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Welcome to Catalyst. I'm Madison Mills. 30 minutes into the US trading day. Let's get you the 3 catalysts we're watching this hour. First up, we go live to the Oval Office as President Trump announces the first trade deal of his presidency. We'll have full coverage for you ahead. Plus we break down what the trade deals.For your portfolio and wallet as the EU threatens new tariffs if talks fall through with the White House, and we bring you the latest on antitrust as Apple tries to save its alphabet partnership by saying the deal may not even be necessary. We'll bring you all those details next.Half an hour into the start of US trading, let's get you a check on the markets brought to you by Tasty Trade. Taking a look here at the major averages moving to the upside. You've got your S&P up about 0.5%. Your tech heavy Nasdaq taking on the majority of the gains this morning. It's up about 7%, being led by those big tech names that are catching a bit of a bid this morning. Let's take a look over at the bond market though. Interesting to see that those yields continuing.Move to the upside just a bit here seeing just a little bit more of that demand picture coming into focus as we had a very successful 10 year auction earlier this week. Those auctions continuing and of course we'll bring you those headlines as they come. But finally, let's take a look at Bitcoin nearing that 100,000 level for the first time since early February here, Bitcoin is up over 2% this morning.Well, I want to bring in my co-anchor for the hour and guest host Keith Lerner. He is Truth's co-chief investment officer and chief market strategist. Keith, it's great to have you here for the hour and here in New York. Thank you for coming up for us. We appreciate it.

Yeah, fun to be here. We have a lot of news to talk about today, but definitely great to be in studio with you.

Plentyof headlines. So let's start there. This US UK.Potential agreement. How much do you think investors can take away any type of framework from this first big trade deal? Is this going to be a signal of what these deals might look like moving forward?

I think so. It's a starting point. I do think we also have to separate what's happening with the UK and other countries and China. China is in its own compartment.But I think what we, what we're hearing is that baseline number of 10% is likely to stay. So far, so far the market's taken that somewhat in stride, and I think the main thing is I'm meeting with business owners, as I'm meeting with investors, we really just want to get some clarity, and I think that's why in general the market's kind of hanging in there OK on this news, not, not being overly excited but also not overly negative. And if we remember that the first day on the liberation day when, when the market thought it was just a 10% tariff, it was actually up, right? And then.We saw they were more dramatic. So now we're almost like going back in some ways, at least this first tranche back to where wewere.

So then how do investors view any sort of rebound at this moment? Yeah,

we're ina tricky situation. I would say this at the lows when we were down 19%, you know, our point of view was a lot of bad news is priced in and that investors should start thinking about two-way risk. That means risk to the upside, and we thought a little bit of good news could go a long way. We've seen that happen. We've had a really dramatic rebound and that.Point, uh, our view at this point is the risk reward as we've snapped back is a little bit less favorable. So that doesn't mean we're, you know, we don't expect the collapse. We, we, you know, the, the economy still seems to be chugging along, but from an investor standpoint, relative to long term benchmarks, we're slightly below equities after this, after the snapback.

So if the risk reward just isn't there, where do you find some advantages? Yeah.

So, one, I mean, part of it is being patient, but again, we're managing private wealth, uh, uh, client assets, so.The way the way we're thinking about this is a little bit less equities. We're still focused on the US large caps over small caps, um, from a sector standpoint we like things like utilities, uh, communication services. We got hit a little bit on the, uh, alphabet news, but outside of that you've seen some good trends in AI so I think that's one thing from starting season that we've seen that's still a positive is that the technology trends are still generally positive and the stock market isn't necessarily the economy, so we like that.Um, we've been bullish on gold. I would say on a short term basis, gold is pretty stressed. I, we'll probably talk more about that later on as well. Um, and also I guess because we have all these kind of back and forth and, and whiplashes in the market, you know, we have brought in some of that even though we're overweight the US, we've kind of brought in bets a little bit because we are seeing, I mean, on this rebound Europe stocks have rebounded to 52 week highs. That's a signal that hasn't happened, you know, in sometime.

So if, if we're talking just US equities, and I want to.to check with you, but more broadly for a second, would you be in the camp of by the dip or sell the rally if you had to pick one? Well,

so I would say it to me it's not green light red light. It's, it's a caviar base allocation and on the margin as we move back up here, we would be fading the rally to go slightly below benchmark ratings because again, you know, you think about where we are right now we're, we're, you know, around 5600 and change on the S&P. We're trading at around a multiple of about 2020.5%.Before, at the highs back in February, we're trading around the 2 uh 22 multiple. I would argue today relative to before all this news came out, we have a lot more uncertainty, so I would suggest a little bit lower multiple and then forward earning estimates are starting to move down. We still think there's downside. We're seeing that in the S&P, the equal weight index, and of course market cap. So in our view was we look at the way the evidence we have an economy that's slowing somewhat, we have some uncertainty we've had.This nice rebound back up again, market, uh, has held in there pretty well, but on a risk reward we think the upside is likely somewhat capped. I don't know that we have to go all the way back down to retest the lows, but I think the downside is a little bit more, at least on a short term basis than the upside as we stand today.

