Rising prices hit a trade war
President Trump isn’t backing off his tariff threats, despite the potential risk to the U.S. economy and financial markets.
That puts additional focus on the latest Personal Consumption Expenditures report, the Fed’s favored inflation measure. It’s due for release at 8:30 a.m. Eastern.
The question is whether lingering inflation also will have big implications for the Trump agenda, with some economists predicting that tariffs will raise inflation and lower growth, even if the target countries don’t retaliate. Friday’s report is expected to show only slight relief for consumers.
Economists worry about a hot P.C.E. reading, which could push the central bank to keep borrowing costs higher well into the second half of the year, even as consumer confidence and the mood in the C-suites increasingly turn south and the economy shows signs of slowing.
A recession is seen as unlikely, but there are other concerns. Recent data shows a growing affordability crunch with egg prices spiking (more on that below), home sales plummeting and jobless claims climbing. Watch next week’s jobs report for more, including which parts of the country could be hardest hit by Elon Musk-led cuts to the federal government. (Alaska is among them.)
“With 3 million federal employees potentially worrying about their jobs and 6 million federal contractors worrying about their jobs, the risks are rising that households may begin to hold back purchases of cars, computers, washers, dryers, vacation travel plans, etc.,” Torsten Slok, Apollo’s chief economist, wrote in a research note on Thursday. Sentiment, he added, is “bad.”
There’s other concerning economic data. This week’s consumer confidence index by the Conference Board made for rough reading, with inflation gripes being a dominant theme.
Yet Stephanie Guichard, an economist at The Conference Board, pointed out more red flags: “There was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019. Most notably, comments on the current administration and its policies dominated the responses.”
Even so, Trump doubled down on Thursday on his tariff threat. He put Canada, Mexico and China on notice that “the proposed TARIFFS scheduled to go into effect on MARCH FOURTH will, indeed, go into effect, as scheduled. China will likewise be charged an additional 10% Tariff on that date.” The S&P 500 sold off afterward, putting the benchmark index — long viewed by Trump as a proxy on his economic record — in the red for 2025.
On the plus side for borrowers: The yield on 10-year Treasury bonds, which tend to underpin mortgage and credit card rates, has fallen in the past month. Market watchers view rising yields as another potential brake on the Trump agenda.
HERE’S WHAT’S HAPPENING
The S.E.C. rules that “memecoins” aren’t securities. The agency’s decision effectively means that the novelty crypto tokens — including those tied to President Trump and the first lady, Melania Trump — won’t be subject to oversight. Trump, who was backed by top crypto executives, has promised less regulation for the industry. Even so, the price of Bitcoin has plunged in recent days, stoking concern about crypto volatility.
The Consumer Financial Protection Bureau drops a lawsuit against Capital One. The agency, under acting director Russell Vought, withdrew a case charging the lender with cheating customers out of $2 billion in interest on their savings accounts. It was the most prominent instance yet of the Trump administration defanging the C.F.P.B., an agency many Republicans have sought to kill.
Citigroup is said to have narrowly avoided another “fat-finger” disaster. The bank had intended to send $280 to a client — but instead credited it with $82 trillion, according to The Financial Times. An employee caught the error before money left Citi, but the incident again raises questions about the lender’s internal controls, after a mistaken $900 million payout in 2020 led to the ouster of its C.E.O. and numerous fines.
Tesla reportedly seeks permission for a robotaxi service in California. Elon Musk’s carmaker has applied to run a program in the state so passengers can summon driverless vehicles, similar to Alphabet’s Waymo operation, according to The Washington Post. If granted, it could further Musk’s ambitions for robotaxis, which he has said are key to the company’s future. Some experts say such vehicles are unlikely to become reality at Tesla anytime soon.
OpenAI introduces a new A.I. model that focuses on more-natural conversation. GPT-4.5, which is designed to communicate more easily with users, will soon be available to those who subscribe to monthly ChatGPT plans. Sam Altman, OpenAI’s chief, wrote on X that the model was “expensive” and required the company to add “tens of thousands” of processors to make it available to more users. Separately, Altman joked that he might create his own social platform after Meta announced plans to release its own stand-alone A.I. app.
Redstone makes her Paramount wishes clear
Shari Redstone, the controlling shareholder of the entertainment giant Paramount, delivered a crucial message to her board a few weeks ago.
For months, Paramount’s lawyers had been jousting with representatives for President Trump, who had sued the company’s CBS News network over its segment on former Vice President Kamala Harris. Trump accused the network of deceptively editing the interview; CBS said Trump’s lawsuit was without merit.
But when the board gathered this month, Redstone was clear: She was in favor of resolving the issue, two people familiar with the matter told DealBook’s Lauren Hirsch and The Times’s Ben Mullin.
As Paramount executives weighed the best course of action, Redstone said she was in favor of moving forward in a way that would lead to some form of conclusion, including mediation.
It was the first time that Redstone made her wishes known to the full board. Many at CBS News and “60 Minutes,” where Harris’s interview aired, strongly opposed a settlement.
