
Xi Keeps Iran at Arm's Length as Middle East Conflict Deepens
Hello, this is Allen Wan in Shanghai.
As President Donald Trump contemplates a US strike against Iran, marking a potentially dangerous turn in the war, his country's chief rival has maintained a fairly low profile.

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Forbes
5 minutes ago
- Forbes
S&P To Crash 50%? Trump Calls Jerome Powell 'Dumbest'
President Donald Trump reignited his long-standing feud with Federal Reserve Chair Jerome Powell on Thursday, calling him "one of the dumbest, and most destructive, people in Government [sic]". The comment on social media followed the Fed's decision to hold interest rates steady, with the Federal Open Market Committee maintaining its target range at 4.25% to 4.5% - unchanged since December. Trump has been calling for lower rates, noting that the Fed was costing the country billions in interest payments. Trump's rhetoric sure does make headlines, but the real danger for investors is the Fed buckling under political pressure and cutting rates too soon. That could unleash a second wave of inflation, which might be more entrenched than the post-Covid surge. If that happens, expect a sharp reset in valuations, a spike in bond yields, and a steep correction in the S&P 500. Cutting interest rates before inflation is fully tamed risks igniting a more persistent cycle of price increases, forcing the Fed to respond later with even more aggressive hikes, just as it did in the 1970s, when inflation spiraled out of control. Back then, the Fed's delayed tightening led to stagflation and a severe equity downturn: the S&P 500 fell nearly 50% between 1972 and 1974. What's more, higher valuations today, coupled with policy uncertainty, might actually make things worse. For investors seeking upside with less volatility than individual stocks, the Trefis High Quality portfolio offers an alternative. This portfolio has outperformed the S&P 500 and delivered cumulative returns of over 91% since inception. Trump's Policies Create The Perfect Storm? This time around, there is a risk of persistent supply-side inflation driven by policy. Trump's policy agenda, which includes tariffs, mass deportations, and tax cuts, could create a perfect storm of sorts. Tariffs are a supply shock. They raise input costs and consumer prices by removing cheaper imports from the market. Mass deportations of immigrants who entered the country illegally sounds reasonable - after all, they're illegal immigrants - except that it will make cheaper labor unavailable. On average, the price of services will go up. This could be a big factor driving inflation higher. Then there are the tax cuts under Trump's Big Beautiful Bill, under which most taxpayers are expected to see a tax cut, with all income groups reportedly likely to benefit. Now, while tariffs and deportations constrain the supply of goods and services to increase prices, reduction in taxes makes more cash available to consumers. So people can spend more while prices are higher. The result would be spiking inflation, and this would make the Fed's job a lot harder. A Replay of the 1970s? The Fed will likely pull out its 2022 playbook: it'll have no choice but to increase interest rates - not just reverting some of the recent cuts, but in fact, going beyond, to rates above 6% and even 7% or higher for short-term treasuries. Now, if you can get a guaranteed 6% on a 1-year Treasury bill, or bank savings - risk-free investments - won't you demand higher earnings and returns from stocks as well? There will be an exodus - a massive outflow from the S&P and overall markets from risky equities into treasuries, CDs, and savings accounts. It happened in 2022 - within months, the S&P 500 tumbled by 20%. It's easy to forget that stocks including Nvidia (NASDAQ:NVDA) and Meta (NASDAQ:META) had lost more than 50% in the 2022 rate cycle alone (Can Nvidia Stock Lose 50%?). Smaller companies, with less cash on their balance sheets, fared even worse. That said, in 2022, inflation was largely transitory, and the Fed was able to bring it under control. This time, it could be entrenched. Covid-related stimulus money was a transient cause of 2022 inflation. This time, tariffs, tax cuts, and deportations, together, are likely to prove a stronger and perhaps much more persistent force. A replaying of the 1970s crisis is very much possible, taking the S&P 500 down. Higher rates don't just hurt stocks - they make U.S. debt less sustainable. Annual interest payments now already exceed $1 trillion, and JPMorgan CEO Jamie Dimon has called it a red flag. If bond markets start to question the government's fiscal path, yields could spike, deepening the equity selloff. On top of that, loan defaults are rising both in the commercial real estate sector and across consumer debt, like credit cards and auto loans. Big lenders like JPMorgan, BofA, and Citigroup are especially exposed. So, how much would that hurt? Well, the combined market cap of S&P 500 constituents is roughly $47 trillion. So a 50% decline in the index would mean a loss of more than $23 trillion in value. And you thought the $5 trillion-plus wipeout the benchmark index witnessed in the first few days of April 2025 was bad! How Low Can JPMorgan Stock Go In A Market Crash? A Question When things are bad, what do you expect Trump to do? Blame everyone else, or change his course on taxes, deportation, and tariffs? There's certainly hope that his cabinet and loyalists will be able to sway his view into easing inflationary policies in the event they create spiking inflation before the U.S. economy plunges into a recession. But if the easing does not materialize or comes into play too late, how bad can things get if there is another recession? Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last seven market crashes. Invest with Trefis Market Beating Portfolios See all Trefis Price Estimates


