During several lengthy interviews this morning on Fox News and Bloomberg TV, Treasury Secretary Scott Bessent said there could be “several large” trade deals announced in the next couple of weeks, adding that he expects Trump administration officials will meet with their Chinese counterparts again in-person to negotiate those tariffs. He also said he expects the US budget deficit “to be something with a 3% in front of it by 2028” with revenue from tariffs to be used to solve the deficit.

“My sense is, over the next couple of weeks we’re going to have several large deals announced,” Bessent said in an interview with Bloomberg TV’s David Westin. Regarding China, he said “I expect that we will be negotiating in-person with them again.” The remarks build on Bessent’s comments earlier Friday that he anticipates such deals will come ahead of the expiration of the 90-day pause on the steep “reciprocal” rates that President Donald Trump unveiled on April 2.

“These deals are moving quickly, and I think as we approach the end of the 90-day period, we’re going to see more and more of them announced,” Bessent said in an earlier interview with Fox News. “Many of the Asian countries have come with very good deals.”

Bessent said that most US trading partners have been negotiating “in very good faith,” and that the European Union is an “exception.” Trump earlier Friday threatened a 50% tariff on EU goods starting on June 1, saying “our discussions with them are going nowhere.”

“I think this is in response just to the EU’s pace,” Bessent said of Trump’s threat. “I would hope that this would light a fire under the EU.”

The Treasury chief has been tapped by Trump as point person for negotiations with a number of Asian trading partners, while Commerce Secretary Howard Lutnick has taken the lead on European talks. Bessent reiterated his view that the EU has a “collective action problem” in negotiating, because of the need to assemble a unified position among multiple member nations. What he means by this is that the US is negotiating with unelected European bureaucrats (it is Europe after all) and not with representatives of sovereign states, which is why it is difficult to make any headway.

Bessent declined to specify which nations the US is likely to announce deals with in the coming weeks. He did say in the Fox interview that “we’re far along with India.”

He also said that the so-called liberation day tariff rates that Trump announced April 2 were “based on countries coming to us and negotiating in good faith.” After that announcement, Bessent had repeatedly said that those rates were a ceiling unless other nations retaliated. “If you don’t retaliate, that is the ceiling,” he said April 9 at an American Bankers Association event. The EU was assigned a 20% rate last month, less than half the level of Trump’s Friday threat.

Asked about the tax bill that passed the House earlier this week, the Treasury chief said that Senate Majority Leader John Thune is aiming “to take this up immediately, and I’m not expecting that there’s going to have to be that much change” in the legislation in that chamber.

Turning to the debt, the Treasury chief said that since the US can grow the economy and control the debt, “what is important is that the economy grows faster than the debt” adding that “if we change the growth trajectory of the country, of the economy, then we will stabilize our finances and grow our way out of this.”

The problem, as he also pointed out, is that there is lots of Congressional resistance to spending cuts. Well, duh. It’s not called grift for nothing.

We can both grow the economy and control the debt. What is important is that the economy grows faster than the debt.

If we change the growth trajectory of the country, of the economy, then we will stabilize our finances and grow our way out of this. pic.twitter.com/lv07wJne1f

— Treasury Secretary Scott Bessent (@SecScottBessent) May 23, 2025

While the modest revenue gains from tariffs are appreciated, they will never be able to fully offset all of the extra spending which just piles up year after year. And speaking of tariffs, Bessent said that “there is an equilibrium rate for tariffs and I think we will reach that rate. Tariff barriers or nontariff trade barriers are coming down, so friction is decreasing. This will lead to several hundred billion dollars a year of revenue, which will correlate to several hundred billion less bonds that the US has to issue.”

There is an equilibrium rate for tariffs and I think we will reach that rate.

Tariff barriers or nontariff trade barriers are coming down, so friction is decreasing.

This will lead to several hundred billion dollars a year of revenue, which will correlate to several hundred… pic.twitter.com/2ZZMjHXeeY

— Treasury Secretary Scott Bessent (@SecScottBessent) May 23, 2025

It’s also why Bessent praised Musk’s efforts with Doge, which he said was “one of the most important of my lifetime and I am committed to not letting the bureaucracy slow it down.” 

“We need to get the costs under control; we need to get government efficiency under control; and we need to make the government work better for the American people.” Yes, well, it took Musk about 4 months to realize that nothing can ever change, and even after cutting a few hundred billion in gratuitous government spending in a few months, he was quickly shocked at just how embedded corruption is and is now fading away from the DC scene.

The effort undertaken by @DOGE and @elonmusk is one of the most important of my lifetime and I am committed to not letting the bureaucracy slow it down.

We need to get the costs under control; we need to get government efficiency under control; and we need to make the government… pic.twitter.com/z2bWCMg9bu

— Treasury Secretary Scott Bessent (@SecScottBessent) May 23, 2025

In terms of matters that matter most to the market, Bessent told Bloomberg that “we are very close to moving the Supplementary Leverage Ratio (SLR) for banks.” He said an SLR shift could bring down yields by tens of basis points. The comment helped back-end yield fall slightly.

And speaking of bonds, Bessent rejected the idea that the US bond market selloff is related to the passing of the “Big, Beautiful” tax bill (he is wrong). Bessent said he is not worried about bond market moves which he stressed was happening globally.

There was much more in the two interviews; here is a summary of the main topics covered:

• Substantial revenue now coming in thanks to tariffs.
• Very optimistic on outlook for deficit.
• Over the next couple weeks we’re going to have several large deals announced.
• Says EU has a collective action problem.
• Expect they will be negotiating with China in person again.
• Very optimistic Germany can help push the EU forward.
• May see a US-Germany reset under Chancellor Merz.
• Wrong to think bonds are moving on US Congress action
• As US growth accelerates not worried about debt dynamics.
• Not particularly worried about markets are thinking.
• Wouldn’t necessarily categorize it as weak Dollar.
• Other countries’ currencies rising, not Dollar falling.
• There is a lot of resistance to government spending cuts.
• Deregulation is to kick in for growth in Q3-Q4, 2026.
• Want to make the US the most attractive for capital.
• Very close to moving the SLR and could see SLR move over the summer.
• A shift in SLR could have an impact on Treasury yields.
• When trade deals are sorted, can focus on the privatization of Fannie Mae and Freddie Mac.
• G7 was very concerned about imbalances around China.

Last but not least, Bessent had some choice comments about Trump’s latest nemesis, Harvard University, which the Treasury secretary called “one giant hedge fund.”

Daniel Ives of Wedbush Securities raised his 12-month price target on Tesla to a Street-high $500 from $350 on Friday morning, citing the near-term launch of Tesla’s autonomous ride-hailing Cybercabs as a major catalyst to spark the “golden age of autonomy.” 

“We believe the golden age of autonomous is now on the doorstep for Tesla with the Austin launch next month kicking off this key next chapter of growth for Musk & Co. and we are raising our price target from $350 to $500 reflecting this massive stage of valuation creation ahead. We maintain our OUTPERFORM rating,” Ives said. 

We believe the golden age of autonomous is now on the doorstep for Tesla with the Austin launch next month kicking off this key next chapter of growth for Musk & Co. and we are raising our price target to $500 reflecting this massive stage of valuation creation ahead. 🔥🏆🐂🍿🏅

— Dan Ives (@DivesTech) May 23, 2025

Key takeaways from Ives: 

• Autonomy as a catalyst: Tesla’s Full Self-Driving (FSD) rollout and the planned “Cybercab” initiative are seen as central to future margin expansion and valuation upside.

• Political tailwind: Ives suggests that with Elon Musk stepping back from DOGE and the Trump administration potentially easing regulatory hurdles, Tesla is well-positioned to accelerate its FSD and AI goals.

• AI positioning: Tesla is described as “the most undervalued AI play in the market today,” and is grouped with top tech names like Nvidia, Microsoft, OpenAI, Palantir, Amazon, Meta, and Alphabet as a long-term AI winner.

• Vision beyond cars: The note emphasizes Tesla’s evolution into a disruptive tech and robotics company and forecasts the long-term potential to license its autonomous tech globally.

🚨 Wedbush’s Dan Ives is raising his price target on Tesla $TSLA from $350 to $500 as the “golden age of autonomous” nears:

“We believe the golden age of autonomous is now on the doorstep for Tesla with the Austin launch next month kicking off this key next chapter of growth for…

— TESLARATI (@Teslarati) May 23, 2025

“We estimate the AI and autonomous opportunity is worth at least $1 trillion alone for Tesla and we fully expect under a Trump White House these key initiatives will now get fast tracked as the federal regulatory spiderweb that Musk & Co. have encountered over the past few years around FSD/autonomous clears significantly under Trump,” the Tesla bull said. 

He added, “We believe Tesla could reach a $2 trillion market cap by the end of 2026 in a bull case scenario.” 

“Rome was not built in a day…and neither will Tesla’s autonomous and robotics strategic vision. There will be many setbacks….but given its unmatched scale and scope globally we believe Tesla has the opportunity to own the autonomous market and down the road license its technology to other auto players both in the U.S. and around the globe,” Ives concluded.

Now that we’ve reached the midpoint of the 2020s, we have a clearer picture of which technologies—and which companies—will potentially lead the 2030s. The firms leading in EVs, autonomous drones, space-based technologies, humanoid robotics, semiconductors, and AI are not just re-shaping consumer markets today—they’re also building dual-use technologies with direct applications in defense and national security (remember President Trump wants hemispheric defense – yet another emerging investing theme). 

