Weekly Research Briefing: Dolls Rejoice!

In a joint statement released earlier in the day, the United States and China said they would suspend their respective tariffs for 90 days and continue negotiations they started this weekend. Under the agreement, the U.S. would reduce the tariff on Chinese imports to 30 percent from its current 145 percent, while China would lower its import duty on American goods to 10 percent from 125 percent.

The outcome of the frenzied weekend of negotiations in Switzerland brought tariff rates close to where they were before Mr. Trump ratcheted them higher on April 2, which he billed as “Liberation Day.” However, the talks did not appear to yield any meaningful concessions beyond an agreement to continue discussions.

“We concluded that we have a shared interest,” said Treasury Secretary Scott Bessent at a news conference in Geneva, where U.S. and Chinese officials met over the weekend. “The consensus from both delegations is that neither side wanted a decoupling,” he said.

@carlquintanilla.bsky.social: Ouch. PIMCO. “.. the Trump Administration clearly touched the hot stove back on what he has deemed Liberation Day, and it is clear they will not go back there.”

@wallstengine: HARLEY-DAVIDSON CUTS TARIFF IMPACT ESTIMATE: After the U.S.-China deal, $HOG now sees $45M in tariff savings, lowering its 2025 China tariff hit to $30–$55M. If 30% tariffs hold through year-end, that drops to $10–$35M. HDFS deal also progressing, with updates expected next Qtr.

"But there’s just so much that we don’t know. I think — and we are in a good position to wait and see, is the thing. We don’t have to be in a hurry. The economy has been resilient. It is doing fairly well. Our policy is well positioned. The costs of waiting to see further are fairly low, we think. So, that’s what we are doing." – Federal Reserve Chair Jerome Powell

@justinwolfers.bsky.social: The Fed didn't use the word "stagflation", but that's what it's warning about. Never a good moment when your central bank says that it's worried about *both* higher unemployment and higher inflation. That's a problem that monetary policy alone can't solve.

Ford said to have raised prices on models produced in Mexico by as much as $2,000 per unit as of May 2nd - press cites dealer notice - Price increases will affect Maverick, Bronco Sport and Mach-E models ‬‬‬

“The U.S. automotive industry is highly integrated with Canada and Mexico; the same is not true for the U.S. and UK,” American Automotive Policy Council President Matt Blunt said in a statement.

“We are disappointed that the administration prioritized the UK ahead of our North American partners,” Blunt added.

The council represents Ford, General Motors (GM) and Stellantis. Each of the three companies have factories in the United States but still forecast major setbacks due to the president’s tariffs, given the auto industry’s highly integrated supply chains across North America…

Blunt said the U.K. deal undercut the United States-Mexico-Canada Agreement (USMCA), Trump’s first-term trade deal that replaced the divisive North America Free Trade Agreement.

“Under this deal, it will now be cheaper to import a UK vehicle with very little U.S. content than a USMCA compliant vehicle from Mexico or Canada that is half American parts. This hurts American automakers, suppliers, and auto workers,” Blunt said Friday.

The owner of a San Francisco card-game company cashed in his money-market funds. The founder of a tent maker is looking for investors. A watch and jewelry company in Colorado is holding off on signing a new office lease. And a New Hampshire consumer-product company has laid off more than half its staff.

Around the country, small businesses that import goods made in China are taking actions—big and small—to try to outlast the current 145% tariff regime on items from that country. But many are worried that their companies won’t survive.

“Nobody in power seems to care about small business,” said Scott Anderson, owner of 5 Star North, which works with Chinese manufacturers to make its products ranging from acrylic markers to tiki torches. “At this point the only option I see is selling out the rest of what we have and shutting our doors.”

Anderson now has five employees, down from 12 at the start of the year. Three are looking for jobs and Anderson expects them to leave by the end of the month. The New Hampshire company is also running low on stock and expects to be out of most items in the next few months.

Unlike larger companies, small businesses have fewer levers to pull to help them endure the new tariff regime. Most work with a single factory or a handful of suppliers, making switching production to lower-tariff countries especially difficult. Smaller margins, thinner cash cushions and tiny staffs leave them more vulnerable to trade battles and other economic storms.

The stakes are high, and deeply personal. Finances of small businesses and their owners are often deeply intertwined, with a business its owners’ largest—or only—asset. Personal guarantees can also make owners liable for their company’s debt.

