Trump Accuses China of Violating Trade Deal; Beijing Calls for Immediate Correction

India's economy picked up speed in the most recent quarter as manufacturing and private consumption continued to show resilience.

Official data on Friday showed that India's economy grew 7.4% in January-March, speeding up from the revised figure of a 6.4% expansion in the prior quarter to set its strongest pace of growth in a year.

That topped the median estimate for 6.8% growth compiled in a Wall Street Journal poll of economists and came after an unexpectedly sharp slowdown in the July-September quarter fanned concerns that the economy was losing steam.

For the full fiscal year, the world's fifth-largest economy expanded 6.5%, in line with the government's forecast as momentum increased in the final quarter.

The data comes as the economy stands at a crossroads: years of robust growth have put it on the cusp of becoming the world's fourth-biggest economy, but it continues to face internal and external challenges.

Economists had largely expected the data to show that the economy had picked up in the final fiscal quarter, citing ramped-up government spending, stronger consumption thanks to easing inflation, and recovering rural demand.

Nomura economists reckon the strong services sector will help support growth in the current fiscal year. India could emerge as a winner of supply-chain shifts resulting from the U.S.-China trade tensions, they said in a note.

Friday's figures showed that manufacturing activity strengthened in the January-March period from the previous quarter, with growth rising to 4.8% from 3.6%. The construction sector's momentum picked up, as well as the mining and quarrying sector.

Growth in private consumption slightly fell to 6.0% from 8.1%, while government spending slipped, contracting by 1.8% during the quarter, compared to the 9.3% growth in the October-December period.

India will likely be a key global growth engine for 2025 and 2026, given the structural growth drivers like the rapid build-out of India's physical and social infrastructure capacity, productivity gains and household-savings resilience, BofA global research analysts wrote in a note.

In line with the growth story, India's capital markets have delivered one of the best returns in the world over the past few decades, they added, but highlight that they are cautious in the short term given lingering trade risks that might not be fully priced in, and the expectation that India's continuing monetary stimulus will help drive a "shallow revival" of growth, capital expenditure and consumption growth, they said.

Source: TradingView

China's Strong Response to U.S. Semiconductor Export Controls

U.S. Semiconductor Restrictions: A Growing Issue for China

A Changing Semiconductor Landscape

Source: CNBC

U.S. Tariff War Results in $34 Billion Loss for Global Corporations

Challenges in Forecasting Amid Trade Uncertainty

Source: Reuters

U.S. Consumer Spending Stalls, Offering Temporary Relief to Inflation

Economic Uncertainty Continues Amid Tariff Disruptions

Consumer Sentiment and Fed’s Response

Inflation Indicators and Future Expectations

Source: Reuters

On Wall Street, it’s been years since anyone had to think very hard to make money. Buy the largest US stocks, ignore everything else and watch your portfolio soar.

Then life got more complicated. President Donald Trump’s sudden tariff escalation in April offered a glimpse of what a world without that certainty might look like. Confidence wavered—not just in megacap resilience, but in American economic exceptionalism and Trump’s market-friendly reputation. But after a sharp market decline, some of the panic subsided. The president backed away from some of his most dramatic tariff plans, and major US equity indexes bounced back. On May 28, a US trade court said many of Trump’s tariffs were illegal, with the administration appealing the decision. Yet for many, the market and political mayhem highlighted the increasing fragility of the one-way buy-America trade. You can still see the shadows of all that doubt in the lower value of the dollar, in Moody’s Ratings’ recent decision to downgrade America’s debt, and in the steady drumbeat of money finding its way to anything that isn’t just another bet on US stocks.

A motley crew of finance professionals long dismissed as having complex and cautious strategies have been having their moment. With megacap valuations still looking stretched, these money managers are pitching a slew of allocation ideas to investors newly receptive to the age-old virtue of diversification. “I am looking forward to this being a world again where prices matter,” says Ben Inker, the co-head of asset allocation at Grantham Mayo Van Otterloo, a money manager known for bull-market skepticism as well as its dedication to value investing. His GMO International Developed Equity Allocation Fund is up about 20% this year—its biggest outperformance over the S&P 500 since the strategy’s 2006 inception. The fund has about half its assets in Europe and almost 30% in Japan.

Meb Faber, too, has been waiting patiently for this. The founder of Cambria Investment Management LP has been calling the end of the US exceptionalism trade for years. Before 2025 his model, which spread money across regions and assets, had trailed the S&P 500 in 14 out of 16 years. Now people are seeing the virtues of contrarian strategies. “Nobody is interested in talking about or wanting any of these investments, and all of a sudden you just blink, and the next thing you know, they’re outperforming,” Faber says.

