The New York Budgets

Category: Economy

  • Trump’s 200% Tariff Threat Leaves Pharma Firms Scrambling for Contingency Plans

    Trump’s 200% Tariff Threat Leaves Pharma Firms Scrambling for Contingency Plans

    Novartis AG NOVN –.–%
    Sanofi SA SAN –.–%
    Roche Holding AG ROG –.–%
    Eli Lilly and Co LLY –.–%
    Johnson & Johnson JNJ –.–%

    U.S. pharmaceutical companies are racing to assess the fallout from President Donald Trump’s proposal of a 200% tariff on imported pharmaceutical products, a policy that has sent shockwaves through the global drug industry and sparked intense scenario planning among manufacturers and investors.

    Speaking on Tuesday, Trump reiterated that long-delayed, industry-wide tariffs are imminent, following the launch of a Section 232 national security investigation into pharmaceutical supply chains in April. While he hinted that the tariffs wouldn’t take effect immediately — instead offering a grace period of 12 to 18 months — industry analysts and executives warn the impact could be both disruptive and long-lasting.

    “This kind of tariff would inflate production costs, compress profit margins, and risk severe supply chain disruptions, leading to drug shortages and higher prices for U.S. consumers,” analysts at Barclays warned in a research note Wednesday.

    Even with a grace period, the pressure is building. UBS called the delay “insufficient time” for pharmaceutical manufacturers to shift operations back to the U.S., noting that relocating commercial-scale production typically takes four to five years.

    According to Pharmaceutical Research and Manufacturers of America (PhRMA), a mere 25% tariff would already drive up U.S. drug prices by $51 billion annually, translating to as much as a 12.9% increase in consumer prices. The group blasted the proposed 200% levy as “counterproductive” to public health, especially given rising inflation and mounting healthcare costs.

    “A 100% or 200% tariff would be potentially disastrous for every person because we need those pharmaceuticals, and it takes those companies a long time to produce them here in the U.S.,” said Afsaneh Beschloss, founder and CEO of RockCreek Group, speaking on CNBC’s Closing Bell.

    Many of the world’s leading drugmakers — including Roche, Novartis, Sanofi, Bayer, and AstraZeneca — manufacture much of their product outside the U.S., particularly in Europe, India, and Asia, where costs are lower and supply chains more mature.

    In anticipation of potential fallout, global firms are exploring relocation strategies and cost restructuring. Roche, for instance, stated it is “monitoring the situation closely” and advocating for policies that reduce barriers to patient access while continuing to expand its U.S. manufacturing footprint.

    Bayer said it is focused on “securing supply chains and minimizing any potential impact,” while Novartis confirmed no changes to its current U.S. investment strategy but emphasized ongoing collaboration with the U.S. administration and trade associations.

    Other firms — such as Sanofi, AstraZeneca, and Novo Nordisk — have remained largely silent, either declining comment or citing pre-earnings quiet periods.

    Trump’s administration argues that reshoring pharmaceutical production is a national security imperative, especially after the COVID-19 pandemic exposed vulnerabilities in the global medical supply chain. Historically, pharmaceuticals have been exempt from trade tariffs due to their essential nature. But Trump has long criticized the industry for “offshoring profits” while “overcharging American patients.”

    The president’s remarks on Tuesday reinforced this stance, describing the move as a necessary step toward bringing “American-made medicine” back to domestic shelves. Critics, however, argue that such sweeping tariffs could drive up drug costs while placing undue stress on an industry already grappling with R&D inflation, regulatory pressures, and price transparency reforms.

    The pharmaceutical industry had hoped for a carve-out from broad tariffs — a strategy that appears increasingly unlikely. Some optimism has shifted toward future trade negotiations that might soften the blow.

    The recently signed U.S.-U.K. trade agreement, while thin on specifics, includes a provision to negotiate preferential treatment for British pharmaceutical products and ingredients, contingent on the outcome of the Section 232 probe.

    Swiss and EU pharmaceutical exporters may be pursuing similar carve-outs, but progress has been slow. With the final Section 232 report due by the end of July, drugmakers are bracing for a pivotal policy moment — one that could redefine their long-term U.S. market strategy.

  • Jamie Dimon Delivers a Stark Warning to Europe: ‘You’re Falling Behind’

    Jamie Dimon Delivers a Stark Warning to Europe: ‘You’re Falling Behind’

    Europe is “losing” the fight for economic supremacy against its main rivals China and the US, and faces a drought of globally competitive companies, the head of JP Morgan has warned.

    Jamie Dimon, chief executive of the world’s biggest bank, warned EU leaders that the trading bloc had lost its edge compared to America.

    “You’re losing,” he told an event organised by Ireland’s foreign ministry. “Europe has gone from 90pc US GDP to 65pc over 10 or 15 years. That’s not good.

