“America's health care system is neither healthy, caring, nor a system.” — Walter Cronkite

Good evening, 

This week could have hardly gone any better for stocks. 

Investors got some much-awaited relief on the U.S.-China trade deal front, helping the S&P 500 erase losses for the year, now up 1.3% in 2025. Since April 7, the index has rallied over 20%, marking the quickest recovery following a decline of the same level from all-time highs since 1998, according to Fundstrat Head of Technical Strategy Mark Newton.

Head of Research Tom Lee, too, is impressed, saying “it’s a miraculous recovery.”

Markets have been roiled in recent weeks by worries about what broad-sweeping tariffs could do to consumer spending and business capital expenditures. Things took a turn for the better this week, leading strategists to raise their S&P 500 year-end price targets and pull back their recession bets. 

According to Lee, greater tariffs visibility is one of the reasons why he believes “stocks are in better shape today than they were on Feb. 18 when they were at all-time highs.” 

The president left it up to Treasury Secretary Scott Bessent to figure out the percentage of tariffs imposed and other key parameters with China, which many investors considered to be prudent. As Washington Policy Strategist Tom Block has noted, many DC insiders agree, seeing Bessent as "the adult in the room."

This was the “ultimate reminder that stocks do have a Trump put,” Lee said. 

Any update on trade policy with China is arguably more important to investors than other countries because it’s one of America’s biggest trade partners. That could be a potential reason why stocks didn’t inch higher last week, even after Trump announced a trade deal with the U.K. 

“It’s the first time really since February that it feels like life is getting back to normal,” Lee said in his Macro Minute videos. “There’s a lot less anxiety about what could be tweeted, allowing investors to really look at ideas again.”

Lee believes the S&P 500 is now primed to make a new high. 

There was good news this week on the economic data side, as well. The consumer-price index showed that inflation in April hit the lowest level since 2021. Producer prices fell last month by the most in five years. 

That, along with tariffs relief, helped solidify the recent climb higher for risky assets. Nvidia shares are now in the green for the year, up 16% this week, while Tesla shares are up 17% and Alphabet shares are up 8.8%. Bitcoin crossed the key $100,000 level, while the small-cap focused Russell 2000 has climbed for six weeks straight. Meanwhile, haven asset gold was a loser this week, down over 4%. 

Bullish sentiment is also improving. An American Association of Individual Investors survey showed that the percentage of bears fell below 50% last week after staying above that level for 11 straight weeks, the longest streak on record. Still, there’s much work to do on the sentiment. 

“It’s the persistent bearishness that has to flip,” Lee said. Our Chart of the Week has more details:  

Of course, many questions remain about whether the rally is sustainable. For starters, the 10-year Treasury yield has climbed this week to over 4.4%, reminiscent of the panic caused in the days after Liberation Day. But Newton says that “people don’t need to fear yields going over 5%,” as companies hold a boatload of cash and can use that to earn returns. 

He’s relieved to see that the equity put-call ratio hit 0.4 on Wednesday, the lowest level since mid-January. That means that investors are seeking fewer protections that would pay off if stocks fell.

Newton said, “For those who are still on the sidelines and underinvested or short, it’s decision time.”

Elsewhere

You know that song, "Habibi come to Dubai"? Well, ask and you shall receive. America’s commander-in-chief went to Saudi Arabia, Qatar, and the United Arab Emirates this week, cementing the start of a new relationship with the Gulf that prioritizes trade and technology. Leaders from all three countries have agreed on investments worth billions of dollars in the U.S. However, Trump’s bromance with the Arab leaders has drawn the ire of many, who argue that the president’s foreign policy could be influenced by his relationship with them. 

There’s new hopes that Ukraine and Russia could reach peace. Delegations from both sides kicked off their first direct peace talks in three years, even though negotiations seemed off to a poor start. They can thank President Trump for that, as the talks took place after he applied pressure. According to local officials though, Russia struck near the Ukrainian city of Dnipro with a salvo of ballistic missiles just as the negotiations started.

Apple shares have rallied sharply in recent weeks, but took a breather this week after Trump said he doesn’t like that the iPhone maker is planning to manufacture in India more so than America. The company has increased its manufacturing capabilities in India in recent years to avoid being caught in a tariffs riff-raff in China. An iPhone made in the U.S., however, would cost thousands of dollars more than the ones put together in Asia, according to some analysts.

The man most emblematic of American capitalism — Warren Buffett — explained his decision to step back from his duties at Berkshire Hathaway to the Wall Street Journal. The answer was simple for Buffett, who is 94. “I didn’t really start getting old, for some strange reason, until I was about 90,” he said. “But when you start getting old, it does become—it’s irreversible.” 

A great week for Coinbase this week turned a bit sour after the crypto exchange said that cybercriminals had stolen certain customer accounts information, such as names, addresses, phone numbers and emails; masked bank account numbers and identifiers as well as the last four digits of Social Security numbers; government ID images and account balances, the company said. Along with that, they also stole other internal documentation. The incident is estimated to cost Coinbase up to $400 million to fix. 

And finally: Pope Leo XIV started his papacy by warning the world about the threat from growing use of artificial intelligence. He said the church would address the risks that artificial intelligence poses to “human dignity, justice and labor.” And he’s been thinking about this for a while, according to New York Times reporting, which says that last September, the pope, who has a degree in mathematics, invited the friar to talk to the heads of other Vatican departments about how to deal with digital life generally, including AI.