And it's interesting taking a look at the leadership when we do have these green days, even today, for example, energy is the biggest gainer. Tech is not really contributing to the majority of the gains.Your S&P 500 this morning, uh, to what extent do you think that investors can continue to trust tech as a defensive hedge in this market?

I thinkit's part of the the overall portfolio. I think the way, you know, if, if let's say we're being too cautious, I think the one thing that we saw during this earnings season is the tech spending is here to stay, because even if the economy slows down, companies have to continue to invest, otherwise.They'll be left behind. So I think that was one thing as we went through the earnings season like these companies are still hanging in there pretty well. We're overweight communication services, not the tech sector per se. I would also say there's a big distinction I'm seeing in the markets right now between software and hardware. If you look at the software side, which is a little bit less focused on the terrorist side, um, we're seeing those the the software side really outperform and again a little bit less headwinds relative to terrorist so I think that would focus more on.That side with in tech and then communications as well. I talk about communications, that's also things like, uh, like Disney and Netflix. Those aren't recommendations and individual stocks, but as a sector as a whole, there's some positive secular themes that we're seeing

there. There certainly are. Well, Keith, we're gonna get more insights from you throughout the hour, so really appreciate you making the time and coming up here we're gonna be taking a look at some of the biggest movers on Yahoo Finance's trending tickers page when Catalyst comes back. Stick around.It's now time for some of today's trending tickers. This morning we are watching Eli Lilly arm and D wave. First up here, Eli Lilly falling after Politico reporting that President Trump is expected to sign an executive order to revive an effort to dramatically slash drug costs by tying the amount the government pays for some medicines to lower prices abroad. The order is expected to direct aides to pursue the initiative for a.Selection of drugs within the Medicare program. It could come as soon as next week. And it's also interesting, of course, amid concerns about whether or not tariff policy is going to impact these pharma stocks. I'm still joined here by Keith Lerner of Truest. Keith, how are you thinking about a sector like Pharma when there is such a question mark about obviously tariff policy, but then you also have Medicare prices and that policy as well?

Yes, we, I think.As one of the most trickiest sectors we call it the Charlie Brown sector. It's like every time it feels like it's gonna start going the right direction, Lucy takes the ball and the other thing with that sector that's, uh, you know, a challenge is that the more money some of these companies make, the more the government's pushing against those prices. So it, it seems like we have these great demographics, secular tailwinds that it should do really well, but you have a lot of competition. The regulations change often, policy changes.And you're in the crosshairs a lot of movement. So I mean we're we're neutral to the sector. I want to be positive there but again I'm just afraid that Lucy is gonna take the ball again for me next time I try to upgrade

the sector. It's a great point. I feel like I've been hearing people say buy healthcare for years now and we haven't necessarily seen that pop a lot of headwinds in the sector here. But next up, we are watching chip stocks as the Trump administration plans to rescind global chip export restrictions put in place under the Biden administration that were set to take effect May 15th. Scrap.The so-called AI diffusion rule would provide opportunities for countries to negotiate their own chip access. This is separate from the curbs on China, which the Trump administration has continued to maintain, though I do also want to talk specifically about AM here. You can see those shares moving to the downside. The company was down as much as 10% in the free market after issuing a weaker than expected outlook. The forecast from the company raising concerns about tariffs leading to a slowdown overall, and Keith, as you know, this comes as the chip sector has already been.Under a lot of pressure due to a lot of headwinds, cyclical, macro uncertainty, and then of course chip curbs as well. How are you thinking about the sector? Well,

the first thing which you acknowledged already is that they peaked last July, so this isn't a new like story and probably they outperformed by so much. I think the, the, the challenge right now with the chip side is that not only the terrorists, but also there's more competition than we thought before. And the question is really about margins going forward, especially as you think about like an Nvidia, like are they gonna be able to hold these margins where they are so.I mean, even and we look at things from a fundamental and also a technical level, from a technical level they are still on a relative basis, not as strong going back to the point I said earlier, we would much prefer I'm sorry, software where we think that the, the spend and the and the and the and the usage will continue to rise in a meaningful way and they're a little bit less, um, have that headwind on the tariff side as much.Listen, I think you know they've been beat up. Maybe we gain oversold balance, but I don't think there's leadership in this market rightnow.