Tesla stands uniquely positioned in 2025. Or, more accurately, Elon Musk does. From EVs and AI to space-based technologies, power grid technologies, tunnels, and even neural interfaces, Musk controls a tech empire that spans nearly every strategic frontier that will be critical for the U.S. to secure dominance in the 2030s. Find another US-based company with these technologies under one roof that can easily scale… Yet China has several. 

Suppose the 2030s are defined by technological innovation in a world fracturing into a dangerous bipolar state. In that case, the U.S. must consider incentivizing the rise of more Tesla-like companies. As Ives pointed out above, the Trump administration understands this. Read:

• America Must Reclaim These Supply Chains By 2030

And let’s not forget what Goldman Sachs recently said about China’s robotaxi rollout—a reminder that the global race in autonomy is already underway.

Update (1200ET): Hours later, a judge has granted Harvard’s request for a temporary restraining order on the Trump administration’s foreign student ban. 

US District Judge Allison Burroughs, an Obama appointee, issued the temporary restraining order freezing the policy.

You will never guess which judge was assigned “purely by chance” to the Harvard lawsuit seeking to block Trump’s foreign student ban:

Yep, same one assigned to Trump Harvard funding lawsuit, Allison Burroughs who previously ruled for Harvard’s affirmative action program https://t.co/32TLf3oZTY

— zerohedge (@zerohedge) May 23, 2025

*  *  *

Update (1919ET): To the surprise of no one, Harvard University sued the Trump administration on Friday, less than 24 hours after the Department of Homeland Security gave the university 72 hours to hand over information on foreign students or they would block international students from attending the nation’s oldest university.

In a Friday morning letter to the Harvard community, president Alan Garber wrote: “We condemn this unlawful and unwarranted action,” adding that it “imperils the futures of thousands of students and scholars across Harvard and serves as a warning to countless others at colleges and universities throughout the country who have come to America to pursue their education and fulfill their dreams.”

The lawsuit, which claims that the move violates its First Amendment and due process rights, accuses the Trump administration of a “campaign of retribution” against the university, which indicated that it would also be filing a temporary restraining order (TRO) asking a judge to immediately block the administration’s action.

The suit claims that the Trump administration is exerting “clear retaliation for Harvard exercising its First Amendment rights to control Harvard’s governance, curriculum and the ‘ideology’ of its faculty and students.”

“With the stroke of a pen, the government has sought to erase a quarter of Harvard’s student body, international students who contribute significantly to the university and its mission,” reads the lawsuit. “Without its international students, Harvard is not Harvard.“

The US revoked Harvard’s Student and Exchange Visitor program certification, meaning foreign students can no longer attend the university. Existing international students must transfer or lose their legal status, the Department of Homeland Security said Thursday. -BBG

This is the second lawsuit Harvard has filed against the Trump administration in a matter of weeks.

Meanwhile, the Trump administration and House Republicans are also investigating Harvard over alleged ties to the Chinese Communist Party.

In a 14-page letter sent Monday, the House Select Committee on the Chinese Communist Party is requesting a series of information about Harvard’s activities that “create risks to U.S. national security and further the Chinese Communist Party’s (CCP’s) genocide in Xinjiang.”

The letter was signed by John Moolenaar, chairman of the U.S. House Select Committee on Strategic Competition; Tim Walberg, chairman of the U.S. Committee on Education and Workforce; and Elise Stefanik, chairwoman of the House Republican Conference, according to masslive.com.

The Congressional bodies are accusing Harvard of, and requesting information on:

1.     Harvard hosted and trained members of the Chinese Communist Party
2.     Harvard researchers collaborated with China-based academics on research funded by an agent of the Iranian government
3.     Harvard researchers used funding from the Department of Defense to partner with China-based academics on research with potential military applications
4.     Harvard researchers partnered with China-based individuals linked to China’s defense academic and industrial base on research that could advance China’s military modernization
5.     Further information regarding the safeguards Harvard places around research collaborations related to organ transplantation when research is conducted with People’s Republic of China-based researchers

*  *  *

Harvard is having a really bad year. From feds yanking billions in grants, to House Republicans alleging ties to the Chinese military, to President Trump threatening their tax-exempt status, to detained embryo-smuggling scientists (and most of that’s just this month), the university has now been blocked from enrolling international students – which constitute nearly 1/3 of Harvard admissions.

“I am writing to inform you that effective immediately, Harvard University’s Student and Exchange Visitor Program certification is revoked,” according to a letter sent to the university by DHS Secretary Kristi Noem, which they promptly shot over to the NY Times. The university has 72 hours to hand over requested information.

The decision followed a back-and-forth in recent days over the legality of a wide-ranging records request by the Department of Homeland Security.

According to Bloomberg, existing foreign students must transfer or lose their legal status, the notice reads.

This administration is holding Harvard accountable for fostering violence, antisemitism, and coordinating with the Chinese Communist Party on its campus.

It is a privilege, not a right, for universities to enroll foreign students and benefit from their higher tuition payments… pic.twitter.com/12hJWd1J86

— Secretary Kristi Noem (@Sec_Noem) May 22, 2025

In April DHS threatened to block Harvard from enrolling international students if the university refused to hand over detailed records about the student body containing “relevant information” on student visa holders who have been involved in “known illegal” or “dangerous” activity.

“It is a privilege to have foreign students attend Harvard University, not a guarantee,” Noem wrote in an April letter. “The United States government understands that Harvard University relies heavily on foreign student funding from over 10,000 foreign students to build and maintain their substantial endowment.”

Harvard dug in last month following the Trump admin’s demands – with president Alan Garber saying in a statement “No government — regardless of which party is in power — should dictate what private universities can teach, whom they can admit and hire, and which areas of study and inquiry they can pursue.”

Not So Fast?

Concurrently, a federal judge in California has blocked the Trump administration from terminating the legal status of international students nationwide while a court case challenging previous terminations is pending.

The order by U.S. District Judge Jeffrey S. White in Oakland bars the government from arresting or incarcerating the plaintiffs and similarly situated students; from transferring any of them outside the jurisdiction of their residence; from imposing any adverse legal effect on students and from reversing the reinstatement of the legal status until the case is resolved. Students can still be arrested for violent crimes. –AP

According to White, the government’s actions “wreaked havoc not only on the lives of Plaintiffs here but on similarly situated F-1 nonimmigrants across the United States and continues do so.”

Read Noem’s letter below (emphasis ours):

Harvard’s Student and Exchange Visitor Program Decertification

I am writing to inform you that effective immediately, Harvard University’s Student and Exchange Visitor Program certification is revoked.

As I explained to you in my April letter, it is a privilege to enroll foreign students, and it is also a privilege to employ aliens on campus. All universities must comply with Department of Homeland Security requirements, including reporting requirements under the Student and Exchange Visitor Program regulations, to maintain this privilege. As a result of your refusal to comply with multiple requests to provide the Department of Homeland Security pertinent information while perpetuating an unsafe campus environment that is hostile to Jewish students, promotes pro-llamas sympathies, and employs racist “diversity, equity, and inclusion” policies, you have lost this privilege.

The revocation of your Student and Exchange Visitor Program certification means that Harvard is prohibited from having any aliens on F- or J- nonimmigrant status for the 2025-2026 academic school year. This decertification also means that existing aliens on F- or J- nonimmigrant status must transfer to another university in order to maintain their nonimmigrant status.

This action should not surprise you and is the unfortunate result of Harvard’s failure to comply with simple reporting requirements.

On April 16, 2025, I requested records pertaining to nonimmigrant students enrolled at Harvard University, including information regarding misconduct and other offenses that would render foreign students inadmissible or removable. On April 30, 2025, Harvard’s counsel provided information that he represented as responsive to my request. It was not.

As a courtesy that Harvard was not legally entitled to, the Acting DHS General Counsel responded on my behalf and afforded Harvard another opportunity to comply. Harvard again provided an insufficient response.

Consequences must follow to send a clear signal to Harvard and all universities that want to enjoy the privilege of enrolling foreign students, that the Trump Administration will enforce the law and root out the evils of anti-Americanism and antisemitism in society and campuses.

If Harvard would like the opportunity of regaining Student and Exchange Visitor Program certification before the upcoming academic school year, you must provide all of the information requested below within 72 hours.

Please be advised that providing materially false, fictitious, or fraudulent information may subject you to criminal prosecution under 18 U.S.C. § 1001. Other criminal and civil sanctions may also apply.

I expect full and complete responses to the following requests:

1. Any and all records, whether official or informal, in the possession of Harvard University, including electronic records and audio or video footage, regarding illegal activity whether on or off campus, by a nonimmigrant student enrolled in Harvard University in the last five years.
2. Any and all records, whether official or informal, in the possession of Harvard University, including electronic records and audio or video footage, regarding dangerous or violent activity whether on or off campus, by a nonimmigrant student enrolled in Harvard University in the last five years.
3. Any and all records, whether official or informal, in the possession of Harvard University, including electronic records and audio or video footage, regarding threats to other students or university personnel whether on or off campus, by a nonimmigrant student enrolled in Harvard University in the last five years.
4. Any and all records, whether official or informal, in the possession of Harvard University, including electronic records and audio or video footage, regarding deprivation of rights of other classmates or university personnel whether on or off campus, by a nonimmigrant student enrolled in Harvard University in the last five years.
5. Any and all disciplinary records of all nonimmigrant students enrolled in Harvard University in the last five years.
6. Any and all audio or video footage, in the possession of Harvard University, of any protest activity involving a nonimmigrant student on a Harvard University campus in the last five years.

