Finance

Chicago Federal Reserve President Austan Goolsbee.
Kate Rooney | CNBC

Federal Reserve Bank of Chicago President Austan Goolsbee on Monday urged against reducing the central bank’s independence as President Donald Trump amped up criticism of Chair Jerome Powell.
“The long-run expectations that the Fed would get inflation back down to the 2% target were critically important. Fed independence is critically important for that,” Goolsbee said on CNBC’s “Squawk Box.”

“When there is interference over the long run, it’s going to mean higher inflation, it’s going to mean worse growth and higher unemployment, because there’s just going to be a little less willingness to step up and do the hard things when the moment is tough,” he said, while declining to comment directly on what Trump has said.
Trump lobbed another salvo at Powell on Friday for not lowering interest rates. There have also been talks that Trump may try to pull strings on monetary policy both by legislation and possibly by installing a “shadow chair” who could undermine Powell’s authority.
“If we had a Fed Chairman that understood what he was doing, interest rates would be coming down, too,” Trump said, pointing to examples of falling prices. “He should bring them [interest rates] down.”
White House economic advisor Kevin Hassett said Friday that Trump and his team are assessing whether they can remove the Fed chair. Powell has said previously that he cannot be fired under law and intends to serve through the end of his term as chair in May 2026.
“I’ve been at the Fed for a little over two years. Before I was ever at the Fed, I would tell you, economists are basically unanimous that Fed independence is critically important,” said Goolsbee. “And to see why, just look at the countries where they don’t have Fed independence. Inflation is higher, unemployment is higher, growth is worse.”

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China has warned it will retaliate against countries that cooperate with the U.S. in ways that compromise Beijing’s interests, according to a statement from the Chinese Ministry of Commerce.
The threat comes as U.S. President Donald Trump’s administration is reportedly planning to use tariff negotiations to pressure U.S. partners to limit their dealings with China.
“China firmly opposes any party reaching a deal at the expense of China’s interests. If this happens, China will not accept it and will resolutely take reciprocal countermeasures,” the Chinese Ministry of Commerce said, according to a CNBC translation.

Dado Ruvic | Reuters

BEIJING — China on Monday warned it will retaliate against countries that cooperate with the U.S. in ways that compromise Beijing’s interests, as the trade war between the world’s two largest economies threatens to embroil other nations.
China’s warning comes as U.S. President Donald Trump’s administration is reportedly planning to use tariff negotiations to pressure U.S. partners to limit their dealings with China. Trump this month paused major tariff increases on other countries for 90 days, while hiking duties further on goods from China to 145%.

“China firmly opposes any party reaching a deal at the expense of China’s interests. If this happens, China will not accept it and will resolutely take reciprocal countermeasures,” the Chinese Ministry of Commerce said, according to a CNBC translation.
The ministry cautioned about the risk to all countries once international trade returns to the “law of the jungle.”
The statement also sought to cast China as willing to work with all parties and “defend international fairness and justice,” while describing the U.S. actions as “abusing tariffs” and “unilateral bullying.”

In a shift toward a harder stance this month, China retaliated against U.S. tariffs with levies of 125% on imports of American goods. Beijing has also restricted critical minerals exports and put several, mostly smaller, U.S. companies on blacklists that restrict their ability to work with Chinese companies.
Analysts don’t expect the U.S. and China to reach a deal anytime soon, although Trump on Thursday said he expected an agreement could be reached in the next three to four weeks.

Chinese President Xi Jinping last week visited Vietnam, Malaysia and Cambodia in his first overseas trip of 2025. In official Chinese readouts of his meetings with the three countries’ leaders, Xi called for joint efforts to oppose tariffs and “unilateral bullying.”
Since Trump imposed tariffs on China during his first term, the Asian country has increased its trade with Southeast Asia, now China’s largest trading partner on a regional basis. The U.S. remains China’s largest trading partner on a single-country basis.
“For African countries, or every country, it should be everyone cooperating, together responding to the U.S.,” Justin Yifu Lin, dean of the Institute of New Structural Economics at Peking University, told reporters on Monday. That’s according to a CNBC translation of his Mandarin-language response to a question from a reporter from Mali about solutions to the trade war.
More and more voices will likely call the U.S. policy “unreasonable and illogical,” he said. “I’m confident that unreasonable and illogical things can’t last that long.”
While Lin did not rule out the possibility of full decoupling between the U.S. and China, he said he expected the two countries would likely remain linked because of U.S. consumer and business reliance on China.
Last week, China’s Ministry of Commerce replaced its top international trade negotiator with Li Chenggang, who also became a vice minister and has been the country’s ambassador to the World Trade Organization. China has filed a lawsuit against the U.S. with the WTO over Trump’s latest tariff increases.