All right, well, interesting to see whether or not the tariffs are going to impact supercomputers moving forward. Let's talk about exactly that D wave reporting record quarterly revenue up more than 500% year over year in the first quarter. The CEO calling it the most significant quarter in the quantum computing companies.History. Taking a look at those shares up over 26% again record first quarter revenue posting a narrower quarterly loss than expected here and Keith, this is something that analysts have been telling me is potentially the next big AI play like this could be the future AI play if we do get these super computers coming in from a company like Dwave.What would you say if a client asked you about that if they asked you, OK, should I invest in a company like D Wave because it's the future of AI?

Well, there's always this falls into the category of like these story stocks, and the, the technology is real. There's also been a big debate, you know, as far as is it 5 years away, is it 10 years away, is it 15 years? So I think it's, listen, I think the quantum computing is coming. It's gonna be probably revolutionary. The question is.How quickly and again people are a lot smarter than me have a big debate when so I would say I'd be OK if you wanna have that as more of like a high beta part of the portfolio but it wouldn't be the core. I would still, I think I would still be focused on some of these larger cap companies that have big balance sheets that can kind of get through some of this uncertainty and they have more than one kind of business line as well and also I think any time you have one of these new technologies it's hard to know who the winner is going to be.So you maybe what you do is you stick with the kind of a core and these like core large cap tech companies and you have a smaller basket knowing maybe out of the 3 or 4 that you have, maybe the one that's really gonna do well and will outperform maybe some of the losses you have on the other side. Right,

really great overview there, Keith. important framework for investors to keep in mind for our audience, you can scan the QR code below to track the best and worst performing stocks with Yahoo Finance's trending tickers page.And we are just moments away from President Trump's US UK trade announcement, taking a look at the White House here, but we have Henriettares of Partners managing partner and director of economic policy, joining us now for a bit of a preview. Henrietta, great to have you here this morning. Talk to me about this potential deal between the US and the UK. Obviously, as you know, this has been years in the making. Should investors view this as good news today?

It is years in the making. I think it's going to be underwhelming as a first opening salvo, but it is a perfect encapsulation of exactly what we should expect from the White House for the next couple of months, um, is like these really small trade agreements and trade deals. The UK US trade is 3% of our overall trade in the United States. This has the potential to be really important.For UK auto manufacturers, so if you're looking to buy a Bentley or an Aston Martin, congratulations, this might be helpful to you. But for the most part we're not even clear on whether this will remove the 10% tariff that President Trump put on Liberation Day across the globe. So there are some components here that are helpful in that, you know, obviously the president is signaling that he's willing to finally sit down and start signing something if in fact that happens today.But there are much bigger pieces of this pie that I think the market has been hoping for. When I talk to my clients, they're looking for deals with South Korea, with Japan, with Canada and Mexico, our two largest trading partners, understanding that China is a very long way off, but there are much bigger fish to fry, and this is a really small.guppy and we need more, quite frankly. Well,

Henrietta, given what you point out that the US and the UK do have a friendlier relationship, is that potentially a signal that we could have a deal sooner than currently seems possible with a partner like Canada, a partner like Mexico that we have had friendlier relations with in the past?

You know, I've actually been taking and distinct from this UK US deal. I've been taking a different approach to Canada and Mexico than my priors. I had been really optimistic that Canada and Mexico would be some of the first tariffs to come off. They are our closest trading partners. They are our actual neighbors. We've got the issues of fentanyl and immigration largely resolved, um, regular communication.With both leaders of both nations, those tariffs are incredibly pernicious and creating massive logjams at customs and border across all of Canada and all of Mexico, which is, you know, effectively equal to the transatlantic trade and Trans-Pacific trade. So I've been really optimistic that we would get the Canada and Mexico tariffs off in 1 to 3 months. We're already almost 1.Half two months in on this original USMCA 10% fentanyl tariffs, and we are nowhere on negotiating an exclusion from the 25% USMCA tariffs. And of course the president negotiated that trade deal during his first term and as we saw from his meeting with Carney earlier this week, has no intentions of taking that off. So while there is a deal with our close partner in theUK, I'm not seeing the same, and I'm having to push out my forecast for clients into instead of 1 to 3 months, maybe a 3 to 6 month breakthrough with those twonations.

And Henrietta, my guest host Keith Lerner has a question foryou.

Henrietta, thanks so much. I, I don't envy your position. Things are moving so, so quickly, you know, as I'm meeting with a lot of our business clients, the question they have is when are we gonna get clarity? I, I know no one knows that, but.If we think forward and say 6 months from now, I mean, do you think a lot of this will have some of that clarity, or do you think this is gonna just be an ongoing thing where it's gonna be even longer than say 6 months from now, knowing how the overall tariff, um, will play out across, you know, across the globe.