Nothing lasts forever, Faber says. He points the 1980s, when international markets, Japan’s in particular, left American equities in the dust. That episode foreshadowed the Nikkei 225’s two decades of woe.

Fund flows highlight the shift away from the go-long-US trade. International equities are attracting money in droves. Exchange-traded funds holding value stocks, which typically snub the top-heavy Magnificent Seven tech stocks, have already seen $30 billion in inflows this year. Hedge funds attracted about $14 billion in cash this year through April, according to data compiled by fund administrator Citco. And quantitatively driven diversification strategies—with names like risk parity and factor investing that seem designed to resist easy marketing—are gaining fresh attention.

Also on the hot list: buffer funds, a breed of ETF that employs stock options to limit a portfolio’s downside while capping the upside. And there’s been a revival of once-dormant techniques such as portable alpha, a way of using borrowed money to try to sprinkle some idiosyncratic bets on top of exposure to the market index. “There’s not as big an opportunity cost in introducing diversification and having to sacrifice that core stock exposure,” says Corey Hoffstein, chief investment officer of quantitative money manager Newfound Research, speaking of portable alpha. This year “has been about making diversification look great again,” says Dan Villalon, principal at AQR Capital Management LLC, a Greenwich, Connecticut-based manager of quant and hedge fund strategies. “We see it in every dimension: We see in equity markets. We see it in asset classes. We see it in alternative strategies.” AQR has long warned that US dominance of equity markets is at risk and that investors are underdiversified. Of course, the push to spread out risks comes with big pitfalls. In an age of artificial intelligence advances, there’s a constant fear of missing out on another Big Tech rally. Already, chipmaker Nvidia Corp.—a key member of the Mag 7—has roared back from its April depths, notching a near-30% return over the past month. Moreover, the leverage used in many market-defying strategies can easily backfire. And many of these techniques layer on cost and are poorly understood by clients. Villalon, for example, has been an outspoken critic of buffer funds. AQR has published research arguing that a simple mix of stocks and safe Treasury bills is a better bet for those seeking downside protection.Christine Benz, director of personal finance and retirement planning at the research firm Morningstar Inc., likewise argues that most individual investors can do just fine with a low-cost, do-it-yourself version of diversification. Just own a broad of mix of different assets. “I would argue that the basic principles of asset allocation are delivering beautifully this year—the vanilla strategy of holding cash and bonds to cushion against equity losses has been a winning one. Diversifying equity exposure globally has also helped.”And there’s still a large chorus warning against giving up on stocks in the world’s most dynamic economy. “With ever more complex investment products becoming available to retail investors, history keeps proving that a simple, diversified portfolio of large-cap stocks wins out,” says Liz Miller, president of Summit Place Financial Advisors LLC. “Alternative and structured investments can appeal to investors’ fears of market volatility, but long-term growth comes from investing appropriately in equities and staying committed throughout market turmoil.”

Still, investors seem to have widened their view of the range of outcomes. For Vineer Bhansali, CIO and founder of LongTail Alpha LLC, it’s been the busiest time since the onset of the pandemic. LongTail’s name refers to the rare but extreme events that can occur at both ends of the bell curve of possible market outcomes; the firm sells strategies that hedge the really bad ones but often suffer losses in a bull market. Bhansali says clients are calling all day with concerns about high exposure to US stocks and market patterns breaking down. Recently, a $24 billion Australian pension fund allocated to the strategies. “Everybody has a lot of US assets,” Bhansali says. “Trade, the reason this whole thing is happening, is a global phenomenon. Everybody gets pulled into it. Everybody’s concerned about what happens to their old global asset allocation.”

Source: Bloomberg Europe

For decades, the US regulators who work to keep inflation down and economic growth up, ensure markets are competitive and transparent, safeguard elections, and protect workers, consumers and investors have operated largely free of political influence. The Federal Reserve, the Securities and Exchange Commission (SEC), the Federal Election Commission, and more than a dozen other regulatory agencies have a remit to make and enforce rules under leaders who are protected from being removed by the president. Their independence is meant to guarantee that their decisions serve only one master: the public.

President Donald Trump wants to upend that arrangement. The president and his allies are trying to exert control over these independent federal agencies, which they view as an extraconstitutional “fourth branch” of government. Trump has issued an order that aims to consolidate regulatory oversight in the White House and has fired several commissioners of independent agencies — moves with no precedent in modern history.

