Financial Breakfast: U.S. Court Temporarily Restores Trump Tariffs! The Dollar Regrets Losing the 100 Level, Bitcoin Breaks Down and Falls!

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Trump's announced reciprocal tariff policy in April faced setbacks in court rulings, and the Trump administration appealed the decision to the federal court. Ultimately, the U.S. Federal Appeals Court temporarily allowed Trump to implement most of the tariff measures, increasing uncertainty in U.S. trade policy once again. Federal Reserve Chairman Jerome Powell met with Trump at the White House, emphasizing the independence of Federal Reserve policy, while the 10-year U.S. Treasury yield surged and then fell back below 4.5%.

The three major U.S. stock indices rebounded from their lows, with the Dow Jones rising 0.28%, the S&P 500 up 0.4%, and the Nasdaq increasing by 0.39%; the China Golden Dragon Index rose 1.44%. In terms of popular stocks, NVIDIA's last quarter performance exceeded expectations, closing up 3.3%; Tesla and Amazon rose 0.4% and 0.5%, respectively. HP and electronics retailer Best Buy both cut their full-year performance outlooks in response to U.S. tariff policies, with their stock prices dropping 8.3% and 7.3%, respectively.

The U.S. dollar index rose and then fell, dropping 0.54% and losing the 100 mark; the USD/JPY fell 0.47%, ending a three-day rise, while the EUR/USD rose 0.66%. Gold increased by 0.89%, recovering the 3300 mark; WTI crude oil fell 1.52%; Bitcoin dropped 2.07% to below $106,000, marking three consecutive days of decline and hitting the lowest level since May 20.

Macro News

U.S. Federal Appeals Court Temporarily Restores Trump's Tariffs

The U.S. Federal Appeals Court on Thursday (May 29) temporarily stayed the trade court judge's order invalidating the tariff measures until further notice, meaning Trump's tariff measures are temporarily reinstated. The appeals court has requested the plaintiffs to respond on the matter by June 5, while the U.S. government will respond by June 9.

The prosecutor representing the U.S. government informed the appeals court that if the court does not issue a stay on the trade court judge's ruling, they will seek an emergency order from the Supreme Court as soon as possible.

The U.S. trade court judge ruled on Wednesday (May 28) that President Trump does not have the authority to impose large-scale tariffs on global goods under the International Emergency Economic Powers Act (IEEPA) of 1977. Subsequently, the Trump administration appealed the ruling to the federal court.

White House National Economic Council Director Kevin Hassett stated that even if faced with a trade court injunction, Trump could still implement global tariffs using "different methods."

Powell Meets Trump, Emphasizes Non-Political Rate Decisions

The U.S. Federal Reserve stated that at the invitation of President Trump, Chairman Jerome Powell met with Trump at the White House on Thursday, where they discussed economic development, including economic growth, employment, and inflation issues.

Powell did not discuss his expectations for monetary policy but emphasized that the policy path would depend entirely on upcoming economic information and its implications for the economic outlook. Powell clearly told Trump that interest rate decisions would be based on "non-political" analysis, with the agency formulating monetary policy solely based on objective analysis Since Trump was sworn in for his second term as president on January 20 of this year, this is his first meeting with Powell. The White House stated that Trump urged Powell to lower interest rates during their meeting.

The minutes of the Federal Reserve's meeting released earlier showed that they may face difficult trade-offs in the coming months, as both inflation and unemployment rates are rising, while increasing economic uncertainty proves that a cautious monetary policy is appropriate.

Goolsbee: If tariff impacts dissipate, the Federal Reserve should lower interest rates

Austan Goolsbee, president of the Chicago Federal Reserve Bank, stated that if the potential impact of U.S. government trade policy on inflation dissipates and the economy recovers to pre-tariff conditions, then the Federal Reserve should lower interest rates.

However, Goolsbee later added in a media interview that if the Trump administration continues to seek other ways to extend tariff actions, it will only prolong trade uncertainty, causing businesses and the public to reduce spending due to concerns about unclear economic prospects, and such decisions would have negative effects. Goolsbee has a voting right on monetary policy at the Federal Open Market Committee (FOMC) and believes that the U.S. economy is facing high inflation and a slowing job market, trending towards stagflation.

Federal Reserve Governor Adriana Kugler stated that they are closely monitoring the impact of significant changes in U.S. trade policy on financial markets and the effects on dollar assets.

U.S. Q1 GDP revised down to a contraction of 0.2%, initial jobless claims rose to 240,000

The U.S. gross domestic product (GDP) for the first quarter of this year was revised down to an annualized decline of 0.2%, compared to expectations and the initial value of a decline of 0.3%; the personal consumption expenditures (PCE) price index final value increased by 1.2%, while the expectation was an increase of 1.7%.

On the other hand, initial jobless claims in the U.S. rose by 14,000 to 240,000 last week, exceeding the expected 230,000; meanwhile, the number of continuing claims for unemployment benefits for the week ending May 17 increased by 26,000 to 1.919 million, also higher than the expected 1.893 million. Additionally, U.S. pending home sales in April dropped sharply by 6.3% month-on-month, a decline much greater than the market expectation of 1%, marking the largest drop since 2022.

