Sigh of Relief

It's encouraging that governments have temporarily reduced the tariff rates

Summary: Markets are feeling relieved that the Trump administration appears to have backed off of the trigger of its trade war. Sentiment is still a bit jittery, but economic fundamentals have remained strong and there's hope that we've avoided a recession. Powell is warning that rates may have to stay higher for longer, but markets are already starting to look past his opinions. The next Fed Chair is almost certain to lower rates.

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Macro

There's relief and some hope after the trade-war pause
"I want to say in this week, we welcome the news coming out of the UK. That was actually last week, making progress on their trade agreement, and then China, of course, this week, that's really changed the sentiment, decrease some of the fears about demand destruction and trade tensions going forward. That gives us hope for where we would like to get with the tariffs for aluminum, which we still have some work to do." – Alcoa (AA 0.00%↑) CEO Molly Beerman

“...encouraged by the announcement that was made…with the China and U.S. tariff pause. So obviously, the market is breathing a sigh of relief” - Energy Vault Holdings (NRGV 0.00%↑) CEO Robert Piconi

"We highlighted in our earnings material, roughly $0.85 of impact from tariffs. Of that, $0.65 relates to U.S. and China. And so we were heartened to see the news. And hopefully, there's a temporary pause on a portion of the tariffs. So hopefully, the trade negotiations continue." – GE HealthCare Technologies (GEHC 0.00%↑) CFO James Saccaro

"First of all, super encouraging in terms of the governments are talking and have, at least temporarily, for a 90-day period, significantly reduced the tariff rates. Of the two rates, the inbound into China is the more important rate for us than the inbound into US. So the reduction to the 10% rate on China effectively reduces a lot of the revenue headwinds that we would expect." – Thermo Fisher Scientific (TMO 0.00%↑) CEO Marc Casper

Have we avoided a recession?
"Well, I'm going to defer to economists, US recession prospects, inflation, who give it about a 50% chance. I think all these things are probably inflationary. A little bit more. And slowing down the economy. If there's a recession, I don't know how big it will be or how long it will last. Hopefully, we'll avoid it. But I wouldn't take it off the table at this point." – JPMorgan Chase (JPM 0.00%↑) CEO Jamie Dimon

"So, no major fears now. I think there's always going to be changes. There's always going to be puts and takes, but I think we've fended off a big recession, in my view." – Jabil (JBL 0.00%↑) CFO Michael Dastoor

"I guess for us, let's just start with the economy. The economy is going to weaken. I was just talking to CEOs of a portion of 100 companies the past few days returning from the West Coast, and there will be issues on shelves, and there will be prices for consumers to absorb, and you kind of already were in a recession. You kind of saw it at the lower half of the country, and the top 10%, 15% of the country was carrying spending and consumption, and now we'll see how the wealth effect actually plays through them." – Starwood Property Trust (STWD 0.00%↑) CEO Barry Sternlicht

The US economy is in good shape overall
"But let me be clear, the U.S. economy is in good shape. The macro trends that we saw for the U.S. economy before the whole conversation of tariffs are still in place today. As I said in my prepared remarks, the leadership of the United States regarding technology, digitization, and medical research. But as I said in my prepared remarks, this is different than other market shocks. So there isn't systemic risk. There isn't a pandemic. I strongly believe, more than ever, the strength of the capital markets worldwide and the strength of the entire financial system is safe and sound." – BlackRock (BLK 0.00%↑) CEO Larry Fink

April and early May show stable consumer spending trends
"I would say that there's the fact, and then there's the sentiment. And the sentiment, which we call soft data, slightly different than what the facts are. And you saw we had a solid first quarter that was on the back of strong consumer spending. So the consumer continues to be healthy as we see it, and we've seen the data through, like we shared in our earnings calls through the first quarter and then through the first 4 weeks of April, which is what we shared at our earnings call, strong consumer. And again, when I look at spending trends, we kind of look at them sequentially to see how trends are actually shaping up...Trends are stable. So consumer continues to be healthy, and that's kind of what we're seeing from an overall standpoint." – Mastercard (MA 0.00%↑) CFO Sachin Mehra