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IN HIS LOVE of lucre Donald Trump can be crass. In their pursuit of efficiency, free-marketeers can be, too. Consider the sale of citizenship. Most people dislike the idea of treating national belonging as a commodity. Yet a dozen or so countries hawk passports and more than 60, including America, offer residency in exchange for an investment or donation. The country’s “golden visa” scheme is cumbersome, underpriced and inefficient. On this point, the president and the market agree. More

Katie Stockton thinks she has a viable option for investors trying to withstand wild market swings.
She manages the Fairlead Tactical Sector ETF (TACK), which is designed to be nimble in times of market stress. It’s not tied to an index.

“What we try to do is help investors leverage the upside through sector rotation, but also minimize drawdowns,” the Fairlead Strategies founder told CNBC’s “ETF Edge” this week. “That’s obviously a big advantage longer term when you can just go into a less deep hole to climb out of.”
According to Stockton, her ETF is particularly nimble in this environment because it uses multiple strategies — not just one. Since President Donald Trump announced his “reciprocal” tariffs on April 2, the ETF has fallen just over 4%, while the S&P 500 has lost 6.9%.
Stockton’s ETF rotates monthly between all 11 S&P 500 sectors.
“We don’t own technology anymore,” Stockton said. “Some of the sectors that we like to invest in have fallen out of favor.”
As of April 16, the fund’s top sector holdings included consumer staples, utilities and real estate, according to Fairlead Strategies. 

As of Thursday’s close, the Fairlead Tactical Sector ETF is down 4% so far this year.
Meanwhile, ETFs that are centered around specific sectors or strategies are largely under pressure. For example, the Invesco Top QQQ Trust (QBIG), which tracks the top 45% of companies in the Nasdaq-100 index, is down 22% in 2025.
The GraniteShares YieldBoost TSLA ETF (TSYY) is off 48% since the beginning of the year.
BTIG’s Troy Donohue, the firm’s head of Americas portfolio trading, thinks Stockton’s ETF employs a sound strategy – particularly during the recent “dramatic pullback.”
“TACK is a great example of how you can be nimble during these market times,” Donohue said. “It’s great to see it in an ETF product that has performed really well during this recent drawdown.”

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Capital One Financial’s application to acquire Discover Financial Services has officially been approved by the Federal Reserve and the Office of the Comptroller of the Currency.
Capital One announced plans to acquire Discover in an all-stock transaction valued at $35.3 billion in February 2024.
It will also indirectly acquire Discover Bank through the transaction.

Sign at the entrance to a Capital One bank branch in Manhattan.
Erik Mcgregor | Lightrocket | Getty Images

Capital One Financial’s application to acquire Discover Financial Services in a $35.3 billion all-stock deal has officially been approved by the Federal Reserve and the Office of the Comptroller of the Currency, the regulators announced on Friday.
“The Board evaluated the application under the statutory factors it is required to consider, including the financial and managerial resources of the companies, the convenience and needs of the communities to be served by the combined organization, and the competitive and financial stability impacts of the proposal,” the Fed said in a release.

Capital One first announced it had entered into a definitive agreement to acquire Discover in February 2024. It will also indirectly acquire Discover Bank through the transaction, which was approved by the Office of the Comptroller of the Currency on Friday.
Under the agreement, Discover shareholders will receive 1.0192 Capital One shares for each Discover share or about a 26% premium from Discover’s closing price of $110.49 at the time, Capital One said in a release.
Capital One and Discover are among the largest credit card issuers in the U.S., and the merger will expand Capital One’s deposit base and its credit card offerings. 
As a condition of the merger, Capital One said it will comply with the Fed’s action against Discover, according to the release. The Fed fined Discover $100 million for overcharging certain interchange fees from 2007 through 2023, and the company is repaying those fees to affected customers.
The OCC said it approved Capital One’s application on the condition that it would take “corrective actions” to remediate harm and address the “root causes” of outstanding enforcement actions against Discover.

