SOTS 2nd Hour: China Trade Deal Latest, Drug Prices EO, and Live: New Trump Remarks 5/12/25

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All right, Eamon, thank you so much for staying on top of it. Let's bring in Mike Santoli with his take on what this all means for the market. Mike, obviously it's a total risk on reaction here. Market surprised by what they saw. Yes, surprised. I think, Leslie, also they were right in a position to react to whatever happened over the weekend because you sort of built back toward the April 2nd levels in the S&P 500 in credit markets in the volatility index. It was almost as if we were right on that fulcrum of, do we relax more or do we have to take back some of that rebound? Now, I wouldn't call it an all clear, I'd call it a more clear. You still can't kind of do the math on what it's going to net out as in terms of overall blended tariff rates and what that's going to mean for inflation and demand and all the rest. But the direction of travel in de-escalation is very clear to the markets and essentially they'll keep pushing in that direction until they're proven otherwise. We are a little bit off the overnight highs in the S&P 500 based on the futures move. It shows you that we already were a little bit stretched on the upside. It's interesting to see whether we can build on that. We crossed above the 200 day average in the S&P. So we've relaxed a little bit more. Some people clearly forced in to participate and chase this rally on the open. But we're kind of still waiting to see if we're in that window when the economy is kind of held harmless based on what's happened already with tariffs. Mike, it seems like it's a total risk on reaction here, but tariff levels are still pretty high. Do you think the markets are missing the potential economic implications as well as the additional uncertainty of this 90 day period? I think the market is going to celebrate the incremental next move until it's somehow punished for that. So one thing to keep in mind, we're trading at levels. We first got to 7 months ago. We're trading at levels. We hit on the open on November 6th, the day after election day. We're trading at a year to day break even just about. In other words, it's not as if we're saying everything's perfect and better than we thought it was, you know, six months ago, but it's better than we thought it was one month ago. So if there's no doubt, we can we can run into a little bit of a come up in here if in fact, the economy buckles or if you see tariffs really creating more friction. I do think you have to keep it in perspective. $30 trillion US GDP, you know, net imports of goods from China are like $300 billion last year. Even if you put a 30% tariff on that, it's no fun for people involved. But it's not something that should be enough to knock the overall US economy off course, unless something else breaks loose. All right, Mike, thank you. Mike Santoli. All right, let's get back to, of course, this China deal, although we're not quite at a deal yet. A lot more to come. The president kept mentioning papering it or basically dealing with all of the different key points. Joining us now to discuss that, Roger Altman, Evercore founder and senior chairman and former deputy treasury secretary. We've also got Jeff Moon, China Moon strategist, founder and a former assistant US trade representative for China Affairs. Roger, let me start with you. You made the trip down here to be with us in person. We always appreciate that. Thanks for having me. You and I, we've been talking for some time about what's going on in the boardroom. What are you hearing from companies in terms of how they're thinking about things? How does what we heard from the president just now and what we know at this point change what corporate America is thinking? Well, I think corporate America is going to have the same reaction that a lot of seasoned observers will have, which is encouraging. It's very encouraging, but it's preliminary. And it's essentially a 90-day pause on the ultra-high tariffs in order to negotiate to try to get a permanent tariff reduction framework and other progress. Keep in mind that the biggest problem with China trade, on our end at least, is essentially dumping. The China exports have a lot of heavily subsidized products where the costs are essentially born in large part by the government through state-owned enterprises and financing subsidies and so forth. And, in effect, unfairly penetrating European and US markets and other markets with products which, if the costs were objectively set, would price at higher levels and wouldn't take as much market share. So, that's a tough set of issues to negotiate, but that's the heart of the matter. Now, even after this pause, excuse me, the weighted average tariff we estimate is 14%. When Trump took office, it was 3 to 4%. So, it's still up a lot. Yes. And that will still be a drag. I mean, we all know what tariffs do. As Chairman Powell has said, they raise prices, reduce consumption, raise inflation.