Breakfast | Musk's xAI plan raises $20 billion; Trump claims he can reach an agreement with major trading partners within three to four weeks

The Political Bureau of the Central Committee of the Communist Party of China emphasized the employment bottom line and promoted the development of artificial intelligence and core technologies. This week’s focus: Berkshire Hathaway will hold its shareholder meeting, the U.S. April non-farm payroll report, and earnings reports from Microsoft, Meta, Apple, Amazon, Pfizer, Eli Lilly, and others. Trump's remarks triggered a four-day rally in U.S. stocks, with significant increases in the stock prices of NVIDIA and Tesla. U.S. Treasury yields declined, the dollar rebounded, and after the consumer confidence index was released, some gains were given back. Bitcoin broke through $95,000, while gold and oil prices retreated

Last Week Review

Last Friday, after Trump "changed his tune," the three major U.S. stock indices rose for four consecutive days. During the session, after Trump mentioned tariffs, the S&P and Nasdaq briefly retraced more than half of their gains, while the Dow fell over a hundred points at one point. Nvidia closed up over 4%, Tesla surged nearly 10%, gaining 18% for the week, and Google initially rose over 4% before giving back most of its gains. The China concept index halted its three-day rise but still gained over 7% for the week. The pan-European stock index hit a three-week high, and the UK stock market rose for ten consecutive days.

U.S. Treasury yields have been declining for several days. The dollar rebounded, and after the release of the University of Michigan consumer confidence index, it gave back most of its gains, marking its first weekly increase in over a month. Bitcoin briefly rose nearly $3,000, surpassing $95,000.

Gold fell over 1%, turning down for the week, marking its first weekly decline since the announcement of reciprocal tariffs. Oil rebounded over two days, but U.S. oil fell over 2% for the week.

Macroeconomic Information

Central Committee Political Bureau Meeting

The Central Committee Political Bureau meeting stated: Coordinate domestic economic work and international economic and trade struggles, and timely introduce incremental reserve policies based on changes in the situation. According to Xinhua News Agency, the meeting emphasized the need to coordinate domestic economic work and international economic and trade struggles, and to steadfastly manage our own affairs. It is necessary to accelerate the establishment of a new model for real estate development, increase the supply of high-quality housing, and optimize the acquisition policy for existing commercial housing, continuously consolidating the stable situation of the real estate market; for enterprises significantly affected by tariffs, increase the proportion of unemployment insurance fund returns to stabilize jobs; timely introduce incremental reserve policies based on changes in the situation, and strengthen extraordinary counter-cyclical adjustments; increase the income of low- and middle-income groups and vigorously develop service consumption.

Minsheng Securities believes that the April Political Bureau meeting clearly released the signal that "employment is the bottom line"—not only placing "stabilizing employment" at the forefront of the "four stabilizations" (i.e., stabilizing employment, stabilizing enterprises, stabilizing markets, stabilizing expectations), but also mentioning "incremental reserve policies" alongside "stabilizing employment." It is expected that "stabilizing employment" will become a top priority in fiscal policy going forward. Additionally, the Political Bureau meeting proposed "for enterprises significantly affected by tariffs, increase the proportion of unemployment insurance fund returns to stabilize jobs," indicating that fiscal measures will focus on countering foreign trade shocks and safeguarding the bottom line of people's livelihoods. Monetary policy will take on more responsibilities for stabilizing markets and enterprises.
CITIC Construction Investment stated that this Political Bureau meeting did not involve adjustments to the budget or the introduction of large-scale incremental stimulus policies, mainly because the current established policies still have significant unused space, making it unnecessary to arrange for incremental policies. It is expected that there will still be incremental fiscal policies in the second half of the year, with the timing likely in the latter part of the third quarter, as by then the current fiscal space may have been fully utilized, and there are also reference experiences from previous years.
Citigroup's latest report pointed out that the Chinese Central Political Bureau meeting did not introduce new incremental measures, and the short-term policy focus is on the implementation of existing policies, emphasizing the timely introduction of incremental reserve policies based on changes in the situation. The decision-making level may enter a "data-driven" proactive response mode.

Trump: 200 agreements reached, tariffs unlikely to be postponed for another 90 days Trump stated that there are "200 agreements" that are "100%" ready to be announced in the next three to four weeks, and some countries may come back to request adjustments, which he will consider. Trump mentioned that he would not cancel tariffs on certain countries unless there are substantial returns. The S&P 500 gave back more than half of its gains, and the Dow Jones returned to a downward trend, dropping over a hundred points. Media reports indicate that the U.S. plans to use a simplified negotiation template to hold talks with 18 major trading partners, with a deadline of July 8.

The atmosphere at the U.S.-Japan negotiations was subtle, with Japanese representative Akizawa Ryozo wearing a MAGA hat to "appease" Trump. Akizawa, wearing a red hat emblazoned with "Make America Great Again" (MAGA), sat in the Oval Office, giving a thumbs-up to the camera with a big smile. Rather than coming for "equal negotiations," it seemed more like an attempt to form a "subordinate alliance."