Developing…

In Goldman’s latest global steel outlook, analysts Aurelia Waltham, Eoin Dinsmore, and others highlight a key inflection point: China’s share of global steel production has declined for the first time in over two decades, reversing a multi-decade expansion period. 

“After more than two decades of China increasing its share of global steel production, we believe this structural trend has now come to an end as China’s domestic demand continues to falter and barriers to steel exports intensify,” Waltham and her team wrote in a note published on Friday morning.

The analysts noted that their global steel supply and demand model forecasted a 3% and 4% year-over-year increase in ex-China steel demand for 2025 and 2026, respectively. As Chinese steel exports are expected to decline, ex-China crude steel production is projected to rise by 3% in 2025 and 8% in 2026. 

“While we are bearish on US and European steel prices on the three-to-six month horizon, we expect a re-acceleration in demand growth and lower Chinese steel exports to provide price upside in 2026,” Waltham said. 

They outlined the biggest risk to their forecast of China losing global market share:

We see the biggest risk to our call that China will start to lose market share of global steel production to the rest of the world over the next two years being indirect[1] Chinese steel exports continuing to climb, pushing down rest of world apparent steel demand. This would likely see China steel demand from the manufacturing sector exceeding our current expectations, preventing a decline in Chinese steel output and apparent domestic demand, while at the same time meaning rest of world steel production growth would fall below end use consumption growth. However, this would be at odds with China’s policy to reduce steel output.

Following a 25-year expansion that saw China increase its share of global steel production from approximately 15% in 2000 to about 55% by 2020, analysts now forecast a decline to about 50% by 2026.

China’s steel production for 2025 already peaked in March. 

Key takeaways about China’s declining influence in global steel markets: 

• Peak Reached: China’s steel production likely peaked in March 2025 and is expected to decline by 2–3% YoY through 2026.

• Domestic demand slowdown: A continued decline in construction activity, especially new housing starts (forecasted to drop 24% in 2025), will more than offset gains from manufacturing (e.g., autos and appliances).

• Export headwinds: Chinese finished and semi-finished steel exports are forecast to drop 33% YoY in 2026, from 12% to under 8% of ex-China steel consumption.

• Policy risk: If exports or output stay elevated, the Chinese government may impose mandated production cuts (likely via emissions controls) in Q4 2025 to meet policy targets.

China’s economy is still a mess. Property sector will continue to weigh on steel demand. 

However, the analysts view a rebound in ex-China steel:

• Ex-China growth: Production outside China is expected to rise 3% in 2025 and 8% in 2026, helped by recovering demand and lower competition from Chinese exports.

• Regional demand: Demand in the U.S., EU, and India will gradually improve. Apparent demand outside China is forecast to rise 3–4% annually into 2026.

Global Steel Price Outlook: 

• Near-term weakness: U.S. and European prices face further downside in the next 3–6 months due to lackluster demand and high inventories.

• 2026 upside: Prices are forecast to rise in 2026 as Chinese exports fall and global demand picks up, particularly in Asia and the EU. Anti-dumping measures and trade friction will help contain Chinese supply abroad.

European Steel Price Forcast

US Hot Rolled Coil Price Forecast

The long-standing concern over China flooding global markets with steel may finally be easing—a shift that could pave the way for Western producers to ramp up output. We anticipate this trend will be evident in the U.S amid President Trump’s ‘America First’ era. 

Authored by Lance Roberts via RealInvestmentAdvice.com,

Market perspective is essential in avoiding investing mistakes. With the media constantly pushing a “Markets In Turmoil” narrative, it’s no wonder that investor sentiment recently reached some of the lowest levels since the financial crisis. The following chart is the z-score of the retail and professional investor sentiment composite index of bullish sentiment.

Notably, we are in one of the longest stretches of more extreme bearish sentiment outside structural bear markets. (Read “Death Crosses And Market Bottoms” for more detail and an explanation of the difference between event-driven corrections and structural bear markets.)

Of course, given the recent market decline and the surge in “bearish” media-driven narratives, it is unsurprising that bearish sentiment has risen. However, this is where investors start making mistakes in their investment process.

As noted, we are in one of the most extended stretches of bearish sentiment outside a structural bear market. The difference between event-driven corrections and structural bear markets is crucial to understand. However, extremely negative investor sentiment and positioning are the hallmarks of the end of corrections and bear markets. To wit:

In other words, historically speaking, the death cross, more often than not, is a potential contrarian indicator. The difference between whether the death cross is a shorter-term corrective process or a larger “bear market” decline depends mainly on whether the cause of the market decline is “event-driven” or “structural.” This context is important when examining the current decline and triggering of the “death cross.” The chart below shows the difference in the length of “event-driven” versus “structural” corrections, signified by the triggering of the “death cross.” The dot.com and financial crisis periods were structural events, as significant corporate failures and credit-market dislocations occurred amid deep economic contractions. However, outside of those two significant structural impacts, all other “events” were short-lived, and markets soon recovered.”

This is because when sentiment is the most bearish and the markets trigger longer-term sell signals, much of the selling has already been exhausted. Nonetheless, now that we are constantly connected to financial media, we are inundated with headlines designed to get “clicks” more than delivering real news. “Investor Resolutions For 2025” noted that investor psychology is the most significant driver of investing failure over time. This cycle of human emotions is continually repeated through investment cycles.

While many behavioral biases significantly negatively impact investor outcomes, from herding to loss avoidance to confirmation bias, “anchoring” is one of the most important.

The Anchoring Problem

“Anchoring is a heuristic revealed by behavioral finance that describes the subconscious use of irrelevant information, such as the purchase price of a security, as a fixed reference point (or anchor) for making subsequent decisions about that security.” – Investopedia

“Anchoring,” also known as the “relativity trap,” is the tendency to compare our current situation within the scope of our limited experiences. For example, I would be willing to bet that you could tell me exactly what you paid for your first home and what you eventually sold it for. However, can you tell me exactly what you paid for your first soap bar, hamburger, or pair of shoes? Probably not.

The reason is that the home purchase was a major “life” event. Therefore, we attach particular significance to that event and remember it vividly. If there was a gain between the purchase and sale price of the home, it was a positive event, and therefore, we assume that the next home purchase will have a similar result. We are mentally “anchored” to that event and base our future decisions around very limited data.

Today, investors are trained by the financial media to “anchor” to a fixed point in the market. Such is why investors consistently measure performance, relative to the market, from January 1st to December 31st. Or, worse, we measure performance from the peak of an advance. For example:

• The market is up 140% from the March 2020 lows.
• The market is down 10% from the 2025 peak.
• Or, the market is down 6% for the year.

The problem is that most investors did not buy the 2020 bottom or sell the 2022 peak. However, one of the most significant forms of anchoring is portfolio “high water marks.” The high water mark is the peak value of an investor’s portfolio over a given time frame. For example, at the market’s peak in 2025, an investor had a portfolio value of $1,000,000. During the recent market correction, the portfolio value declined to $950,000. While that $50,000 loss is significant and is certainly concerning for that investor, it must be put into the context of what is happening in the markets.

• First, before the correction that started in February, the market had rallied nearly 5%. Therefore, our example investor started the year with a portfolio value of roughly $960,000 that grew to $1,000,000.
• Secondly, while the $50,000 decline is significant, the investor is “anchored” to the portfolio’s high-water mark.
• As noted above, the market is down 6% for the year, but the investor is at roughly the same level as he started this year.
• In other words, the portfolio return is roughly a loss of 1% versus a market decline of 6%.

Yes, a decline of $50,000 is significant, but these “anchor” points provide little perspective for the average investor regarding their relative position to their financial goals. However, these “anchors,” tied to constant media updates, feed our emotional decision-making processes driven by “greed” or “fear.”

Let’s take a look at an example:

As of Friday’s close, the market is down 10% from its all-time high.

As we warned about several times in 2024 and early this year, when a 10% correction eventually came, it would “feel” worse than it was because of the long period of low volatility.

Yes, it feels terrible. However, investors are now focusing on that “high-water mark.”

But this is the goal of the Wall Street marketing machine. Getting you to focus on current gains or losses creates a “sense of urgency” for you to do something. Why?

“Money in motion creates fees and revenue for Wall Street.”

Therefore, pushing you to take action may not necessarily be “profitable” for you, but it IS profitable for Wall Street.

Changing Your Anchor Point

To reduce your “emotional action button,” step back and change your “anchor” point.

If your portfolio is down 10% from the recent peak, ask yourself two questions:

1. Am I losing money? Or,
2. Is my portfolio still aligned with my investing goals?

If my goal is to average a 6% annualized return, where am I today relative to that goal? The issue of using the “high-water mark” as the “anchor” is that it resets psychologically to measure our performance from that level. Therefore, we should look back at where we were on a trailing one-year basis. If our goal was 6% a year, we almost doubled that goal over the last 12 months. All of a sudden, the recent decline doesn’t seem as significant.