    “We’ve got this huge strong market and our companies are big and successful, have huge kinds of scale that are global. You have that, but less and less.”

    Mr Dimon is one of the world’s most influential bankers, having led JP Morgan for almost two decades since taking over as chief executive in 2006.

    The JP Morgan boss has repeatedly voiced concerns about the state of Europe’s economy, while calling on the EU to boost its economic growth.

    In April, Mr Dimon told the Financial Times that Europe needed “to do more” to stay competitive. “The GDP per person has dropped from something like 70pc of America to 50pc. That’s not sustainable,” he said.

    “I think Europe has already recognised it needs to change its own rules, regulations, and guidelines if they want to grow faster.”

    His comments come as EU leaders seek to kickstart the bloc’s economy following more than a decade of underwhelming growth since the 2008 financial crash.

    In a 400-page report last year, Mario Draghi, the former president of the European Central Bank, warned of a widening gap between the size and strength of Europe and America’s economies.

    In response, Mr. Draghi’s report called for an additional $810 billion to $865 billion in annual investment in the EU economy to help ensure the bloc’s future competitiveness.

    The report warns that the EU faces an “existential challenge” due to its weak economy, which it blames on slow development of its technology industry.

    The Draghi report adds that the abrupt loss of cheap gas supplies from Russia due to the war in Ukraine is now making the situation faced by the EU even worse.

    The JP Morgan chief has also been a vocal critic of Brexit, including warning that the UK’s exit from the EU could see jobs in the City moved to European financial centres including Paris, Frankfurt and Amsterdam.

    In his annual letter to investors in 2021, Mr Dimon said: “In the short run (i.e. the next few years), [Brexit] cannot possibly be a positive for the UK’s GDP.”

    A JP Morgan spokesman declined to comment further on Mr Dimon’s remark.

  • U.S. Tariffs Dominate Headlines, but EU-China Trade Tensions Quietly Escalate

    U.S. Tariffs Dominate Headlines, but EU-China Trade Tensions Quietly Escalate

    While the United States’ aggressive tariff strategies continue to dominate global trade headlines, a quieter but increasingly tense economic confrontation is unfolding between China and the European Union — one that could have lasting implications for global markets, supply chains, and industrial policy.

    Behind the scenes, tit-for-tat measures between Brussels and Beijing have intensified in recent months, exposing a fractured relationship marred by accusations of unfair trade practices, overcapacity, and geopolitical divergence.

    The European Union recently restricted Chinese companies from participating in public tenders for medical devices, citing concerns over procurement transparency and national security. China quickly retaliated by imposing import curbs on European medical products, marking a fresh escalation in the long-simmering standoff.

    Simultaneously, China made good on its long-threatened tariffs on EU-made brandy, a move widely interpreted as a retaliatory response to the EU’s 2024 imposition of anti-subsidy duties on Chinese electric vehicles (EVs).

    Both sides have since ramped up their criticism and countermeasures, with diplomatic language growing sharper and economic cooperation increasingly fraught.

    “EU-China trade relations are now quite poor,” said Marc Julienne, director of the Center of Asian Studies at the French Institute of International Relations (Ifri), speaking to CNBC earlier this week. “What was once a domain of great opportunity and enthusiasm has now become more about managing risk.”

    This sentiment is echoed across European policy circles. Grzegorz Stec, a senior analyst at the Mercator Institute for China Studies, noted that the two economies are increasingly on a collision course, especially on issues like industrial policy, trade diversion, and market access.

    “Beijing’s increasingly urgent need to export contradicts the EU’s desire to protect its own industrial base,” Stec said, referencing China’s ongoing struggle with overcapacity and sluggish domestic demand. These structural issues have compelled Chinese exporters to look outward, often at prices and volumes that European officials say distort competition and threaten homegrown industries.

    Beijing’s recent tariffs on European brandy are being described by analysts as “economic weaponization” — part of a broader strategy to pressure Brussels into scaling back scrutiny and protectionist measures. The Chinese investigation into European spirits began shortly after the EU initiated its own probe into Chinese EV subsidies.

    This pattern of retaliatory trade policy is not new in global geopolitics, but the stakes are growing. Europe’s trade deficit with China continues to widen, and concerns are mounting over the environment for foreign firms in China, which many say has become increasingly restrictive and opaque.

    Interestingly, some experts argue that U.S. tariffs under President Donald Trump could have served as a catalyst for closer EU-China cooperation. Instead, both parties have grown more entrenched in their respective trade positions.

    “If anything, the EU and China should have used the U.S. pressure as a common ground for negotiation,” Julienne said. “But instead, geopolitical divergence and mutual distrust prevailed.”

