Unadorned Notes: April 21-24, 2025
Trump Eases Tensions With Fed; Tech Rally Lifts Markets; U.S. Labor Market Remains Resilient; China Leads EV Charging Race; China’s Rare Earths Leverage
Economics, Finance, and Business
Trump Eases Tensions With Fed: President Donald Trump stated he has no intention of firing Federal Reserve Chair Jerome Powell, easing market concerns over central bank independence. His remarks followed days of criticism aimed at Powell for not cutting interest rates further, which had unsettled financial markets. U.S. equity futures rose after Trump’s comments, reflecting investor relief and hopes for a potential U.S.-China trade deal that could lower tariffs. Legal uncertainty remains over a president’s authority to dismiss a Fed chair, though the Federal Reserve Act limits removal of governors to cases of misconduct. Despite recent rate cuts, Fed officials have held policy steady amid inflation concerns tied to Trump’s tariffs, while markets now anticipate three more rate cuts by year-end.1
QZ’s Comment: As I predicted in previous notes, Trump will find domestic shock absorbers for his tariffs by putting pressure on the Fed. He doesn’t need to fire the chairman of the Fed; he just needs to make him fear enough to act differently. So yes, there will be rate cuts due to “rising uncertainty”, and yes, the Fed has never been and will never be truly independent of politics.
Tech Rally Lifts Markets: U.S. stocks rose for a third consecutive session, driven by gains in technology shares and investor optimism over potential trade agreements and lower interest rates. The Nasdaq Composite advanced 2.7% Thursday, bringing its weekly gain to 5.4%, while the S&P 500 exited correction territory, now down 5.8% for the year. Despite ongoing volatility and limited progress in U.S.-China trade talks, markets responded positively to dovish signals from Federal Reserve officials suggesting potential rate cuts. Earnings reports have generally supported sentiment, with major firms like Alphabet posting stronger-than-expected results. Analysts caution that uncertainty remains high, and upcoming economic data and trade developments could trigger further market swings.2
U.S. New Home Sales Rise: New home sales in the United States increased 7.4% in March 2025 to a seasonally adjusted annual rate of 724,000 units, surpassing forecasts, according to Census Bureau data. Inventory levels reached 503,000 homes, the highest since 2007, driven by a supply increase during the spring selling season. Regional sales varied, with notable gains in the South and Midwest but declines in the West and Northeast. Affordability remains a concern, as high mortgage rates near 7% and elevated home prices continue to challenge buyers. Homebuilders, including PulteGroup and Taylor Morrison, warned that tariffs on metals could raise construction costs, impacting housing affordability later in the year.3
U.S. Labor Market Remains Resilient: U.S. initial jobless claims rose slightly to 222,000 for the week ending April 19, 2025, indicating continued labor market resilience despite rising economic uncertainty from trade tensions. Business spending on equipment barely increased in March 2025, reflecting caution amid President Donald Trump’s shifting tariff policies, which have eroded confidence and raised fears of inflation and stagnation. The Federal Reserve’s Beige Book reported firms delaying hiring decisions and preparing for potential layoffs as economic conditions remain unclear. Durable goods orders surged 9.2% in March, driven by a sharp rise in aircraft bookings, though economists expect this to be temporary due to tariffs and geopolitical risks. Existing home sales fell 5.9% in March, as high mortgage rates and economic anxiety weighed on housing demand.4
Cantor, Tether, SoftBank Launch Bitcoin Venture: Cantor Fitzgerald, Tether, and SoftBank announced the formation of Twenty One Capital, a $3.6 billion bitcoin investment vehicle targeting Wall Street institutions. The entity will go public through a merger with Cantor Equity Partners, a SPAC, and will initially hold approximately 42,000 bitcoin, making it the third-largest corporate bitcoin holder globally. Tether, Bitfinex, and SoftBank have committed $1.5 billion, $600 million, and $900 million respectively in cash and bitcoin contributions for equity stakes, with Tether and Bitfinex maintaining majority control. The venture has secured $585 million in financing through convertible notes and private equity investments to fund further bitcoin acquisitions. Twenty One aims to develop bitcoin-based financial products and will trade under the ticker symbol “XXI” upon completion of the transaction.5
China Leads EV Charging Race: Chinese battery makers CATL and BYD have unveiled electric vehicle charging technologies capable of adding hundreds of miles of range in five minutes, marking a significant advancement in EV infrastructure. These developments reinforce China’s global leadership in electric mobility, supported by state incentives and a rapidly expanding domestic charging network exceeding 13 million facilities. By contrast, U.S. EV infrastructure remains underdeveloped, with approximately 230,000 charging points, limiting the near-term impact of these technologies on American consumers due to high tariffs on Chinese EVs and batteries. CATL, which supplies over one-third of global EV batteries, also introduced a sodium-ion battery aimed at reducing reliance on lithium. Despite these breakthroughs, challenges such as infrastructure build-out, costs, and battery longevity continue to temper expectations for widespread adoption.6
QZ’s Comment: Charging speed doesn’t matter much for the environment if your EVs are still tethered to a coal-fired grid. Ironically, the current U.S. energy policy—“drill, baby, drill”—is keeping global energy prices down and undermining China’s EV cost advantage. Beijing needs to bleed more subsidies to stay competitive.
