A few "choice phrases" from the president can swing markets

Summary

Marketplace Morning Report: A Few "Choice Phrases" from the President Can Swing Markets

Release Date: April 23, 2025
Host: David Brancaccio

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Market Surge Driven by Presidential Commentary

In the latest episode of Marketplace Morning Report, host David Brancaccio explores the significant impact of President Trump's remarks on the stock market. Early in the broadcast, Brancaccio notes a remarkable uptick in market indices:

• Dow Jones Industrial Average: +1,100 points (2.8%)
• S&P 500: +3.3%
• Nasdaq: +4.1%

This surge is attributed to President Trump's recent statements indicating his intention not to fire Jerome Powell, the Federal Reserve Chair. Previously critical of Powell, Trump's reassurance has restored investor confidence. Brancaccio states at [00:01] that the market's positive response follows Trump's claim that "he's not going to fire the supposedly independent guardian of interest rates, Jerome Powell."

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Investor Sentiment and Market Volatility

Brancaccio converses with Susan Schmidt, a portfolio manager at Exchange Capital Resources, who provides deeper insights into the market dynamics:

• Susan Schmidt at [00:47]: "A couple choice phrases from President Trump and everybody gets a little spring in their step."
• At [00:56]: Schmidt elaborates on the current volatility, attributing it to presidential rhetoric that bolsters investor confidence. She observes, "We're seeing that rebound in the market this morning and expectations for better, rosier picture ahead with those indices up over two and a half, 3% now."

Schmidt highlights how Trump's statements have led to a significant shift in investor sentiment, with markets rebounding sharply as confidence is restored.

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Corporate Earnings and Tariff Concerns

The report transitions to the ongoing earnings season, emphasizing how companies are grappling with uncertain tariff environments:

• Brancaccio at [01:23]: Discusses companies like Chipotle, Southwest Airlines, and Pepsi Cola, all of which are navigating the repercussions of higher tariffs. These companies are still assessing how increased tariffs will impact their business operations.

Schmidt adds at [01:45], "Companies that don't really have a clear guideline yet, no one knows how tariffs are going to impact them." This uncertainty is causing volatility, as investors remain cautious and often retreat to the sidelines until clearer economic signals emerge.

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Strategic Stockpiling Amid High Tariffs

The Financial Times report featured by Brancaccio reveals that several online retailers are strategically preparing for prolonged high tariffs:

• Brancaccio at [02:15]: Mentions that companies selling products on platforms like Amazon and Walmart are filling Canadian warehouses with Chinese goods. This move aims to mitigate the impact of the current high tariffs, which Exxon tariffs at 145% according to Trump.
• Trump's Statement at [02:15]: "It won't be anywhere near that number," suggesting a potential reduction in tariffs, which has been positively received by the markets.

This strategic stockpiling indicates businesses are adapting to the uncertain tariff landscape, anticipating a possible decrease in tariffs based on presidential assurances.

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Elon Musk's Strategic Shift and Tesla's Performance

A significant portion of the episode focuses on Elon Musk and Tesla's recent developments:

• Brancaccio at [02:15]: Reports that Tesla's profits fell 38% below estimates, yet the stock rose by 3.6% in early trading.
• Nova Safo's Analysis at [03:07]: Highlights that Tesla dealerships face protests due to Musk's cost-cutting measures affecting federal programs. Despite a 70% plunge in first-quarter profits, Tesla's financial health was partly sustained by sales of regulatory credits.
• Elon Musk's Statement at [03:41]: "Time allocation to Doge will drop significantly," indicating a focus shift towards managing Tesla more intensively.
• Nova Safo at [03:44]: Confirms Musk's commitment to spending only "one or two days a week" working with the Trump administration, emphasizing his strategic withdrawal from federal program interactions.

Musk's decision to prioritize Tesla operations over federal engagements reflects his response to the company's financial performance and market pressures, signaling a strategic realignment to bolster Tesla's future growth.