Yeah, that's a good question. We have a lot of, uh, of events that are gonna happen within that 1 to 6 month period. So for example, as y'all were just talking about, the semiconductor tariffs, 232 and 301 are gonna go into effect. That combat period ends, uh, next week, I believe.So we're gonna get an uptick in semiconductor tariffs somewhere in that 6 month range. We're gonna get the imposition of pharmaceutical tariffs in that 6 month range. We're gonna see an escalation on copper, uranium, critical minerals, and a whole host of other products and and chemicals as well. And then think about the nations that we could actually hash a deal out with. I mentioned South Korea moments ago. They don't even have a president.And they won't have their election until next month, so there's not an opportunity to get a deal with South Korea before they have a confirmed leader, as Secretary Besson is learning in real time right now, and I think that that's going to be the case with our other largest trading partners. I think the best piece of silver lining I can find is to say that we'll probably.Have a deal with Japan which would be constructive. I suspect we might be almost finalized with the South Korea deal within 6 months. I think India is far, very far away. 6 months would be the earliest that I would anticipate that we have 19 different segments of the US and India economies that we need to negotiate in that period, and Canada.Mexico, those negotiations aren't set to be finalized until July of 2026, so it's distinctly possible that at least the 25% tariffs on 40% of trade between Canada, Mexico, and the United States will be with us for that entire now you know, additional 1213, 14 month period.Um, and so what that leaves us with and the rest of the globe is very small scale deals. The one that I was actually anticipating being announced today, which I think is interesting that it's not, is with less than 1% of our trading partners, and that would be a deal with Peru, um, the Dominican Republic, and Colombia. Those negotiations between the USTR and his assistants have been occurring. They went to Bogota last week, you know, I was hopeful that we might get a deal there even if.It's de minimis, I think it's 0.8% of US trade with those three nations, but signaling forward progress on the, you know, 96 different countries that Trump has had negotiations with all at the same time. So six months from now, I'm hopeful that, you know, a fraction of the tariffs could be off, but a lot of this uncertainty plus additional tariffs from what we've seen now compounded by the trans shipping and cargo issues we're seeing, means that the US economy is going to be in the in the heat of the trade wars, I think 6.Months from now as opposed to on the back end

and Henrietta, we're getting some headlines in right now. This is coming from the Telegraph reporting that the US will cut tariffs on UK-made cars to 10%. So getting some of these headlines trickling in that we are expected to get clarity on when the president does speak in hopefully a few moments here. Henrietta, how much of a lift is that headline in your view off the back of this news again, the US cutting tariffs on UK made cars to 10% according to the telegraph. Is that needle moving?

I'm not in the market for a Bentley personally, so this doesn't help me, um, but it is something, um, I, I think that the best takeaway for investors right now is that this is signaling that President Trump is in fact ready to sign something and to reach deals. We need that logjam to break. This is the first one. It makes perfect sense that it would be with.So let's get this show on the road. Well,

I'm curious then about the headlines that we're hearing in terms of potential EU retaliation targeting US cars, planes, and bourbon if these negotiations fail. Is that a threat that has teeth to it, or is the fact that we're already hearing news of potential negotiations and deal making here a sign that we're not going to get to that point?

you know, I, I was remiss in not including the EU in my earlier rundown before I apologize. Think about what's happening with the UK right now. Our biggest issue with the UK and with the EU is trade and agriculture. That's something that's been a problem for us for a century. They don't want our genetically modified products. They have different sanitary standards for shipping over of, uh, soybeans, poultry, beef, all kinds of components. Now the UK reached a deal with us on cars because they have to.Reach a deal with the EU on agriculture trade and if they reach a substandard deal with us, with the United States on ag trade that undercuts their negotiations with the European Union on ag which is more important to them. So it's a really notable development that the US and the UK are focused on Aston Martin's when really what we need is the farming access, and that's not going to be coming, and I think that's what you're hearing right now.

Henrietta, you're going to stick with us. I do want to bring in Roger Aliaga Diaz, Vanguard's chief economist, global head of portfolio construction as well. Roger, great to have you on with us this morning. We are gearing up to hear President Trump speak about this potential US and UK deal, but Roger, from an economic perspective here.Where is your head at when it comes to the US economy potentially slowing off the back of these tariffs if we start to get deal making headlines in from a country like the UK for example, does that move the needle for you on your outlook for the US economy at all?

