Vindication?
In the span of 24 hours, the “buy America” trade is back on and the odds of a U.S. recession have dipped. And pressure on the Fed to cut interest rates has abated despite the uncertainty surrounding Tuesday’s Consumer Price Index report.
That has made Jay Powell one of the biggest beneficiaries from Monday’s U.S.-China tariff truce. The Fed chief may feel vindicated for holding steady on borrowing costs even as Wall Street second-guessed him and President Trump called him a “fool” for refusing to cut.
The markets have come around to the Fed’s thinking. Futures traders now see roughly two cuts this year. That’s down from five on April 7 and in line with the central bank’s March forecast that market watchers had widely questioned. Some economists see even fewer, especially with resurgent signs of inflation.
While many investors worry that Trump’s tariffs on Chinese imports may stick, the pause signals that such duties won’t be cripplingly high — and that the Fed won’t be forced to cut rates in an effort to bolster the economy.
At a U.S.-Saudi investment conference in Riyadh on Tuesday, Treasury Secretary Scott Bessent said there was momentum for forging more trade deals, including with Indonesia, South Korea and Taiwan. “At the end of the day, we will reach a satisfactory conclusion,” he said, adding that it could take longer to reach an accord with the European Union.
That said, companies aren’t taking their chances. They have begun frantically rushing their orders from China to take advantage of the temporary tariffs relief. “Ninety days is not a long runway for people in our business,” Gene Seroka, the executive director of the Port of Los Angeles, told The Times.
Will panic buying show up in Tuesday’s C.P.I. data? Some economists expect to see the first signs that consumers are getting squeezed by Trump’s trade war, with so-called core prices — which strip out food and fuel — having risen by a predicted 0.3 percent month-on-month.
More evidence of that could come with Thursday’s retail sales report. David Mericle, a Goldman Sachs economist, wrote in a research note on Monday that he expected to see “a boost from consumers front-loading purchases ahead of tariffs.”
All that points to Powell and the Fed sticking to their guns. That could once again anger Trump. But such a move would align with the growing consensus that there’s no risk in the central bank continuing to wait until the trade-war fallout becomes clearer.
Bill Adams, the chief economist for Comerica Bank, wrote in a research note that he saw no cuts this year. He added that the Fed “won’t think it necessary to cut interest rates this year with fewer fears of recession, and with fiscal policy set to provide more support to growth in 2026.”
DEALBOOK WANTS TO HEAR FROM YOU
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HERE’S WHAT’S HAPPENING
UnitedHealth Group names a new C.E.O. The giant health insurer said on Tuesday that its chair and former chief, Stephen Hemsley, would replace Andrew Witty, who was stepping down for “personal reasons.” The company also said it had suspended its 2025 financial outlook. Shares in UnitedHealth were down 10 percent in premarket trading.
Newark airport experiences more delays amid signs of strain. Flights to Newark Liberty International were delayed by as much as seven hours yon Monday, as the airport suffered staffing shortages. (As few as three air traffic controllers were scheduled to work last night, far fewer than the target of 14 controllers for most of those hours.) That said, the C.E.O. of United — Newark’s biggest carrier — told customers that flights to and from there were “absolutely safe.”
Pharmaceutical stocks rise as executive order on drug prices proves limited. While President Trump had promised that “drug prices will come down,” the order he signed on Monday merely pushes drugmakers to voluntarily reduce prices and doesn’t explicitly seek to link U.S. costs to those of other countries. Shares in Merck jumped 5.9 percent on Monday, while those in Pfizer climbed 3.6 percent and those in Eli Lilly rose 2.9 percent.
The Trump administration may sell chips to an Emirati A.I. company. Officials are weighing the sale of hundreds of thousands of artificial intelligence processors to G42, which the U.S. government had previously scrutinized for its ties to China, The Times reports. It’s one of several deals the White House is negotiating with Middle Eastern countries, as Trump tours Saudi Arabia, Qatar and the United Arab Emirates, with hopes of striking over $1 trillion worth of business agreements.
Hollywood presses Trump for tax breaks to revive U.S. film production. Groups including the Motion Picture Association and the main writers’ and actors’ guilds called for new tax incentives to persuade production companies to make more movies and TV shows in the U.S. It follows up on Trump’s (since minimized) threat to impose tariffs on movies made outside the country, which set off panic in Hollywood.
How crypto investors could bend Trump’s ear
Criticism has done little to dissuade President Trump and his family from seeking to profit from crypto. The latest example: A Bitcoin mining business backed by Eric Trump, one of the president’s sons, plans to go public via a merger with a competitor.
