Dollar Wobbles, Hope Rises, Tesla Sinks: A Fragile Recovery Attempt

Markets Rebound Sharply on Hopes of Trade De-escalation

Wall Street roared back Tuesday as Treasury Secretary Scott Bessent offered the first real hint of a potential truce in the US–China trade standoff. Bessent called the current tariff escalation “unsustainable” and predicted de-escalation “in the very near future.”

• Dow Jones: +1,017 pts (+2.7%)

• $S&P 500(.SPX)$ : +2.5%

• $NASDAQ(.IXIC)$ : +2.7%

Optimism that the worst of tariff tensions may be behind us — and that talk of Fed interference may be more bark than bite.

President Trump walked back speculation of removing Chair Powell, saying he has “no intention” of firing him, though reiterated his desire for faster rate cuts.

Hope

Morning Briefing Highlights: Markets, Data, Disruption

Markets: Dollar Weakness Sends Mixed Signals

• The dollar is weakening, which typically reflects global optimism — but can also signal rising US uncertainty.

• Equity markets are siding with the “rest-of-world strength” interpretation, at least for now — a contrarian yet defensible perspective.

• Meanwhile, the Atlanta Fed’s GDPNow model projects flat Q1 growth (-0.1%) when adjusting for volatile gold imports — not a good sign.

Data Focus: Risky Rallies and Structural Shifts

1. Emerging Markets & China Surge — But Likely to Fade Both asset classes have outperformed the S&P 500 by ~2 standard deviations. Historically, this has signaled near-term underperformance ahead. We offered tactical positioning advice in both our Morning Briefing and Community Plus reports.

2. Corporate Profits at 20-Year Highs (Not Thanks to Big Tech) A fascinating St. Louis Fed study attributes today’s high profits-to-national income ratio to broad-based margin gains, not just Tech. Think tax arbitrage, global supply chains, and scale-driven efficiency.

Disruption: AVs Are Evolution, Not Revolution

In our Full Report, we challenged the idea that autonomous vehicles (AVs) are truly “disruptive” in the U.S.:

• AVs improve personal transport — but only offer full disruption as urban ride-sharing platforms.

• Just ~10% of Americans live in dense urban areas where full AV deployment makes economic sense.

• Automakers should pivot capital toward scalable autonomy features (e.g., driver assist, highway autopilot) vs. moonshot full AV tech.

Tesla Misses — But Markets Shrug (For Now)

$Tesla Motors(TSLA)$ reported Q1 earnings of $0.27/share, well below the $0.36 expected. Automotive revenue plunged 20% YoY, and forward growth commentary was notably absent.

$TSLA

• The stock is down 41% YTD, yet held steady after-hours as investors focus on future guidance.

Next up in the Magnificent Seven earnings slate: $IBM(IBM)$ and $Texas Instruments(TXN)$ (Wednesday), $Alphabet(GOOG)$ (Thursday).

MAG7

The Bigger Picture: IMF Slashes Global Growth Forecasts

The IMF has cut its US GDP growth forecast by nearly 1 full point, citing Trump’s trade policies and a slowing global economy. All G7 nations, plus China, India, Brazil, and South Africa, also saw downgrades.

“The US is facing increased recession risk,” the IMF warns, while defending the Fed’s current stance.

Investor Takeaway: Relief Rally or Foundation for Rebound?

Markets surged on talk, not action, and risk assets remain deeply tied to political clarity:

• Dollar weakness is not yet signaling crisis — but neither is it fully risk-on.

• Emerging markets’ recent strength could be short-lived — mean reversion risk is high.

• Tesla’s miss won’t hurt if others surprise to the upside — but sentiment remains fragile.

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This summary is for informational purposes only and does not constitute financial advice. Investors should conduct their own research before making investment decisions.