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🕑 Added 2025-05-11 19:45:16 +0000 UTCUS-China Reach Tentative Trade Agreement to Cut Deficit
Headline Deal Announced, Details Expected Monday
Top US officials announced “substantial progress” in trade talks with China after two days of high-level negotiations in Geneva, with a formal announcement due Monday. The outcome is described as a deal aimed at reducing the US’s $1.2 trillion global goods trade deficit, particularly the $295 billion gap with China.
US Treasury Secretary Scott Bessent: Talks were “productive,” with details to follow.
US Trade Representative Jamieson Greer: “A deal we struck with our Chinese partners.”
President Donald Trump: Called the talks a “total reset... much agreed to” in a “friendly” tone.
This marks the first face-to-face engagement since both countries imposed tariffs exceeding 100% on hundreds of billions of dollars of goods earlier this year.
Key Highlights & Context
No immediate details were shared on tariff reductions, but expectations are high for mutual rollbacks.
Bessent and Greer met with Chinese Vice Premier He Lifeng and two vice ministers.
White House economic adviser Kevin Hassett said China appeared “very, very eager” to reset relations.
Talks were held at the residence of Switzerland’s UN ambassador in Geneva, underlining the neutrality of the venue.
The breakthrough comes as pressure mounted from both business and political communities to de-escalate the damaging trade war, which has impacted global supply chains, capital flows, and commodity markets.
Implications and Expectations
While no specifics are confirmed, the US is pushing for China to open its markets to American companies and reduce reliance on export-driven growth.
Greer emphasized the speed of the agreement, hinting that the differences may have been overstated in public rhetoric.
Upcoming agreements: Hassett hinted that more trade deals with other countries may be announced in the coming week, following the recent UK agreement.
Markets and global trade watchers now await the formal announcement on Monday, which will clarify the scope of tariff relief, sector-specific terms, and any enforcement mechanisms.
TL;DR
The US and China have reached a tentative trade deal aimed at reducing the trade deficit and de-escalating tariffs, following high-level talks in Geneva. Details will be released Monday, but officials on both sides described the outcome as positive. This marks the first major diplomatic breakthrough since the onset of Trump’s second-term trade war.
China Cuts Benchmark Rate and Reserve Requirements to Counter US Trade War Pressure
Key Developments
People’s Bank of China (PBoC) cut the seven-day repo rate by 10bps to 1.4%, a new low
The bank reserve requirement ratio (RRR) was reduced by 0.5 percentage points, releasing Rmb1tn ($138bn) in liquidity
Beijing aims to support exporters, stabilize the property sector, and reassure markets ahead of resumed trade talks with the US
Pan Gongsheng, governor of the PBoC, said the steps were driven by global economic fragmentation and worsening trade tensions, which are beginning to disrupt supply chains and dent manufacturing orders.
Policy Measures in Detail
Monetary Actions:
The RRR cut lowers the banking sector’s average reserve ratio from 6.6% to 6.2%
Specialised finance institutions like vehicle finance and leasing firms received a full RRR waiver, down from 5% to 0%
Refinancing loan rates for housing purchases reduced by 25bps to 2.6%
Regulatory and Fiscal Measures:
New support schemes for exporters and property developers will be introduced
Insurance capital will be mobilized to support the equity market, expanding its role as long-term stabilizing capital
These moves reflect a broader attempt to avoid the appearance of reactionary policymaking tied solely to US tariffs. ING’s Lynn Song called the timing “tactically aligned” with the start of trade negotiations, but not overtly reactive.
Strategic Context
The easing comes just as China and the US kick off high-level trade talks in Geneva — the first since Trump reignited tariff hostilities in February. Tariffs have begun to hurt China's industrial base, prompting furloughs, cancelled export orders, and mounting concern over reaching Beijing’s 5% GDP growth target.
China is also attempting to boost investor confidence after months of soft data and deflationary pressures. Recent signs point to resilience in rerouted exports via Southeast Asia, but the pressure on domestic growth remains intense.
TL;DR
China has cut interest rates and bank reserve requirements to inject liquidity and cushion its economy as it grapples with a trade war and domestic slowdowns. The move comes just as Beijing enters talks with Washington in Geneva, with policymakers hoping to stabilize manufacturing, exports, housing, and investor sentiment. The package signals flexibility — and possibly more easing ahead — as Beijing tries to maintain its 5% growth target despite intensifying external shocks.
