Business

1. Back in the red
2. Gaming out a ‘Xi put’
3. CEOs left ‘frozen’
4. Fed: Don’t look at us
5. Republicans in Trump’s ear

It turns out there was a “Trump put.” It just had a lower strike price than we thought and was on a different market.

Investors who had clung to the idea that enough pain would force Donald Trump to buy back his policies — a “put” in market-speak — turned out to be correct, but it wasn’t the $10 trillion that vanished from stock portfolios since last Thursday that did the trick. It was the bond market, where Treasurys had seen their sharpest moves since 2008, that pushed the president back from the brink of a trade war that could have sparked a global recession. The threat of sustained high borrowing costs — “yippy” markets, in the president’s words — took the king of debt from “BE COOL” to blinking in just a few hours.

In head-to-head negotiations during his presidency, Trump has been all but unbeatable, cowing one law firm and university and world leader after another. But the market is too diffuse to be bullied. Its bosses can’t be hit with executive orders or dragged on Truth Social. In the end, the crypto president was beaten by decentralized finance.

“You mean to tell me,” President Bill Clinton famously asked, when told that his bold economic plans would likely cause an untenable spike in borrowing costs, “that the success of the program and my re-election hinges on the Federal Reserve and a bunch of f*cking bond traders?” His political adviser James Carville once said he’d like to be reincarnated as a bond trader: They “can intimidate everybody.”

And they may not be done. While the S&P 500 has regained almost 95% of its post-Liberation Day losses, the bond market is still sulking. Investors are worried about another rug-pull: 90 days is both an eternity in Trump world and a very short window to negotiate 75 trade deals. His 145% tariffs on China still leave the world’s two largest economies in a full-blown trade war, with business caught in the middle.

And the entire episode has undermined confidence in the administration’s handling of the economy — long one of Trump’s strong suits — leading some to wonder if this is America’s “Liz Truss moment,” when the UK government’s budget blunders enraged the bond market (and cost the prime minister her job). Watch today’s auction of 30-year Treasury bonds for a mood check.

Here we go again

US stocks plunged again, wiping out half of yesterday’s gains.

The tech-heavy Nasdaq is down 6% after posting its best day since the height of the internet bubble in 2001. Investors weren’t heartened by what appears to be swift progress from the White House on securing trade deals: Trump economic adviser Kevin Hassett said 15 countries have put proposals on the table (just don’t ask which ones). The market also ignored new data showing that March inflation cooled because tariffs have scrambled the picture on prices.

One Wall Street executive called Trump’s pause “the financial and economic equivalent of Khrushchev turning the ships around” during the Cuban missile crisis — before noting grimly that the Cold War went on for another 25 years.

All eyes on Xi

After the “Trump put” comes the “Xi put.”

An escalating trade war between the world’s two biggest economies has started a new game of chicken, leaving global investors to ponder who will blink first. China’s leader is facing economic pressures at home, where consumer demand has tanked — CPI has now fallen for two months straight — and the government is trying to push banks to lend.

China hasn’t yet raised the 84% tariff on US goods it put in place before Trump’s latest moves, but has begun to take steps to attack America’s soft exports. Beijing’s film czar said it would reduce Hollywood studios’ access to Chinese moviegoers, who are expected to account for nearly a quarter of this year’s global box office. Chinese officials also issued warnings on the risks of traveling to the US, a threat to one of America’s biggest sectors — tourism.

The US’s $32 billion trade surplus in services with China is more vulnerable than its $300 billion trade deficit. Put another way, adversaries can inflict more pain taxing the merger advice America does export than the toasters it doesn’t.

Elsewhere in American soft power: Ken Griffin noted the significant overlap between billionaires with the president’s ear and billionaires who own sports teams popular all over the world — among them Robert Kraft, Steven Ross, and Josh Harris. “The owners of American sports teams represent one of the pinnacle services industries in the United States,” he observed this week: “They also carry a huge voice with the administration.” Nearly 95% of political donations by sports owners since 2020 have gone to Republicans, The Guardian found (though Miriam Adelson, the widow of megadonor Sheldon Adelson, accounts for a large chunk).

— Rohan Goswami

Trump turnaround leaves CEOs “frozen”

Trump’s reversal left CEOs relieved but discombobulated and warning of pain ahead.

“There’s a lot that goes into why things are made where they’re made, and a lot of those things are not quickly undone,” Bayer CEO Bill Anderson tells Semafor. “There need to be some new [trade] agreements made, but long-term, high walls would be very difficult for countries, companies, and consumers.”

