US Treasury Secretary Scott Bessent (R) and US Trade Representative Jamieson Greer hold a news conference in Geneva on May 12, 2025, to give details of “substantial progress” following a two-day closed-door meeting between US and China top officials aimed at ending a devastating tariff war.
Fabrice Coffrini | Afp | Getty Images
My top 10 things to watch Monday, May 12
1. The United States and China agreed to temporarily slash their “reciprocal” tariff rates while a larger trade deal is worked out. The U.S.’s new tariff rate on Chinese imports will be 30%, down from 145%. China’s duty rate on American goods will be 10%, down from 125%.
2. Thawing trade tensions should be best for companies that make things in China and sell them here in the U.S, such as lower-level semiconductors, sneakers and Club name Apple’s iPhones. Also should help out Boeing, which last month had planes returned by China in retaliation.
3. Stock futures are soaring this morning on the trade news. The S&P 500 is on track to open up 3%, while the Dow is looking at a roughly 1,100-point pop. The tech-heavy Nasdaq 100 is up the most, at 4%.
4. There is a considerable short position against the market and a general drumbeat of negativity. Last week billionaire investor Paul Tudor Jones said he believes the market would hit new lows even if President Donald Trump cut China tariffs to 50%. The billionaire class has crushed younger and retiree investors once again.
5. Trump said he’s planning to sign an executive order today that would cut drug prices in the U.S. to bring them in line with what over high-income nations pay. Still plenty unknown about this, but a fierce legal fight would likely ensue and the drug companies should be able to win in court.
6. Trump’s drug pricing threats are why pharma stocks are mostly sitting out this morning’s rally. Pfizer, AbbVie and Merck are all lower, as is Club name Eli Lilly. On the positive side for Lilly, though, we got more complete trial data showing that its obesity drug Zepbound is superior to Novo Nordisk’s Wegovy.
7. Deutsche Bank upgraded Johnson Controls to a buy rating from hold. I like this call, but among industrial companies with data center exposure, I prefer Club names Eaton and Dover. Eaton had a great first quarter, and Dover is so cheap.
8. Bernstein downgraded Target to an underperform sell rating from hold, with analysts worried about the upcoming results for its February-to-April quarter due to poor weather and consumer sentiment. But the tariff relief does give Target a break going forward.
9. Barclays upped its price target on Affirm to $53 a share from $45 and kept its overweight buy rating on the stock. Affirm’s quarter was good, and the lapdog negativists will have to turn positive just like they will with Palantir. You can’t stay short these names.
10. Barclays also boosted its PT on CoreWeave, the newly public AI cloud computing provider, to $60 from $48. CoreWeave should be a rocket, and it reports earnings this week.
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