However, let’s assume an investor was unlucky enough to have bought the market’s peak before the pandemic’s onset. Despite the pandemic shutdown, surging inflation, fears of recession, the Russia/Ukraine war, and every negative headline, the portfolio is still 63% higher. In other words, the portfolio has an annualized return of roughly 12%, double what was required to meet the needed financial goals.

The point here is that where you choose to “anchor” your analysis will significantly affect your emotional psychology when managing your money.

Yes, there has been a lot of volatility this year, but if I “anchor” my view to a longer-term time frame, the recent volatility is much less concerning.

Market perspective is essential.

Stick To Your Process

Does this mean you shouldn’t pay attention to your money or take action when things go wrong? Of course, not.

With the media fueling our fears 24/7, from “Fear Of Missing Out” to “Fear Of Losing It All,” it is difficult not to let our emotions get the better of us. However, “anchoring” our market perspective to a previous high-water mark or portfolio dollar value exacerbates our fragile emotional states.

In the “heat of the moment,” it is easy to get caught up in the emotional pull of markets and portfolio valuation changes. This past weekend’s #BullBearReport discussed the requirement of being more like Dr. Spock from Star Trek when managing your money.

“If I ask you what’s the risk in investing, you would answer the risk of losing money.

But there actually are two risks in investing: One is to lose money, and the other is to miss an opportunity. You can eliminate either one, but you can’t eliminate both at the same time. So the question is how you’re going to position yourself versus these two risks: straight down the middle, more aggressive or more defensive.

How do you avoid getting trapped by the devil? I’ve been in this business for over forty-five years now, so I’ve had a lot of experience.

In addition, I am not a very emotional person.In fact, almost all the great investors I know are unemotional. If you’re emotional then you’ll buy at the top when everybody is euphoric and prices are high. Also, you’ll sell at the bottom when everybody is depressed and prices are low. You’ll be like everybody else and you will always do the wrong thing at the extremes.” – Howard Marks

We all make “bad choices,” and we need guidelines to maintain our market perspective.

A sizable contingent of investors and advisors has never experienced a real bear market. After a decade-long bull market cycle fueled by central bank liquidity, mainstream analysis believes the markets can only go higher. What has always been a concern to us is the rather cavalier attitude toward risk that the media promotes.

“Sure, a correction will eventually come, but that is just part of the deal.”

What gets lost during bull cycles, and is always found most brutally, is the devastation caused to wealth during inevitable declines.

Therefore, it remains essential to follow your investment discipline. If you don’t have a process, here are the guidelines we follow during tough markets.

7-Rules To Follow

1. Move slowly. There is no rush to make dramatic changes. Doing anything in a moment of “panic” tends to be the wrong thing.
2. If you are overweight equities, DO NOT try to fully adjust your portfolio to your target allocation in one move. Again, after big declines, individuals feel like they “must” do something. Think logically above where you want to be and use the rally to adjust to that level.
3. Begin by selling laggards and losers. These positions were dragging on performance as the market rose and they led on the way down.
4. If you need risk exposure, add to sectors or positions performing with or outperforming the broader market.
5. Move “stop-loss” levels up to recent lows for each position. Managing a portfolio without “stop-loss” levels is like driving with your eyes closed.
6. Be prepared to sell into the rally and reduce overall portfolio risk. You will sell many positions at a loss simply because you overpaid for them to begin with. Selling at a loss DOES NOT make you a loser. It just means you made a mistake. Sell it, and move on with managing your portfolio. Not every trade will always be a winner. But keeping a loser will make you a loser of capital and opportunity. 
7. If none of this makes sense to you, please consider hiring someone to manage your portfolio for you. It will be worth the additional expense over the long term.

Keep your market perspective in check, avoid anchoring, and focus on your investment goals rather than market volatility.

Despite the plunge in homebuilder confidence, US New Home Sales soared in April to 743k SAAR…

The 10.9% MoM surge in sales in April (versus a 4.0% MoM expected decline) was bolstered by a big downward revision in March from +7.4% MoM to just +2.6%…

This is the biggest beat since August 2022… and the second big downward revision in a row…

Meanwhile, the median new home sales price decreased 2% from a year ago to $407,200 (on an annual basis, prices have largely been retreating over the past 12 months) and is now back below existing home sale prices…

This month, 34% of builders reporting cutting prices, the largest share since December 2023, according to recent data from the National Association of Home Builders.

The surge in new home sales comes as mortgage rates tumbled…

So, don’t hold your breath for a recovery – rates are rising once again!

Via Greg Hunter’s USAWatchdog.com,

Analyst and financial writer John Rubino has a new warning concerning Trump’s “Big Beautiful Bill” making its way through Congress and Moody’s downgrade of US debt.  The Big Beautiful Bill is going to explode the debt by $20 trillion in the next 10 years, and the credit downgrade has people like billionaire investment fund founder Ray Dalio worries about money printing to pay the $1.5 trillion in interest on federal debt.  

Rubino warns, “The story with Moody’s downgrade isn’t that they did it, that they moved the US from triple A (Aaa) to one notch below (Aa1).  It’s kind of insane that a government with 125% of GDP has an investment rating at all.  Right?”

” They are clearly baking a gigantic currency crisis into the cake.  Ray Dalio gets it right.  

The rating agencies excuse or explanation for why the US still has an investment grade credit rating is that a country with a printing press can never default because it can just print enough money out of thin air to pay interest on its bonds, and it can do that forever.  

So, it’s triple A credit, which does not make any sense at all because if you just print a lot of money out of thin air to pay your debts, then your currency goes down in value, and you are paying back your creditors with depreciating currency, which is a form of default.  

The credit rating agencies are only looking at one kind of default where we just stop paying.  

They are not looking at paying with cheaper currency year after year, and we stiff our creditors that way.  

That’s why you don’t want to own Treasury bonds. 

They are not going to stop paying interest, but the interest will not cover inflation going forward.  So, you will have a net real loss until they just crater, and then you will have a massive capital loss.”

On top of that, interest rates have been rising and not falling.  The 30-year mortgage rate is now just under 7% again.  Rubino says, 

“We went back up to unsustainable interest rates really quickly. . . . 

The Fed has promised a couple of rate cuts this year, and for interest rates to go up while the Fed is inferring easing means we are risking losing control of the financial markets. 

If the Fed can’t control interest rates, we are monumentally screwed as a financial system.  That’s kind of what we are headed for now.  

In the US, interest rates are going back up, but if you want to look at an extreme case, look at Japan.  They don’t just have 30-year bonds, they have 40-year and 50-year bonds and those are cratering, which is to say the interest rates on those bonds are spiking.  Long term Japanese bonds used to be 0%.  Now, they are 3% and change. . . . That change is huge.  

So, Japan, the US, Europe, the UK and China, all of these big countries are basically making the same mistakes, and they are all headed in the same direction.  

We are in the early stage of a currency death spiral where interest rates start to go up and the government can’t control that and then their debt goes parabolic . . . and this goes until everything breaks down.  

We are in the third inning of that game, and the last couple of innings are going to be hair raising.  

There are going to be currency crises, which we have never seen in our lifetimes. . . . It will be fun times if you are a gold bug.”

Rubino thinks gold will go up in price way over $10,000 per ounce, and he also expects silver to take off too.  Rubino says, 

“Silver is a great story because it is an industrial metal that is in deficit.  Industrial uses are taking more silver off the markets than what they are producing, and that is going to lead to a shortage.  

Even if you don’t look at silver as a monetary metal, the industrial demand makes it a buy right now.”

Rubino does not think the US will be in a civil war, but Europe is going authoritarian, and civil war is most likely there if Russia does not blow them up first.  Rubino thinks America will do better than Europe, but we will still have trouble, chaos and a financial reset to work through.

There is much more in the 46-minute interview.

Join Greg Hunter as he goes One-on-One with financial writer John Rubino of the popular site called Rubino.Substack.com for 5.20.25.

To Donate to USAWatchdog.com, Click Here

John Rubino is a prolific financial writer, and you can see some of his work for free at Rubino.Substack.com.

It was set to be a relatively quiet day, with stock futures unchanged, yields modestly lower, bitcoin just shy of record highs… and then Trump woke up. 

First, in a post on his Truth Social just after 7:20am ET, the clearly angry president said that unless iPhone that are sold in the US are not also built in the US, then a “Tariff of at least 25% must be paid by Apple to the U.S.”

The comment immediately wiped out tens of billions in value from AAPL stock, which tumbled $10 to $193, or more than 4%…

… and while the news also dragged broader futures lower, Trump saved his second market punishment for 25 minutes later when at 7:45am ET, the president doubled down on his post-awakening stream of Truth Social consciousness and wrote that he is “recommending a straight 50% Tariff on the European Union, starting on June 1, 2025. There is no Tariff if the product is built or manufactured in the United States.” 

His ire was likely triggered by overnight reports that EU talks with the US had gone nowhere, which is why he said that Europe’s “powerful Trade Barriers, Vat Taxes, ridiculous Corporate Penalties, Non-Monetary Trade Barriers, Monetary Manipulations, unfair and unjustified lawsuits against Americans Companies, and more, have led to a Trade Deficit with the U.S. of more than $250,000,000 [sic] a year, a number which is totally unacceptable.”