    Jean-Marc Fenet, senior fellow at the ESSEC Institute for Geopolitics & Business, believes part of the reason is that China feels it has already ‘won’ its tariff standoff with Washington, reducing the urgency to compromise with Brussels.

    “Beijing no longer sees the need for a unified front with the EU,” Fenet said. “In fact, there’s growing concern in Beijing that the EU may fall in line with Washington’s harder stance on China.”

    The China-U.S. trade framework agreement announced in June — covering contentious areas such as rare earth exports and technology regulations — only reinforced that perception. Earlier this year, Beijing had already moved to restrict exports of critical rare earth elements and magnets, leveraging its dominance in materials vital to the automotive, energy, and defense sectors.

    With an upcoming EU-China Summit scheduled for July 24 in Beijing, hopes are low for a breakthrough. Sources confirm that European Commission President Ursula von der Leyen and Chinese President Xi Jinping are expected to meet, but even senior officials are bracing for a tense and possibly unproductive dialogue.

    “The significant hardening of the European Commission’s trade stance, and the bolstering of protectionist tools in recent years, suggest more frictions ahead,” Fenet said.

    Indeed, trade experts warn of a long and bumpy road for EU-China relations. As the EU pursues greater economic autonomy and retools industrial policy to protect key sectors, Beijing is unlikely to ease its assertive stance, particularly as it looks to export its way out of structural economic stagnation.

    “The overcapacity issues, paired with China’s use of rare earths as leverage in EV tariff talks, suggest that this trade conflict has only just begun,” said Stec.

    The brewing tension between two of the world’s largest economies — the EU (GDP $19 trillion) and China (GDP $17.5 trillion) — threatens to disrupt multiple industries, from luxury goods and automobiles to healthcare and green technology.

    Companies operating across both markets may face regulatory uncertainty, new tariffs, and a rising compliance burden. Investor sentiment may also sour, particularly in sectors heavily reliant on EU-China trade flows.

    As of July 11, European stock markets remain volatile, with the Euro Stoxx 50 down 0.8% over the past week. Chinese markets, meanwhile, have been weighed down by weak domestic data and trade anxiety, with the Shanghai Composite dipping 1.2% this week.

  • Ford is still struggling to secure enough rare-earth magnets due to a supply shortage

    Ford is still struggling to secure enough rare-earth magnets due to a supply shortage

    Detroit, MI – Ford Motor Co. is facing a persistent supply shortage of rare-earth magnets—critical components for EV motors and various automotive systems—despite a recent U.S.–China agreement intended to ease export restrictions. The situation remains dire, forcing Ford into a “hand-to-mouth” rhythm to keep its production lines running.

    Last May, Ford halted production of its Explorer SUV at the Chicago Assembly plant for several days after its magnet supplier ran dry. These powerful rare-earth magnets—made from metals like neodymium, dysprosium, and terbium—are essential not only for EV motors but also for braking, steering, and seating systems.

    Lisa Drake, Ford’s VP of Industrial Planning for EVs, remarked that the company “still needs to move things around” to avert fresh shutdowns, admitting the operation remains “hand to mouth”. CEO Jim Farley echoed the concern in a recent Bloomberg interview: “It’s day-to-day… We have had to shut down factories. It’s hand-to-mouth right now.”

    Since April, China—which dominates 90% of global rare-earth magnet refinement—has enforced stricter export licensing rules on these metals, requiring detailed disclosures and slowing approval processes, WSJ reported.

    Although a temporary six-month agreement was struck in June to accelerate exports, affected automakers—including Ford—report little meaningful relief. Many export licenses continue to dribble in, primarily favoring larger, state-affiliated firms.

    Ford’s stock slipped nearly 1% on news of the supply disruptions—though year-to-date gains remain near 7%. At the same time, domestic mining and processing firms like MP Materials (NYSE: MP) and Freeport-McMoRan (NYSE: FCX) enjoyed surging stock prices as investors bet on a long-term shift toward U.S. production of critical minerals.

    Ford’s CFO recently disclosed that design improvements could cut annual rare-earth usage by up to 500,000 pounds, and the new hybrid systems already consume 50% less neodymium per vehicle. While the automaker is mapping raw-material sourcing directly back to mines, those efforts will take years to offset immediate shortages.

    Analyst Michelle Krebs of AutoForecast Solutions warns, “Every OEM assumed they could scale battery production linearly. The rare-earth situation proves how quickly geopolitical factors can disrupt those plans”.

    Continued supply volatility; potential further single-shift delays or plant pauses if authorization backlogs persist. Push for non-Chinese magnet sources (Canada, Australia, U.S.) and increased recycling, but industrial-scale capacity remains 2–3 years off. Deep investment in domestic mining and refining will diminish supply chain chokepoints—but remains a strategic and political challenge.

