Bitcoin bulls
Bitcoin’s march to new heights is going strong: It is trading above $122,000 on Monday, having more than doubled year on year. (Among other things, that’s made Satoshi Nakamoto, the token’s pseudonymous creator, one of the wealthiest people on the planet.)
The steep rise of Bitcoin, the biggest cryptocurrency around, is further testament to the industry’s good fortunes in the Trump era. That could continue as the House — where leading Republicans have nicknamed this week “crypto week” — is set to take up legislation aimed at making America a haven for digital currency.
What the House is considering:
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The GENIUS Act, which seeks to regulate so-called stablecoins and which the Senate has already passed;
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The Digital Asset Market Clarity Act, which is meant to outline a clear system for regulating cryptocurrencies, including by defining the roles of the Commodity Futures Trading Commission and the S.E.C. in overseeing digital tokens;
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And the Anti-CBDC Surveillance State Act, which would forbid the Fed to create its own digital currency.
Republicans say that their efforts are aimed at nurturing a fast-growing industry, one that faced strict scrutiny under the Biden administration. “We are taking historic steps to ensure the United States remains the world’s leader in innovation,” Representative French Hill of Arkansas, the chair of the House financial services committee, said in a statement.
Such an endorsement is powering the run of Bitcoin, as well as of other digital currencies like ether, XRP and Solana, as mainstream investors and institutions rush to get a piece of the action. Bloomberg notes that U.S. Bitcoin exchange-traded funds had more than $2.7 billion in inflows last week, one of their best periods of performance since they debuted last year.
Skepticism about crypto remains, however. The industry strongly backed President Trump and Republicans in last year’s elections, and critics say it is now enjoying the rewards for its political bet.
Some Democrats have also criticized crypto ventures by Trump and his family, which have minted them huge fortunes, at least on paper. (There’s also the question of potential conflicts of interest and untoward influence made possible by these ventures: The Nation took a close look at the mystery behind a big investor in a Trump-affiliated crypto token.)
“These bills would make Congress complicit in Trump’s unprecedented crypto scam,” Representative Maxine Waters of California, the top Democrat on the House financial services committee, said in a statement.
Some expect crypto to keep rising regardless. “Recent U.S. policy developments such as fiscal expansion and expectations of further monetary easing have created a backdrop that is undeniably favorable for Bitcoin,” Nicolai Sondergaard, an analyst at Nansen, told Bloomberg.
HERE’S WHAT’S HAPPENING
Trump administration officials continue to attack the Fed. Futures traders on Monday see little chance of a rate cut later this month, but President Trump hasn’t let up on pressure to get the Fed to quickly lower borrowing costs. Federal officials have started emphasizing another line of attack on Jay Powell, the central bank’s current leader: suggesting that Powell lied to Congress about renovations of the Fed’s headquarters, which could be grounds for his removal.
A raft of economic data will be in focus this week. The releases of the latest Consumer Price Index (tomorrow) and the Producer Price Index (Wednesday) should give investors more clues about the potential inflationary effects of Trump’s trade war. Also worth keeping an eye out for are the releases of the Fed’s Beige Book report (Wednesday) and the University of Michigan’s monthly survey of consumer sentiment (Friday).
Meta goes on trial in Delaware. The tech giant, which owns Facebook and Instagram, is facing accusations by three small shareholders who accuse its board of mismanagement over billions of dollars in fines the company paid out over data breaches. The trial, which is scheduled to begin on Wednesday, is set to feature testimony from big names including Mark Zuckerberg; Sheryl Sandberg, Meta’s former C.O.O.; and the venture capitalist Marc Andreessen, a director and longtime investor.
“Superman” gives Warner Bros. a much-needed hit. The superhero’s return to the big screen topped the weekend’s box office with an estimated worldwide gross of $217 million. The movie’s strong performance provides more ballast for Warner Bros., which has struggled in recent years and faces an uncertain future as its parent company, Warner Bros. Discovery, prepares to split itself in two.
Pricing in trade risk
Investors appear to be preparing for at least the possibility of a worst-case outcome in President Trump’s trade war.
Global markets were mostly down again on Monday after the president threatened the European Union and Mexico, two of the U.S.’ biggest trading partners, with 30 percent tariffs starting Aug. 1 if they don’t reach new trade agreements by then.
The bullish take: Despite Trump’s threats, the MSCI All Country World Index, a benchmark for global stocks, is just shy of a record. Investors may be anticipating a strong start to earnings season, which has been a catalyst for previous rallies. (More on that below.) Or they may be betting that Trump will again back down from his tariff threats.
Brussels so far has emphasized negotiations with the U.S. rather than potential retaliation. “We have always been clear that we prefer a negotiated solution,” Ursula von der Leyen, the president of the European Commission, the bloc’s executive arm, told reporters on Sunday.
The bearish view: The U.S. and the E.U. do roughly $2 trillion in trade annually. Even if Trump doesn’t impose a full 30 percent tax on European imports, rates will go up by some amount, driving up prices and crimping growth.
And economists caution that drawn-out negotiations have their own cost. “Even if negotiations ultimately avert the highest new tariffs, the longer it takes to get there, the more economic damage will already accumulate” as businesses put off investments and households rethink purchases, Salomon Fiedler, an economist at Berenberg, wrote in a research note on Monday.