After the deal closes, Capital One shareholders will hold 60% of the combined company, while Discover shareholders own 40%, according to the February 2024 release.
In a joint statement, Capital One and Discover said they expect to close the deal on May 18.
WATCH: Jamie Dimon on Capital One’s $35.3 billion Discover acquisition: ‘Let them compete’ More

China missed several key targets from its 10-year plan to become self-sufficient in technology, and fostered unhealthy industrial competition which increased global trade tensions, the European Chamber of Commerce in China said in a report this week.
Out of ten strategic sectors identified in the report, China only attained clear technological leadership in shipbuilding, high-speed rail and electric cars.
Despite not making all “Made in China 2025” targets, the country has advanced so rapidly, it’s now a direct competitor with European and U.S. manufacturing in many aspects, the chamber said.

Smart robotic arms work on the production line at the production workshop of Changqing Auto Parts Co., LTD., located in Anqing Economic Development Zone, Anhui Province, China, on March 13, 2025. (Photo by Costfoto/NurPhoto via Getty Images)
Nurphoto | Nurphoto | Getty Images

BEIJING — China missed several key targets from its 10-year plan to become self-sufficient in technology, while fostering unhealthy industrial competition which worsened global trade tensions, the European Chamber of Commerce in China said in a report this week.
When Beijing released its “Made in China 2025” plan in 2015, it was met with significant international criticism for promoting Chinese business at the expense of their foreign counterparts. The country subsequently downplayed the initiative, but has doubled-down on domestic tech development given U.S. restrictions in the last several years.

Since releasing the plan, China has exceeded its targets on achieving domestic dominance in autos, but the country has not yet reached its targets in aerospace, high-end robots and the growth rate of manufacturing value-added, the business chamber said, citing its research and discussions with members. Out of ten strategic sectors identified in the report, China only attained technological dominance in shipbuilding, high-speed rail and electric cars.
China’s targets are generally seen as a direction rather than an actual figure to be achieved by a specific date. The Made In China 2025 plan outlines the first ten years of what the country called a ‘multi-decade strategy’ to become a global manufacturing powerhouse.
The chamber pointed out that China’s self-developed airplane, the C919, still relies heavily on U.S. and European parts and though industrial automation levels have “increased substantially,” it is primarily due to foreign technology. In addition, the growth rate of manufacturing value add reached 6.1% in 2024, falling from the 7% rate in 2015 and just over halfway toward reaching the target of 11%.
“Everyone should consider themselves lucky that China missed its manufacturing growth target,” Jens Eskelund, president of the European Union Chamber of Commerce in China, told reporters Tuesday, since the reverse would have exacerbated pressure on global competitors. “They didn’t fulfill their own target, but I actually think they did astoundingly well.”

Even at that slower pace, China has transformed itself over the last decade to drive 29% of global manufacturing value add — almost the same as the U.S. and Europe combined, Eskelund said. “Before 2015, in many, many categories China was not a direct competitor of Europe and the United States.”

The U.S. in recent years has sought to restrict China’s access to high-end tech, and encourage advanced manufacturing companies to build factories in America.
Earlier this week, the U.S. issued exporting licensing requirements for U.S.-based chipmaker Nvidia’s H20 and AMD’s MI308 artificial intelligence chips, as well as their equivalents, to China. Prior to that, Nvidia said that it would take a quarterly charge of about $5.5 billion as a result of the new exporting licensing requirements. The chipmaker’s CEO Jensen Huang met with Chinese Vice Premier He Lifeng in Beijing on Thursday, according to Chinese state media.
The U.S. restrictions have “pushed us to make things that previously we would not have thought we had to buy,” said Lionel M. Ni, founding president of the Guangzhou campus of the Hong Kong University of Science and Technology. That’s according to a CNBC translation of his Mandarin-language remarks to reporters on Wednesday.
Ni said the products requiring home-grown development efforts included chips and equipment, and if substitutes for restricted items weren’t immediately available, the university would buy the second-best version available.
In addition to thematic plans, China issues national development priorities every five years. The current 14th five-year plan emphasizes support for the digital economy and wraps up in December. The subsequent 15th five-year plan is scheduled to be released next year.