    Ford remains committed to its 2 million EVs-per-year goal by 2026, but acknowledges that resolving this bottleneck is crucial for meeting that target.

    The magnet logjam is more than an automotive hiccup—it’s a flashpoint in global industrial policy. “China’s dominance in rare earths is a geopolitical weapon,” says an analyst at the Center for Strategic and International Studies. “There’s no quick fix—this is a wake-up call”.

    Even with diplomatic progress and asset-light design pivots, Ford remains locked in a daily scramble for magnets that may define its EV production trajectory—and automobile manufacturing’s broader global supply resilience.

  • What are the implications now that the British pound has reached its highest value in almost four years?

    What are the implications now that the British pound has reached its highest value in almost four years?

    The British pound rallied to its highest level in almost four years on Thursday, even as analysts remain divided on the potential for further upside.

    Sterling was last seen trading more than 0.5% higher against the U.S. dollar, hitting $1.3736 — its highest level since October 2021.

    So far this year, the pound has surged almost 10% higher versus the greenback, according to LSEG data.

    Against the euro, however, sterling is down 2.9% year-to-date. It was last seen trading 0.2% higher against the euro zone currency, with one pound buying around 1.173 euros.

    Dollar weakness

    According to Janet Mui, head of market analysis at RBC Brewin Dolphin, much of the pound’s upward trajectory is actually more to do with underlying dollar weakness than faith in sterling itself.

    “The relative strength of the pound has been more of a weak U.S. dollar story this year,” she told CNBC News by email on Wednesday.

    U.S. President Donald Trump’s unpredictable trade policies shook confidence in American assets earlier this year, which in turn has sparked concerns in markets about de-dollarization.

    Paul Jackson, global head of asset allocation research at Invesco, said sterling was on a recovery journey from the “extreme low” seen in the aftermath of former British Prime Minister Liz Truss’s so-called mini budget, which sparked a severe sell off of the pound and U.K. government bonds in 2022.

    He agreed, however, that much of the movement this year was attributable to dollar weakness, pointing out sterling’s simultaneous depreciation against the euro.  

    Will sterling go higher?

    “I would expect that pattern to continue in the future, with the dollar weakening along with the US economy (and investor doubts about US fiscal and tariff policies), while the euro could strengthen on optimism about the implications of the coming fiscal boost (especially in Germany),” Invesco’s Jackson said.

    He argued that the ECB had likely completed most of its monetary easing for the current cycle, whereas the Bank of England and the Federal Reserve “have a lot of catching up to do.”

    “In 12 months, I would expect GBPUSD to be around 1.40 and GBPEUR to be around 1.15 (currently 1.17),” Jackson added.

    Jackson’s forecast represents a roughly 2.9% premium from current exchange rates against the dollar.

    RBC Brewin Dolphin’s Mui suggested that in the coming months, the outlook for the British pound is not overly compelling — but noted that geopolitical developments could catalyze further upward movements in the longer term.

    “In the near-term, further upside for the pound may be limited due to softer UK economic momentum and more scope for the Bank of England to cut rates,” she said.

    “Looking ahead, one potential catalyst for the pound could be improved relations with the EU, particularly if it translates into more concrete action over time.”

    Brian Mangwiro, an investment manager with the multi asset group at Barings, took a more pessimistic view.

    “We are bearish GBP in the medium term. We would forecast EURGBP at 0.875 and GBPUSD at 1.30 in [six months],” he told CNBC by email on Wednesday.

    He argued that the macroeconomic backdrop does not justify sterling’s performance against the greenback this year, attributing it instead to a reflection of a post-liberation day sell-off of the U.S. dollar.

    “Markets had been overly bearish on the UK following Chancellor Reeves’ Budget,” he added. “Consequently, positive data surprises became supportive to GBP. However, we continue to expect UK economic growth and inflation to slow; signs are already showing, which the Bank of England is also acknowledging. This supports further BoE rate cuts, and ultimately weighs on the pound.”

    Mangwiro also noted that in his view, de-dollarization risks seemed “over-blown.”

    “Sentiment will likely reverse as US growth outlook rebounds and corporate earnings remain resilient,” he said. “Along with current extreme short USD positioning, this should support a USD rebound, dragging Cable lower.”

    Jackie Bowie, managing partner and head of Chatham Financial EMEA, labeled the British pound as “a currency that is struggling to regain its former glory” despite playing an “outsized role” in global foreign exchange markets. The outlook for sterling is mixed, in her view.

    “Looking at the key fundamentals of the UK, we can see some reasons to be upbeat on the outlook for the GBP but there are challenges too,” she said by email, forecasting “moderate” economic growth backed by government spending.