The following figure shows the percentage of U.S. credit card debt in delinquency. This statistic is most commonly used to describe the incidence on lenders’ balance sheets. This delinquency rate rose in each of the last 10 quarters—since the third quarter of 2022— at the national level. Similarly, it has trended upward during the same period in the Eighth District and in the lowest-income and highest-income deciles of ZIP codes.

President Donald Trump’s immigration crackdown is making it harder for foreigners to buy and rent homes, threatening a key pillar of Miami’s half-decade-long economic boom.

Miami, like much of the US, had already been seeing a real estate slowdown driven by higher mortgage rates and record prices. South Florida was also hard hit by soaring insurance costs and condo maintenance fees, as well as the inevitable comedown after the pandemic-induced relocation frenzy that made the area a magnet for new arrivals.

Now, conversations with house hunters, brokers and mortgage lenders point to another dynamic at play: Growing concern that even legal immigrants aren’t safe from ever-changing policy is paralyzing the market in Miami, where more than half the population is foreign born.

Home sales are down more than 17% from a year earlier in Miami, nearly six times the national decline, according to March data from Redfin Corp. Properties now spend a median of almost 100 days on the market, more than twice the US rate and a sign of waning demand. In the rental market — which is more likely to cater to undocumented migrants and legal immigrants living temporarily in the US — prices for one-bedroom apartments have plunged 16% in the past year, Zillow Rentals data show.

Google may not be such a hard habit to break after all.

A senior Apple executive said Wednesday that Google searches over the Safari web browser fell over the last two months. “That has not happened in over 20 years,” Eddie Cue, Apple’s senior vice president of services, said on the witness stand during the penalty trial phase of the Justice Department’s antitrust lawsuit against Google. Cue attributed the drop to a growing number of people using generative AI services such as ChatGPT and Perplexity.

It was a costly revelation. Google-parent Alphabet saw its share price tumble more than 7% Wednesday after news outlets reported the comments. That cost Alphabet about $250 billion in market cap. Apple’s shares also fell more than 1% by the close, as Google’s traffic over Safari powers a lucrative partnership that now generates more than $20 billion in annual payments to the iPhone maker…

Its near-90% search share now is down from around 93% in late 2022, when ChatGPT first launched. A small slip, to be sure. But Google has also remained below the 90% mark for most of the last six months, which is a duration not seen in at least a decade, according to Statcounter’s data. As of last month, around 400 million people were using ChatGPT on a weekly basis, according to parent company OpenAI.

Perplexity is in advanced talks for a new funding round that would value it at $14 billion, a more than 50% increase from late last year, according to people familiar with the matter.

Venture-capital firm Accel is set to lead the new round, which is expected to total $500 million, people familiar with the matter said. The raise underscores investor enthusiasm for generative artificial-intelligence companies, some of which have begun to challenge Google’s longstanding dominance over search.

Perplexity was valued at $9 billion last November, its fourth round that year, The Wall Street Journal reported. It is one of a set of AI startups that have grown quickly after the launch of ChatGPT three years ago.

The San Francisco-based company sells an AI-powered search tool that provides summarized answers using information gathered from the web. Instead of the list of blue links users have long seen on Google, Perplexity offers answers in sentence form with links to the websites it pulls information from.

It is also planning to launch its own web browser, called Comet, a potential early challenge to incumbents such as Google Chrome and Apple’s Safari.

NRG Energy has agreed to acquire LS Power’s portfolio of natural gas generation facilities and power plant platform in a cash-and-stock deal with an enterprise value of about $12 billion.

The power company also boosted its earnings in the first quarter as revenue surged on gains across its regions and segments.

NRG said Monday that the acquisition gives it 18 more natural gas-fired facilities located across nine states, doubling its generation capacity and expanding its footprint.

NRG is also acquiring CPower, LS Power’s commercial and industrial virtual power plant platform which operates in all of the country’s deregulated energy markets.

Chief Executive Larry Coben said the deal strengthens NRG’s credit profile and growth rates.

The transaction includes $6.4 billion in cash consideration, $2.8 billion in stock consideration and $3.2 billion in net debt, net of about $400,000 million in tax benefits. The deal is expected to close in the first quarter of 2026.

@wallstengine: Morgan Stanley sees AI infrastructure spend topping $3T by 2028. That includes $2.6T on data centers (chips + servers), $210–330B on new power generation, and likely hundreds of billions more for grid upgrades.