Global Investors Begin Pivot from Dollar Assets Amid US Policy Volatility
Key Developments
Global institutional investors, including pension funds and asset managers, are increasingly shifting capital out of US assets — particularly equities — amid growing concerns about Trump-era policymaking, attacks on the Federal Reserve, and an intensifying trade war with China.
Bank of America reports the biggest-ever cut to US equity allocations in March
European investors have moved €2.5bn out of US ETFs in April alone, the largest outflow since early 2023
The US dollar is down over 7% YTD, with mounting signs of institutional “real money” selling and euro accumulation
Causes of the Shift
Primary concerns driving investor reallocation include:
Policy uncertainty stemming from Donald Trump’s erratic statements and sudden tariff changes
The perception that the US is entering a period of deglobalization, discouraging cross-border investment flows
Growing belief that the “US exceptionalism” thesis may have peaked
Large global asset managers like Pictet, BNP Paribas, and pension funds in Finland, Denmark, and Australia are leading the trend, citing high US valuations, trade confusion, and shifting geopolitical risks.
Where the Capital Is Going
Europe is the primary beneficiary, seen as a haven with rising defence spending, stable governance, and undervalued equity markets
The euro has strengthened alongside rising German bond prices, defying typical safe-haven flows
European defence stocks, infrastructure, and even Bunds are receiving fresh inflows
Bank of America and Deutsche Bank confirm that institutional investors are buying euros and selling dollars, a rare shift of “real money” capital that may suggest a longer-term reallocation cycle is underway.
Implications for the US
The trend could result in structural capital outflows from the US, pressuring dollar strength, equities, and Treasuries
Pension managers like CalSTRS are now openly discussing reducing overweight positions in US assets, due to geopolitical blowback and exposure risks
Foreign investors unhedged against the dollar have suffered disproportionately from recent currency depreciation
Should investors also begin rebuilding hedges on their $2.5tn of US exposure, further downward pressure on the dollar is likely.
TL;DR
Big global investors are starting to reduce their exposure to US assets due to Trump-era volatility, trade war fears, and dollar weakness. While the trend is still early, it may mark the beginning of a broader structural shift toward European markets and away from the longstanding dominance of US equities and debt. The implications could reshape global capital flows — but many are still cautious about betting against the US outright.
Alphabet Shares Slide as Apple Considers AI-Powered Search Alternatives
Key Developments
Apple is in talks with AI start-ups including Perplexity, Anthropic, and China’s DeepSeek, as well as Elon Musk’s xAI
Apple may allow users to set these as default search engines on iPhones and iPads
This could threaten Google’s lucrative agreement with Apple, estimated to be worth $20bn per year
Apple shares also slipped 1.1% on the day as the disclosure came during a federal hearing on antitrust remedies following the DOJ’s 2023 ruling that Google held an illegal monopoly in search.
Strategic and Legal Context
The revelation comes amid a broader challenge to Google’s search dominance:
A federal judge previously ruled that Google had abused its dominance via default-setting deals with device makers and carriers
The Google-Apple deal was central to the DOJ’s case and may be at risk of being unwound
Cue's testimony indicates Apple is actively looking to diversify its AI partners, even as it currently benefits financially from the Google partnership.
The AI Disruption to Search
The broader trend is driven by generative AI, which is reshaping web search by providing direct, conversational answers rather than Google’s traditional link-based results.
Perplexity and other startups offer search interfaces that respond with full answers supported by citations
Google has responded by integrating AI-generated summaries into its own search results
Apple has lagged in releasing proprietary AI tools but is beginning to integrate OpenAI’s ChatGPT into Siri and explore third-party AI collaborations more aggressively.
Market and Competitive Implications
Alphabet investors are increasingly worried that AI-based search tools may erode Google’s core revenue engine
While Google’s AI upgrades are progressing, the monetization model for AI-based search remains untested compared to traditional ad revenue
Colin Sebastian of Baird noted that while startups are innovating fast, Google’s ad tech infrastructure remains unmatched, and it may take years for rivals to replicate its advertising dominance at scale.