Yeah, great to be here. Um, well, um, obviously we're, we're tracking the, the headlines and the news very closely to see if we need to uh revise our, our expectations for the year, but the, but the reality is that there is some level of of uncertainty that has been already injecting the system, uh, and probably will will be very difficult to uh undo even if we have an announcement is made, right?Um, the level of tariffs we're talking about, uh, with the UK, for example, 10% versus, uh, carve outs on cars or steel, um, may not materially really impact the that the general level of tariffs that we have. So we have this, uh, 0.8% growth for the year, um, considerably slower, no recession, but, uh, uh, it's, it will depend really a lot about uh deals achieved with with China mainly and with other countries for, for that picture to change, uh, dramatically.

And Roger, my guest host Keith Lerner has a question for you. Yeah,

thanks so much. I was just curious. I mean, the big debate in the market right now is this kind of divergence between the hard data and the soft data. It sounds like you're at 0.8% GDP, so that would, that would lead me to, uh, uh, suspect that you think that we're gonna have a convergence to the downside with the, the, the soft data leading to the hard data following suit, uh, shortly. And if so, when do you expect to see that in the numbers?

Yeah, yeah, absolutely, yeah, um, I, I think what happened with tariffs is that, um, clearly you don't see it in the in the activity data yet, so the, the hard data when you see, uh, even high frequency, uh, indicators, uh, uh, like uh retail trades and consumer spending and things like that you, you don't see it until later. Um, the first place where you're gonna see the impact of tariffs is on the price side on inflation shock. So we're really keeping um a close eye on.On on things like PPI and and import prices versus CPI um and also on tariff revenues because that's the clear evidence that tariffs are actually impacting import import activity. So we're gonna see that price shock first. That price shock in turn is going to impact the partnership power of the consumer and that is gonna eventually turn into a slow down in activity that in consumer spending data more towards the back end of the year.

Would you, um, would you expect as we move past some of this tariffs, maybe even if, if it's by the end of the year that we actually then see a bit of a, a kickback or move back up next year or are you thinking that this is gonna be prolonged where we have that slow economic environment today and that next year we're still growing around 1% or less.

No, um, this is the thing with with tariffs, um, uh, there is this one, off shock both on the price side and on the, on the spending side. Once, um, the, the tariffs are set at that level, you could, um, basically in terms of growth rates, right, in terms of the of how fast the economy is growing, you can have a 2026 where the economy is going back to something closer to 2%.Um, of course the uncertainty, uh, will continue, um, basically, uh, uh, hindering the, uh, the activity and the investment decisions, right, because even if you achieve a bilateral agreement, um, you never know when those terms of the agreement or the enforcement commitments under of that agreement are are changed, right? So the uncertainty is something that may continue on the line, but you could, you could see how activity will go back even though level.Of activity right like the consumer spending levels are not recovered, the growth rate next year of the lower base could actually become more normal. same with inflation, same with inflation, right? So we see inflation perhaps jumping to something like high trees this year. Next year you could well see inflation going back down, not because prices have decreased, but because the inflation rate is actually normalizing. Yeah,

it makes a lot of sense, Roger and Madison.From my perspective, that's what the market's grappling with. If this is a 1 or 2 quarter slowdown and, and in the earnings come down for 1 or 2 quarters, it's can the market look past this? And if we rebound, if you're buying a stock, you're buying it for cash flow and earnings over the next 5 and 10 years. So that's the main question. And if we get that kind of soft data that leads to the hard data moving down that Roger talked about, is the market gonna be able to just look through that in real time? And that's why and, and when we heard earlier about it.Everything that's going on with Washington, it's complicated is the main thing. So at our standpoint, the range of outcomes is pretty wide, and that's why at this point, why should we be paying a peak multiple given the wide range of outcomes? But again, the bull case would be we're gonna look through this and the other side we have all the prices down to 10 year down. But again, our perspectively short term is the risk reward is somewhat less favorable because.Everything we've just discussed,

yeah, and it's such a great overview too, and I know you see that range bound action moving forward. Where, where is your top for the S&P

58 right now? I mean, it's getting close. It's getting a little bit uncomfortable, but we've been thinking about 5800, and we've been saying that since the lows and the way we get there is two ways. We look at the technicals, we have some price resistance right around 5800.And then if I say for the S&P PE we go back to say 21, so still below that 22 peak which I think is optimistic and we keep and we based it on forward earning estimates where they are today, we get around 5835 somewhere around there and again I think those forward earning estimates are somewhat optimistic and we are where we are paying uh high multiple. So right now what the market is embedding right is that we will get through this. It'll be.of a smooth ride and we have a small buffer should that not happen again, if you believe in that and you're saying, hey, I'm all in that this is going to be a smooth ride, then markets can push through and it has been resilient. We just think that we're not pricing in or have much of a buffer should something go wrong.