U.S. Politics, Policies, and Geopolitics
Trump Targets College Accreditation: President Donald Trump signed an executive order directing the Department of Education to reform college accreditation processes, emphasizing academic results over diversity initiatives. The order also empowers the department to penalize accrediting agencies that fail to meet federal standards, including suspending their recognition. Additionally, Trump signed measures enforcing existing laws requiring universities to disclose large foreign gifts, singling out Harvard University for alleged noncompliance. The administration has frozen federal funding to several institutions, including Harvard and Columbia, over disputes regarding policy compliance and responses to antisemitism. Other executive actions included initiatives to support Historically Black Colleges and Universities (HBCUs), expand apprenticeships, and promote artificial intelligence education.7
Rubio Unveils State Department Overhaul: Secretary of State Marco Rubio announced a major reorganization of the State Department, aiming to cut 132 offices and 700 positions to streamline operations and align with the administration’s “America First” agenda. The plan seeks to reduce U.S.-based staff by 15% and eliminate or consolidate programs deemed misaligned with national interests, including offices focused on human rights and war crimes. While some bureaus, such as the Bureau of African Affairs, remain intact, others will be absorbed into new structures, including a consolidated office for foreign and humanitarian affairs. A new bureau for emerging threats, focusing on cybersecurity and artificial intelligence, will be established. The proposal has drawn sharp criticism from Democratic lawmakers concerned about weakening U.S. diplomacy, while Republican allies argue the reforms are necessary to modernize foreign policy operations.8
States Challenge Trump Tariffs: A coalition of twelve states filed a lawsuit against the Trump administration, arguing that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) are unlawful. The suit, led by New York Attorney General Letitia James, claims the president lacks authority to impose tariffs under IEEPA, which was not intended for trade measures. The plaintiffs assert that these tariffs function as illegal tax increases, exacerbating inflation and economic hardship for American families. The legal action, filed in the U.S. Court of International Trade, seeks to block both existing and impending tariffs, citing violations of the Constitution and the Administrative Procedure Act. The Trump administration maintains that trade deficits and border security threats constitute national emergencies justifying the tariffs.9
China’s Rare Earths Leverage: China’s recent restrictions on rare-earth mineral exports to the United States have intensified concerns across federal agencies, highlighting vulnerabilities in critical supply chains. These minerals, essential for military, electronics, and energy industries, remain largely under Chinese control, leaving U.S. manufacturers facing potential shortages within months. Despite prior efforts to diversify sources, alternative supply chains remain underdeveloped, requiring up to 15 years to become fully operational. The Trump administration is considering expedited domestic production and new international partnerships to reduce dependence on China. This latest escalation underscores Beijing’s strategic use of rare earths amid broader trade tensions.10
QZ’s Comment: Some would argue that without direct government involvement, private companies will eventually rise to meet rare earths demand through innovation and competition. But relying on the private sector rests on the false premise that market forces will self-correct, a notion that has already failed spectacularly in trade. Rare earths should be processed in the U.S. regardless of cost, because power trumps price in this arena.
Russia Launches Deadly Kyiv Strikes: Russia launched its deadliest attack on Kyiv in nine months, firing 70 missiles and 145 drones, killing at least 12 and injuring 90, according to Ukrainian authorities. President Donald Trump condemned the strikes, urging Russian President Vladimir Putin to “STOP” and pressed for a ceasefire, though Ukrainian President Volodymyr Zelensky rejected concessions tied to ongoing attacks. The bombardment, which struck civilian infrastructure across Kyiv and other regions, was described by Moscow as targeting military industries, while Zelensky suggested the assault aimed to pressure the U.S. into advancing peace negotiations. Tensions escalated over U.S. proposals to recognize Russian control of Crimea, a point of contention between Washington and Kyiv. International leaders, including French President Emmanuel Macron, condemned the Russian strikes, calling for accountability and renewed focus on Russian aggression.11