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China's Economic Measures: Silver Trains Initiative

The episode also delves into China's innovative approach to counteracting the trade war's economic strain:

• Brancaccio at [04:02]: Introduces the concept of "silver trains," a strategy to boost domestic consumption by encouraging retirees to travel and spend within China.
• Stephen McDonnell's Report at [04:22]: Provides a vivid portrayal of retirees enjoying the silver trains, engaging in leisure activities, and contributing to local economies. McDonnell describes passengers like Daniel Lee, who states, "We have been working so hard for many years... must really enjoy our life."
• Dr. Huang Huang from the China Tourism Academy at [05:30]: Explains that the silver trains target rural and economically underdeveloped areas, aiming to generate consumption and stimulate economic growth in these regions.

While the silver trains initiative alone may not resolve China's broader challenges with low consumer spending, economists view it as a positive step towards mitigating the trade war's economic impact.

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Conclusion

The episode wraps up with a brief mention of the burgeoning misinformation landscape affecting personal finance, promoting Financially Inclined, a trusted podcast by Marketplace hosted by Jannelli Espinal. This segment underscores the importance of reliable financial information in today's volatile economic climate.

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Key Takeaways

• Presidential Influence: President Trump's comments, especially regarding the Federal Reserve and tariffs, have a profound and immediate impact on market sentiments.
• Investor Behavior: Market volatility remains high as investors navigate the uncertainty surrounding tariff policies and corporate earnings.
• Corporate Strategies: Companies are adopting diverse strategies, such as stockpiling goods and reassessing operational focuses, to mitigate tariff-related risks.
• Strategic Leadership Shifts: Elon Musk's pivot to prioritize Tesla management highlights the adaptive strategies leaders must employ in response to economic pressures.
• Innovative Economic Solutions: China's silver trains represent an inventive approach to fostering domestic consumption and supporting regional economies amid trade tensions.

This comprehensive analysis provides listeners with a nuanced understanding of the interplay between political rhetoric, economic policies, corporate strategies, and innovative solutions shaping today's global markets.

Transcript

[David Brancaccio]

How market prices hang on a few syllables from the president of the United States. I'm David Brancaccio in Los Angeles. The stock market is open with wind at its back. The Dow Jones Industrial Average is up 1100 points, 2.8%. The S&P is up 3.3%. The Nasdaq is up 4.1%. Market participants tell us this is President Trump saying he's not going to fire the supposedly independent guardian of interest rates, Jerome Powell at the Federal Reserve. It comes after president had been casting shade on Powell for days, boasting that Powell's termination could not come fast enough. Plus, Trump said he foresees US China tariffs coming way down. Let's say good morning to Susan Schmidt, portfolio manager at Exchange Capital Resources.

[Susan Schmidt]

Good morning.

[David Brancaccio]

Wow. Couple phrases from the president and everybody gets a little spring in their step. Everybody being market professionals. You're watching that.

[Susan Schmidt]

Absolutely. And that's the kind of volatility we're seeing right now. A couple choice raises from President Trump and the administration. That gives investors a lot of confidence. And we're seeing that rebound in the market this morning and expectations for better, rosier picture ahead with those indices up over two and a half, 3% now as we're looking at this and investors really just turning 180 degrees on sentiment on this.

[David Brancaccio]

This is also still the season when companies report how they did in the first three months of this year and give hints about the road ahead. A lot of consumer facing. I see Chipotle, we're waiting on Southwest Airlines, Pepsi Cola. These are all companies that are trying to figure out how, for instance, higher tariffs will affect biz.

[Susan Schmidt]

That's right. And companies that don't really have a clear guideline yet, no one knows how tariffs are going to impact them. Volatility causes problems for investors. They tend not to like it. And that tends to have them move to the sidelines more often than not. We'll see what happens here and how confident investors can be to get involved once we hear more about how consumers might be handling this uncertainty as well.