Yes, absolutely, and you never want to be in that position, but Henrietta, I want to bring you back into the conversation because one potential buffer, at least according to our Treasury Secretary Scott Besson, is the idea.Of tax cuts coming up here, ignore the tariffs. Tax cuts are coming. Henrietta, do you think tax cuts are going to be that catalyst for the stock market? How are you thinking about tax cuts?

It's like you read my mind, Mandy. Maddy, that was exactly what I was thinking. Um, when you think about risk reward, think about what the market is pricing in right now and what expectations are, and understandably so, the Treasury Secretary is out here talking about the biggest tax bill in history.And that is correct from a cost perspective. This is gonna be a $5.3 trillion deficit increasing bill, but the stimulative components of that, the new stuff, the new tax cuts, is the tiniest fraction of that pie, somewhere between $300 and $500 billion. That's not enough to reduce the corporate tax rate, fix the salt cap, extend the child tax.Credit or do anything on par with what the president promised on the campaign trail. no taxes on tips, no taxes on overtime, etc. those pieces will not be included in the final bill. So what you're gonna be getting, and we're watching in real time right now is $3.8 trillion in extension of existing rates that will all be deficit financed.$1.5 trillion in new deficit increases, which again will go towards offsetting a salt cap hike that will be relatively small versus what I think the five hardcore Salt caucus Republicans in the House want to see from, you know, New York.In New Jersey and California, um, and very limited extensions on the business tax credits. So the reward side, the positive from Bescent, is really not being written right now and of course simultaneously you have cuts to SNAP, cuts to Medicaid, etc. that's gonna be a drag on the consumer.

And I actually want to bring you into the conversation, Roger with the headline that we are getting in this morning here. Trump officials mull fast tracking deals with Gulf wealth funds. We also know obviously the president's first trip outside of the US, outside of heading to the Pope's funeral, is going to be to meet with the Saudis coming up here. To what extent do you think that there is a global reorder of allies of powers here that could potentially impact, obviously not just the US economy but the global economy.

No, there is, there is no question that um beyond the particular policies that we're keeping track here there is a rewiring right of of the global, global trading system um is is is a um a new world order centered around basically um the the agenda of the of of the US administration.Um, that, that obviously injects, um, uh, uh, some uncertainty because of, of the, as I was saying before, uh, the nature of the trade deals of being bilateral, um, uh, adds basically a little bit of discretion, uh, in a case by case basis.Right, um, so that, that would be something that we need to to grapple with, uh, going forward even though when growth uh recovers from a potential from a a long run perspective and certainty for something that will stay with us.

And Keith has

a question for you. Well, and I also just maybe, maybe more of a comment, um, you know, the other thing as we think about the global landscape, we do have a point right now where the Fed is on hold and global central banks around the world are cutting, so they're providing that monetary stimulus. We have fiscal stimulus from, from, from Germany, from China, so.And we're we're, we're basically showing some fiscal restraint and also some monetary restraint. So in some ways some of this rebalancing even outside the terrorists, and, um, you know, it makes sense so much because you're seeing stimulus outside the US but not in the US, and it would, it would make sense to me from a portfolio asset allocation that whatever allocation you had before to the US on the margin you wanna have a little bit more in international.We've been Team USA for many years and we still are, but since last fall we've been bringing in our bets a little bit because of that

shift. Yeah, it brings the question to mind of the US's sort of safe haven status. Henriette, I'd like to bring you back in here. Talk to me about how you're thinking about the X date. This is something the Treasury Secretary was asked about, of course, when he was on Capitol Hill this week. What is your thought on how, how that is progressing?

The XD delay in announcing when that is is really interesting to me and really worth following. As you know, Treasury receipts after tax day this year were the highest they've been in 3 years. Almost all tax returns have in fact been received by the Treasury Department, but Secretary Besson on Capitol Hill earlier this week said that he is delaying announcing what the X date is because there's still.A lot of outstanding returns. So that's a little bit discordant with what is completely discordant with what we've gotten in terms of data that we can track as outside observers in real time. It's very likely to me that the Secretary is working very closely with Speaker Johnson and Leader Thunene to coordinate the X date with whatever the deadline is going to be for this massive reconciliation bill.They're going to need all the muscle power that they can get to twist arms on the House Republican side and the Senate Republican side to get this bill passed, so it makes a lot of sense that he'd hold off announcing what the deadline is going to be, and I would tell your watchers to think of three key dates late July, July 24th, that's when the August recess starts. So I think that's a reasonable time to have Besant set the X date.But the fiscal year 25 budget reconciliation Authority exists through September 30th, and there are some estimates from CBO and others who say that we can get functionality for Treasury through the end of September or even early October. So that's another realm. And then finally, the last thing to be mindful of is that these tax rates don't actually expire until December 31st. So sort of like God help us if Besset sets the deadline at November or something, we very likely wouldn't get the tax bill until that time.November December, and they can do that pretty easily either with votes from Democrats that of course do not have any kind of deadline or by passing another budget resolution. So those are the three time horizons I've watched. I think the debt ceiling X date has become plainly a part of the reconciliation bill calculus, which is perfectly reasonable from a leadership perspective.

