Donald Trump struck a softer tone toward Beijing on the eve of his meeting with Xi Jinping, telling reporters he plans to ease tariffs on Chinese goods tied to the fentanyl dispute.
“We’re making great progress,” Trump told reporters following him on Air Force One, then cut to the chase, “and I think we’ll have a great conversation about AI.”
Markets heard what they wanted. NVIDIA’s stock surged premarket on news that Trump would discuss the company’s Blackwell AI chip with Xi, pushing it to an unprecedented $5 trillion valuation.
Meanwhile, China quietly bought its first cargoes of U.S. soybeans this season — a symbolic gesture that reminded traders that diplomacy still runs on trade.
“It’s not détente,” wrote Bloomberg’s Jennifer Welch this morning, “It is a dealmaking with a timer.” Wall Street is ambivalent on peace, but they do like profits.
In the background, China’s biotech sector continues its ethically murky sprint forward — this week, reports surfaced of Chinese scientists creating monkeys engineered to exhibit schizophrenia and autism.
A decade ago, this would have been unthinkable. Today, it’s state-funded research. In Washington, it may be another reason for tariffs. In Beijing, it’s the future of competitive advantage.
Asia Ascendant, Allies Uneasy
Trump’s diplomacy remains uneven. He joked to reporters that he “didn’t come to South Korea to see Canada!” — a dig at Canadian Prime Minister Mark Carney, who’s attending the same summit. Mexico, on the other hand, got a warm mention. Trump praised the U.S.-Mexico tariff truce, saying the two countries were “on the same page economically.”
The Financial Times described the mood among Asian leaders as “transactional but wary.”
Japan’s Nikkei touched a record high above 50,000 points yesterday, buoyed by hopes of regional stability — and by what Nikkei Asia called “a speculative wave of foreign money chasing the illusion of order.”
Even copper joined the rally, hitting a record high on the prospect of easing tensions. When diplomacy trades in commodities, every headline becomes a futures contract.
Earnings and Endings
Back in New York, Wall Street is staging another high-wire act.
Today brings both the Federal Reserve’s rate decision and earnings from Microsoft, Alphabet, and Meta — the kind of day that defines a quarter.
Citadel strategist Scott Rubner told CNBC this morning that the “rally has legs,” arguing that liquidity from global central banks is still driving risk assets higher.
“Every dip is met with sovereign cash,” he said. It’s the same line traders used in 1999 and 2007.
You already know we have our reservations. For a quick review, see our latest report, Anatomy of a Stock Market Bubble.
Royal Caribbean, meanwhile, sank after weak guidance — a reminder that not all boats rise with the tide. Or on the backend of a historic hurricane in the Caribbean.
The $4 Trillion Club
For a moment yesterday, Apple’s market cap crossed $4 trillion, joining NVIDIA and Microsoft in the club of companies now valued higher than most national economies.
The catalyst? Better-than-expected iPhone 17 sales in the U.S. and China.
“Apple is the world’s safest risk,” wrote Barron’s this morning. “It sells dreams that fit in your hand.”
Heh.
The stock has jumped 25% in the last three months as investors price in its late pivot to AI. The question, as always: How much future can you buy today?
The AI Efficiency Dividend
Amazon announced 14,000 corporate job cuts yesterday — part of a larger 30,000-role reduction. UPS revealed it has already cut 48,000 positions this year. Paramount, Target, and PwC are all trimming as well.
Most of these layoffs share a quiet rationale: freeing capital for AI. Amazon CEO Andy Jassy said the company is “simplifying bureaucracy to scale AI,” turning Amazon into what he called “the world’s largest startup.”
As The Wall Street Journal noted, “Corporate America isn’t shrinking. It’s upgrading its operating system.”
Despite the bloodletting, ADP data showed that private employers still added 14,000 jobs a week over the past month. The economy is bifurcating — machines (and stock returns) at the top, labor below.
The real AI story has been a collapse in job openings – which would normally caution investors about the economy – as tech earnings propel the S&P 500 to new heights. (Source: BLS)
We expect layoff announcements to cause another round of mispricing of stocks on Wall Street as well. AI innovation will be blamed for lost jobs. But, as with all new innovations that rip through the marketplace, we expect AI will create more jobs than those lost when companies pivot to new efficiencies.
The Fed’s Balancing Act
The Federal Reserve will almost certainly cut rates by a quarter point today — the easy part. In fact, the betting site Polymarket now forecasts at least a quarter-point rate cut in each of the next three Fed meetings through January.
As for today’s announcement, the hard part is what comes next. Chair Jerome Powell faces a divided committee: the doves see fragility, the hawks see inflation. The Trump administration’s “Shadow Fed” has a heavy thumb on the scale in the form of Fed governor Stephen Miran.
“Powell’s silence will speak louder than any statement,” said Reuters analyst Howard Schneider. “If he leaves the path unclear, volatility will do the talking” in the stock market.
Meanwhile, Treasury Secretary Scott Bessent is telling Tokyo to “give its central bank room to fight inflation” — advice he hasn’t extended to the Fed. Trump, for his part, wants rates lower. The government needs cheaper debt to finance its own promises.
The Climate Pivot
Bill Gates is trying to dial down the apocalypse. In a memo released hours before a Category 5 hurricane hit Jamaica, Gates urged climate advocates to “tone down the doomsday rhetoric” and focus instead on poverty reduction and adaptation.
“There’s no reason to pit poverty reduction against climate transformation,” countered Columbia’s Jeffrey Sachs.
But Gates’ shift is telling — even idealists are repricing what’s possible. Microsoft, Meta, and Google still promise carbon neutrality by 2030, but the money is flowing elsewhere.
The AI Mind Field
Elon Musk’s xAI launched Grokipedia, a new rival to Wikipedia, boasting 900,000 AI-written entries “fact-checked” by Grok itself. The Guardian noted that it “reads like the internet through a funhouse mirror.”
Articles on January 6, for example, call it a “riot amid voting irregularities,” a phrasing that the supposedly apolitical editors at Wikipedia would certainly take as an affront to their all-knowing correctness.
Meanwhile, OpenAI released internal data showing that 0.15% of its 800 million weekly users exhibit “explicit signs of suicidal intent.” Probably in large part brought on by gender and race politics and confusion over the speed of change in modern life. (Fair warning, the italics and emphasis are our own.)
Following a recent lawsuit regarding the suicide of a teenager using the platform for personal therapy, OpenAI says it’s updating safety features. If accurate, the figures translate to hundreds of thousands of users in crisis — a sobering measure of how deeply AI has embedded itself in human psychology.
And if you thought keeping law and order was tough in Chicago or Portland, Oregon, how about this nugget from Rio de Janeiro this morning: Police engaged in their deadliest-ever raids yesterday, leaving 64 people dead.
The violence erupted days before Brazil hosts pre-COP30 climate events, underscoring a bitter irony: the fight for environmental justice unfolding amid social collapse.
~ Addison
P.S. Tomorrow on Grey Swan Live!, we’re pivoting to the advent of Trump’s economic nationalism and U.S. military readiness for future conflicts.
Our guest, John Robb — a former consultant to the Joint Chiefs of Staff — will unpack how drone warfare, autonomous systems, and AI are reshaping geopolitics.
With markets rallying on optimism over a U.S.–China trade thaw, John will identify the next global hotspots — and the overlooked investment opportunities emerging as technology transforms the defense industry.
If you’re not a Grey Swan Investment Fraternity member yet, go here for details so you can join us at 2 p.m. ET tomorrow.
If you’d like, you can drop your most pressing questions right here: Feedback@GreySwanFraternity.
