Successful US-China Trade Talks, Stock Market News, and Geopolitics
Latest stock market news
• US stock index futures rise 1-2%. In China, stocks rise 0.5-1%. Gold falls 2%. Crypto is calm.
The US dollar is up 0.3%. Commodities are calm.
Take your pick from “significant progress,” “constructive,” “an important first step,” “an important agreement reached,” “good news for the world,” and, by far the best: “As we say in China, if the food is good, time is of no importance.” These were all words uttered by negotiators during the U.S.-China trade talks in Geneva over the weekend, and they do seem like progress compared to the jingoistic war of words that marked President Trump’s initial announcement of 145 percent tariffs.
What was missing was specifics, and it was notable that neither team mentioned actual tariff levels at all over the weekend. A joint statement is expected later Monday that could provide more detail, although markets are skeptical that the White House believes a “deal” is in place.
It's a strange world in which investors trust the word of a communist one-party state more than the United States.
• In any case, markets are relieved that there was no gunfire in the talks, with S&P 500 futures up 1.4% and Nasdaq futures up nearly 2%. European stock futures are up about 0.8%.
The dollar rose modestly in safe-haven assets and Treasuries suffered a visceral sell-off as the market further reduced its expectations for the pace of future Fed rate cuts.
• The odds of a Fed easing have fallen. The chances of a June move are now just 17%, while the odds for July are 59%. Futures are suggesting 63 basis points of cuts this year, down from more than 110 basis points in mid-April.
• The mood was boosted by a fragile ceasefire between India and Pakistan, as well as Ukrainian President Volodymyr Zelensky's statement that he was ready to meet Vladimir Putin in Turkey on Thursday for talks.
• In the economic diary, Tuesday's U.S. consumer price index could hint at further price gains to come, although analysts expect the first clear impact of the tariffs to emerge in the May report. Retail sales are forecast to be flat in April, with risks to the downside given the chilling effect the tariff announcement has had on consumer sentiment.
• Trump said he would sign an executive order this morning to cut prices on prescription and pharmaceutical drugs by 30-80%
The plan could deal a serious blow to pharmaceutical companies, significantly reducing their income: JNJ, MRK, LLY, ABBV, etc.
• Mexico sues Google (GOOG) over renaming the Gulf of Mexico to the Gulf of America.
• If gold mining companies were a separate sector, they would have shown the best returns over the past year, - Otavio Costa.
Until recently, they were considered unattractive to investors, now the opposite is true. Demand for hard assets is returning interest in mining companies as a strategic and profitable position.
• Apple will earn more than $10 billion in US App Store commissions in 2024,
more than double its 2020 figure ($4.76 billion).
U.S. developers generated $33.68 billion in gross revenue through Apple's payment system, of which they received $23.57 billion after fees. Globally, the App Store brought in $27.39 billion in fees for Apple.
• Banks and brokers are seeing a surge in demand for currency derivatives that beat the US dollar, with particular momentum in Asia - Bloomberg.
• Companies are increasingly requesting hedging transactions that do not involve the dollar, instead using the yuan, Hong Kong dollar, UAE dirham and euro. Demand for yuan-denominated loans is also growing.
• OpenAI in talks with Microsoft over new funding and future IPO - FT
• Most baby boomers can't afford institutional housing and are impacting the housing market by staying in their homes, says 'Oracle of Wall Street'
"That's one of the problems with housing inventory. They're staying in their homes longer because they can't afford to move," - Fortune
• Saudi oil giant Aramco posted first-quarter profit of $26 billion, down 4.6 percent from a year earlier as
falling global oil prices batter the kingdom's economy.
• China's car sales rose for a third straight month in April, up 14.8 percent from a year earlier, as government-subsidised auto trading cushioned the impact of U.S. tariffs - Reuters
• Goldman Sachs disclosed ownership of $1.65 billion in Bitcoin ETFs through exchange-traded funds.
In a March 31 13F filing, the company reported ownership of:
30.8 million IBIT shares worth $1.4 billion;
3.47 million FBTC shares worth $250 million;
Goldman is now the largest owner of IBIT in the world, according to the SEC.
• Texas has reached a $1.38 billion settlement with Google.
The agreement resolves two lawsuits that involved three products that allegedly violated Texas consumer protection laws.
• Global sovereign wealth funds have started buying BTC on a small scale.
But large-scale purchases will not happen until the situation with crypto regulation in the US becomes clearer.
For BTC to reach $1 million, sovereign wealth funds must recognize it as part of the global financial services infrastructure, says Anthony Scaramucci, founder of SkyBridge Capital.
• Digital health company Omada has filed for an IPO in the US.
• Shares of Insulet (PODD) rose 21% on Friday
after the insulin pump maker reported stronger-than-expected quarterly results and raised its full-year profit forecast.
• Affirm Holdings (AFRM) shares fell 14.5% on Friday after
the buy now, pay later (BNPL) loan provider issued a disappointing revenue outlook for the current quarter.
• Tariffs and uncertainty will likely cut bonus pay on Wall Street.
Incentive pay for investment bankers at large firms is expected to fall 13% this year from 2021 levels, according to a report from a consulting firm. But stock traders could benefit.