TL;DR
Alphabet shares tumbled after Apple confirmed it's exploring AI-powered search alternatives like Perplexity and DeepSeek to replace Google as Safari’s default engine. The potential shift threatens Google's $20bn/year deal with Apple and underscores growing investor fears that conversational AI could disrupt Google’s ad-based search dominance. The DOJ’s antitrust case has accelerated scrutiny — and Apple may be ready to pivot.
Coinbase to Acquire Deribit for $2.9bn in Largest-Ever Crypto Deal
Key Developments
Coinbase, the largest publicly traded US cryptocurrency exchange, has agreed to acquire Deribit, the world’s leading crypto derivatives platform, for $2.9bn — marking the biggest M&A deal in crypto history.
The acquisition includes $700mn in cash, with the rest in Coinbase shares
Deribit processed over $1tn in trading volume last year, primarily in crypto options and futures
The deal positions Coinbase as the dominant global player in the crypto derivatives market, a segment widely seen as critical for institutional adoption
Strategic Significance
This acquisition reflects the industry's broader expectation of a boom in institutional crypto adoption, as Wall Street banks and asset managers increase exposure to digital assets.
Greg Tusar, Coinbase’s head of institutional product, likened current conditions to the 1990s equity options explosion
Coinbase aims to offer a unified platform across spot, perpetuals, futures, and options trading
Analyst Mark Palmer emphasized the deal gives Coinbase “an immediate and dominant foothold” in a high-growth vertical
The move comes as regulatory pressure eases under the Trump administration, which has rolled back enforcement actions and opened the door for banks to custody digital assets.
Market Context
The announcement came as bitcoin surged past $100,000, its highest level since February
Bitcoin has rallied over 40% since Trump’s election, fueled by his promises to make the US the “crypto capital of the world”
This has triggered a wave of crypto dealmaking, including: Ripple’s $1.25bn acquisition of broker Hidden Road and MGX’s $2bn investment into Binance, backed by Trump-linked World Liberty Financial
Deribit, based in Dubai, had long sought entry into the US, but regulatory uncertainty under past administrations delayed expansion.
Now, with lighter-touch rules, exchanges like OKX and Nexo are also establishing US offices to capitalize on the policy shift.
Industry Implications
Deribit is a favorite among leveraged traders and institutional crypto desks
Its integration into Coinbase bolsters the latter’s product suite as it competes against Binance, which still dominates spot volumes
The deal adds momentum to Coinbase’s transformation from a consumer-facing exchange into a full-service digital asset infrastructure provider
The acquisition still requires regulatory approval and is expected to close by year-end.
TL;DR
Coinbase is buying Deribit for $2.9bn, making it the global leader in crypto derivatives at a time when Wall Street is poised to ramp up digital asset investments. With bitcoin topping $100K and regulators easing, the deal marks a pivotal moment for crypto’s institutional mainstreaming — and for Coinbase’s evolution as a powerhouse in global finance.
Novo Nordisk Cuts Forecasts as US Compounded Drugs Hit Wegovy and Ozempic Sales
Key Developments
Novo Nordisk, the Danish pharmaceutical giant behind Wegovy and Ozempic, has lowered its 2025 sales and profit guidance after US demand for its GLP-1 drugs was hit by widespread availability of compounded replicas — cheaper, pharmacy-made versions created during previous shortages.
Sales growth guidance cut to 13–21% (from 16–24%)
Operating profit forecast now 16–24% (down from 19–27%)
First-quarter sales rose 18% to DKr78.1bn ($11.9bn)
Operating profit beat expectations, up 20% to DKr38.8bn
Despite the forecast cut, shares in Novo Nordisk rose over 5%, buoyed by a belief that the worst impact of compounded competitors may soon ease.
Impact of Compounding and FDA Ruling
The drag on growth stems largely from compounded GLP-1 replicas — custom-made versions sold during FDA-declared shortages of Wegovy, Ozempic, and rival Zepbound (by Eli Lilly). These unbranded alternatives cost as little as $199/month, compared to over $1,000/month for branded versions without insurance.