Well, Henriette, I also want to get your take on another upcoming meeting between the US and others, and that of course being Treasury Secretary Scott Besson and also Jamieson Greer set to meet.With officials from China to start talking about that triple digit tariff as well, what news might we be able to anticipate getting out of those talks? Do you anticipate that rate of tariff coming down at all?

I do not. Uh, I think it's completely inappropriate to anticipate that tariff rates would come down after a first meeting between Secretary Bessett, the Vice Premier of China, and USTR Greer. I'd have a couple points to relay. Number one, this time around.In Trump's second term, it's actually taking two men to do the job of one from Trump's first term. So Bob Lighthizer was the formal trade negotiator between the US and China with Liu He at the um the first president's administration, uh, the president's first administration. This time around it's taking two of them. If we can just get an agreement that Besant and Greer will be the chief economic, um, deal makers, talkers with China.That's going to be effectively the most that I could hope for. If they issued a joint statement of resolution saying that they met and they kept the language the same between the US side and the China release, that'd be a big deal. But in all likelihood, it's going to be two distinct press releases, lots of pomp and circumstances, you know, a 1 to 3 hour long meeting that really is just introducing the two sides to each other. The Chinese are not willing to call this a negotiation, um.Secretary Bessin came out and said that this was the start of negotiations. They are not even willing to call him a negotiator at this point, so I think it's unreasonable to anticipate that tariffs will come down this weekend when they meet.

Henrietta, always great to have you. Thank you for your insights and our thanks, of course, to our entire panel here for our special coverage. Keith Lerner, Roger, and Henrietta, thank you both and all so much for joining us ahead of President Trump speaking about the US and UK deal. We appreciate it. We're gonna have much more ahead on Catalyst stick around for more.Another story we are watching in Washington this morning. The CEOs of OpenAI, AMD, and core we've testifying before the Senate on AI competition. I want to bring in Adam Kovakovich. He is the Chamber of Progress's CEO and founder. Adam, great to get your insights on days like today because you have both the expertise in Washington and in tech, having worked in tech yourself. Talk to me about what we can anticipate hearing from Sam Altman as he is speaking on Capitol Hill today.

Well, I think you're gonna, I think two big things are gonna come out of today's hearing. One is that this is a space where it's frankly intensely competitive. We have all the big players Google, Microsoft, Amazon competing in AI. We've got upstarts like OpenAI and Anthropic. They're all competing really avidly with each other and that, that is great. That's actually prompting.Companies to innovate at such a huge, you know, rapid pace, and that's been great for consumers and so I think what you see when you see multiple CEOs testify like you have today that competition is kind of alive and well, but I think the second thing that will come out is that we are in an AI arms race against China and it's really important that the government.Um, really put forward kind of a unified policy approach to beating China in AI. We don't have that today. We actually have some cases where our government is at war with some of our leading companies, particularly on the antitrust front, who are going to be the ones who beat China in AI. And so I'd like to see kind of a more unified approach.To how we approach our AI competition against other countries.

Yeah, and talk to me about that competition piece. We're going to get to some of the headlines about Alphabet and Apple in just a second here, but do you think that there are going to be questions to Sam Altman about whether or not there's enough competition in the AI space? How do you think that's going to go?

There will be, but I mean to me the answer is obvious. I mean, again, I think there, you know, there, there tends to be kind of focused on, well, you know, is there enough room for startups, but I mean when you have 5 or 6 large companies competing with each other to be, you know, to really lead an AI that is outstanding and that's really what we're in the midst of or that kind of intense AI competition, so.I see nothing but upside for for companies competing with each other to to be leaders in AI. And

Adam Keith Lerner, my guest host has a question for you as well. Hey, Adam,

thanks so much. Great, uh, great points. You know, when we think about the broader stock market to us, uh, you know, the stock market, as I mentioned earlier, is different than the economy. So as I'm talking to small, like small and mid-size business owners, they're seeing some weakness with the AI side. The competition you said is good. So do you think then the capital spending that we've been seeing, is it gonna just continue to accelerate like we've seen over recent quarters?