Weekly Calendar
Monday, May 12
Monthly Federal Budget (April)
Fed Member Adriana Kugler Scheduled to Speak
Reports from Simon Property Group (SPG), NRG Energy (NRG), Fox Corp. (FOX), and Monday.com (MNDY)
Tuesday, May 13
NBF Small Business Optimism Index (April)
CPI (April)
JD.com (JD), On Holding (ONON), Tencent Music Entertainment (TME), and Oklo (OKLO) Reports
Wednesday, May 14
Scheduled testimony from Fed Vice Chairman Philip Jefferson, Fed member Christopher Waller, and San Francisco Fed President Mary Daly
Reports from Sony Group (SONY), Cisco Systems, CoreWeave (CRWV), Dynatrace (DT), and Alcon (ALC)
Thursday, May 15
Initial Jobless Claims (week ending May 10)
U.S. Retail Sales (April)
Producer Price Index (April)
Industrial Production (April)
Factory Utilization (April)
Business Inventory (March)
Builder Confidence (May)
Scheduled Testimony from Fed Chair Jerome Powell and Governor Michael Barr
Reports from Walmart, Alibaba, Deere & Co, Applied Materials, Mizuho Financial Group (MFG), Take-Two Interactive, and Cava Group (CAVA)
Friday, May 16
Import/Export Price Index (April)
Construction Starts (April)
Building Permits (April)
Consumer Sentiment - Preliminary (May)
Richmond Fed President Tom Barkin is scheduled to speak.
• The focus of the week starts with inflation data scheduled for Tuesday.
But investors will also be assessing the outcome of weekend meetings between U.S. and Chinese trade officials after a quiet session on Friday.
Traders will also be watching Fed Chairman Jerome Powell's comments on Thursday regarding the Fed's interest rate policy.
And retail sales data will be closely watched Thursday, the same day that retailer Walmart (WMT) reports earnings.
Other results scheduled for the week include earnings from Cisco Systems (CSCO), Alibaba Group (BABA), Deere & Co. (DE), Applied Materials (AMAT) and video game maker Take-Two Interactive (TTWO).
Key events that could impact markets on Monday:
ECB board members Cipollone and Buch attend Eurogroup meeting; Bank of England Deputy Governor Lombardelli and policymakers Green, Mann and Taylor speak.
Federal Reserve Chairman Kugler talks economic outlook.
Current Fundamental Reviews
• Trump announced a “full reset” of relations with China. “We had a very good meeting with Chinese representatives in Switzerland. In a friendly but constructive atmosphere, we agreed on the terms of a full reset of relations. We want to see China open up to American business in the interests of both China and the United States.”
Senior Trump administration officials said the U.S. and China held “productive” trade talks over the weekend, without providing further details.
A Chinese delegation later described the weekend meetings as “candid, in-depth and constructive dialogue” and said a joint statement would be released on Monday.
• Rubio will visit Turkey on May 14-16 to participate in an informal meeting of NATO foreign ministers - State Department
Earlier, Putin proposed holding direct negotiations between Russia and Ukraine on May 15 in Turkey.
• Hassett says new trade deals could be announced this week.
• Iran will adjust its uranium enrichment level to build trust with the US, Iranian Foreign Minister Abbas Araghchi said.
The minister described the fourth round of Iranian-American talks as “difficult but useful.”
• The ceasefire agreement between India and Pakistan appears to be working, although each side accuses the other of violations and disagrees about what was agreed - FT
India opened one of the sluice gates of the Chenab River dam, water began flowing towards Pakistan - media
• The French Armed Forces plan to equip the army with combat robots by 2040.
• Pope Leo XIV outlined the vision for his pontificate on Saturday, calling artificial intelligence (AI) one of the most important challenges facing humanity and pledging to follow Pope Francis' key priorities - Bloomberg.
• The United States is preparing an agreement for Greenland to be included in its sphere of influence - Reuters.
The Compact of Free Association (COFA) stipulates that the United States will provide the country with a wide range of services - from mail delivery and emergency assistance to military protection.
In return, the American military gets freedom of action on the partner's territory, and trade with the United States becomes mostly duty-free.
• Trump may announce US recognition of Palestine during summit in Saudi Arabia - The Jerusalem Post.
The publication's diplomatic source claims that the US president will also announce the creation of a Palestinian state without the presence of Hamas.
• India and Pakistan have agreed to a complete and immediate ceasefire, Trump says.
An Indian government source told AFP that Pakistan was violating the ceasefire.
• China's overseas investment up 28% on US trade pressure.
Chinese companies increased their overseas investment by 28% in the first quarter of 2025 amid Trump's trade crackdown on Beijing.
China - CPI consumer inflation (April) y/y = -0.1% (exp. -0.1% / prev. -0.1%).
PPI -2.7% (exp. -2.8% / prev. -2.5%).
• Taiwan is urgently rebuilding its armed forces to prepare for a possible conflict with China by 2027 and to hold out until the US intervenes in the conflict - WSJ.
• In Spain, they have started to fine for withdrawing large sums of cash without notifying the tax authorities: from €600 to €150,000.
If you withdraw more than €3,000 from your account, you must report it 24 hours in advance, and if more than €100,000 - 72 hours in advance. The warning must be submitted through the official website of the tax authority. After that, the person will receive a receipt, which he must present at the bank.
If a person does not inform the state what he wants to do with his money, he will be fined 1-10% of the amount withdrawn. Banks are also required to report frequent small withdrawals to the authorities.
• Elliott Investment Management is in talks to buy a stake in the Bulgarian section of the Turkish Stream.
However, the talks are at an early stage and there is no guarantee that the deal will be completed.