Goldman Sachs President John Waldron: The U.S. economy and consumers show tremendous resilience. High Frequency Economics economist Carl Weinberg pointed out that the latest week saw initial jobless claims in the U.S. rise to the highest level since April, but he believes that while this increase is worth noting, it has not yet reached a concerning level.

Shinzo Abe and Trump hold a phone call, Japan is considering purchasing U.S. defense equipment to reduce the trade deficit

Japanese Prime Minister Shinzo Abe stated that he spoke on the phone with U.S. President Trump on Thursday to exchange views on tariff issues. This is the second call between the two sides this month following May 23, as the two countries are about to hold the fourth round of tariff negotiations.

As a U.S. court ruled that President Trump overstepped his authority by imposing comprehensive tariffs globally, Japan's chief trade negotiator Akizawa Ryo is about to travel to Washington to conduct the fourth round of trade negotiations with U.S. officials. He met with Prime Minister Abe on Thursday and revealed that Abe issued instructions to "negotiate firmly," demanding the U.S. to fully withdraw the previously proposed tariff measures Akizawa Ryozo stated that Japan could consider purchasing U.S. defense equipment to reduce the trade deficit that the U.S. sees as problematic.

On Wednesday (May 28), the results of the much-watched 40-year Japanese government bond auction were lukewarm. According to data from the Japanese Ministry of Finance cited by Reuters, foreign capital saw a net outflow of 334.4 billion yen from Japanese long-term bonds last week, marking four consecutive weeks of net selling; short-term bonds also experienced a net outflow of 2.41 trillion yen, the highest in five months.

Market Overview

U.S. Stocks: All three major U.S. stock indices rose, with the Dow Jones up 0.28%, the S&P 500 up 0.4%, and the Nasdaq up 0.39%.

European Stocks: European stock markets generally fell, with Germany's DAX 30 index down 0.44%. France's CAC 40 index fell 0.11%. The UK's FTSE 100 index dropped 0.11%.

Bond Market: The yield on the U.S. 10-year benchmark government bond is about 4.42%, up 5 basis points from the previous trading day.

Commodities: Gold rose 0.89% to $3,315 per ounce. WTI crude oil fell 1.52% to $60.83 per barrel.

Foreign Exchange: The U.S. dollar index fell 0.54% to 99.3. The USD/JPY fell 0.47%, while the EUR/USD rose 0.66%.

Cryptocurrency: Bitcoin fell 2.07% in the last 24 hours, currently priced at $105,744. Ethereum dropped 1.88% in the last 24 hours, currently priced at $2,636.

Hong Kong Stocks: The Hang Seng Index night market futures closed at 23,207 points, down 153 points, 366 points lower than yesterday's Hang Seng Index closing of 23,573 points, with a turnover of 14,236 contracts. The Hang Seng China Enterprises Index night market futures closed at 8,409 points, 151 points lower than yesterday's closing.

Global Company News

Gap expects tariff losses of up to $150 million

Gap (GAP.US) reported a 2% year-on-year increase in first-quarter revenue to $3.46 billion, exceeding the expected $3.42 billion. However, the company anticipates that if tariffs on China remain at 30% and tariffs on other countries at 10%, tariff costs will range from $250 million to $300 million. Through mitigation measures, the expected tariff costs will be reduced to between $150 million and $100 million. The company's stock price fell over 15% in after-hours trading. CEO Richard Dickson stated plans to diversify the supply chain and reduce reliance on production in China, without intending to significantly raise prices.

Costco (COST.US) reports 8% sales growth, with earnings and revenue exceeding expectations

Warehouse-style retailer Costco (COST.US) reported a 13% year-on-year increase in net profit for the third fiscal quarter to $1.9 billion, with revenue up 8% to $63.21 billion, surpassing the expected $63.19 billion. Currently, Costco operates a total of 905 stores worldwide, including 624 in the U.S. and Puerto Rico, 109 in Canada, and 7 in China Jensen Huang plans to sell $800 million worth of NVIDIA stock

NVIDIA President and CEO Jensen Huang plans to sell over $800 million worth of stock this year. The company disclosed in a filing with the U.S. Securities and Exchange Commission on Wednesday that on March 20, Huang submitted a 10b5-1 plan to sell 6 million shares of NVIDIA stock. The plan will expire at the end of 2025, and he has not yet sold any NVIDIA stock. His last plan also involved selling the same number of shares, which took place from June 14 to September 13, generating $713 million in revenue at an average selling price of $118.83 per share.

Musk: Autonomous driving Model Y will be delivered for the first time next month

Musk stated on Thursday that the first deliveries of autonomous vehicles are expected to occur as early as next month. In recent days, Tesla has been testing the self-driving Model Y on public streets in Austin, Texas, without any accidents, a month ahead of the original schedule. He added that next month will mark the first delivery from the factory to customers.

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