I do, but I think the big cloud over the whole space, both big and small, is Trump's tariffs because, you know, yes, companies do want to invest, but there's this uncertainty, right? And, and you know Trump on the one hand says I want to, you know, spur building here in the United States, but on the other hand, on the other hand, he's giving exemptions to companies that creates uncertainty and then he, on the other hand, he says he wants to use the tariffs as kind of a negotiating tool for other policies, so the.Tariff strategy isn't isn't clear at all. That's created a huge amount of uncertainty on the part of business about, you know, do I have any predictability in terms of my investment that's also having downstream impacts on the small companies, the small suppliers. So you look at AI, OK, you think, OK, well, they're building AI data centers. Well, those data centers are full of equipment, hardware that is subject to tariffs, right? And so you know the tariff policy has all these downstream impacts on the AI industry.

I, I want to pivot a little bit to talk to you about Apple and Alphabet here uh this morning. Adam. Apple and Alphabet shares really both getting hit a little bit after Eddie Hugh, he is Apple services chief, he said that he sees AI search engines eventually replacing standard search engines like Google, and he also talked about declines in search that we have been seeing on Google's platform. How do you read that as somebody who has been inside of Google? How do you read the risk of AI to its search engine?

Well, you know, when I worked at Google, we said competition was one click away, and I think what you see right now is that the real competition for Google and Search is the next generation of search, which is really chat GPT and AI chatbots, right? So I think what you, what, what I take away is that this sort of shows the utter pointlessness of the Department of Justice's ongoing antitrust trial against Google, right, which is really focused on its, you know, years old distribution agreements with Apple.And other companies about the traditional search results. Well, if Apple's saying, look, we're thinking about shifting to AI services anyway, then you know, these, these deals aren't such an ironclad fortress for Google that the Justice Department thinks that they are, and I think this is a this kind of goes to a regular critique of antitrust that it's fighting yesterday's battle and that technology has a way of making yesterday's advantage obsolete.And this is why I think so many leaders in tech are sort of rightly paranoid about being ahead of the next thing, right, because you can lose your advantage.You usually use your lose your advantage through iterations and technology and that's, I think, you know what, what you know is a threat to Google right now and it's so I so I think frankly this this kind of dynamic sort of undermines the whole argument of the Justice Department's case against Google and

Keith, I want to bring you into the conversation too, because I wonder how investors should read this moment for a name like Alphabet. Obviously search is key.But in their earnings print they were able to talk about the idea that their AI rundown that wasn't a headwind for search, so maybe they can put forward a bull case that AI is something they can benefit from and not just lose from. How should investors read that?

Well, I think the question really is the transition. Are they able to transition their AI? Are they able to be competitive as well, because I don't know that it's a huge surprise. I'm not a fast mover and I do most of my searches now on.BT and I know a lot of other folks, even Anne Doley as well. So I think that's the question, but I also, I think the point made is how fast moving this stuff is. I mean, I remember and, and I, I, I was, I've been doing this since the mid 90s, like there was something called the Four Horsemen back in the late 90s. Uh it was Intel, uh Microsoft, Dell, and Cisco and you say like how many of those are the big leaders today? Well, Microsoft is but after hibernating for a long.So I think the main point is that this moves quickly and the leaders that we have today may not be the leaders of tomorrow. Yeah,

and Adam, I do want to end with you, uh, get the final word from you on how you're thinking about Google moving forward, especially as this trial is set to end on Friday. And I also want to hear from you about the potential forced sale of Chrome, which would obviously be a huge headwind. Do you think that that is a potential likelihood?

Well, I frankly think it's on the outer bounds of likely remedies, and as the trials has gone on, I think it's pretty clear that's probably not going to happen. More likely is that the judge forces Google to not be able to pay for these search distribution deals. But one of the big questions in this trial that's been going on is whether Google should have to give its search query data to rival search engines so that they can be able to compete. And I think, you know, in some ways it's.Like, well, let's say you're you're a baker who's been perfecting their cake recipe for years, right, and the government comes in and says you have to give your recipe with rival bakeries, you're gonna be pretty demotivated to keep working on your future recipe, right? If, if you're being forced to share it with your rivals, and frankly, the ultimate loser in all that is the consumers who benefit from all of that innovation search. So I am concerned about kind of what that's gonna ultimately mean for just the quality ofsearch results.

All right, Adam, we got to leave it there. Thank you so much for joining us and of course thanks to Keith Lerner of Trust, our guest host for the hour for his insights in the conversation as well. We appreciate it. We're gonna head to break, but afterwards we're gonna bring you President Trump's live comments on the US UK trade deal and any headlines we're getting ahead of those talks. That's next.