The fired regulators have argued their removals are a breach of long-settled law. But the Supreme Court’s conservative majority appears sympathetic to Trump’s consolidation of authority over the regulators: On May 22, the justices temporarily blocked a lower court from overturning the firings of members of the National Labor Relations Board (NLBR) and the Merit Systems Protection Board (MSPB). The decision sets up a reckoning over the legal foundation of regulators’ independence, with sweeping implications for the government’s role in the economy and society.

In its broadest sense, an independent agency can mean any executive body that doesn’t report to a cabinet secretary. These include non-regulatory agencies like the Social Security Administration, the National Aeronautics and Space Administration or the Central Intelligence Agency.

But Trump is particularly focused on gaining influence over independent agencies that meet the narrower definition of holding regulatory power over markets, utilities, the workplace and other parts of the public sphere. These include financial regulators such as the Fed, the SEC and the Commodity Futures Trading Commission, and others with important enforcement functions such as the NLRB, the Nuclear Regulatory Commission, and the Occupational Safety and Health Review Commission. Though housed in the executive branch, independent regulators often have quasi-judicial and quasi-legislative functions: They don’t just execute rules, but also enforce and make them.

Congress has come up with a number of mechanisms to insulate these bodies from political pressure. They’re often led by a director with tenure protection or multi-member boards with staggered terms of between five and 14 years. Those boards must consist of members from more than one political party. And though directors and commissions are generally appointed by the president and confirmed by the Senate, the president typically can fire board members only “for cause” — neglect of duty or malfeasance — not at will.

In many cases, agencies are even more removed from political influence — or, some would say, accountability — by having budgets that aren’t subject to annual congressional spending bills. The Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA), for example, are funded by charging deposit insurance premiums to banks and credit unions, and the Fed and the Consumer Financial Protection Bureau (CFPB) get income from the interest on assets held by the Fed.

In the 19th century, corruption was rampant in the railroad industry. Companies often bought the approval of politicians and newspaper owners by offering them free passes and discounted stock. Railroads used their monopoly power to set high rates.

The Grange movement, a collection of rural and agricultural interests harmed by the high railroad rates, pressed Congress to do something. And so in 1887, Congress passed the Interstate Commerce Act, which established the Interstate Commerce Commission to regulate the industry. It was the first federal regulatory agency.

Though it was originally created inside the Interior Department, the ICC had many of the hallmarks of the independent regulatory agencies that we still see today: Instead of a single director, it was headed by a board of five commissioners appointed by the president and confirmed by the Senate. Those board members had staggered, six-year terms, so the president couldn't replace them all at once. They could only be removed for “inefficiency, neglect of duty, or malfeasance in office.” And no more than three commissioners could be from the same political party.

Other regulatory agencies controlled by boards and commissions with staggered terms — the Federal Trade Commission, and Federal Reserve Board, the Federal Communications Commission, and more — followed in the decades after.

In a unanimous 1935 decision in Humphrey’s Executor v. United States, the Supreme Court said the president didn’t have the power to fire members of the FTC for solely political reasons. The landmark decision was one of several 20th century rulings that affirmed the independence of this class of agency.

Trump’s attempts to establish more control over regulators have two prongs of attack: firing personnel and changing policy.

The president has dismissed several Democratic commission members of independent agencies, who are historically seen as having protection across administrations. Those included members of the NLRB, the MSPB, the FTC, the NCUA, the Consumer Product Safety Commission (CPSC), and more. Several have challenged their dismissals in court, citing Humphrey’s Executor. Some agencies were left without a quorum to function after the firings.

In a Feb. 18 executive order, Trump aimed to bring rulemaking by independent agencies under the sway of the White House. He ordered agencies to establish a White House liaison position and submit all proposed regulations to the White House’s Office of Information and Regulatory Policy for approval. That office had previously exempted independent agencies from review.

More than two dozen lawsuits have directly challenged or cited Trump's executive order, according to data compiled by Bloomberg Law. At least one agency, the CPSC, defied the order by moving to propose a rule on lithium-ion batteries without getting White House signoff. Trump fired the three Democratic members of that commission on May 8, and on May 21, they sued, arguing that he had exceeded his authority. (The two remaining members of the commission — both Republicans — later voted to withdraw the rule proposal.)