The post slammed S&P futures which were already reeling from the AAPL news, and spoos tumbled about 100 points lower from where they were just minutes earlier.

The news also slammed bond yields, the euro, European stocks, crude, and bitcoin…

… while gold was the only asset that rose on the renewed trade war escalation.

VIX spiked back above pre-Liberation Day lows…

Now, we wait to see if ‘retail’ will step back in to save the day (because macro hedge funds have been positioning for just this kind of Trump-driven turmoil)

The sudden shift in Trump’s temperament, not to mention markets, underscores the ongoing risk that shifts in US policy can abruptly upend market dynamics at short notice. Markets had rebounded in recent weeks on optimism that Trump was softening his approach to the tariffs and investor attention had shifted to concerns about the ballooning US debt and deficits.

“It’s going to keep markets on edge,” said Aneeka Gupta, head of macroeconomic research at Wisdom Tree UK Ltd. “Markets were hoping news on tariffs had abated until at least the 90-day pause expired, but that’s clearly not the case. Uncertainties are here to stay. We’re in for a period of very high volatility.”

The rest of this post was going to be the a recap of the overnight news, but obviously none of that matters now that Trump decided to take a nuke to newsflow and blow everything up.

As US traders were scrambling to pick up the pieces of wtf just happened, European stocks were dumping, while traders ramped up bets on further ECB monetary easing after dire wage data earlier. Money markets priced in 65 bps of additional easing in 2025, which implies three quarter-point rate cuts at the ECB’s remaining five scheduled decisions is most likely. Traders favored just two such reductions before Trump’s social media posts. 

“I think a lot of people see it as just another Trump tweet, which can be cancelled by another one in a few hours or a few days,” David Kruk, head of trading at La Financiere de L’Echiquier. “I don’t think a lot of European investors are selling on the news.” The same can no be said for US – or certainly crypto investors – who clearly relish this kind of rollercoaster idiocy.

Kruk said the bigger issue for investors remains the budget credibility of the US. Bond markets this week have jolted after Moody’s Ratings stripped the US of its top credit rating and the House’s approved a tax bill that is likely to increase the debt burden.

This week’s selloff in long-dated Treasuries presents a “great entry point” for buyers with the 30-year yield above 5%, according to Bank of America Corp. strategist Michael Hartnett.

The US government is likely to heed warnings from bond vigilantes, who are “incentivized to punish the unambiguously unsustainable path of debt and deficit,” the strategist said.

The Stoxx 600 is little changed as gains in mining and travel shares are offset by losses in insurance and consumer products. Here are the biggest European movers (or at least until the Trump tweets):

• GSK shares climb as much as 1.3% after the British drugmaker won US approval for Nucala as an add-on treatment for some patients with chronic obstructive pulmonary disease (COPD).
• Lundbeck shares rise as much as 5.7% after Kepler Cheuvreux initiated coverage on the stock with a buy recommendation, saying the valuation doesn’t reflect the “full value” of the Danish pharma company’s late-stage pipeline.
• PVA TePla gains as much as 12% after Deutsche Bank raises recommendation on the chip equipment firm to buy from hold, seeing the firm positioned to deliver structurally higher returns from 2026 onwards.
• AJ Bell shares jump as much as 10%, the most in a year, after the investment platform beat expectations in the first half and said annual results should come in above guidance. Shares are now trading at their highest level since December.
• PolyPeptide shares jump as much as 11%, among the top performers in the Swiss Performance Index on Friday morning, after the Swiss contract development and manufacturing organization secured additional financing under its revolving credit facility.
• Azimut gains as much as 5.3%, the most in more than a month, after the Italian asset manager raised its profit outlook for the year and flagged a deal with private equity fund FSI for a digital bank called TNB.
• European mining stocks are the best performers in Europe’s Stoxx 600 benchmark on Friday, as a Treasuries selloff eased, lifting base metals prices.
• KGHM gains as much as 4.2% as Poland’s plans to lower copper tax is set boost the metal producer’s output.
• Thule gains as much as 7.7% after Nordea upgrades to buy from hold, saying the year-to-date drop in the Swedish outdoor equipment maker’s share price offers an attractive entry point.
• Yellow Cake shares jump as much as 8.3%, climbing to its highest level since January, amid reports US President Donald Trump will sign multiple nuclear-related executive actions as soon as Friday.
• Games Workshop shares fall as much as 4.1%, slipping further from a recent record high, after the maker of the Warhammer tabletop game gave a trading update, with analysts pointing to a sparser games release slate for next year and several headwinds, including tariffs.
• Matas falls as much as 11% after full-year earnings from the Danish cosmetics retail group disappointed. DNB Carnegie analysts noted a “soft set of results,” that fell short on several key metrics, including revenues.

Asian equities rebounded, putting them on track for a sixth week of gains, as risk appetite recovers on encouraging progress in trade negotiations. The MSCI Asia Pacific index rose as much as 0.7%, with Japanese shares including Nintendo, Mitsubishi Heavy and Hitachi among the biggest boosts. The Philippines’ stock benchmark jumped 1.7%, recouping Thursday’s loss spurred by a call for the cabinet to quit. Stocks also advanced in India. Investors are looking past worries over US fiscal deficit that had weighed on regional equities throughout the week. Assurances of open communication between US and China also helped lift sentiment. 

In FX, the Bloomberg Dollar Spot Index eyes its lowest close since December 2023 as it falls 0.5% on concerns over the US fiscal outlook. The drop accelerate after Trump’s tweets. The Swedish krona leads G-10 currencies against the greenback, rising 1%. The pound adds 0.6%, briefly touching a fresh three-year high of $1.35. The euro also climbs 0.6%. Meanwhile, mainland Chinese shares bucked the trend, falling 0.8%. Benchmarks in Taiwan and South Korea also ended slightly lower. 

In rates, treasuries extdended their gains, with the 10Y sliding as low as 4.45% after hitting 4.62% yesterday, before moving modestly higher. 30-year yields fell 2 bps to 5.02% having reached 5.15% during Thursday’s session. Longer dated maturities also outperform in Europe with UK and German 30-year borrowing costs falling 2-3 bps each.

In commodities, oil prices are of course in the red, with WTI falling 0.3% to $61 a barrel, because Trump wants to make sure there is zero capex in the shale patch and watch production crater, sending oil to triple digits in a year or so when the bullwhip effect from his punitive policies finally catches up. Spot gold climbs $39 to around $3,333/oz. Bitcoin is steady just above $111,000.

On today’s calendar we get New Home Sales and the Kansas Fed.

Market Snapshot

• S&P 500 -1.5%
• Nasdaq 100 mini -1.8%
• Stoxx Europe 600 -2%;
• 10-year Treasury yield -5 basis point at 4.48%
• VIX 24.54
• Bloomberg Dollar Index -0.5% at 1214.85
• euro +0.5% at $1.1337
• WTI crude -0.5% at $60.9/barrel

Top Overnight News

• Trump threatens Apple with 25% tariffs, EU with 50% tariffs
• Trump is to sign orders to boost nuclear power as soon as Friday and will invoke a wartime act over US uranium independence, according to sources.
• Trump’s trade negotiators are pushing the EU to make unilateral tariff reductions on US goods, saying without concession the bloc will not progress in talks to avoid additional 20% “reciprocal” duties. FT
• Bank of Japan Governor Kazuo Ueda said on Thursday the central bank will closely monitor market moves as yields on super-long Japanese government bonds (JGB) reached record highs this week. RTRS
• The U.S. and China agreed to keep lines of communication open, following a call between senior officials Thursday, signaling continued high-level engagement as both sides work toward a broader deal. CNBC
• China has lowered the ceilings on deposit rates, three banking sources with direct knowledge of the guidance said on Friday, as authorities seek to protect banks’ profit margins and discourage savings. RTRS
• Big investors say they are diversifying their bond portfolios to include greater exposure to markets outside the US as Trump’s trade war and the country’s growing deficit erode the appeal of the world’s biggest debt market. FT
• Japan’s key inflation gauge accelerated to 3.5% in April, the fastest clip in more than two years, fueled by rising food and energy costs. BBG
• Germany’s Q1 GDP is revised higher from +0.2% Q/Q to +0.4% thanks to a rush of activity as companies attempted to get ahead of Trump’s tariffs. WSJ
• UK retail sales gained 1.2% in April, continuing a surprisingly strong start to the year. Consumer confidence rose to -20 in May, GfK said, also beating estimates. BBG
• Big US banks (including JPM, BAC, C, and WFC) are exploring whether to team up to issue a joint stablecoin, a step intended to fend off escalating competition from the cryptocurrency industry. WSJ
• BofA Flow Show: USD 1.8bln outflows from US equities, USD 4bln from Japanese equities, inflows into European equities for a six week, EM saw largest inflow in 14 weeks