South Korea urged for "calm and orderly" negotiations with the U.S., hoping to reach a tariff agreement by early July. Media reports indicated that South Korean Finance Minister and other senior government officials urgently traveled to the U.S. last week to seek to avoid potential trade impacts.

The U.S. has established a framework for tariff negotiations, Trump: Agreements can be reached in three to four weeks

The U.S. government has drafted a framework for negotiating tariffs with trading partner countries, planning to negotiate with six countries each week. President Trump believes that agreements can be reached with trading partners within three to four weeks.

The Wall Street Journal reported on Friday (April 25) that U.S. negotiators plan to adopt a fixed model, listing areas of mutual concern to guide the negotiation process, categorized into tariffs, non-tariff barriers, digital trade, economic security, and business issues.

The U.S. hopes to engage in negotiations with about 18 major trading partners under the new framework in the next two months. The preliminary plan is to negotiate with six countries each week, repeating this sequence after three weeks until the self-imposed deadline of July 8. By that time, countries that fail to reach agreements will face reciprocal tariffs unless Trump further extends the 90-day tariff suspension.

Drug tariffs will lead to an annual increase of $51 billion in U.S. drug costs

A report seen by Reuters indicates that if the U.S. imposes a 25% tariff on imported drugs, the annual cost of drugs in the U.S. will increase by nearly $51 billion, and if passed on, U.S. drug prices will rise by 12.9%. The report, dated April 22, has not been publicly released and was commissioned by the Pharmaceutical Research and Manufacturers of America (PhRMA). The association has not yet responded to requests for comments.

China's industrial profits turned positive year-on-year in March, but the subsequent impact of tariffs should not be underestimated

With the effects of "export grabbing" and domestic demand policies continuing to drive industrial production, China's industrial profits turned positive year-on-year in both the first quarter and March (with a year-on-year growth of 0.8% in the first quarter and 2.6% in March). Cumulative revenue growth reached a more than one-year high, with nearly 60% of industries seeing profit growth, and significant improvements in manufacturing. Analysts believe that while industrial profits continued to recover in the first quarter, it is important to recognize that the good performance of the economy in the first quarter is now in the past, and the short-term impact of the tariff war initiated by the U.S. on the Chinese economy should not be underestimated, necessitating corresponding policies to hedge against it China's Finance Minister: Will adopt more proactive macro policies to promote the achievement of the annual growth target

China's Minister of Finance, Lan Fo'an, recently stated that under the current complex external environment, China will adopt more proactive macro policies to promote the achievement of the annual growth target and continue to bring stability and momentum to the global economy. According to a press release published on the Ministry of Finance's official website on Saturday, Lan Fo'an also mentioned at the 111th meeting of the World Bank Development Committee in 2025 that China adheres to the basic national policy of reform and opening up, has granted zero tariff treatment to products from all least developed countries with which it has diplomatic relations, and is willing to further open its doors to share China's super-large market with the world for mutual benefit and win-win results.

IMF-World Bank Spring Meeting concludes, tariff issues remain unclear and economic outlook is not optimistic

The IMF-World Bank Spring Meeting concluded on Saturday, with participants hoping to clarify how to ease Trump's tariff offensive and the extent of the pain it would bring to the global economy, but most returned home with questions rather than answers. The IMF holds a slightly optimistic view on the economic impact of high tariffs in the U.S., having lowered the economic growth forecasts for most countries in its World Economic Outlook, but did not predict a recession, even for the U.S. and China. Several finance officials told Reuters that, according to private sector forecasts, the probability of a recession is higher than the IMF's predicted 37%.

IMF President Georgieva stated that the IMF will do more work to address external imbalances and continue to review potential issues in the financial sector.
The IMF Steering Committee stated in the Chair's statement that the escalating trade tensions are undermining economic growth, increasing uncertainty, and posing risks to market and financial stability. However, member countries reiterated their commitment to the IMF, believing it is crucial in helping countries cope with complex environments.

Global trade war and policy uncertainty are the biggest risks to U.S. financial stability – Federal Reserve survey

A new survey by the Federal Reserve shows that rising global trade risks, overall policy uncertainty, and the sustainability of U.S. debt rank high among potential risks in the U.S. financial system. 73% of respondents consider global trade risks to be the primary concern, while half of the respondents view overall policy uncertainty as the top worry. "Concerns about changes in trade policy are the most frequently mentioned risks in this cycle," the report states. "Respondents believe that the escalation of the trade war could lead to more severe consequences."

U.S. consumer confidence remains weak in April, tariff concerns linger

U.S. consumer confidence fell for the fourth consecutive month in April, with the public worried about the impact of tariffs on the economy. A survey by the University of Michigan showed that the final consumer confidence index for April was 52.2, compared to an expected unchanged initial value of 50.8. The final one-year inflation expectation for consumers was 6.5%, the highest since 1981, and it has seen an increase of 0.5 percentage points or more for four consecutive months. The final long-term inflation expectation was 4.4%.

Breakfast | Musk's xAI plan raises $20 billion; Trump claims he can reach an agreement with major trading partners within three to four weeks

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