The FDA has now ended the shortage designation, which means compounded sales must stop by May 22
Novo expects to recapture business from compounders starting in H2 2025
Partnerships with CVS and telehealth companies are expected to help restore branded sales
Strategic Outlook and Expansion Plans
To counter slowing US growth, Novo Nordisk is accelerating its global expansion of Wegovy:
The drug is already available in ~25 international markets
The company plans a faster rollout schedule as supply constraints ease
CFO Karsten Munk Knudsen said the company was “encouraged” by signs that volumes will rebound in the second half of the year.
Novo also flagged upcoming discounted access deals and efforts to reinforce market share, especially in light of growing competition from Eli Lilly.
Other Corporate and Political Pressures
Novo Nordisk will exclude US operations from its global gender diversity targets, citing pressure from the Trump administration to eliminate diversity mandates
The company also warned that pharmaceutical tariffs under consideration by the Trump administration could be a headwind, though Novo exports more from the US than it imports
The company has invested over $24bn in US production over the past decade, making it relatively insulated compared to others in the industry.
Analyst View and Long-Term Risks
Despite optimism about a second-half volume rebound, investors remain cautious due to:
Ongoing competition from Eli Lilly
Weak trial results for CagriSema, Novo’s next-generation GLP-1 candidate
Pressure on pricing and market share from compounded and biosimilar drugs
Barclays’ Emily Field noted that investors are focused on “how confident they are that volumes are going to increase in the second half — because it’s a volume play.”
TL;DR
Novo Nordisk cut its 2025 outlook after low-cost compounded drugs dented US demand for Wegovy and Ozempic. While Q1 earnings beat expectations, the company now eyes a H2 rebound as FDA compounding exemptions end and international expansion ramps up. Despite political and pricing pressures, investors welcomed the signs of stabilization — though competition and trial setbacks remain key watchpoints.
Disney to Open First Middle East Theme Park in Abu Dhabi as Earnings Beat Expectations
Key Developments
Disney will design and operate the park, while Miral will provide all capital investment and pay Disney royalties
The Abu Dhabi park is Disney’s seventh globally, and first since Shanghai Disneyland in 2016
The location targets a vast regional audience with high disposable income across Africa, India, Asia, the Middle East, and Europe
The announcement came alongside a strong quarterly earnings report that lifted Disney shares by 10.8%.
Strategic Significance
CEO Bob Iger said the decision to enter Abu Dhabi stemmed from the desire to reach consumers unable to travel easily to Disney’s existing parks in the US, Europe, or East Asia.
The UAE is seen as a more accessible visa destination than the US or Europe
Yas Island is already home to SeaWorld, Warner Bros World, the Louvre, and the upcoming Guggenheim
The park is part of Iger’s $60bn decade-long investment plan for Disney’s experiences division, which also includes expansions in Florida and California
Financial Performance and Outlook
Disney beat analyst expectations in Q2 and raised its outlook for the fiscal year:
Net income surged to $3.28bn (from a $20mn loss a year ago)
Revenue rose 7% to $23.6bn
Adjusted EPS of $1.45 exceeded forecasts of $1.20, up 20% YoY
US parks revenue up 9%, with strong spending and cruise growth
International parks weaker, with lower attendance in Shanghai and Hong Kong
Streaming also contributed to growth:
Disney+ and Hulu combined subscribers: ~180mn
Streaming revenue up 8% YoY, aided by price increases, though subscriber growth is expected to be modest in the current quarter
Broader Context and Risks
Despite the upbeat tone, Disney flagged uncertainties related to Trump’s trade policies, particularly potential tariffs affecting the film and entertainment industry. However, Iger maintained a positive view on the company’s trajectory, stating:
“Overall, we remain optimistic about the direction of the company and outlook for the remainder of the fiscal year.”
Disney stock remains down ~8% year-to-date, but the strong earnings report and international expansion plans have helped rebuild investor confidence.
TL;DR
Disney will open its first Middle East theme park in Abu Dhabi via a partnership with Miral, marking a major global expansion as it rides strong Q2 earnings. With robust US theme park and streaming growth, the company raised its outlook despite global uncertainties. The Yas Island park extends Disney’s reach into a high-spending market and is a cornerstone of Iger’s long-term $60bn strategy for global experiences growth.
Bill Ackman Launches Berkshire Hathaway-Style Conglomerate with Howard Hughes Acquisition
Vision Realized
Financier Bill Ackman has finalized his long-held ambition to replicate Warren Buffett’s Berkshire Hathaway, transforming Howard Hughes Holdings—a real estate firm he has long been involved with—into a diversified acquisition platform.