    “Relative monetary policy is expected to keep the GBP attractive, but the geopolitical environment will play a key role in determining whether that benefits the GBP, particularly vs. the EUR (that has benefited from outflows from the US dollar due to Trump’s chaotic policy making and seeming authoritarian approach to government),” she said, also noting that U.S. trade policy and geopolitical tensions posed downside risks.

  • Trump is defending the interests of the oil giants concerning climate regulations in EU trade discussions

    Trump is defending the interests of the oil giants concerning climate regulations in EU trade discussions

    Former U.S. President Donald Trump is intervening in current transatlantic trade negotiations to bolster American oil giants by pressuring the European Union to relax its landmark climate regulations—moves that threaten to weaken global environmental commitments.

    In recent trade discussions ahead of the July 9 deadline, Trump officials have floated proposals aimed at diluting the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) and methane emissions mandates, both central to Brussels’ aggressive climate stance. These rules impose rigorous environmental and human rights oversight on companies and require verified methane caps for fossil fuel imports by 2030—a move the U.S. energy sector says could drive them out of the European market.

    Executives from ExxonMobil, including CEO Darren Woods, explicitly lobbied Trump to use trade leverage against Brussels. Private sources confirm U.S. negotiators are now urging the EU to soften or delay these regulations in exchange for tariffs relief.

    Trump has dangled a steep 50% tariff threat on EU exports if the EU doesn’t step back on its climate rules—a key tactic in forcing concessions. Meanwhile, Brussels, eager to avert a damaging tariff spike, is considering trade-off proposals such as increasing imports of U.S. LNG and adjusting methane oversight frameworks to qualify U.S. gas under equivalency schemes.

    This duel underscores a broader conflict between climate ambition and trade power: Trump’s approach aims to fuse energy dominance with economic leverage, while the EU seeks to uphold its Green Deal principles.

    Following reports of these contentious trade maneuvers, European carbon credit futures slipped approximately 1.2%, signaling investor anxiety over potential dilution of climate policy. Analysts caution that even talk of loosening methane or sustainability rules could erode confidence in the EU’s green market framework—while bolstering U.S. oil and gas margins temporarily.

    Environmental groups have sounded the alarm, labeling the U.S. push “a direct attack on the Paris Agreement,” warning that any weakening of EU standards could unravel global climate governance.

    EU Commission President Ursula von der Leyen has reaffirmed the EU’s “sovereign right” to set its own environmental rules and cautioned against ceding core Green Deal elements just to avert U.S. tariffs.

    Yet internal EU divisions bite: some leaders argue for flexibility to secure broader trade benefits, while others—like France’s Stéphanie Yon-Courtin—warn that concessions risk setting a dangerous precedent on environmental sovereignty.

    EU negotiators will decide whether to carve out limited flexibilities—such as pragmatic methane measurement standards or delayed rollout of the CSDDD—to soften U.S. trade pressure. If no deal is struck, Brussels is reportedly readying retaliatory tariffs worth up to €95 billion. This clash may redefine transatlantic relations—showing whether trade imperatives outweigh climate leadership at a critical geopolitical juncture.

    Trump’s alignment with Big Oil in EU trade talks reveals more than one-off bargaining—it spotlights a strategic confrontation over whether commercial leverage can override environmental clarity. The outcome will signal how far Washington and Brussels are willing to bend in balancing market access against the planet’s future.

  • The S&P 500 ended the day just shy of a $9.8 trillion comeback

    The S&P 500 ended the day just shy of a $9.8 trillion comeback

    The S&P 500 on Thursday flirted with closing at an all-time high, vying to complete a whirlwind roundtrip that saw the benchmark US stock index shed and then regain roughly $9.8 trillion in market value across just four months.

    The S&P 500 has been on a roller coaster ride this year as President Donald Trump’s trade policy has jolted markets.

    The S&P 500 hit its last record high on February 19 before dropping as low as 18.9% by early April as tariff confusion rocked markets.

    The index has soared more than 23% since hitting its low point on April 8, in what has been a remarkable come back from the precipice of a bear market.

    US stocks were higher on Thursday. The Dow closed higher by 404 points, or 0.94%. The broader S&P 500 gained 0.8% and the tech-heavy Nasdaq Composite rose 0.97%.

    The S&P 500 briefly rose above its February record high during trading but fell below that level by the closing bell. The index needed to finish the day with a gain of 0.86% or more to officially notch a record high.

    The Nasdaq on Thursday briefly rose above its previous record in December but similarly finished below the mark needed to notch a record high. The tech-heavy index dropped into a bear market in early April before surging into a new bull market and gaining 32%.

    Stocks had pushed higher on Thursday amid a flurry of economic data, including a downward revision to how much the economy contracted in the first quarter.

    That revised data is “backward looking,” and markets were higher on Thursday because they have already priced in the turmoil from earlier this year, Paul Stanley, chief investment officer at Granite Bay Wealth Management, said in an email.