Tariffs/Trade

• US Deputy Secretary of State Landau spoke with Chinese Vice Foreign Minister Ma on Thursday and acknowledged the importance of the bilateral relationship to the people of both countries, while they discussed a wide range of issues of mutual interest and agreed on the importance of keeping open lines of communication.
• US President Trump is pushing the EU to cut tariffs or face extra duties with US negotiators to tell Brussels they expect unilateral concessions, while USTR Greer is preparing to tell EU counterpart Sefcovic that recent “explanatory note” falls short of US expectations, according to FT.
• Japanese PM Ishiba said he held a call with US President Trump in which they discussed tariffs, diplomacy and security, while there might be an occasion where he visits the US for in-person talks with Trump. Furthermore, Ishiba said there are no changes to Japan’s stance on US tariffs and demand for the elimination of tariffs, nor to Japan’s policy of talking with the US on creating US jobs.
• Japan’s chief tariff negotiator Akazawa reiterated there is no change to stance on requesting elimination of US tariffs, but noted they aim to reach an agreement, while he plans to visit the US around May 30th for the fourth round of trade talks, according to sources cited by Reuters.
• Japan is to reportedly propose investments by Nippon Steel (5401 JT) in tariff talks with the US, according to NHK.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly in the green albeit with gains in the region capped following the indecisive performance stateside where participants digested PMI data and the House approved US President Trump’s tax bill to send it to the Senate. ASX 200 eked mild gains as the strength in real estate, energy, tech, telecoms and financials was partially offset by losses in defensives and miners. Nikkei 225 returned to above the 37,000 level with the index unfazed by the firmer-than-expected Core CPI data, while Japanese Economy Minister Akazawa is visiting the US for a third round of talks and is reportedly planning to visit again late next week for a fourth round of discussions. Furthermore, Japanese PM Ishiba had a call with US President Trump and discussed US tariffs, diplomacy and security although no major developments were announced. Hang Seng and Shanghai Comp gained but with advances in the mainland limited in the absence of any fresh significant macro drivers, although there were some talks between the US and China at a deputy ministerial level, in which the US Deputy Secretary of State spoke with his Chinese counterpart on Thursday and discussed a wide range of issues of mutual interest. The two agreed on the importance of keeping open lines of communication.

Top Asian News

• China reportedly lowers deposit rate ceiling to protect banks’ interest margins, according to Reuters sources.
• Philippine Central Bank Governor said they are looking at cutting holdings of US Treasuries, while he added they are looking at two more rate cuts which would not necessarily be consecutive and noted that a rate cut is on the table for June.
• Indian economic growth is on track, according to Reuters sources.
• Fast Retailing (9983 JT) 6M (JPY): Net Profit 233.57bln, +19.2% Y/Y, Op. Profit 304.22bln, +18.3% Y/Y; affirms FY24/25 outlook.
• China Vice Premier He Lifeng says China’s economy continues to show an upward trend; growth potential of the primary, secondary and tertiary industries are being released, via Xinhua; The economy has shown great resilience and vitality

European bourses opened incrementally firmer and trudged higher throughout the morning – though more recently, some downside has been seen to display a mixed picture in Europe. European sectors opened without a clear bias, but have since moved to a strong positive direction. Basic Resources tops the pile, joined closely by Travel & Leisure and then Healthcare. Retail lags. US equity futures are flat/modestly firmer, following similar price action seen in Europe. Docket ahead is lacking in terms of Tier 1 data, but the focus will be on Fed speak from Musalem and Cook.

Top European News

• ECB’s Rehn said a June rate cut is appropriate if backed by data, via Kathimerini.
• ECB’s Stournaras said he sees a June rate cut and then a pause, via Kathimerini
• EU confirms it will soon delay bank trading rules by one year, according to Bloomberg.
• UK’s OFGEM says from 1 July to 30 September 2025 price for energy for the typical household will go down by 7% to GBP 1,720/yr; this is 9% higher than the price cap set for the same period last year.

FX

• This week’s downtrend for the USD has resumed. For today’s session, the calendar is light in terms of tier 1 data but Fed’s Goolsbee, Musalem, Schmid and Cook are all due on the speaker slate. DXY has just slipped below the bottom end of Thursday’s 99.44-100.11 range.
• EUR is capitalising on the softer USD with EUR/USD back on a 1.13 handle. Today’s detailed release of Q1 German GDP exceeded expectations but failed to engineer much in the way of additional support from the EUR given that the beat was attributed to front-loading ahead of expected tariff actions by the Trump admin. On the trade front, the FT has reported that US President Trump is pushing the EU to lower tariffs or face additional duties with US negotiators to tell Brussels they expect unilateral concessions. On the speaker front, ECB dove Stournaras has stated that he sees a June rate cut and then a pause, whilst Rehn has backed a June rate reduction, data permitting. The pair was little moved to the latest ECB Wage Tracker. EUR/USD currently around 1.1337.
• JPY is out-muscling the USD in the wake of hot Japanese core inflation data overnight. ING writes that “Excluding both fresh food and energy, core-core inflation rose to 3.0%, suggesting that underlying inflation will remain above the BoJ’s target of 2.0%”. On the trade front, Japan’s chief tariff negotiator Akazawa reiterated there is no change to the stance on requesting the elimination of US tariffs. However, he noted they aim to reach an agreement and plans to visit the US around May 30th for the fourth round of trade talks. USD/JPY currently sits within Thursday’s 142.80-144.40 range.
• GBP stronger vs. the broadly weaker USD with Cable at its highest level since February 2022 – today’s peak at 1.3491. Sentiment for the GBP has been underpinned by a strong showing for UK retail sales in April (M/M 1.2% vs. exp. 0.2%, prev. 0.1%). BoE’s Pill is due to speak later in the session, however, he gave quite an extensive explanation over his dissent earlier in the week and therefore is unlikely to add much more that will be of use to markets.
• Antipodeans are both at the top of the G10 leaderboard alongside a pick-up in risk sentiment with newsflow otherwise light.
• PBoC set USD/CNY mid-point at 7.1919 vs exp. 7.2151 (Prev. 7.1903).

Fixed Income

• USTs are on a firmer footing, venturing as high as 110.03+ with the next target coming via Wednesday’s peak at 110.10+. After a soft start to the week on account of the Moody’s downgrade and concerns over the deficit impact of Trump’s Tax/Spending Reconciliation bill, US paper is attempting to recover off the lows. Fresh US newsflow is relatively light after yesterday’s passage of Trump’s bill, which will now move to various Senate committees before being debated and voted on by the Senate floor. Today’s Fed docket includes remarks from Goolsbee, Musalem, Schmid and Cook.
• German paper is on the front foot and tracking gains in global peers. Downticks from a better-than-expected outturn for German GDP proved to be fleeting with the beat attributed to front-loading ahead of expected tariff actions by the Trump admin. On the trade front, the FT has reported that US President Trump is pushing the EU to lower tariffs or face additional duties with US negotiators to tell Brussels they expect unilateral concessions. Note, USTR Greer and EU Trade Commissioner are set to meet in June. ECB speak and the latest ECB Wage Tracker today has had little impact on Bunds. Jun’25 Bund is currently sitting just above Thursday’s best at 130.00 but down from its earlier session peak at 130.28.
• Gilts are higher despite a strong showing for UK retail sales in April (M/M 1.2% vs. exp. 0.2%, prev. 0.1%). BoE’s Pill is due to speak later in the session, however, he gave quite an extensive explanation over his dissent earlier in the week and therefore is unlikely to add much more of note. After hitting a fresh MTD low on Thursday at 90.10, Gilts have ventured as high as 90.73.

Commodities

• Another subdued session for the crude complex despite the slide in the dollar and a revision higher in German Q1 GDP, with sentiment capped by Thursday’s source reports that OPEC+ members are discussing whether to agree to another output hike of 411k BPD in July. In other news, the US-Iran nuclear talks will be going ahead today from 12:00 BST/ 07:00 EDT, although views heading into the meeting are rather pessimistic, with Iran suggesting any deal which includes zero enrichment will not go ahead. Most recently, the complex has lifted off worst levels but still resides in negative territory.
• Precious metals are mixed with the yellow metal underpinned by the softer dollar and ongoing tariff uncertainty. Spot gold gradually rebounded from yesterday’s trough and returned to above the USD 3,300/oz level in APAC hours amid the cautious risk tone. Spot gold currently resides in a USD 3,287.07-3,334.46/oz range.
• Copper futures traded rangebound and were kept afloat alongside the mildly positive sentiment during the Asia-Pacific trade. 3M LME copper remains north of USD 9,500/t in a USD 9,502.80-9,598.95/t range.
• Russia’s Arctic LNG 2 plant has shut down its first production train, according to Reuters sources.
• Japan’s Steel Industry Head says Japan must urgently take trade measures against rising steel shipments from China.

Geopolitics

• Russian Foreign Minister says work on the memorandum leading to a ceasefire in Ukraine is at an advanced stage; will hold a second round of direct negotiations with Ukraine.
• Iran-US nuclear talks reportedly set to begin at 12:00 BST/07:00 EDT, according to IRNA.
• “Member of the Security Committee of the Iranian Parliament: The fifth round of negotiations will not reach a result”, according to Al Arabiya.

US Event Calendar

• 5:00 am: Apr F Building Permits, est. 1412k, prior 1412k
• 10:00 am: Apr New Home Sales, est. 695k, prior 724k
• 10:00 am: Apr New Home Sales MoM, est. -4.01%, prior 7.4%

Central Banks :

• 8:30 am: Fed’s Goolsbee Appears on CNBC
• 9:35 am: Fed’s Musalem, Schmid Speak in Fireside Chat
• 12:00 pm: Fed’s Cook Gives Speech on Financial Stability

DB’s Jim Reid concludes the overnight wrap

After a heavy selloff on Wednesday, markets began to stabilise again over the last 24 hours, despite investors’ ongoing fears about the fiscal situation. In particular, long-end Treasury yields started to fall again, with the 30yr yield (-4.3bps) moving down to 5.05%, whilst the dollar index (+0.37%) also recovered. But even so, there were still several signs of concern, as the 30yr Treasury yield had moved as high as 5.15% on an intraday basis, and a similar pattern was being echoed globally. For example, Japan’s 30yr yield (+3.3bps) moved up to 3.18% yesterday, the highest since that maturity was first issued in 1999. And in the UK, the 30yr yield (+3.2bps) moved up to 5.55%, closing just shy of its highest level since 1998.

