dergarabedian says a top three showing is a serious possibility.

• The biggest showing of all time was the weekend of April 26, 2019, led by the megahit "Avengers: Endgame," at $402 million.

🎞️ Zoom in: It's a good weekend to be married couple Tom Holland and Zendaya, who star in both "Spider-Man" and "The Odyssey."

• Variety reported that box office analysts expect $260 million–$280 million for "Spider-Man."

💭 Nathan's thought bubble: The overall weekend record probably isn't in jeopardy — "Avengers: Endgame" was just impossibly big — but second place is a legitimate possibility.