Trump and Xi to Meet in China: What’s at Stake

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Alex Ossola (0:33)

Inflation rises to its highest level in three years.

Plus, President Trump heads to Beijing for a summit with Chinese leader Xi Jinping. We'll get into what's on the table and what's at stake.

Damian Paletta (0:45)

If he has a good meeting and he comes away with some tangible things from Beijing, he could sell that to the American people, that his brand of 2026 diplomacy is still effective.

Alex Ossola (0:55)

And criminal charges against the operator of the ship that crashed into Baltimore's Key Bridge and killed six people. It's Tuesday, May 12th. I'm Alex Ossola for the Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today.

We start the show today on a topic that's on top of mind for a lot of people, how much things cost. And it turns out they're costing more. New data from the Labor Department out today showed that inflation rose 3.8% in April from a year earlier. It's the biggest jump in three years and clearly shows the effect of the Iran War on energy costs. Journal Economics reporter Chao Deng joins me now to discuss what's behind the numbers.

Chao, I feel like this is what economists have been afraid of ever since the start of the Iran War, that higher gas prices would start to make their way through the economy. Is that what's driving the numbers?

Chao Deng (1:51)

Yeah, unfortunately, energy prices, they were up 18% from a year earlier and within that you have gas. All Americans who drive know that gas was up 28% from a year earlier. Airfare prices were up 21%. It's really all about energy.

This report suggests that our economy is almost entering a new chapter where inflation appears to have stepped up. And some of the analysts I was talking to today were talking about inflation at 4%, even 5% as the year goes on.

Alex Ossola (2:24)

Inflation is now growing faster than people's paychecks. And that's the first time since 2023 that that's been the case.

Chao Deng (2:30)

Families are having a harder time paying for things that even if their salary paychecks are going up, it's just not keeping up with inflation. And that reflects why consumers are constantly feeling so down about the economy.

Alex Ossola (2:45)

Keeping inflation down is one of the things the Fed is supposed to be doing, right? What does this new data mean for the central bank and for Trump's pick for Fed chair Kevin Warsh?

Chao Deng (2:54)

President Trump has made it pretty clear that he expects interest rate cuts. This is going to be very difficult for Kevin Warsh. Investors started the year talking about potential rate cuts by the Fed. And this report pretty much takes that all off the table.

Alex Ossola (3:09)

That was WSJ Economics reporter Chao Deng.

Concerns about inflation pushed 10-year Treasury yields to a one-year high. And oil prices keep rising. The global benchmark Brent Crude gained more than 3% to above $107 a barrel. As for stocks, they were mixed today. The NASDAQ led losses and ended down 0.6%, while the Dow edged up by 0.1%.

In other business news, we're exclusively reporting that Google is in talks with SpaceX for a rocket launch deal that would help Google put its own data centers in space. A deal like this would have Google and SpaceX working together even as they prepare to compete on orbital data centers. That speculative technology is at the heart of SpaceX's IPO pitch to investors. SpaceX didn't respond to a request for comment. And eBay's board has rejected an unsolicited takeover proposal from GameStop for $56 billion. The company says the offer is incredible or attractive. GameStop CEO Ryan Cohen is a meme stock favorite, but the rollout of his campaign for eBay appears to have fizzled. One of his TV appearances left many on Wall Street confused as he offered limited details on how he planned to finance the deal. Cohen has said that he's prepared to take an offer directly to shareholders if eBay isn't receptive. Shares of GameStop fell 3.5% while eBay stock added about 2%.

Coming up, why some business schools are offering discounts on their MBA programs. That's after the break.