Those moves came as the US House of Representatives narrowly passed the tax bill yesterday, with an incredibly tight 215-214 margin in favour. As a reminder, that would extend the Trump tax cuts from his first term, which are currently due to expire at the end of this year, and it also includes a $4tn increase in the debt ceiling. However, there’s still some way to go before passage, as it also has to pass the Senate, which is expected to make changes to the bill. For instance, fiscal hawks in the Senate are unhappy about some of the measures, with Senator Rand Paul having said “I’m not voting to raise the debt ceiling $4 trillion to $5 trillion”, whilst Senator Ron Johnson has described the deficits from the House bill as “completely unacceptable”.

The Republicans have a slightly more comfortable margin in the Senate of 53-47, but they can still only afford to lose 4 votes, and both chambers of Congress need to pass the same version of the bill before it can become law. So any changes made by the Senate will have to be re-voted on by the House, where it already passed by just one vote. 

Treasury Secretary Bessent has previously set a goal of July 4 for the bill to be signed, and Trump said in a post that “it’s time for our friends in the United States Senate to get to work, and send this Bill to my desk AS SOON AS POSSIBLE! There is no time to waste.” Another effective deadline is the late summer anyway, as the CBO have estimated that the debt ceiling will become an issue around August-September again, so Congress would need to raise the limit by then to avoid default.

Despite the fiscal concerns, US equities were comparatively resilient, with the S&P 500 (-0.04%) stabilising after its sharp -1.61% decline on Tuesday. That said, there was a late slump, with the index down -0.6% in the final 30 minutes of trading, having been in positive territory for much of the session. And nearly two-thirds of the S&P 500’s constituents declined, with defensive sectors including utilities (-1.41%) and healthcare (-0.76%) underperforming. Moreover, it would have been a larger decline had it not been for the Magnificent 7 (+0.78%), which outperformed after three consecutive declines.

One factor helping US assets to stabilise was some stronger US economic data, which continued to point away from a recession. For instance, the flash composite PMI for May was up to 52.1, up from 50.6 in April, and above the 50-mark that separates expansion from contraction. Moreover, the weekly initial jobless claims also remained in their recent range, coming in at 227k over the week ending May 17 (vs. 230k expected). So again, that showed no sign of a deterioration in the labour market, with the numbers still within their pre-Liberation Day range.

The rally also got a fresh boost from the decline in bond yields, with the 2yr Treasury yield (-2.8bps) falling back to 3.99%, whilst the 10yr yield (-7.0bps) fell back to 4.53%. In part, that followed comments from Fed Governor Waller, who suggested that if the tariffs were closer to 10% and that was done by July, then the Fed would be well placed “to kind of move with rate cuts through the second half of the year”.

In other Fed-related news, yesterday evening the US Supreme Court said that the Federal Reserve was an exception when it comes to the President’s ability to remove officials, referring to the Fed as a “uniquely structured, quasi-private entity” that was different to other independent agencies. So that offered a bit more certainty on the position of senior Fed officials, and whether Chair Powell might be removed before his term as Fed Chair ends in May 2026.

Back in Europe, the last 24 hours saw a much weaker performance, with the STOXX 600 (-0.64%) posting its biggest decline in over 6 weeks. That came amidst a disappointing set of economic data, with the flash PMIs narrowly falling into contractionary territory. For example, the Euro Area composite PMI was down to 49.5 in May (vs. 50.6 expected), which is the first sub-50 reading since December. So even though the data wasn’t showing an aggressive contraction, it added to the signs that the Euro Area economy had lost momentum since Liberation Day, leading to a bigger risk-off move. That was echoed in the country prints as well, with the composite PMIs in Germany (48.6), France (48.0) and the UK (49.4) also coming in below the 50 mark. Nevertheless, it wasn’t all bad news, and in Germany the Ifo’s business climate indicator rose to an 11-month high of 87.5 in May (vs. 87.3 expected).

That backdrop saw European equities lose ground across the board, whilst sovereign bond spreads also widened. So even as 10yr bund yields (-0.3bps) came down slightly, those on 10yr OATs (+1.0bps) and BTPs (+0.9bps) moved higher. So it also meant that the Italian 10yr spread over bunds moved back above 100bps, after recently falling below that mark for the first time since 2021.

Overnight in Asia, the mood has become more positive overnight given the recovery in US Treasuries. So that’s supported gains across the board, including for the Nikkei (+0.61%), the Hang Seng (+0.58%), the CSI 300 (+0.30%) and the Shanghai Comp (+0.08%). The one exception to that is the KOSPI (-0.04%), which has posted a very modest decline. But looking forward, US and European equity futures are also in positive territory, with those on the DAX (+0.10%) and the S&P 500 (+0.05%) both slightly higher.

The other main news overnight has been the latest CPI print from Japan. It showed headline CPI remaining at +3.6% in April (vs. +3.5% expected). Moreover, the core measure of inflation (excluding fresh food) was up to +3.5% (vs. +3.4% expected), which was its fastest level since January 2023. The Japanese Yen has strengthened +0.42% against the US Dollar this morning, although much of that has been driven by dollar weakness, with the dollar index down -0.30% overnight.

Elsewhere, one asset that continued to outperform was Bitcoin, which moved up to another record high of $111,092 yesterday. On the theme of cryptocurrencies, Marion Laboure put out a note yesterday on the GENIUS Act, which would establish rules around stablecoins.  

To the day ahead now, and data releases include UK retail sales for April, French consumer confidence for May, and US new home sales for April. Central bank speakers include the Fed’s Musalem, Schmid and Cook, and the ECB’s Lane.

Submitted by QTR’s Fringe Finance

I’ll say right off the bat that I’m biased. I’ve developed a growing fondness for Megyn Kelly over the past few years—partly because the way she breaks things down on her podcast often tracks almost exactly with how I think (profanity included), and partly because when I randomly met her a couple of years ago in Atlantic City, she was warm, endearing, and genuinely kind to a total stranger who had almost certainly had one too many vodka tonics in him.

On her podcast over the last few years—especially during election season—she’s consistently showcased her razor-sharp intellect and her passion for objective truth. For what it’s worth, she also happens to be just as stunning in person as she is on television—a rarity in the entertainment world, based on my experience.

Naturally, all of this makes her a perfect femme fatale counterpart to CNN’s Jake Tapper, whose work during the same period served as a kind of journalistic foil to Megyn Kelly’s. Everyone reading this blog already knows what Tapper did in the lead-up to the election: he repeatedly defended President Joe Biden’s mental acuity—not inherently a problem, except that 1) it bore zero resemblance to the truth and 2) he did so while claiming to be an “unbiased” journalist.

Tapper’s humiliating stint carrying water for the Democrats’ hapless candidate heading into the 2024 election turned out to be as pointless as it was obvious. He and a cohort of equally biased journalists—masquerading as “unbiased” fact-checkers—were delivered a crystal-clear message by voters in November, when President Trump bulldozed Kamala Harris, the Democratic elite, whoever was manning the autopen during the Biden era, and the rest of the deep state she had in tow with her.

The federal ass-whooping Harris received should’ve been Tapper’s cue to pull a Brian Stelter—disappear from TV for a year, sit quietly in a corner, and reflect on what he’d done. But no. Instead, Tapper went full DumbassDoubleDown™ and decided to write a book about how Biden had always been mentally unfit for office—after spending years lying about Biden’s mental state and insisting he was totally fit for office. The book, hilariously, lays out the details of the massive cover-up put in place to hide the fact that Biden has been the cognitive equivalent of a side dish of hand-mashed potatoes for years.

Tapper came out swinging, peppering his media interviews about his new book with indignant whining about how everyone was misled by the mainstream media when it came to Joe Biden. And hey, why not try to recalibrate and reposition yourself after such a public faceplant? Chris Cuomo seems to have pulled it off, and Democrats are even strategizing ways to start podcasting more—presumably in an effort to seem vaguely human. But all these efforts ignore one simple truth: no focus group or thousand-page McKinsey PowerPoint can teach you how to be honest, speak from the heart, stand by genuinely held values or actually sound like a real person.

Take Cuomo, for example. During COVID, he sat on CNN smugly mocking anyone who dared question the vaccine or brought up alternative treatments like ivermectin. Then he magically reappeared at a more conservative-leaning gig with NewsNation and even popped up on the right-wing PBD Podcast. To his credit, Cuomo took his medicine—most notably in a livestream debate with Libertarian Dave Smith, who mercilessly curb stomped him on a number of topics, to the roaring approval of a well-informed and rightly furious audience.

Maybe Tapper saw that and thought, “Okay, all I need is one solid public ass-whooping on a conservative platform, and I’m good. That’ll square me with all the people I insulted and lied to.”