    “The market is betting on continued progress on trade and a de-escalation of tensions in the Middle East is giving investors confidence,” Stanley said.

    While the S&P 500 and Nasdaq have recovered, the Dow is still 3.75% away from its record high set in December. The Dow this year has been weighed down by stocks like UnitedHealth Group (UNH), which is down 40%.

    A $9.8 trillion recovery

    At its low on April 8, the S&P 500 had shed $9.8 trillion in market value since its record high on February 19, according to FactSet data. The index is set to recover all of that market value as it tests a new record high.

    Wall Street analysts are mixed on whether the S&P 500 can grind higher, or whether its return to record highs means there’s more downside to come.

    As tensions in the Middle East have settled, the focus returns to Trump’s agenda. Lawmakers hope to deliver the president’s budget bill to his desk by July 4, and his administration’s deadline for trade deals is July 9.

    “Meaningful progress on any of the two matters can bolster equities to fresh records,” José Torres, senior economist at Interactive Brokers, said in a note.

    Investors in coming weeks will be focused on how tariff rates ultimately settle and whether Trump’s trade policy might reignite inflation.

    “It would help stocks if we were to see a narrative shift from a focus on tariff, trade policy and geopolitics to company fundamentals,” Carol Schleif, chief market strategist, BMO Private Wealth, said in a note.

    Despite the rally, the ratio of bullish versus bearish outlooks for the market remains below the historical average, Ed Yardeni, president of Yardeni Research, said in a note.

    “That suggests more upside for the stock market since many investors remain wary and are not overly bullish,” Yardeni said.

    “Greed” was the sentiment driving the market on Thursday, according to CNN’s Fear and Greed index. It was the highest reading on the index in two weeks.

    Dollar stumbles to three-year low

    The US dollar on Thursday dropped to its lowest level since February 2022 after a report by the Wall Street Journal that Trump plans to announce his pick for Federal Reserve Chair Jerome Powell’s successor as early as this fall.

    Powell’s term ends in May 2026, meaning there would effectively be a “shadow” Fed chair in the months before his term expires.

    The US dollar index, which measures the dollar’s strength against six major foreign currencies, was down 0.45% as of the afternoon.

    “A candidate who is perceived as being more open to lowering rates in line with President Trump’s demands would reinforce the US dollar’s current weakening trend,” Lee Hardman, senior currency analyst at MUFG, said in a note.

    The dollar index has tumbled nearly 10% this year. The euro and British pound this year have both hit their highest levels against the dollar in four years.

    Francesco Pesole, an FX strategist at ING, told The NYBudgets that concerns about the Fed’s independence have been one of the contributing factors to the dollar’s broad decline this year.

    “One of the key foundations of the strong dollar, of the dollar as a dominant currency globally, is to have an independent central bank,” Pesole said. “So, if [global investors] feel there is greater influence of politics into the Fed’s decisions, then they are pricing in a greater risk for the dollar.”

    Greg Valliere, chief US policy strategist at AGF Investments, said in a note that Trump announcing Powell’s successor is a “terrible idea,” as it would be “sure to annoy and confuse the financial markets if there are two Fed chairs.”

    “The damage to the Fed’s independence would be considerable if Trump becomes a monetary back-seat driver, second-guessing Fed policies this fall,” Valliere said.

  • Shell refutes reports it’s in discussions to acquire BP

    Shell refutes reports it’s in discussions to acquire BP

    Shell rebuffed a Wall Street Journal report that said the oil giant was in early talks to take over rival company BP.

    “This is further market speculation. No talks are taking place,” the company said in a statement Wednesday.

    An agreement between the two rival oil corporations would be the largest oil deal in modern times, with BP valued around $80 billion, the WSJ reported. The report about a potential deal comes as geopolitical tensions threaten to jeopardize the broader oil and gas market.

    “As we have said many times before we are sharply focused on capturing the value in Shell through continuing to focus on performance, discipline and simplification,” Shell said in a different statement. BP declined to comment.

    BP stock had risen as much as 10.5% Wednesday after news of prospective talks, though the rise has tapered.

    Bloomberg first reported on the speculation of a takeover in May. BP has been struggling, underperforming Shell by 17% over the past year and 84% over the past 5 years, according to a RBC research report last month. But Shell stands to benefit from BP’s liquified natural gas portfolio, and the RBC report said Shell still needs to work on its energy transition strategy as well as the longevity of its crude oil and natural gas portfolio.

    BP axed thousands of jobs in January and cut its investments in clean energy a month later, aiming to grow its oil and gas production instead. The company’s stock plummeted almost 16% over 2024 as it floundered and attempted to ease investors’ concerns over its energy transition strategy.