China catching up

It remains unclear to what extent China can become completely self-sufficient in key technological systems in the near term. But local companies have made rapid strides.
Chinese telecommunications giant Huawei released a smartphone in late 2023 that reportedly contained an advanced chip capable of 5G speeds. The company has been on a U.S. blacklist since 2019 and released its own operating system last year that is reportedly completely separate from Google’s Android.
“Western chip export controls have had some success in that they briefly set back China’s developmental efforts in semiconductors, albeit at some cost to the United States and allied firms,” analysts at the Washington, D.C.,-based think tank Center for Strategic and International Studies, said in a report this week. However, they noted that China has only doubled down, “potentially destabilizing the U.S. semiconductor ecosystem.”
For example, the thinktank pointed out, Huawei’s current generation smartphone, the Pura 70 series, incorporates 33 China-sourced components and only 5 sourced from outside of China.
Huawei reported a 22% surge in revenue in 2024 — the fastest growth since 2016 — buoyed by a recovery in its consumer products business. The company spent 20.8% of its revenue on research and development last year, well above its annual goal of more than 10%.
Overall, China manufacturers reached the nationwide 1.68% target for spending on research and development as a percentage of operating revenue, the EU Chamber report said.
“‘Europe needs to take a hard look at itself,” Eskelund said, referring to Huawei’s high R&D spend. “Are European companies doing what is needed to remain at the cutting edge of technology?”
Dutch semiconductor equipment firm ASML spent 15.2% of its net sales in 2024 on R&D, while Nvidia’s ratio was 14.2%.

Overcapacity and security concerns

However, high spending doesn’t necessarily mean efficiency.
The electric car race in particular has prompted a price war, with most automakers running losses in their attempt to undercut competitors. The phenomenon is often called “neijuan” or “involution” in China.
“We also need to realize [China’s] success has not come without problems,” Eskelund said. “We are seeing across a great many industries it has not translated into healthy business.”
He added that the attempt to fulfill “Made in China 2025” targets contributed to involution, and pointed out that China’s efforts to move up the manufacturing value chain from Christmas ornaments to high-end equipment have also increased global worries about security risks.

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In an annual government work report delivered in March, Chinese Premier Li Qiang called for efforts to halt involution, echoing a directive from a high-level Politburo meeting in July last year. The Politburo is the second-highest circle of power in the ruling Chinese Communist Party.
Such fierce competition compounds the impact of already slowing economic growth. Out of 2,825 mainland China-listed companies, 20% reported a loss for the first time in 2024, according to a CNBC analysis of Wind Information data as of Thursday. Including companies that reported yet another year of losses, the share of companies that lost money last year rose to nearly 48%, the analysis showed.
China in March emphasized that boosting consumption is its priority for the year, after previously focusing on manufacturing. Retail sales growth have lagged behind industrial production on a year-to-date basis since the beginning of 2024, according to official data accessed via Wind Information.
Policymakers are also looking for ways to ensure “a better match between manufacturing output and what the domestic market can absorb,” Eskelund said, adding that efforts to boost consumption don’t matter much if manufacturing output grows even faster.
But when asked about policies that could address manufacturing overcapacity, he said, “We are also eagerly waiting in anticipation.” More

American Express’ affluent cardholders are showing few signs of curbing their spending, Chief Financial Officer Christophe Le Caillec told CNBC.
Billed business on AmEx cards in the first quarter rose 6%, or 7% when adjusted for the impact of the leap year.
The bump in spending has continued into April, the CFO said, despite sharp declines in stocks this month amid concerns about President Donald Trump’s tariff policies.

American Express

American Express’ affluent cardholders are showing few signs of curbing their spending, and younger customers drove growth in first-quarter transaction volumes, Chief Financial Officer Christophe Le Caillec told CNBC.
Billed business on AmEx cards rose 6% in the period, or 7% when adjusted for the impact of the leap year, the company reported Thursday, which shows that the bump in spending late last year continued into 2025, according to Le Caillec.