Which brings us to his interview with Megyn Kelly a few days ago. From the jump, it felt like this was supposed to be Tapper’s version of Cuomo’s beatdown by Smith. I’m sure some part of him figured, no press is bad press for the book, and resigned to mumbling through a half-hearted mea culpa before trying to compete with himself on how many times he could mention his own book’s name during a 2 hour interview.

But if you’re anything like me, you didn’t tune in to the Megyn Kelly podcast for the book. You tuned in for the overdue piper-paying. After all, no one needs a detailed breakdown of Biden’s incompetence—we were all living it while Tapper purposely kept his head in the sand.

Kelly, in surgical fashion, force-fed Tapper about 25 minutes of his own bullshit before finally agreeing to talk about the book—which, let’s be honest, was probably the price of admission for having him on in the first place.

She wasted no time in challenging Tapper over his and CNN’s role in what she bluntly called “an attempted cover-up” of President Joe Biden’s cognitive decline. According to Kelly, “It wasn’t just falling down, it was getting lost,” a reference to Biden’s increasing public gaffes and reliance on editing tricks and teleprompters. “We knew and we were reporting on the multi-jump cuts in the videos of him, where it was obvious he couldn’t get through a one-minute take.”

She made it clear that, from her vantage point, it wasn’t a secret—just a story most of the press didn’t want to touch. “It was clear to us that he was using teleprompter,” she said, adding, “There was some reporting on that at the time, all of which the White House was denying.” Then she got right to the heart of it: “There was an attempted cover-up. It could only ever work if you allowed it. If the press allowed it. Some of us tried not to, and some of us were complicit.”

Tapper, clearly on the defensive, tried to distance himself from the administration. “The Biden White House did not like me. OK?” he said. “I do not have great connections with the Biden White House.” But Kelly pounced. “Well, clearly, do you have a lot of sources? You say you talked to over 200 sources for this book.” Tapper clarified that this deep reporting came “after the election.”

Kelly, not letting up, pressed again: “You have some you could have called and worked.” Tapper insisted, “That’s the point, is that they were not being honest.” But Kelly wasn’t buying it. “Well, how did The Wall Street Journal get it in June of 2024? And Jake Tapper and CNN couldn’t find sources for this story then, before he dropped out?”

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Tapper tried to give credit where it was due: “Annie Linskey and Siobhan Hughes did an amazing job in their reporting. And they should be heralded. And I heralded them.” He claimed he brought them on his show “right after the debate,” to which Kelly retorted: “After the debate. But you did not put them on when they published that story, which was before the debate.”

Caught off guard, Tapper admitted, “Correct. I don’t know what the booking situation was. But it wasn’t because I didn’t want them. I’m sure I said that day, let’s book.”

Kelly fired back with a damning summary: “Yeah. You put on a Democrat and you allowed the Democrat to rip on the report as a Rupert Murdoch sponsored hit piece.” When Tapper protested—“Megyn…”—she cut him off: “That’s what happened.”

Frustrated, Tapper snapped, “Megyn, if we’re going to do this, let’s just stick to the facts here, OK?” Kelly coolly replied, “Jake, that’s what I’ve been doing all along.”

And then, delivering the coup de grâce, Kelly dropped the final blow: “One of us didn’t miss the biggest story of the century when it comes to presidential politics, and one of us did.”

“You didn’t follow up on the fact that he was falling up the stairs,” Kelly said at one point, “that he was losing his train of thought regularly. That he was slurring, that he was incomprehensible, that he was getting lost on the White House lawn.”

“You sat right across from him and you asked none of that,” Kelly continued, “notwithstanding the fact that he had promised you he would be fully transparent about his health issues.”

For Tapper, the game plan should’ve been simple: show up, fall on your sword immediately, and beg for mercy. There’s no gray area here—he got the story spectacularly wrong, and there’s no navigable route anywhere near common sense where a PR spin can fix beefing three years of political coverage. But of course, that’s not what happened.

Instead, Tapper bumbled through the interview, stammering and stumbling like a man who just discovered consequences, haphazardly offering up half-assed excuses while showing a total aversion to swallowing even the smallest dose of reality. Had he kicked things off with a sincere apology and admitted he was actively running cover for Biden, I wouldn’t even be writing this. But no—he clawed tooth and nail for any mirage of a scapegoat he could find, while Megyn Kelly ran up the score on him like he was a swing state in November.

And for me? The whole thing was delicious. Tapper getting his comeuppance is pure catnip for anyone who had to endure his sanctimonious nonsense during election season. But what I didn’t expect—the true cherry on top—was walking away from the interview thinking Tapper’s credibility with viewers, readers, centrists, and conservatives might actually be lower than it was before the interview.

If you had asked me beforehand, I would’ve told you that wasn’t even possible.

Putting aside the fact that the content of his book is irrelevant and about three years too late, it was deeply satisfying to watch a “comeback” PR tour go up in flames, sabotaged by the very same hubris that got Tapper into this mess in the first place.

And the whole self-immolating circus? Couldn’t have been narrated—or dissected—by anyone better than Kelly.

Here’s the full interview:

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Russian President Vladimir Putin is revisiting a strategy first proclaimed last year, but which appeared to be thwarted or put on hold by Ukraine’s Kursk invasion. But now with Kursk liberated from the over six-month Ukrainian troop occupation, Putin is talking a ‘buffer zone’ along the southern border once again.

Russian troops are seeking to carve out a large security buffer zone along the Russia-Ukraine border, Putin announced Thursday during a meeting with ministers and Kremlin officials. “We have approved the creation of a necessary security buffer zone along our borders. Our armed forces are actively working to accomplish this task,” the Russian leader stated.

Putin is fresh off his in-person tour of Kursk region, which happened Tuesday, which was a first since the August cross-border invasion by Ukraine. 

Yet the southern oblasts are still threatened by near-daily artillery and drone fire. A big part of the rationale for a buffer zone is for full stability to return to Russian border towns and villages, for example especially in Belgorod:

He emphasized that, given the recent developments in the Kursk, Belgorod, and Bryansk regions, immediate efforts are required to restore and rebuild areas affected by recent events. This includes assisting local residents in returning to their native villages, provided security conditions allow. Furthermore, it is essential to rehabilitate transportation networks and other infrastructure, ensure the smooth operation of industrial and agricultural enterprises, and support entrepreneurs and their employees.

This month alone has seen hundreds of drones launched from Ukraine onto southern oblasts, with some drones targeting as far as Moscow, which has resulted in commercial flight stoppages this week (not for the first time).

The timing of Putin’s buffer zone plan is very significant, as President Trump is currently being widely perceived as ‘stepping back’ from pursuit of a final peace settlement.

“The enemy chooses targets that have no military significance. It targets ambulances, farm machinery, women and children. We have taken a decision to create a buffer zone along the border of the Kursk, Bryansk and Belgorod regions.”

You didn’t expect anything else, did you now. pic.twitter.com/t4natuRrqH

— Margarita Simonyan (@M_Simonyan) May 22, 2025

The NY Times is currently reporting that Trump is ready to throw his hands up in the air and say ‘not my problem’ as neither side is ready to compromise:

For months, President Trump has been threatening to simply walk away from the frustrating negotiations for a cease-fire between Russia and Ukraine.

After a phone call on Monday between Mr. Trump and President Vladimir V. Putin of Russia, that appears to be exactly what the American president is doing. The deeper question now is whether he is also abandoning America’s three-year-long project to support Ukraine, a nascent democracy that he has frequently blamed for being illegally invaded.

The Times concluded, “In a reversal, President Trump appears to have backed off joining a European push for new sanctions on Russia, seemingly eager to move on to doing business deals with it.”

And yet, on Thursday, the Western allies are speaking loudly:

G7 FINANCE LEADERS SAYS IF A RUSSIA/UKRAINE CEASEFIRE IS NOT AGREED, THEY WILL CONTINUE TO EXPLORE ALL POSSIBLE OPTIONS, INCLUDING FURTHER RAMPING UP SANCTIONS – COMMUNIQUE

As for Putin, is he readying to expand operations in Ukraine? This buffer zone could mean new efforts of the Russian military to control chunks of Kharkov, Sumy, and Chernigov. Sumy next?

NEW | Russian President Vladimir Putin likely orchestrated a meeting with Kursk Oblast officials on May 20 to set conditions to justify the renewal of Russian plans to seize Sumy City and illegally annex Sumy Oblast. (1/9) pic.twitter.com/482IyJc2b7

— Critical Threats (@criticalthreats) May 22, 2025

It was a mere day ago that Putin expressed the following in a joking fashion:

President Vladimir Putin appeared to make light of militarily seizing Ukraine’s Sumy region during a visit to Russia’s southwestern Kursk region, even as the Kremlin claims to be pursuing a negotiated end to the war.

The moment was captured on video published by the state-run news agency TASS, in which a local official from the Glushkovsky district near the border with Ukraine told Putin: “Sumy should be ours.”

“We cannot live like we’re on some kind of peninsula. There should be more of us [Russians]. At least in Sumy,” the official, Pavel Zolotarev, added. “With you as commander-in-chief, we’ll win.”

All of this makes Kiev and Europe extremely worried that Putin will have a freer hand, given Trump could be lowering the pressure on Moscow. The White House has thus far resisted ramping up sanctions, despite Europe’s best lobbying efforts.