  • How New York City Mayoral Candidates Propose to Address the Housing Crisis

    How New York City Mayoral Candidates Propose to Address the Housing Crisis

    Seize deteriorating apartment buildings run by negligent landlords. Stop spending on new homeless shelters. Build apartments on church campuses and golf courses and on top of libraries.

    In the race to be New York City’s next mayor, few issues have generated proposals as ambitious and sprawling as the housing crisis, a top concern for a growing number of voters.

    The share of available apartments is at its lowest point in nearly 60 years, rents continue to climb and high rates of homelessness remain a persistent part of city life. There aren’t enough homes being built to satisfy the demand to live here, many housing experts say, while the Trump administration’s plan cut to federal housing aid could upend the city’s ability to help its most vulnerable residents.

    Mayoral candidates across the political spectrum — those running in the June 24 Democratic primary and in November’s general election — agree that the situation is a threat to the city. In ways big and small, though, they differ on the best solutions.

    Many of their proposals would be difficult to carry out. Several would require the skillful balancing of adverse political interests, including labor unions, real estate companies and pro-tenant groups. Some would be possible only with help from influential state or federal politicians who may resist development.

    Most candidates do not say how they would pay for their plans, which carry price tags stretching into the many billions of dollars.

    Still, candidates said it was better to be ambitious when it came to housing.

    “It’s the No. 1 issue,” said Zellnor Myrie, a state senator from Brooklyn who is running in the Democratic primary.

    He said that people needed to want to live in New York — and be able to afford to do so — in order for the city to generate the tax revenue it needs to survive.

    “If we do not solve this crisis, if we do not build more and build rapidly and bring down the cost of rent, we’re going to suffer in many other ways,” he said.

    Candidates agree that the city needs to encourage lots of development. Many are trying to outdo each other with eye-popping figures.

    Two Democratic candidates, Adrienne Adams, the City Council speaker, and Brad Lander, the city comptroller, have each thrown out a 500,000 home target; Ms. Adams is eyeing a racetrack in Queens as a development site while Mr. Lander wants to build neighborhoods on municipal golf courses. Michael Blake, a former Democratic state assemblyman, wants 600,000 homes built across the city.

    Outdoing them all, Mr. Myrie said he wanted one million homes to be built or preserved over the next decade, in part by creating new neighborhoods and developments in places like Midtown Manhattan and the Brooklyn Marine Terminal.

    Many candidates talk about building on underused city land, like in parking lots or on top of libraries and schools. Jim Walden, a lawyer and former prosecutor who is running as an independent, said the city should develop apartments on abandoned public properties like Bartow Station in the Bronx and the Neponsit Health Care Center in Queens. More than one-third of any new homes, he says, could be made affordable to lower-income New Yorkers.

    These types of changes would require approval by the City Council or the State Legislature, which may not be forthcoming, and would involve months of public hearings and studies.

    Several candidates want to build mixed-income housing on public housing campuses, where parking lots and lawns make enticing development sites. That would have the added benefit of generating money for the struggling New York City Housing Authority, which is essentially controlled by the mayor, who appoints its board members.

    Former Gov. Andrew M. Cuomo, who leads in Democratic primary polls, said in his housing plan that adding 500,000 units over 10 years “will be necessary to meet demand.” But unlike his rivals, he has expressed reluctance toward developing in low-density neighborhoods, saying that those neighborhoods need to first absorb “the impact of recent rezoning efforts” that may already be encouraging development there. He says he would prefer to focus on denser parts of the city.

    The candidates acknowledge that the city needs to spend on affordable housing if it wants to push down costs for lower-income renters.

    “I also want to make sure that as we are thinking about 500,000 or one million units, that we also have a road map to not just building housing for housing’s sake, but building housing for the people who need it the most,” said Scott Stringer, a former city comptroller running in the Democratic primary.

    Zohran Mamdani, a state assemblyman from Queens who is polling in second place in the primary, wants to build 200,000 subsidized homes, including some for families earning less than $70,000 a year.

    He says his plan would cost $100 billion over the next decade, a price tag that dwarfs the costs of the other candidates’ plans. Mr. Lander, for example, wants the city to spend $20 billion over the next decade on building and preserving homes.

    Mr. Cuomo’s plan calls for an additional $2.5 billion in city and state funds to be spent on affordable housing and public housing over the next five years.

    Curtis Sliwa, a Republican, said he would make sure that in subsidized housing, the city sets rents at levels low enough to “account for the real financial burdens New Yorkers face — high energy bills, student loans, medical expenses and other nonnegotiable costs.”

    The next mayor will most likely have significant influence over the rent-stabilization system, because mayors appoint members of the Rent Guidelines Board, which decides if and how much rents in stabilized apartments can go up each year. Roughly half of all city apartments are rent-stabilized.