Those trends have continued into April, the CFO said, despite sharp declines in stocks this month amid concerns that President Donald Trump’s tariff policies will cause a recession.
The dynamic, which helped AmEx top expectations for first-quarter profit, shows that the company’s wealthier customer base may help to insulate it from concerns about tariffs and stubborn inflation. On the other end of the credit spectrum, Synchrony Financial, which offers store cards for dozens of popular retailers, has warned of a spending slowdown.
“There’s a lot of stability and strength, despite the news and the environment,” Le Caillec said.
Growth at AmEx came from younger cardholders, with millennial and Gen Z members spending 14% more in the quarter. Gen X and Baby Boomer cardholders showed more caution, registering 5% and 1% increases, respectively.
Le Caillec said it’s difficult to discern whether cardholders were pulling forward purchases because of the looming tariffs, creating an artificial boost to purchase volumes, as JPMorgan executives said last week. But some small businesses may be doing so to build inventory because of concerns about the duties increasing costs, he added.

Airline slump

One category in particular gave Le Caillec confidence that the spending trends may be durable.
“Restaurant spend is up 8%,” the CFO said. “This is the ultimate discretionary expense, it’s not something you can bring forward, and so it’s really a good indicator of the strength of our cardmember base and the confidence they have.”
If there was a weak area besides the spending slowdown from older Americans, it was in airline transactions, according to the company’s earnings presentation. The category grew just 3%, or 4% when adjusted for the leap year, after climbing 13% in the fourth quarter.
But while airlines, retailers and other corporations have pulled their earnings guidance on tariff uncertainty, AmEx was holding firm.
It maintained its guidance for revenue growth of 8% to 10% and earnings of $15 to $15.50 per share this year, Le Caillec said.
In the company’s presentation, though, it added a new caveat to its guidance: “Subject to the Macroeconomic Environment.” More

U.S. stocks had been outperforming the world for years heading into 2025.
Now, some investors are changing their investment strategy to boost their international exposure.
Although global diversification may be a good move as U.S. markets come under pressure, CNBC Financial Advisor Council members caution against chasing returns.

Some investors accustomed to the dominance of U.S. stocks versus the rest of the world are making a stunning pivot toward international equities, fearing U.S. assets may have taken on more risk amid escalating trade tensions initiated by President Donald Trump.
The S&P 500 sank more than 6% since Trump first announced his tariff plan, while the Dow and Nasdaq have each tumbled more than 7%.

There was a strong argument to dial back U.S. stock holdings and adopt a more global portfolio even before the recent volatility, said Christine Benz, director of personal finance and retirement planning for Morningstar.
“But I think the case for international diversification is even greater [now], given recent developments,” she said.
Jacob Manoukian, head of U.S. investment strategy at J.P. Morgan Private Bank, offered a similar assessment. “Global diversification seems like a prudent strategy,” he wrote in a research note on Monday.

U.S. had the world beat by ‘sizable margin’

Some experts, however, don’t think investors should be so quick to dump U.S. stocks and chase returns abroad.
The United States is still “a quality market that looks like a bargain,” said Paul Christopher, head of global investment strategy at the Wells Fargo Investment Institute.

U.S. stocks had been outperforming the world for years heading into 2025.

The S&P 500 index had an average annual return of 11.9% from mid-2008 through 2024, beating returns of developed countries by a “sizable margin,” according to analysts at J.P. Morgan Private Bank.
The MSCI EAFE index — which tracks stock returns in developed markets outside of the U.S. and Canada — was up 3.6% per year over the same period, on average, they wrote.
However, the story is different this year, experts say.
“In a surprising twist, the U.S. equity market has just offered investors a timely reminder about why diversification matters,” the analysts at J.P. Morgan Private Bank wrote. “Although U.S. outperformance has been a familiar feature of global equity markets since mid-2008, change is possible.”
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The Trump administration’s tariff policy and an escalating trade war with China have raised concerns about the growth of the U.S. economy.
U.S. markets have been under pressure ever since the White House first announced country-specific tariffs on April 2. Trump imposed tariffs on many nations, including a 145% levy on imports from China.
As of Thursday morning, the S&P 500 was down roughly 10% year-to-date, while the Nasdaq Composite has pulled back more than 16% in 2025. The Dow Jones Industrial Average had lost nearly 8%. Alternatively, the EAFE was up about 7%.