But that — and Trump’s intention to proceed with a dinner for the biggest holders of his memecoin — further illustrate how the Trumps have turned to crypto to bolster their fortunes.
Example A: American Bitcoin, which said on Monday that it planned to combine with the publicly traded Gryphon Digital Mining and take over its Nasdaq listing. It’s a small deal, with Gryphon’s market value before the agreement was announced standing at about $36 million. Existing American Bitcoin shareholders are expected to own about 98 percent of the company.
A publicly traded American Bitcoin provides a way for people to invest in a Trump family business — potentially attractive for those seeking favor from the president. Consider that shares in Gryphon soared Monday on the news, giving it a market value of $98.5 million, with more than 259 million shares trading hands. (The average trading volume for Gryphon is far, far lower than that, and just last week it was trading well under a buck.)
Example B: $TRUMP. The president on Monday ended an auction in which the top 220 holders of his memecoin would win seats at a dinner with him set for next week, a contest that crypto investors worldwide raced to participate in. The top holder, according to the contest’s website, was identified as “Sun” — which The Times, with the help of two crypto forensics companies, identified as an overseas exchange linked to the crypto entrepreneur Justin Sun, whom the S.E.C. had sued for fraud in 2023.
Buying $TRUMP coins helps Trump in a couple of ways. The frenzy of investments pushed up the paper value of the Trump family’s holdings. And the Trumps and their business partners collect a fee from every transaction involving the memecoin, to the tune of $1.3 million in a matter of weeks, according to The Times.
Critics point to potential conflicts of interest, including the possibility of seeking to influence Trump. Several buyers of $TRUMP explicitly said that they wanted to lobby Trump directly: The C.E.O. of a transportation logistics company announced last month that he would buy $20 million worth of the token to press the president to lower tariffs on Mexican goods. (The company later said it “currently does not have plans” to have a representative at the dinner.)
Buying the memecoin or shares in American Bitcoin also offers an end-run around U.S. ethics laws: While noncitizens can’t donate to political campaigns, they can invest in those assets.
“It looks very corrupt,” Senator Ron Wyden, Democrat of Oregon, told The Times. And Senator John Kennedy, Republican of Louisiana, previously told The Times that he would support a ban on “all public officials” using their positions to profit from digital currencies.
Crypto isn’t the only area critics are concerned about. Trump on Monday angrily brushed off concerns about accepting a Boeing 747 from Qatar: “You should be embarrassed asking that question,” he told one reporter.
Budget standoff
Tuesday will be a big one for Republican lawmakers, who are set to begin debating an expansive tax bill meant to fulfill key parts of President Trump’s campaign pledges on taxes.
Congressional Republicans are aiming big. But they will need to find huge savings in the federal budget to offset generous tax cuts.
What’s in the draft legislation:
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Raising the capital gains tax on some types of university endowments, which could hit schools like Harvard and Yale that already face funding cutbacks after the White House’s assault on higher education.
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Targeted cuts to Medicaid, including stricter citizenship checks and work requirements for some recipients, and tougher screenings for health care providers. (Still, Republicans are fearful of political blowback.)
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A phaseout of electric vehicle tax credits, including a popular $7,500 commercial-vehicle credit. Many of these were first introduced under the Biden administration. The rebates and tax breaks were a significant driver of E.V. sales in recent years, and come as the sector has been clobbered by Trump’s tariffs.
Homeowners and wage earners could get some relief. Some tips and a portion of overtime pay would be spared from the I.R.S., a prominent Trump campaign promise. And taxpayers would be able to deduct up to $30,000 of their state and local tax tab, up from $10,000 now, though extending the deduction often known as SALT has long been a tough ask within the party as it would most benefit affluent homeowners in blue states.
A tax on the wealthiest Americans, which Trump had called for last week, isn’t currently in the package.
What’s next? Some major House committees will debate their portions of the bill before sending them to the full chamber for a vote. They include:
But some Republican lawmakers have already challenged parts of the plan, making it harder for party leaders to pass their package in the face of what’s expected to be unified Democratic opposition.
THE SPEED READ
Deals
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Perplexity, the A.I.-powered search engine, is said to be in talks to raise new funds at a $14 billion valuation. (WSJ)
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SoftBank’s efforts to raise money for the immense Stargate A.I. data center projects have reportedly stalled amid economic uncertainty stoked by President Trump’s tariff policies. (Bloomberg)
Politics, policy and regulation
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