Donald Trump arrived in China looking for leverage. Xi Jinping greeted him with ceremony, polite words, and a warning. That warning was about Taiwan. At the start of the two-day summit in Beijing, Xi told Trump that trade talks were making progress, but that Taiwan remained the issue most likely to push the United States and China onto a dangerous path. The message was not subtle: Washington may want a deal on trade, chips, AI, and energy, but Beijing wants to define the terms of the relationship.

This is the heart of Trump's China problem. He likes to present diplomacy as a test of personal will: one strong leader across the table from another, a bargain waiting to be struck. But China in 2026 is not the China Trump visited in 2017. Beijing is more confident, more technologically capable, and more willing to use its market, its supply chains, and its geopolitical patience as tools of pressure. Trump may still talk like the man with all the cards. Xi is acting like the man who has read the whole deck.

The guest list made that plain. Xi met not only Trump but also the American business leaders who traveled with him: Nvidia's Jensen Huang, Apple's Tim Cook, and Elon Musk, whose empire spans Tesla, SpaceX, X, and more. Together, their companies represent trillions of dollars in market value. Their presence sent a clear signal. This summit is not only about flags, handshakes, and national pride. It is about who gets access to the future economy.

That future is built on chips, artificial intelligence, electric vehicles, energy systems, and the rules governing them. Nvidia's shares rose after reports that the U.S. had cleared about 10 Chinese firms to buy the H200, its second-most powerful AI chip. Investors loved the news. The market can forgive almost anything when a semiconductor stock is going up.

The summit's agenda is crowded: trade truce, AI, energy, semiconductors, Taiwan, and Iran. Any one of these would be enough to test a normal diplomatic visit. Together, they show how much the U.S.-China relationship has changed. Iran may was also the most immediate complication. Trump has insisted he does not need China's help to pressure Tehran. His own secretary of state, Marco Rubio, has sounded less certain, saying Washington wants Beijing to push Iran to step back from its actions in the Persian Gulf. 

The war with Iran has helped push energy prices higher, feeding inflation: April producer prices rose 6% from a year earlier, the hottest annual reading since 2022, and the monthly jump was also the sharpest since 2022. Companies have absorbed some of the cost rather than passing it all to consumers, but that can only last so long.

That puts the Federal Reserve in a bind. If oil stays high and inflation keeps running hot, the Fed may have to keep policy tight or even raise rates. Traders have already increased bets on a rate hike by year-end. Meanwhile, investors demanded a 5.05% yield at a 30-year Treasury auction, the highest since 2007, a sign that the bond market is no longer willing to politely ignore inflation risk.

Still, equities are climbing, with futures on the Dow up by 0.8% this morning. S&P 500 and Nasdaq futures reached record highs yesterday, pulled upward by Nvidia and the broader AI trade. Cisco also jumped after announcing nearly 4,000 job cuts and raising its revenue forecast on strong hyperscaler demand. In Europe, chipmakers such as STMicroelectronics and Infineon rallied. In Asia, the reaction was muted, with regional indexes close to flat.

Today's economic highlights:

Today's agenda includes: in the United Kingdom, data on GDP growth, non-EU goods trade balance, industrial production, and business investment; In the Euro Area, ECB President Lagarde's speech; In the United States, initial jobless claims, retail sales, import and export prices, business inventories, followed by speeches from several Fed members. See the full calendar here.

  • Dollar index: 98.472
  • Gold: $4,696
  • Crude Oil (BRENT): $106.09 (WTI) $105.2
  • United States 10 years: 4.45%
  • BITCOIN: $79,262

In corporate news:

