Trump's Latest Whiplash: Powell's Back in the Saddle as China Gets a Wink

Donald Trump has once again performed his signature policy pirouette, retracting his threats to fire Fed Chair Jerome Powell and promising a more amicable approach to China on tariffs. This new diplomatic stance has sparked optimism for a potential trade agreement with China, sending futures on Wall Street and global markets into a cheerful ascent.

In premarket trading, the Nasdaq futures climbed 2.8%, Dow futures rose 1.7%, and S&P 500 futures advanced 2.3%. Meanwhile, Tesla shares soared by 7%. Despite lackluster earnings overall, the company reported better-than-expected profits in its core automotive business. CEO Elon Musk announced he would reduce his involvement in the Trump administration to focus on his companies, a move that seems to have reassured investors.

Trump's earlier musings about dismissing Powell had raised concerns about the Federal Reserve's independence, causing U.S. stocks and the dollar to stumble. Trump's unpredictable trade policies have weighed on Wall Street, with the S&P 500 still down nearly 14% from its February peak.

POTUS said that he had no intention of firing Jerome Powell. Many commentators believe that if an economic downturn were to occur, Trump would put the blame solely on Powell for refusing to reduce rates. However, while he has backtracked on firing the Fed chair, he continues to pressure the Federal Reserve to ease its policy. However, central bank policymakers remain cautious about rate cuts due to the uncertain impact of Trump's trade policies. The market currently sees a 92% chance that the Fed will maintain its current policy at the next meeting, according to CME's FedWatch.

U.S. markets rebounded strongly yesterday. Some might say they simply erased the previous day's losses, which is not incorrect. Treasury Secretary Scott Bessent suggested that the tariff standoff with China was unsustainable and anticipated a de-escalation, even if negotiations would be "laborious." This sentiment was echoed by Trump himself, who announced that tariffs on China "will be significantly reduced". It seems there's a "President Put," a threshold of financial disorder that must not be crossed, with Bessent as its guardian.

This is reassuring for the U.S. business community. European stock markets cautiously followed suit, having been spared Monday's U.S. decline due to Easter closures. The Euro Stoxx 50 rose 0.5%, buoyed by L'Oréal's strong performance (+6.3%) after better-than-expected quarterly results.

Over the next three days, around 20% of S&P 500 companies will release their results, allowing for adjustments to annual projections. So far, comments point to uncertainty surrounding the trade war, but the impact on activity remains moderate. Amid the earnings deluge, the macroeconomy makes a brief comeback with the preliminary PMI activity indicators for April.

In the Asia Pacific region, U.S. administration comments buoyed indices. Japan rose 1.8%, South Korea and Australia 1.5%, and Hong Kong 2.4%. Taiwan led the charge with a rise of more than 4%. A potential de-escalation between the U.S. and China would be welcome news for Taiwan, which often finds itself in a geopolitical bind. India bucked the trend with growth limited to 0.6%. European indices are bullish, with the Stoxx Europe 600 up 1.5%.

Today's Economic Highlights:

On today's agenda: Japan's PMIs, followed by those of France, Germany, the Eurozone, and the United Kingdom; In the United States with PMIs, new home sales for July, and DOE crude oil inventories. See the full calendar here.

• Dollar index: 98,922
• Gold: $3,325
• Crude Oil (BRENT): $66.91 (WTI) $63.10
• United States 10 years: 4.36%
• BITCOIN: US$93,579.6

In corporate news:

• Tesla Q1 results showed higher than expected gross margins despite a drop in car sales; Elon Musk plans to refocus on the company.
• Boeing sells Jeppesen to Thoma Bravo for $10.6 billion.
• Intel will announce plans this week to cut more than 20% of its workforce, according to Bloomberg.
• ConocoPhillips is planning layoffs as part of a major restructuring.
• Musk is prioritizing Tesla over his role in the White House as profits fall (which explains the stock's rebound despite a poor first quarter).
• Barrick Gold is looking for buyers for its last mine in Canada, according to Bloomberg. Barrick Gold is selling its stake in an Alaskan mine to John
• Paulson and NovaGold for up to $1.1 billion.
• Bristol-Myers Squibb's Cobenfy fails to meet its primary endpoint as an adjunct treatment for schizophrenia.
• OpenAI is interested in buying Google's Chrome web browser if a court forces Google to sell it, an OpenAI executive said.

Today's main earnings: Philip Morris, IBM, AT&T, Thermo Fisher Scientific, ServiceNow, Boston Scientific, Texas Instruments, NextEra Energy, Boeing, GE Vernova, Lam Research, CME Group, O'Reilly Automotive, General Dynamics Corporation ...

Analyst Recommendations:

• American Express Company: Redburn Atlantic upgrades to neutral from sell with a target price reduced from USD 270 to USD 255.
• Cava Group, Inc.: Bernstein upgrades to outperform from market perform with a target price of USD 115.
• Chevron Corporation: Redburn Atlantic downgrades to sell from neutral with a price target reduced from USD 156 to USD 124.
• Global Payments Inc.: Wolfe Research downgrades to peerperform from outperform.
• Intuit Inc.: HSBC upgrades to buy from hold with a target price of USD 699.
• Oracle Corporation: Piper Sandler & Co downgrades to neutral from overweight with a target price reduced from USD 190 to USD 130.
• Texas Roadhouse, Inc.: Citi downgrades to neutral from buy with a target price reduced from USD 213 to USD 164.
• Albemarle Corporation: HSBC maintains its hold recommendation with a target price reduced from 100 to USD 60.
• Applovin Corporation: HSBC maintains its buy recommendation with a target price reduced from 547 to USD 436.
• Bill Holdings, Inc.: Oppenheimer maintains its outperform recommendation and reduces the target price from USD 90 to USD 50.
• Block, Inc.: KeyBanc Capital Markets maintains its overweight recommendation and reduces the target price from 85 to USD 65.
• Chevron Corporation: Redburn Atlantic downgrades to sell from neutral with a price target reduced from USD 156 to USD 124.
• Enphase Energy, Inc.: TD Cowen maintains its buy recommendation and reduces the target price from USD 78 to USD 58.
• Hasbro, Inc.: Morgan Stanley maintains its overweight rating and reduces the target price from 84 to USD 65.
• Manhattan Associates, Inc.: Raymond James maintains its outperform rating and reduces the target price from USD 270 to USD 195.
• Mattel, Inc.: Morgan Stanley maintains its market weight recommendation and reduces the target price from 23 to USD 16.
• Oracle Corporation: Piper Sandler & Co downgrades to neutral from overweight with a target price reduced from USD 190 to USD 130.
• Pinterest, Inc.: Stifel maintains its buy recommendation and reduces the target price from USD 50 to USD 36.
• Procore Technologies, Inc.: BMO Capital Markets maintains its outperform recommendation and reduces the target price from USD 95 to USD 75.
• Salesforce.com, Inc.: Piper Sandler & Co maintains its overweight recommendation and reduces the target price from 400 to USD 315.
• Snap Inc.: Stifel maintains its hold recommendation and reduces the target price from 11 to USD 8.
• Southwest Airlines Co.: Zacks maintains a neutral recommendation with a price target reduced from USD 42 to USD 33.
• Tesla, Inc.: Fubon Securities maintains its buy recommendation and reduces the target price from 764 to USD 470.
• The Trade Desk, Inc.: Stifel maintains its buy recommendation and reduces the target price from USD 122 to USD 87.
• United Parcel Service, Inc.: Bernstein maintains its outperform recommendation and reduces the target price from USD 179 to USD 132.