Ackman’s firm Pershing Square made a $900mn additional investment, giving him effective control
Howard Hughes will shift strategy to become a conglomerate, acquiring controlling stakes in public and private businesses
The company will be guided by Ackman and CIO Ryan Israel, as a long-term vehicle for capital deployment
Ackman declared the company could now serve as “a superb platform to build a faster-growing, high-returning holding company”.
Fee Structure and Shareholder Backlash
The deal, months in the making, initially faced criticism due to a controversial management fee proposal that would have paid Ackman’s firm potentially tens of millions annually. In response, Ackman revised the structure:
Annual base fee: $15mn paid to Pershing Square
Performance fee: 1.5% on any increase in market capitalization above the inflation rate
The final deal does not include compensation for market cap gains from issuing new shares
Some shareholders welcomed the changes as a “pretty big modification” from previous proposals, though others criticized the low benchmark (inflation, rather than the S&P 500 or another stringent hurdle).
Notably, the deal did not require a shareholder vote and closed on Monday.
Background on Howard Hughes
Ackman originally created Howard Hughes Corp. in 2012 to spin out non-core assets from his successful trade on General Growth Properties during the 2008 crisis.
Howard Hughes’ portfolio includes major residential and commercial developments in Houston, Las Vegas, Maryland, and Hawaii
These assets, often overlooked by public markets, are seen by Ackman as a launchpad for bigger acquisitions, offering steady cash flow and tax benefits
Strategic Ambitions
Ackman’s plan mirrors Buffett’s model: use free cash flow and strategic acumen to build a long-term, acquisition-driven conglomerate.
The move formalizes Pershing Square’s private-equity-style ambitions inside a public vehicle
He believes public markets have undervalued Howard Hughes’s potential and sees the new structure as a way to unlock greater returns and expand into non-real estate sectors
TL;DR
Bill Ackman has converted Howard Hughes Holdings into a Berkshire-style conglomerate, taking control with a $900mn investment and installing his team to lead acquisitions. After revising a controversial fee structure, Ackman will earn performance-based compensation only above inflation. The move transforms a historically undervalued real estate firm into a publicly traded investment platform, positioning it for aggressive deal-making and long-term growth modeled on Buffett’s playbook.
Ford Withdraws Outlook and Warns of $1.5bn Profit Hit from Trump Tariffs
Tariff Impact and Profit Outlook
Previous guidance projected $7bn–$8.5bn in operating profit
Tariffs, implementation uncertainty, and possible retaliation from other countries have created a volatile environment
The company stated the risks are “substantial” and “industry-wide”
Ford’s decision underscores the difficulties faced by automakers amid fast-changing US trade policy, especially on imported vehicles and parts.
Ford vs GM
While Ford is less exposed to international production than General Motors due to its greater domestic manufacturing base, it still faces significant headwinds.
General Motors also cut guidance last week, now expecting $10bn–$12.5bn in adjusted operating profit — a 23% drop at the midpoint
Ford's net income fell 64% YoY to $471mn in Q1
Adjusted operating earnings: $1bn
Revenue dropped 5% to $41bn, due to planned downtime at global plants including the Kentucky Truck Plant
Tariff Workarounds and Mitigation Efforts
Ford is actively trying to minimize tariff impacts through logistical and supply chain adjustments.
Reduced Q1 tariff costs by 35% through strategies like: Using bonded truck routes from Mexico to Canada to defer customs duties. Reallocating shipments to avoid key tariff choke points
Despite these moves, Ford still anticipates a $1.5bn full-year earnings hit from the levies.
Market Reaction
Ford shares fell 2.6% in after-hours trading
The company said it is monitoring developments and will update guidance when the policy landscape becomes clearer
TL;DR
Ford has pulled its 2025 earnings forecast and expects a $1.5bn profit hit from Trump’s tariffs, citing industry-wide supply chain disruption and trade policy uncertainty. The company posted a 64% decline in Q1 profit and 5% drop in revenue, despite efforts to reduce tariff costs. As trade policy remains in flux, Ford joins General Motors in warning of significant financial headwinds.
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Adrian mateo martinez
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Vojtěch Šimeček
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Chris H
Lit as always