  • OpenAI said two employee devices were compromised in the TanStack npm supply-chain attack, but found no evidence that user data, production systems, software, or intellectual property were affected.
  • U.S. had cleared about 10 Chinese firms to buy the Nvidia's H200, its second-most powerful AI chip
  • Foxconn reported a forecast-beating 19% rise in Q1 profit, driven by strong AI server demand, and expects AI server rack shipments to more than double this year.
  • Citigroup plans to increase Asia-Pacific prime brokerage staffing by about 10%, focusing hiring in Singapore and India.
  • ENEOS agreed to buy Chevron's 50% stake in Singapore Refining and other Asia-Pacific downstream fuel and lubricants assets for about $2.17 billion to expand outside Japan.
  • United Parcel Service said director Kevin Warsh stepped down from its board after being confirmed as Federal Reserve chair.
  • Blackstone's AirTrunk is reportedly seeking a $2.3 billion syndicated loan to fund a 200-megawatt data center campus in Malaysia.
  • Blackstone Digital Infrastructure Trust priced its IPO at $20 per share, raising $1.75 billion to invest mainly in income-generating data center assets.
  • Cisco Systems reported better-than-expected fiscal Q3 earnings and revenue, raised full-year guidance, announced a restructuring plan focused on AI, security, silicon and optics, and saw its shares surge premarket.
  • Advanced Energy Industries priced a $1 billion offering of 0% convertible senior notes due 2031, with proceeds earmarked for capped calls, note exchanges, share issuance and general corporate purposes.
  • Microsoft is reportedly exploring AI startup deals, including discussions with Inception and earlier interest in Cursor, as it seeks to broaden its AI strategy beyond OpenAI.
  • ITV said it remains in active talks to sell its media and entertainment division to Comcast's Sky, with Reuters reporting that discussions include a performance-based payout and related production-rights arrangements.
  • Sivers Semiconductors is preparing for a possible dual listing in the United States.
  • Ford gained 13% yesterday, buoyed by the prospects of its energy storage division, as highlighted by Morgan Stanley.
  • Arm Holdings and SoftBank attempted to acquire Cerebras but were rebuffed, according to Bloomberg.
  • Broadcom is taking legal action against Brussels in connection with the antitrust investigation involving VMware.
  • Apple is exploring the integration of AI agents into the App Store, according to The Information.
  • The Council of State has rejected a request from Amazon regarding book delivery charges.
  • PayPal is partnering with Anthropic to offer a service for small businesses.
  • Cerebras has set the price for its IPO at $185 per share, raising $5.55 billion.
  • Today's key earnings releases: Applied Materials, Figma, Yeti Holdings, Merlin

Analyst Recommendations:

  • Commercial Metals Company: UBS upgrades to buy from neutral and raises the target price from USD 79 to USD 89.
  • Doximity, Inc.: Baird downgrades to neutral from outperform and reduces the target price from USD 40 to USD 18. 
  • Illumina, Inc.: Daiwa Securities upgrades to outperform from neutral with a price target raised from USD 128 to USD 155.
  • Jbs N.v.: JP Morgan downgrades to neutral from overweight and reduces the target price from USD 20.50 to USD 18.50.
  • Macom Technology Solutions Holdings, Inc.: Zacks upgrades to outperform from neutral and raises the target price from USD 384 to USD 417.
  • Reddit, Inc.: Phillip Securities upgrades to buy from accumulate with a price target raised from USD 200 to USD 230.
  • Whirlpool Corporation: Goldman Sachs downgrades to neutral from buy and reduces the target price from USD 72 to USD 53.
  • Akamai Technologies, Inc.: Morgan Stanley maintains its overweight recommendation and raises the target price from USD 120 to USD 165.
  • Aramark: Jefferies maintains its buy recommendation and raises the target price from USD 47 to USD 58.
  • Caterpillar Inc.: Rothschild & Co Redburn maintains its neutral recommendation and raises the target price from USD 700 to USD 950.
  • Circle Internet Group, Inc.: President Capital Management Corp maintains its buy recommendation and raises the target price from USD 122 to USD 156.
  • Cisco Systems, Inc.: BNP Paribas maintains its outperform rating and raises the target price from USD 87 to USD 132.
  • Dell Technologies Inc.: Citi maintains its buy recommendation and raises the target price from USD 235 to USD 290.
  • Echostar Corporation: New Street Research LLP maintains its buy recommendation and raises the target price from USD 125 to USD 161.
  • Hewlett Packard Enterprise Company: Citi maintains its buy recommendation and raises the target price from USD 27 to USD 39.
  • Lucid Group, Inc.: Zacks maintains its neutral recommendation and reduces the target price from USD 9.25 to USD 6.50.
  • Marvell Technology Group Ltd: Arete Research maintains its buy recommendation and raises the target price from USD 97 to USD 143.
  • Nebius Group: Citizens maintains its market outperform recommendation and raises the target price from USD 175 to USD 270.
  • Palo Alto Networks, Inc.: Baird maintains its outperform rating and raises the target price from USD 220 to USD 265.
  • Sandisk Corporation: Arete Research maintains its buy recommendation and raises the target price from USD 1800 to USD 2300.
  • Western Digital Corporation: Arete Research maintains its buy recommendation and raises the target price from USD 435 to USD 610.