Do You Remember That Distant Time When the Fed Meeting Mattered for Markets?

That time when we thought Powell’s words could actually impact investor decisions? Well, that was just over 36 hours ago. But don’t worry, we’ve moved on—because since yesterday morning, tariffs have taken center stage again. Or rather, the negotiations surrounding them. The British got “their deal,” and Trump said it was time to BUY STOCKS—what more could you ask for?

The Fed has been forgotten.

The whole issue of rates—and the fact that the Fed doesn’t want to cut them for reasons we’ve already discussed extensively in these morning notes—had absolutely no impact on the markets yesterday. Simply because we’ve already moved on. And what we’ve moved on to is THE FIRST SIGNED DEAL on tariffs. The Brits are taking the spotlight and have sparked a wave of optimism across global markets. Risk appetite is back, and people are talking again about a potential return to the bullish trend we had before the day of LIBERATION.

Of course, we still got the usual comment from Donald Trump about Jerome Powell. The President made a remark that needs no comment—he said:

“The Bank of England cut rates. China cut rates. Everyone’s cutting rates except him. I don’t know, we’ll see what happens. It’s a shame. I call him ‘Too Late’. Too Late Powell, that’s his little nickname. And it’s really a shame, it’s ridiculous… he’s always late. But in this case, it won’t really matter, because our country is so strong and our economy is so powerful that it won’t really make a difference.”

So there you have it. “Too Late Powell” is an idiot, according to Trump. And VP JD Vance piled on, saying the Fed Chair is a “nice guy” but wrong about pretty much everything. Clearly, relations between the White House and the Fed are at an all-time high. Time will tell who was right about inflation and rate cuts, but one thing is clear: the market doesn’t care anymore. Rates too high or too low—it’s not the issue. All the market wants is to forget about tariffs and move on, and the deal announced yesterday was a signal that everything “might get fixed” faster than expected.

God Save the King

Some may say it’s a bit premature to find so much optimism in this first “deal,” but the market doesn’t care and it was enough to reignite the rally. Donald Trump pulled out the very first trade deal, and it’s the United Kingdom that gets the honor of being the first under the Trump era to “seal a deal.” The market, allergic to uncertainty and addicted to good news, reacted like a trader on amphetamines: the S&P 500 jumped by +1.2%. All because Trump said it was a “REALLY good deal for both countries.” But behind the fireworks, you have to check what’s actually in the box… and it’s more like a McDonald’s Happy Meal toy: fun, but not life-changing. In fact, by the end of the session, the euphoria had faded—because the more people read the details, the more it felt like a slapdash arrangement. Still, it was enough to get people believing that maybe, just maybe, there’s a way out of the tariff crisis.

In concrete terms, the UK will import more U.S. beef, ethanol, and machinery. In return, the U.S. will slightly ease tariffs on British steel and cars. But beware: the 10% base tariff announced in April remains in place. So basically: one step forward and two steps standing still. The cherry on top? The Brits will buy $10 billion worth of Boeing planes. Trump announced this deal like he had just saved America from nuclear war, and according to him, it’s a full, comprehensive agreement. And just the first of many. Then came one of his trademark punchlines:

“You better go buy some stocks now because the U.S. economy is going to explode.”

Even Warren Buffet must have raised an eyebrow. But the worst part is, the markets listened. When the President tells you to buy, you buy. Period. If you want to play geopolitical critic, you could easily say there’s nothing dazzling about the deal—but it does show that solutions can be found, and that’s all the market wants right now.

What About China?

Trump used the moment to tease his next big move: “very substantial” discussions with China this weekend. Asked whether tariffs could be lowered, Trump replied they couldn’t get any higher. So we can assume that if things go well this weekend in Switzerland, the President might “make a gesture.” It’s pure speculation, but that’s more than enough for the wonderful world of finance—which after all, managed to rally for nearly a year just on the hope that the Fed might cut rates eventually.

Right now, U.S. tariffs on Chinese goods are up to 145%, while China is slapping a modest 125% on U.S. imports. The atmosphere is more Rocky IV than a friendly diplomatic brunch.

Trump wants China to open its markets more to American products. He even added:

“Trade can bring greater friendship with China.”

That’s Trump in peace & love mode… to be taken with a grain of salt.

In Conclusion

This deal with the UK is mostly a warm-up. The real fight is with China. And even if Trump wants to rack up bilateral deals, the UK is not China. The stakes are low: UK–U.S. trade is fairly balanced, so this won’t fix America’s trade deficit. But it gave Trump the chance to put on a show, boost the stock market, and play his favorite role: the deal maker.

Asia Rides the Tailwind

Friday morning Chinese trade figures showed a slight improvement in the April trade balance. Exports dropped to 8.1% from 12.4% the month prior, but beat expectations, which were at 1.9%. Meanwhile, imports only dropped by 0.2%, versus 4.3% before, and beat forecasts of a 5.9% decline. These numbers indicated some resilience in both domestic and foreign demand despite tariff headwinds. Still, it wasn’t enough to lift the Chinese market, which dipped 0.26%, while Hong Kong hovered near flat. Only the Japanese markets truly enjoyed the optimistic mood sparked by the U.S.–UK agreement.

And the Rest

Oil is back above $60, boosted by tariff deal hopes—because since yesterday, Trump’s DEAL has become the miracle cure for everything. Weak oil demand due to a slowing economy? Doesn’t matter, there’s THE DEAL! Layoffs spiking? Doesn’t matter, there’s THE DEAL! The Fed doesn’t want to cut rates? Doesn’t matter, there’s THE DEAL! Your wife left you? Doesn’t matter, there’s THE DEAL! Your car broke down? Doesn’t matter, there’s THE DEAL! The DEAL is like those mystic healers in newspaper ads—capable of everything as long as you believe and are willing to pay 300 bucks for a consultation. Anyway, oil is up because of THE DEAL. Gold is at $3,334 thanks to THE DEAL. And quite logically, Bitcoin is back above $100,000—currently at $102,745—because of THE DEAL, because right now, that’s all it takes.

And as for the rest
When it comes to today’s news, look no further—it’s all about THE AGREEMENT and what might eventually happen on our side between China and the USA. It’s also worth noting that the new Pope is American and apparently, the Vatican too wants to please Trump. Palantir is now among the 10 largest companies in the US, and valuations are simply stratospheric—they no longer make any sense. Yet another reason (as if we needed one) to say that the market learns nothing and forgets everything. And Donald Trump (him again) is calling for a 30-day ceasefire between Russia and Ukraine. I honestly wonder if there isn’t more than one Donald Trump—there’s no way a single guy can do and say all that in one day.

As for today’s economic data, there’s absolutely nothing of much interest. Plenty of FED officials will be speaking, which probably won’t change much—but at least it’ll keep us busy. Futures are slightly up, and one takeaway is that optimism is back—the “Greed and Fear” index is at 62, whereas it was down to 4 at the lows on April 7. Just goes to show, the contrarian indicator still works incredibly well!

As for me, I wish you an excellent weekend and I’ll be back next Wednesday—taking a 4-day break for birthday reasons—so enjoy, and see you next week!