The fraught discussions playing out between President Donald Trump and one of the world’s most powerful figures could shape his presidency and the direction of the market. His playground fight with Elon Musk isn’t helping, either.
OK,
that might seem a little flippant. But Trump’s call with Chinese leader Xi Jinping on Thursday was boosting markets before the blowup with Tesla CEO Musk grabbed everyone’s attention. In the
long-term, the U.S.-China negotiations are still where investors should be focused.
Trump and Musk’s fallout isn’t inconsequential. Wiping more than $150 billion off Tesla’s valuation and calling into question
the U.S. government’s relationship with its dominant space launch provider in Musk’s SpaceX shook the market. But tempers seem to be cooling, with a call between the two to be held Friday, according to Politico.
Will that call be more productive than the one between Trump and Xi Jinping? While the leaders of the world’s two largest economies talking is definitely a positive, there appeared to be little progress made on any agreement to permanently lower tariffs.
There’s plenty of incentive to do a deal, with tariffs causing economic pain. China’s central bank injected around $139 billion of liquidity into markets on Friday, looking to offset bank-deposit withdrawals in the face of lower interest rates designed to cushion the trade-war blow. Meanwhile, U.S. economic data has been soft this week and on the eve of the May jobs report, BlackRock CEO Larry Fink warned of “very elevated inflation” if tariffs are implemented.
Whether Trump and Musk make up is of pressing interest for Tesla investors and fans of social-media drama.
But whether he reaches a deal with Xi Jinping matters for everyone.
—Adam Clark
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Trump-Musk Breakup Mesmerizes Internet With Insults, Threats
Political observers got the drama they had anticipated in the once-close relationship between President Trump and Tesla CEO and government cost-slasher Elon Musk. The world watched mesmerized as the two men hurled insults, barbs, and threats at each other, and their bromance rapidly dissolved.
- Musk has been trashing Trump’s signature legislative effort, which GOP lawmakers call the “One Big Beautiful Bill” containing Trump’s tax and spending priorities. From the Oval Office, Trump said Musk’s criticism was “very disappointing.” He later suggested spending cuts could come by canceling Musk’s government contracts.
- That was like tossing gasoline on the fire. In a rapid-fire string of social media posts, Musk said he would decommission SpaceX’s Dragon rocket, the vehicle used to transport astronauts to the space station, he agreed with someone on X that Trump should be impeached, and he said tariffs would cause a recession.
- Taunting the president, Musk said “Make my day,” in response to Trump’s post threatening to cancel his federal contracts. Trump said Musk’s presence as a senior advisor in the administration had worn thin and he asked the billionaire to leave. The president told reporters Musk’s criticisms could be “Trump derangement syndrome.”
- Musk appeared to be insulted by Trump’s Oval Office remarks, posting that the president wouldn’t have been elected without his support and that the Democrats would control the House. “Such ingratitude,” he added. Trump claims Musk was upset that the tax bill eliminates the electric vehicle tax credit.
What’s Next: Musk’s feud with Trump erased
$150 billion from Tesla’s market value, one of its worst days ever. But Musk’s SpaceX, a private company, also has much to lose. SpaceX is the world’s dominant space launch provider, and NASA accounts for about $15 billion of total awards to the commercial space company.
—Anita Hamilton and Al Root
Trump, Xi Call on Tariffs Leaves Plenty of Problems
President Trump and Chinese leader Xi Jinping held talks on Thursday but investors shouldn’t
get their hopes up. The two spoke by phone to discuss rare earth minerals and trade, defusing a tit-for-tat that had put into question the fragile truce reached last month.
- Having the world’s two largest economies on talking terms, with both leaders inviting the other for a visit and sending top officials to meet their counterparts again on trade, was a near-term positive.
- The call was aimed at breaking an impasse sparked by differing
interpretations of what the two sides agreed on in the May talks in Geneva. It reduces the risk that the levies could return to the trade-paralyzing levels seen before the May agreement.
- The way the two governments presented Thursday’s discussion, however, added to skepticism any real progress was made. “The U.S. side
should acknowledge the progress already made, and remove the negative measures taken against China,” said a readout on the call by Beijing. Trump, meanwhile, described the call and his relationship with Xi positively.
What’s Next: Geopolitical strategists saw little that meaningfully reduces the uncertainty hanging over businesses. Investors and companies now looking forward to the
next meeting between high-level U.S. officials and their counterparts may want to lower their expectations.
—Reshma Kapadia
Circle’s Soaring IPO Paves the Way for More Crypto Offerings
Circle Internet Group, the leader in the world of stablecoins, closed its first day of trading up nearly 170%, in a sign that crypto mania is back. Circle CFO Jeremy Fox-Geen told Barron’s after the stock began trading that it was “still the early days for our mission.”
- Circle listed 34 million shares on the New York Stock Exchange under the ticker symbol CRCL. It opened at $69 a share and quickly soared to $103.75, or 235% above its initial public offering price of $31 a share. Shares closed at $83.23, a 168% gain.
- At $83.23, Circle has
a market value of about $18.4 billion. (The value would increase to $21.4 billion including options, warrants, and shares that could be purchased by underwriters.) The company and its investors raised nearly $1.1 billion from the stock sale.