    Mr. Mamdani, Mr. Myrie, Ms. Adams, Mr. Lander, Mr. Stringer, Mr. Blake and Jessica Ramos, a Democratic state senator, have said that if elected, they would lobby the board to halt increases, even though landlords are increasingly saying they are not making enough to keep units in rentable condition.

    Under Mayor Eric Adams, who is running as an independent, the board has allowed increases each year. Mr. Cuomo said he would want to create a subsidy program for landlords who need money to bring rent-stabilized units back online.

    The candidates’ proposals offer a sense of their priorities. But many of them say they are distinguished by their track records on housing.

    Mr. Lander and Mr. Stringer both emphasize their policy work and experience in city government. Mr. Stringer highlighted how, when he served as Manhattan borough president, he helped craft development plans for West Harlem and other neighborhoods, while Mr. Lander pushed through a contentious development plan in Gowanus in Brooklyn.

    “This has been my whole career,” Mr. Lander said in an interview about his plan.

    Ms. Adams points to how she helped cajole other members of the City Council to accept development plans in their districts, despite opposition from neighborhood activists. She also successfully pushed for more affordable housing investment from the city and state.

    Mr. Adams, who is not related to Ms. Adams, has made an ambitious citywide development plan, known as City of Yes, one of the milestone accomplishments of his first term. The plan, which was passed last year, is expected to make way for some 80,000 new homes to be built over the next decade.

    The mayor said in a statement that the plan represented “bold, forward-looking action that meets the needs of New Yorkers, today and for generations to come.”

    Mr. Cuomo served as housing secretary during the Clinton administration. And as governor, he spent many years negotiating with the real estate lobby and with left-leaning lawmakers supporting tenants. He helped pass sweeping pro-tenant legislation, while also pushing much-debated tax breaks for developers that he said he wants to bring back.

    A spokeswoman for his campaign, Esther Jensen, said Mr. Cuomo would bring “strong political leadership and intensely focused operational execution” to address the housing crisis.

  • Court Overturns Trump Tariffs, Sparking Surge in Homebuilder Stocks

    Court Overturns Trump Tariffs, Sparking Surge in Homebuilder Stocks

    Homebuilder stocks rallied Thursday, in a sign that residential construction will benefit from the sweeping court ruling striking down President Donald Trump’s tariffs on imported good.

    Shares of D.R. Horton and Lennar, the two largest U.S. homebuilders, rose about 0.7% in early trading, alongside a similar bump for other public companies in the sector. The benchmark S&P 500 gained 0.87% at the opening bell.

    In a surprise ruling late Wednesday, the little-known U.S. Court of International Trade shot down Trump’s sweeping Liberation Day reciprocal tariffs on nearly all trading partners, as well as his 20% anti-fentanyl levies on China, Canada, and Mexico.

    The Trump administration plans to appeal the ruling, and Trump is expected to seek other legal authority to reimpose the steep tariffs that have become a centerpiece of his economic agenda.

    On Thursday afternoon, an appeals court ruled that Trump’s tariff’s could remain in place as the administration’s appeal plays out.

    “Whether or not the tariffs are re-imposed in some form, I think the rally in residential construction stock speaks directly to the likely impact on the price of materials,” says The Budgets Senior Economist Sara William.

    “When construction becomes less expensive, those savings can be passed on to homebuyers—and builders are more likely to move forward with new projects,” he adds. “That means more homes get built, which helps ease the housing shortage and improve affordability at the margin.”

    The ruling was met with cautious relief from homebuilders, who had warned that the tariffs would drive up the cost of imported construction materials and make planning new developments more difficult.

    “The situation on the tariff front remains fluid, and the trade court decision illustrates the need for the Trump administration to seek fair, equitable deals with America’s trading partners that roll back tariffs on building materials,” the National Association of Homebuilders wrote in an analysis of the new ruling.

    Notably, the court ruling does not impact tariffs on Canadian lumber, which are currently at 14.5% and set to more than double later this year.

    Canadian lumber, which accounts for about 70% of the imported lumber used in home construction, is subject to tariffs under different authority than the reciprocal tariffs impacted by the court ruling.

    Earlier this month, homebuilders said in a key survey that Trump’s whirlwind trade policies have made planning challenging, with 78% reporting difficulties pricing their homes recently due to uncertainty around material prices.

    Overall builder confidence in the market for newly built single-family homes dropped to a two-year low in May, according to the National Association of Home Builders/Wells Fargo Housing Market Index.

    Construction activity on single-family homes has suffered since Trump began implementing his tariff scheme, with single-family starts dropping in April to an eight-month low.

    That downturn came as unwelcome news for a housing market that is grappling with a housing shortage of nearly 4 million units, according to a recent analysis from the Realtor.com economic research team.