Is U.S. exceptionalism dead?

The sharp sell-off in U.S. markets has raised doubts as to whether U.S. assets “are as attractive to foreigners now as they once were and, perhaps as a consequence, whether ‘U.S. [equity] market exceptionalism’ could be on the way out,” market analysts at Capital Economics wrote Thursday.
At the same time, rising global trade tensions have taken a toll on the bond market, threatening to shake the confidence of holders of U.S. debt. The U.S. dollar has also weakened, nearing a one-year low as of Thursday morning.
It’s unusual for U.S. stocks, bonds and the dollar to fall at the same time, analysts said.
Former Treasury Secretary Janet Yellen said Monday that President Donald Trump’s tariffs have made it more difficult for Americans to find comfort in the U.S. financial system.
“This is really creating an environment in which households and businesses feel paralyzed by the uncertainty about what’s going to happen,” Yellen told CNBC during a “Squawk Box” interview. “It makes planning almost impossible.”

The U.S. fire had ‘already been burning’

A trader works on the floor of the New York Stock Exchange at the opening bell in New York City, on April 17, 2025.
Timothy A. Clary | AFP | Getty Images

That said, international and U.S. stock returns tend to ebb and flow in cycles, with each showing multi-year periods of relative strength and weakness.
Since 1975, U.S. stock returns have outperformed those of international stocks for stretches of about eight years, on average, according to an analysis by Hartford Funds through 2024. Then, U.S. stocks cede the mantle to international stocks, it said.
Based on history, non-U.S. equities are overdue to reclaim the top spot: The U.S. is currently 13.8 years into the current cycle of stock outperformance, according to the Hartford Funds analysis.

U.S. markets had already showed weakness heading into the year amid concerns about the health of the economy grew and as “air came out the valuations of ‘big-tech’ stocks,” according to Capital Economics analysts.
“In that respect, ‘Liberation Day’ — which accentuated these moves — only added fuel to a fire that had already been burning,” they wrote.

Advisors: ‘Tread carefully here’

A good starting point for investors would be to mirror a global stock fund like the Vanguard Total World Stock Index Fund ETF (VT), said Benz of Morningstar. That fund holds about 63% of assets in U.S. stocks and 37% in non-U.S. stocks.
It may make sense to pare back exposure to international stocks as individual investors approach retirement, she said, to reduce the volatility that comes from fluctuations in foreign exchange rates.
“Part of our core models for clients have always had international exposure, it’s traditionally part of any risk-adjusted portfolio,” said certified financial planner Douglas Boneparth, president of Bone Fide Wealth in New York, of the conversations he is having with his clients.

Financial advisor or business people meeting discussing financial figures. They are discussing finance charts and graphs on a laptop computer. Rear view of sitting in an office and are discussing performance
Courtneyk | E+ | Getty Images

Even though those asset classes didn’t perform as well over the last few years, “they’ve done a pretty good job here of helping reduce the brunt of this tariff volatility,” said Boneparth, a member of the CNBC Financial Advisor Council.
Still, Boneparth cautions investors against making any sudden moves to add non-U.S. equities to their portfolios.
“If you are thinking about making changes now, be careful,” he said. “Do you lock in losses to U.S. stocks to gain international exposure? You want to tread carefully here,” he said. “Are you chasing or timing? You usually don’t want to do those things.”
However, this may be a good time to check your investments to make sure you are still allocated properly and rebalance as needed, he added. “By rebalancing, you can rotate out of less risky assets into equities, strategically buying the dip.”

There have been very few times in history when clients asked about increasing their investments overseas, “which is happening now,” said CFP Barry Glassman, the founder and president of Glassman Wealth Services.
“Given that both stocks and currency are outperforming U.S. indices it’s no wonder there is greater interest in foreign stocks today,” said Glassman, who is also a member of the CNBC Advisor Council.
“Even in the past, when U.S. stocks have fallen, the dollar’s gains helped to offset a portion of the losses. In the past two weeks, that has not been the case,” he said.
Glassman said he maintains a two-thirds to one-third ratio of U.S. stocks to foreign stock funds in the portfolios he manages.
“We are not making any moves now,” he said. “The moves for us were made over time to maintain what we consider the appropriate foreign allocation.” More