"Consumers are worried. You see this in the consumer confidence data. You see it in any number of consumer survey data. Consumers are anxious. They're worried. But I think you also have to look at the facts. And the facts, certainly in this country, show very strong employment, strong wage growth, moderating inflation, strong consumer balance sheets. And then to your point, what we can add to this conversation is what are we seeing on our broad-based network in terms of consumer spending? We're seeing stability. We showed 6% year-over-year growth in spending on the Visa network in the United States this last quarter. That's consistent with what we've seen for many, many quarters." – Visa (V 0.00%↑) CEO Ryan McInerney

"We don't think consumption is at where levels have been, but it has improved sequentially versus where we were in February and March, broadly across our categories. And that's in the U.S." – Colgate-Palmolive (CL 0.00%↑) Chief IR John Faucher

"So from a domestic perspective, honestly, the domestic volumes from an e-commerce perspective are resilient right now, May...May domestically is stronger than our normal seasonality up until this point. So that was encouraging." – FedEx (FDX 0.00%↑) EVP Brie Carere

"We continue to believe that our guidance, which includes a softening in the consumer spend environment, which we have not seen through April or even through the early part of May, which continues to also be strong, is a conservative guidance and is a guidance practice." – Block (SQ 0.00%↑) CFO Amrita Ahuja

"What I would say though is we haven't seen a marked difference -- or as of the first quarter when we reported, we hadn't seen a real marked difference in consumer spending in spite of all the crazy volatility that we've all been writing in the marketplace." – Etsy (ETSY 0.00%↑) CEO Josh Silverman

Sentiment remains soft, though
"We do experience some headwind in the SMB, and I think the overall sentiment is negative." – Fiverr International (FVRR 0.00%↑) CFO Ofer Katz

"In terms of the consumer sentiment, which I think you're kind of getting at, it's – I read the same things everyone else does. It certainly looks like sentiment is pretty low, and it's inconsistent with what we see in wage and employment data that suggests there's just – there's a lot going on in the mind of the consumers." – Affirm (AFRM 0.00%↑) COO Michael Linford

There's still a lot of uncertainty
"Last month, sweeping tariff announcements shocked the global economy. I was traveling in Europe at that time, meeting with our clients locally. Markets have partially recovered and tariff pauses and de-escalation. Investors want to be optimistic, but there's still quite a bit of anxiety and uncertainty. We hear this in each and every client conversation. I've traveled to Europe multiple times, I'll be back in Europe next week. And I was in the Middle East earlier this week. And it's on top of every client's minds. Where are we going? And what shall we, should we do?" – BlackRock (BLK 0.00%↑) CEO Larry Fink

"I think the right thing to do is to back off some of that stuff, to have an engaged conversation. I'm grateful they did the US-UK deal. You know, it's an agreement in principle. So, there's a lot of uncertainty still and there's diversity still in the China thing, but we restarted it, which obviously calms down the markets. That's not the reason to do it for democracy, you know, do vote or something like that. And so you'll still have uncertainty to resolve your 90-day triggers and all of these things, and hopefully they will be resolved. I don't expect immediate resolution, you know, to the satisfaction of everybody in 90 days." – JPMorgan Chase (JPM 0.00%↑) CEO Jamie Dimon

Supply chain mitigations continue either way
"We're still taking the mitigating actions because we don't know whether this is temporary or not... those the customers think of we're going to bear the tariff, they place the orders. If they're bearing the tariff, they're saying, hold on a minute. Right? So we'll see." – Thermo Fisher Scientific (TMO 0.00%↑) CEO Marc Casper

Powell is warning that rates may have to stay higher for longer
"Higher real rates may also reflect the possibility that inflation could be more volatile going forward than in the inter-crisis period of the 2010s. We may be entering a period of more frequent, and potentially more persistent, supply shocks—a difficult challenge for the economy and for central banks." – Federal Reserve Chair Jerome Powell

But Powell's days are numbered
"So, the economy will weaken, and that means [indiscernible] sooner or later will lower rates, and for sure when he's out in May of 26, there's no chance rates will be higher, because the selection will depend on somebody who accommodates a lower rate environment." – Starwood Property Trust (STWD 0.00%↑) CEO Barry Sternlicht

International