CBS News
6 minutes ago
- CBS News
Biden pans "efforts to erase history" — and takes veiled shot at Trump — in Juneteenth event at Texas church
Understanding Juneteenth and why it still matters Washington — Former President Joe Biden criticized "ongoing efforts to erase history" during a Juneteenth Celebration Service at a historic African Methodist Episcopal Church in Galveston, Texas — and appeared to take a shot at his successor, President Trump. He took part in the service at the Reedy Chapel AME Church, one of the locations where an order announcing the end of slavery in Texas was read on June 19, 1865, two years after President Abraham Lincoln issued the Emancipation Proclamation, according to the church. Biden called Galveston "the city where freedom rang out 160 years ago." Former President Joe Biden speaks during a Juneteenth event at the Reedy Chapel AME Church, on June 19, 2025, in Galveston, Texas. David J. Phillip / AP In 2021, Biden signed into law a measure that made June 19, or Juneteenth, a federal holiday commemorating the end of slavery in the U.S. Called the Juneteenth National Independence Day Act, the bill passed the House with overwhelming support and was approved by unanimous voice vote in the Senate. Juneteenth became the nation's first new federal holiday since Martin Luther King Jr. Day was established in 1983. Biden spoke about his early history in politics and recounted his role in making Juneteenth a federal holiday, saying, "the events of Juneteenth are of monumental importance to America's story." "Still today, some say to me and you that this doesn't deserve to be a federal holiday. They don't want to moral stain of slavery," he said. Biden also chided what he referred to as "ongoing efforts to erase history from our textbooks and our classrooms." In at least two moments, Biden seemed to reference Mr. Trump, though not by name. When speaking about attempts to erase history, he referenced "this guy" before giving himself the sign of the cross — drawing laughter from the audience. At another point, Biden pointed to efforts during his administration to rename military bases named after Confederate military officers, a process mandated by Congress. "What are we doing now? Reinstating those names," Biden said, referring to the Trump administration's push to restore the military bases' old names. The bases are now dedicated after non-Confederate military veterans who share the same last name as the installations' original Confederate namesakes. "Darkness can hide much but can erase nothing," the former president said. Several speakers recognized Biden during Thursday's service, including Galveston Mayor Craig Brown, who presented Biden with a plaque noting his role in making Juneteenth a national holiday. "I still consider our special guest, President Joe Biden, as my president," Brown said to applause. Mr. Trump — who has recognized Juneteenth in prior years — said earlier Thursday the U.S. has "too many non-working holidays."

Washington Post
10 minutes ago
- Washington Post
Live updates: Trump touts court decision allowing him to keep National Guard in Los Angeles
President Donald Trump is touting a court decision that will allow him to keep the California National Guard in Los Angeles to police protests against his deportation efforts despite objections by California Gov. Gavin Newsom (D). Trump hailed the decision by a three-judge panel of the U.S. Court of Appeals for the 9th Circuit as a 'BIG WIN' late Thursday in a social media post. On Friday, Trump is scheduled to participate in a national security meeting as he continues to weigh whether to attack Iran's nuclear program. In a statement Thursday, Trump suggested he could wait as much as two weeks to decide. Later Friday, Trump is scheduled to head to his golf club in Bedminster, New Jersey, where he will host an evening fundraiser. The Department of Homeland Security has issued a new policy limiting congressional lawmakers' access to U.S. Immigration and Customs Enforcement facilities, a move that several House Democrats are criticizing as a violation of their right to conduct oversight. The guidance, dated this month, follows confrontations between Democratic officials and federal agents at detention centers across the country. Some of the encounters have led to criminal charges. Senate Democrats are increasingly concerned that President Donald Trump is considering striking Iran without seeking authorization from Congress — or even filling in lawmakers on his plans. Sen. Tim Kaine (D-Virginia) is mounting a last-ditch push to force a vote as soon as next week to restrain Trump from attacking Iran without Congress's approval. A federal appeals court in San Francisco said Thursday that President Donald Trump can keep the California National Guard in Los Angeles for now, delivering a win for the president as he aims to use the military to police protests against his deportation efforts. President Donald Trump will wait as much as two weeks to decide whether to attack Iran's nuclear program, the White House said Thursday, dialing back rhetoric about Iran having missed its window to reach a deal. In a statement read by his press secretary, Trump said he believes there is now a 'substantial chance of negotiations' with Iran. The small federal agency tasked with easing the nation's profound struggles with mental illness and drug addiction is in crisis itself: Hundreds of employees have left its staff of about 900, and its budget would be slashed as part of President Donald Trump's proposed overhaul of the nation's health apparatus. The reshaping of the Substance Abuse and Mental Health Services Administration, or SAMHSA, is already hampering public health efforts in communities big and small.