Further complicating the matter: The Federal Communications Commission is reviewing Paramount’s pending deal with Skydance. Some executives believe that a settlement would smooth the way to closing the merger, even as others worry that a settlement could be interpreted as bribery for the F.C.C. to clear the Skydance deal. Trump, for his part, told reporters Wednesday that the two were not linked.
National Amusements, Paramount’s parent company, declined to comment, and Paramount has said that its legal battle with Mr. Trump is unrelated to its deal with Skydance.
Redstone’s carefully written statement did not mention Paramount’s deal with Skydance — but it did underscore the fact that a pending multibillion-dollar lawsuit from the president made it difficult for Paramount to do business. Redstone also said that she was removing herself from day-to-day discussions about the lawsuit.
Earlier this week, The Times reported that Paramount had agreed to bring in a mediator.
Any settlement could be perceived as the latest corporate concession to the White House, including Disney’s $15 million settlement in December and Meta’s $25 million settlement last month. The possibility of a settlement, which is likely to further embolden Trump’s crusade against the media, has been met with a strong backlash within the CBS ranks and outside the company.
Though Redstone didn’t mention the Skydance deal in her remarks, people familiar with her thinking believe she’s focused on closing the deal.
Paramount is also navigating the consequences of doing business under a retributive president. Beyond the Skydance deal, Trump has made clear his willingness to exact revenge when it comes to companies.
“Corporations — particularly these days are often in the cross hairs of policymakers — and they have to navigate that,” Jill Fisch, a professor at the University of Pennsylvania Law School, told DealBook. “And that’s not easy.”
Egg diplomacy
Retailers are facing wholesale egg prices that have soared to more than $8 a dozen, up from $2.25 last fall, prompting the Trump administration to direct the Agriculture Department to find ways to bring down prices.
But one of his administration’s ideas is raising more questions than answers, The Times’s Danielle Kaye writes for DealBook: importing eggs from abroad.
First, the scope of imports is unclear. Brooke Rollins, the agriculture secretary, said the United States was in talks with several countries to secure egg imports as a short-term solution. She didn’t say how many eggs would be imported.
Turkey said it would export 420 million eggs to the U.S. That might seem like a lot — but it amounts only to the number of eggs the U.S. produces in a day and a half.
The U.S. would need to import a lot more to make a dent in prices. In 2024, the United States produced 109 billion eggs. For prices to come down noticeably it would need to import eggs in the billions, said Bruce Babcock, an agricultural economist and professor at the University of California, Riverside.
There are logistical roadblocks, too. Foreign countries might not have a surplus of eggs ready to export. “Other countries are also dealing with the avian influenza,” said Chad Hart, an agriculture professor at Iowa State University. On top of that is the hurdle of transporting hundreds of millions of fragile eggs by air, he said.
Trump’s tariff plans complicate the picture. The president said on Thursday that sweeping tariffs on Canada and Mexico would go into effect next week, and that he would impose an additional 10 percent tariff on China. Tariffs discourage imports, a strategy at odds with his administration’s effort to source more eggs. That could turn eggs into a possible negotiation tactic for countries that find themselves in his cross hairs.
“You might see eggs will be one of the things that is left off the tariff list,” Hart said. “But if the president is talking about tariffs on everything, it does create a definite conflict in policy here.”
Even if enough egg imports do come through, some Democrats might still call for inquiries into the industry’s pricing practices. Five companies control half the U.S. egg market, leading to windfall revenue and profit for the biggest producer. A jury in 2023 found leading egg producers liable for unlawfully inflating prices in the early 2000s.
The Sergey Brin philosophy of work
An army of Google programmers has been hyperfocused on keeping the tech giant at the forefront of artificial intelligence, as the company battles for supremacy with OpenAI and others.
But to Sergey Brin, the Google co-founder who helps oversee A.I. efforts, some employees aren’t working hard enough.
He has expressed a very particular view of the kind of pace required for success, according to The Times’s Nico Grant:
“I recommend being in the office at least every weekday,” he wrote in a memo posted internally on Wednesday evening that was viewed by The New York Times. He added that “60 hours a week is the sweet spot of productivity” in the message to employees who work on Gemini, Google’s lineup of A.I. models and apps. …
“A number of folks work less than 60 hours and a small number put in the bare minimum to get by,” he wrote. “This last group is not only unproductive but also can be highly demoralizing to everyone else.”
Worth noting: Brin’s in-office stipulation doesn’t apply to Google more broadly.
THE SPEED READ
Deals
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The payments giant Stripe is planning a tender offer for employee-owned shares at a $91.5 billion valuation, edging closer to the peak it reached in 2021. (Bloomberg)
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Apollo Global Management and KKR are said to be helping to arrange $35 billion in financing for Meta to build new data centers. (Bloomberg)
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The head of Britain’s competition regulator said the agency would scrutinize fewer global deals, in line with the explicitly pro-economic-growth agenda of the British government. (FT)
Artificial intelligence
Best of the rest
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Joe Gebbia, a billionaire founder of Airbnb, said he had joined the so-called Department of Government Efficiency to modernize the paper-based retirement system for federal employees. (NYT)
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The Trump administration cut funding for Ebola-related work in Uganda, hours after Elon Musk said that funding for the prevention efforts had been restored. (NYT)
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