[David Brancaccio]

Analyst Susan Schmidt at Exchange Capital Resources, thank you so much.

[Susan Schmidt]

Thank you.

[David Brancaccio]

The Financial Times talked to a half dozen companies that sell their products online as third parties on Amazon and Walmart. Those companies have taken to filling warehouses in Canada with products made in China, essentially stocking up to wait out what they see as a temporary stretch of high tariffs. Again, Trump told reporters Yesterday he thinks US China tariffs will come down substantially. They're at 145% now. But the president said yesterday, quote, it won't be anywhere near that number. Bonds are up, allowing the 10 year interest rates to drop to 4.29%. Elon Musk says he'll spend more time managing Tesla and much less time working with the Trump administration to cut federal programs. This after profits at Musk's electric car company came in 38% lower than estimated. Tesla stock is up 3.6% in early trading now.

[Nova Safo]

Tesla dealerships have been targets of protests over Elon Musk's and his Doge Group's cost cutting efforts at the federal government. And that's cost the automaker its first quarter results out yesterday showed profits plunged 70%, with Tesla rescued in large part through sales of regulatory credits to other automakers. But Elon Musk, as he often does, directed attention to the future, telling analysts in a call that he would soon spend more time at Tesla. Starting probably next month in May, my.

[Stephen McDonnell]

Time allocation to Doge will drop significantly.

[Nova Safo]

Musk did still promise to spend one or two days a week working with the Trump administration. I'm Nova Safo for Marketplace.

[David Brancaccio]

One option for China, given the trade war, is for policymakers there to compensate for reduced exports by encouraging domestic consumption. Maybe retirees could spend more on travel. There are silver trains for that the BBC's Stephen McDonnell went aboard.

[Stephen McDonnell]

The karaoke microphone is being passed around and the cocktail preparations are in full swing. On board one of the new silver trains, named this way because of the hair color of the passengers, is Daniel Lee. Along with a group of his retired friends, he's tucking into a plate of barbecued goose washed down with Chinese white spirit alcohol. We have been working so hard for many years, so I'm 66 years old, so important thing is that when we reach this year, this age, we must know what is the right thing to do and must really enjoy our life. These silver trains are an attempt to turn an economic problem into an economic solution. Every year, the proportion of older people here becomes greater with lower birth rates, making it harder for the economy to sustain them. But what if specialist trains could take retirees with plenty of time and cash to places they've never been, where they could spend some of their retirement money and boost the local economy. Dr. Huang Huang, research associate from the China Tourism Academy, has been studying the potential impact of this plan. The main places where the silver trains will stop are rural areas or small towns with less developed economies. Though these big city travelers will consume various products on the trains after they pull into a station, they will also visit tourist attractions and traditional villages. It has huge development potential in Baixa, built by the Naxi ethnic minority. Our retirees are off the train and checking out the modest street stalls at the bottom of old two storey wooden houses. In the street I'm standing in, you can buy cured meats, potatoes with spicy sauce, fresh orange juice, lamb, and the clothing of the local Naxi people. If only the smallest percentage of China's retirees take a silver train, this can mean millions of ticket sales. Yet even with growth of this magnitude, these trips alone are not going to fix China's difficulties with low consumer spending. The problem is just too big. However, economists would say at least it's a step in the right direction in China. I'm the BBC's Stephen McDonnell for Marketplace.

[David Brancaccio]

And in Los Angeles, I'm David Brancaccio. It's the Marketplace morning report at 8pm American Public Media if there's one thing.

[Jannelli Espinal]

We know about social media, it's that misinformation is everywhere, especially when it comes to personal finance. Financially Inclined from Marketplace is a podcast you can trust to help you get serious about your money so you can build a life you've always dreamed of. I'm the host, Jannelli Espinal, and each week I ask experts important money questions, like how to negotiate job offers, how to choose a college that you can afford, and how to talk about money with friends and family. Listen to Financially Inclined wherever you get your podcasts.