Negotiators’ work continues on a less U.S.-centric global trade system. After all, trading partners have tried a variety of tactics with Trump, including friendlier and more combative ones, with little to show for their efforts.
The E.U. is trying to cultivate stronger ties with Asian countries, including with Indonesia, which also could face a major hit from Trump’s tariffs. And Anwar Ibrahim, Malaysia’s prime minister, told a gathering of Southeast Asian leaders last week: “As we navigate external pressures, we need to fortify our foundations. Trade among ourselves. Invest more in one another.”
Could the markets force Trump to retreat, again? Last week, the dollar edged higher and sovereign bonds slumped in Europe and the U.S. as the Trump administration made its latest tariff threats. On Monday, the yield on the 10-year Treasury note, which underpins borrowing costs for consumers and businesses, rose to near a one-month high at 4.43 percent. Bondholders appear to be concerned about the trade war’s economic fallout and whether it may force the Fed into a lengthy holding pattern on interest rates.
In April, jitters in the bond market forced Trump to back down on his first round of tariff threats. Analysts are closely watching to see if bond vigilantes might sway him again.
“I view Stanford and M.I.T. as mainly political lobbying operations fighting American innovation at this point.”
— Marc Andreessen, the venture capitalist, in private group chats that included White House officials and other tech leaders, according to The Washington Post. Andreessen’s contributions to the chats included criticism of top American universities, which he said focused on matters like increasing diversity over advancing technology.
A crucial earnings season on tap
Even though President Trump’s trade war is kicking into high gear, stocks are near record highs — and some on Wall Street think the rally isn’t over. Much of that will depend on companies’ weathering the tariff turmoil, making this earnings season a pivotal one.
Some of America’s biggest banks, including JPMorgan Chase and Wells Fargo, report quarterly results tomorrow, updates that should offer an important glimpse of the state of households and businesses. Netflix, Johnson & Johnson and United Airlines go later this week.
A recap: The S&P 500 had a strong comeback after falling into a tariff-driven correction. First-quarter earnings were generally solid. Companies from Meta to Dollar General beat the market, helping fuel the rebound.
Companies face a higher bar now. S&P 500 companies are expected to post their worst quarterly profit gains since the fourth quarter of 2023, according to FactSet. Investors are expected to pay careful attention to corporate guidance and executives’ takes on consumer spending.
Two themes to watch:
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Tariffs: So far, the full fallout has not appeared in inflation data. “And so the question is, where is it going to show up?” Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, told DealBook. “Is it going to show up in corporate margins?”
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Consumers: Their spending, which accounts for more than two-thirds of U.S. economic activity, has held up in recent quarters. But executives at bellwether companies such as McDonald’s and Starbucks have warned about signs of strain, especially among the less affluent. Is that a blip, or something more worrying?
The full hit from tariffs on margins and pricing most likely won’t show up until the second half of the year, economists say. “It does put more reliance on guidance” and what companies intend to do with prices, Kevin Gordon, a senior investment strategist at Charles Schwab, told DealBook.
That said, executives may offer little clarity, especially with trade talks still ongoing.
Reason for optimism? Last week, Delta reported a bigger quarterly profit than expected, citing an improving outlook for travel as consumers and businesses regain economic confidence. “I do think the consumer is doing much better than expected,” Adam Turnquist, the chief technical strategist at LPL Financial, told DealBook.
The big question: Do C.E.O.s share that view?
THE SPEED READ
Deals
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Elon Musk suggested that Tesla shareholders may get a vote on whether to invest in xAI, his artificial intelligence start-up, as SpaceX is reportedly set to buy a $2 billion stake in the venture. (Bloomberg, WSJ)
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Andrew Ferguson, the F.T.C. chair, has more in common with his predecessor in the Biden administration, Lina Khan, than Wall Street had expected. (Bloomberg)
Politics, policy and regulation
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“Drones Are Key to Winning Wars Now. The U.S. Makes Hardly Any.” (NYT)
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McKinsey researchers blame a slowdown in hiring in Britain on artificial intelligence. (Bloomberg)
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A.I.’s potential for social transformation explains why the Vatican is keeping a close eye on the technology. (FT Opinion)
Best of the rest
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Berkshire Hathaway has underperformed the S&P 500 recently. Does it have anything to do with Warren Buffett’s pending retirement? (Business Insider)
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This influencer claims he’s the “sports betting king.” Other gamblers say he can’t be what he seems. (NYT)
We’d like your feedback! Please email thoughts and suggestions to [email protected].
Andrew Ross Sorkin is a columnist and the founder of DealBook, the flagship business and policy newsletter at The Times and an annual conference.
Bernhard Warner is a senior editor for DealBook, a newsletter from The Times, covering business trends, the economy and the markets.
Sarah Kessler is the weekend edition editor of the DealBook newsletter and writes features on business.
Michael J. de la Merced has covered global business and finance news for The Times since 2006.
Danielle Kaye is a Times reporter, covering business and policy for the DealBook newsletter.
The post Bitcoin Soars Past $120,000 as House Takes Up Crypto Bills appeared first on New York Times.