• Delta CEO Ed Bastian said the company wouldn’t take delivery of any tariffed Airbus planes. “It gets very difficult to make that math work,” he said this morning. Delta pulled its 2025 profit forecast.
• Haas Automation, a privately held precision-parts manufacturer, warned it had halted overtime, paused hiring, and slowed production and asked the White House for exemptions on important machine components and raw materials.
• Amazon began canceling orders from China, Bloomberg reported. CEO Andy Jassy told CNBC that sellers on its platform will pass tariff costs along to consumers: “Depending on which country you’re in, you don’t have 50% extra margin that you can play with.”
• “We have over the years adjusted country-of-origin on some things,” Walmart CEO Doug McMillon said on a call this morning. “We will manage that mix artfully.” The company, which imports about one-third of the products sold in its US stores from China and Mexico, rescinded its first-quarter profit guidance.
• Tariffs are expected to make Audi’s most popular car “unsellable” in the US.

Trump’s quick reversal left business leaders confused about the true purpose of the tariffs, which the White House has, at various times, said are meant to raise revenue, bring back manufacturing jobs, eliminate trade deficits, punish freeloading allies, hurt adversaries, and crack down on fentanyl. Raising meaningful revenue or revitalizing US factories would require high and sustained tariffs, not ones that can be negotiated away.

“People are just frozen. The rules of the game changed,” said Connor Fitzgerald, a credit portfolio manager at Wellington Management, the $1.2 trillion investment giant. “That hasn’t played through economic data yet.”

— Rohan Goswami and Liz Hoffman

Fed tamps down rate-cut chatter

Fed officials are trying to squash any talk of an emergency interest-rate cut, pointing to potential price shocks from tariffs and trading sessions that have, despite steep drops, lacked the telltale signs of panic.

“I intend to keep my eye squarely focused on the outlook for inflation,” in balancing the central bank’s dual mandate of keeping prices stable and unemployment low, Kansas City Fed chief Jeff Schmid said.

“Markets are, generally speaking, pretty good at working themselves out,” Cleveland Fed President Beth Hammack told Bloomberg yesterday. “I think that’s what we’ve been seeing.”

The Fed’s problem (aside from a meddlesome White House) is that its playbook doesn’t neatly work in a world of high prices and low growth, which is most experts’ base case for the US economy. “Some of the shifts we’re seeing run the risk of both being inflationary and negative for unemployment,” Richmond Fed President Tom Barkin told Axios, scrupulously avoiding the s-word. Powell noted last week that “elevated risks of both higher unemployment and higher inflation” are on the horizon.

For now, wait and see prevails. “I would much rather wait and move in the right direction than move quickly in the wrong direction,” Hammack said.

— Rohan Goswami

Senators pressed Trump to pause

Republican senators lobbied President Donald Trump directly to use the leverage created by his massive tariff regime to pressure US allies to cut their own tariffs, Semafor’s Burgess Everett, Eleanor Mueller, Shelby Talcott report. Ted Cruz, Lindsey Graham, and Mike Lee all spoke to Trump directly about using the opportunity created by his tariffs to strike some deals. When Trump announced he would do exactly that, there was applause in the Senate Republican lunch. “Jubilation is too strong a word, but it was positive,” said Sen. John Cornyn, R-Texas, of the mood.

➚ BUY: Cargo. Companies are scrambling to fill ships before Trump’s 90-day pause expires.

➘ SELL: Shorts. Stock-market bears got squeezed hard yesterday after Trump’s surprise sent stocks soaring. Total short positions against the S&P 500 at the end of March were larger than at any point since 2016, according to Bank of America.

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Markets

• Smoke, but no fire: Corporate borrowers tiptoed back into the market this morning. Japan Tobacco, Diageo, and Autozone were among highly rated companies issuing new debt, and deals went smoothly, bankers and investors said.
• Absence of gilt: The Bank of England delayed a £600 million long-dated gilt auction scheduled for today, citing market uncertainty. The central bank will sub in a larger, shorter-dated auction next week.

Companies and Deals

• Threading the needle: Prada cut $200 million off the purchase price of Versace to get the deal through today’s choppy market, the Financial Times reported. Prada will pay around $1.4 billion, less than half of what Versace had been seeking when the process began, according to the FT. Demand for luxury goods has fallen, especially in China.
• Fault in their stars: Brewery giant Constellation backed away from much of its DEI programming, under pressure from conservative activist Robby Starbuck. The company will rename its DEI team and nuke a supplier diversity program.

Watchdogs

• Auto-regulation: Elon Musk’s government layoffs have hit one of his regulators particularly hard. The National Highway Transportation Safety Board has been a thorn in Musk’s side, opening a number of inquiries into the safety of Tesla’s self-driving functionality. NHTSA’s unit overseeing automated driving has been slashed, the FT reports.
• Sovereign wealth: A Rhode Island lawmaker wants to take advantage of the state’s Royal Charter and create a free trade zone for the state, allowing the smallest state in America a respite from Trump’s tariff talk.

US President Donald Trump’s ramped-up tariffs on Chinese goods is a gamble that his trade war will hurt Beijing more than Washington. But in the energy sector, at least, US victory is far from assured.

Chinese clean tech companies may actually emerge stronger as a result of increased isolation from the US market, analysts told Semafor, while American energy companies — fossil fuels and renewables — could find themselves increasingly at a loss, Semafor’s Tim McDonnell wrote.