One thing is that JPMorgan Chase CEO Jamie Dimon sat down at FT for an exclusive interview on the trade war, Washington’s relationship with Beijing, and the future of American economic excellence.
Another: Nvidia says it expects the US to deal a $5.5 billion blow after closing its Silicon Valley Group’s ability to export artificial intelligence chips to China.
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In today’s newsletter:
How Wall Street miscalculated Trump 2.0
Many of Wall Street rely on excessively actuating models. An elaborate Excel spreadsheet filled with infinite variables.
From analysts to managing directors, everyone takes pride in foreseeing the possible outcomes of a particular investment, transaction, or hedge.
But Donald Trump’s second rise to the White House has disrupted their ability to predict what the president will do next.
Trump’s “liberation day” that caused the free fall of global markets left some of the most influential figures Wall Street shakes.
The financiers who had seats at the table last time were left relatively helpless to curb grand economic miscalculation. They then felt an uneasy lack of influence within the administration.
As the big FT reads report, Wall Street miscalculated.
Trump and other administration officials, including Vice President J.D. Vance and Treasury Secretary Scott Bescent, have repeatedly said they will not deal with the country’s wealthiest citizens.
Many thought those pledges were promises of the empty campaign. But when tariffs got caught up, it was a turning point — a clear indication that Trump won’t become Wall Street president.
It puts the finance department in a vulnerable position. Corporate acquisitions have been declining the most in about a decade, with elite law firms in fires and consulting giants losing government contracts.
“We assumed someone from an administration with an economic background would tell him that global tariffs were a bad idea,” said one Wall Street executive.
Others were even dull. “This is the stupidest economic policy the US has ever come up with,” says Anthony Scarumucci, founder of Skybridge Capital and former Trump’s White House communications director.
During Trump’s first administration, notable figures such as Stephen Schwartzman and Larry Fink were all members of the (short-lived) business task force called the Strategic and Policy Forum, which highlighted their relationship with the president.
At the time, they enjoyed the direct lines to the oval office. There’s nothing more than this. To recapture his toughest tariffs to influence Trump, JPMorgan Chase chief Jamie Dimon appealed to the Fox business rather than one-on-one with the president.
However, high finances are currently unable to shake Trump’s decision-making. Instead, the financial markets bent their strength and forced the president to retreat.
“Trump is fine if Wall Street hits,” said someone close to Trump. “But he doesn’t want the whole house to come down.”
Private Equity Groups will be suspended on trading
Buying and selling companies is oxygen to private equity executives.
But the outlook for the fresh air appears to have been taken away from the world’s oppressed deal makers. This time, by the very person they thought they would open the window.
Two years after higher interest rates brought much of the sector’s trading activity to halt many of the sector’s trading activities, buyout executives and their advisors were banking Trump’s reelection in November, and eventually started things again.
However, the economic uncertainty that has led to much of Wall Street becoming unstable due to his drastic tariffs has forced buy-out groups to stop trading activities again.
“There’s a pause. “People are worried that there will be a recession.”
Several advisors at private equity companies said they saw bidders walking away from the process in the past two weeks, but another adviser said the dealer was “pen down.”
Several late transactions have been signed over the past two weeks, including Silver Lake’s acquisition of a majority stake in chip designer Altera and the purchase of KKR from E45 moisturizer maker Karo Healthcare.
But others have also been postponed, including the 3i’s Audrey trip auction, which was suspended in the weeks leading up to Trump’s so-called release date.
The deadline for the final bid for Boeing’s navigation unit has been pushed back several times, but the £4 billion sale by the buy-in group APAX of insurance group PIB took longer than expected.
Many will be seeing what happens with the multi-billion dollar carve-out of home-disabled brands.
Many private equity companies have relied on financial engineering in recent years to return cash to investors without selling the company at unwanted valuations, either opposed to portfolios or in the form of selling assets to themselves.
The trader may be breathing air for some time to come.
Credit markets can run under pressure
For the tariff topics we stumble across all the different aspects of finance, let’s dig into another corner that has been affected: the junk bonds and leveraged drone market.
After Trump’s tariff announcement, the eight consecutive win days were passed in a deadly silence in the world of high-yield bonds. It was a notable shutout and it ended on Tuesday with relatively high quality refinance pricing.
High-yield issuance is far below its normal trajectory in April, and leveraged loans have not kept pace, according to data from the London Stock Exchange Group.
This freeze in the market raises the question of how banks and lenders will fund transactions over the remaining years.
Not only does the investor’s desire for risky debts are less, but banks are reluctant to provide short-term bridge funding. This will act as a placeholder until long-term funding is secured.
“Everything is pending,” says Bob Krishev, head of multi-asset credits at investment firm Schenkman Capital Management. “No one is trying to price a transaction in this environment.”
Some banks, including Citigroup, Morgan Stanley and JPMorgan, have pulled out plugs of loan transactions with high-yield bonds that investors have been trying to return to traditional debt markets, people have explained the issue.
The market has stabilized after Trump agreed to suspend many new trade collections for 90 days, but they have charged more to lend.
And even after the subsidiaries of the liquefied natural gas producer venture ended the drought in the high-yield bond market that borrowed $2.5 billion on Tuesday, bankers and investors warned they still don’t know anything completely clear to other borrowers looking at key sources of capital.
Job movements
Global Counsel hired Sourav Bhowmick as director to gain US and North American leads in global investor services practice. He was recently a senior advisor to the Department of Treasury and previously worked for Deloitte Consulting and the Brunswick Group.
Ares Management has appointed Richard Sehayek as joint head of Europe for alternative credits. He has been with the company since 2023 and previously worked for KBC Financial Instruments.
Fannie May tapped Omed Malik for the board of directors. He was the capital president in 1789, with Donald Trump Jr. recently joining as a partner – and founder and CEO of Farvahar Partners.
Smart Lead
There could be a major delay between weakening the risk economy of the recession and confirming that R-Word events will catch up, Lex writes. Wall Street may not be a real risk pricing.
Power has long been seen as a success story for the Singaporean billionaire Kwak family, Bloomberg writes. The father-son conflict later exposed the rift.
According to New Yorkers, tax officers work throughout the tax season as employees of the company’s revenue services are dismantled throughout the tax season.
News Round Up
Wall Street Banks wins $37 billion from Trump Trading Boom (FT)
Activist Elliott acquires $1.5 billion in stake in Hewlett Packard Enterprises (FT)
Blackstone joins Vanguard and expands to personal portfolio (FT)
Hermes overtakes LVMH at the top spot after weak sales sparksell-off (FT)
The US wants to retain key EU tariffs, according to European authorities (FT)
Mark Zuckerberg admits that he thought about spinning Instagram in 2018 (FT)
Johnson & Johnson warns pharma fees (FTs) that could cause drug shortages
Due diligence was written by Arash Massoudi, Ivan Levingston, Ortenca Aliaj, Robert Smith, James Fontanella-Khan, Sujeet Indap, Eric Platt, Antoine Gara, Amelia Pollard and Maria Heeter of London. Send feedback to due.diligence@ft.com
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