Among other agencies, the order names the Federal Election Commission, which regulates campaigns for federal office, as subject to this new oversight. The Democratic National Committee went to court, calling the order an “unprecedented assertion of presidential power.”

Trump is also disrupting independent agencies in the same ways that he’s singling out bureaucrats directly under his control in the cabinet-level departments. With an April 18 executive order, Trump intended to reclassify about 50,000 career civil servants as positions he can hire and fire, and Elon Musk’s Department of Government Efficiency hasn’t spared regulators in its search for ways to cut costs.

Trump has made threats — which he later recanted — to fire Federal Reserve Chairman Jerome Powell. On May 29, at their first in-person meeting since the inauguration, Trump told Powell he thought it was a mistake not to lower interest rates, the White House said.

The president’s February executive order, which put the Fed under OIRA’s regulatory jurisdiction, specifically carved out an exemption for Fed functions related to the conduct of monetary policy. Instead, it applies only to functions “directly related to its supervision and regulation of financial institutions.”

Economists generally agree that political influence on the Fed would impair investor trust. Trump’s Treasury secretary, Scott Bessent, said in April that the Fed’s independence in setting monetary policy was a “jewel box that has got to be preserved.”

But as Peter Shane, who teaches law at New York University, argues, Trump is still walking a tightrope with his executive order. Ultimately, the only way to enforce the regulatory policy is to oust Fed officials who don't comply — and many of those same officials are also responsible for monetary policy. “Members of the Fed cannot be half-fired, half-empowered,” he said.

“The Constitution vests all executive power in the president and charges him with faithfully executing the laws,” Trump’s February executive order begins. “However, previous administrations have allowed so-called ‘independent agencies’ to operate with minimal presidential supervision. These regulatory agencies currently exercise substantial executive authority without sufficient accountability to the president, and through him, to the American people.”

That language is a succinct distillation of the so-called Unitary Executive Theory. That school of constitutional interpretation — which has been growing in conservative legal circles since Ronald Reagan’s time — holds that the Founders specifically intended the president to have broad authority over the bureaucracy. The theory is the basis for efforts from Office of Management and Budget director Russell Vought and other administration officials to dismantle the federal workforce and bring independent agencies under White House control. The CFPB, for instance, is operating without a full-time director and instead is being run by Vought, who has said the agency, created in the aftermath of the Great Financial Crisis and a longtime target of conservatives, would conduct only the minimum functions required by law.

Proponents often point to a quotation from James Madison, the fourth US president: “If any power whatsoever is in its nature Executive, it is the power of appointing, overseeing, and controlling those who execute the laws,” Madison, then a House representative, said in 1789.

Project 2025, the manifesto for a more muscular presidency authored by Vought and other conservative thinkers, urged Trump to directly challenge the Humphrey’s Executor decision. On Feb. 12, the Justice Department stated that it would encourage the Supreme Court to overturn it.

In recent years, the court’s conservative majority has indicated a willingness to give the president the power to fire leaders of independent agencies — with the exception of the Fed.

Recent Supreme Court decisions have already limited the scope of Humphrey’s Executor: In 2010, the court weakened for-cause removal protections, and in 2020, in Seila Law LLC v. Consumer Financial Protection Bureau, it found that the CFPB’s single-director structure, with for-cause removal protection, was unconstitutional, while agencies with a multi-member board structure are constitutional. Critics said the distinction in the latter case was not based on a coherent legal principle and was rather an arbitrary attempt to preserve the independence of the Fed, which is led by a board of seven governors, while limiting the independence of other agencies.

In May, the court ruled that fired NLRB member Gwynne Wilcox and MSPB member Cathy Harris can’t return to their jobs as their legal challenges continue. The majority wrote that Trump could remove the officials “because the Constitution vests the executive power in the president.” However, In its decision, the court said the ruling wouldn’t apply to the Fed because it’s a “uniquely structured, quasi-private entity.”

Writing for three liberal justices in dissent, Justice Elena Kagan said the majority had created “a bespoke Federal Reserve exception” to reassure markets.

After the case moves through lower courts, it may return to the Supreme Court.

Proponents have long argued that independence can contribute to better, more impartial decision-making driven by expertise. This is important not only for highly technical subjects – interstate electricity transmission and telecommunications, for example – but also for finance. Political interference in financial regulation may lead to greater unpredictability, as regulatory philosophies shift based on which party controls the White House, or undue influence by moneyed interests. “Time and again in the past decades, national and regional financial crises have been deepened and worsened by political interference in financial sector regulation and supervision,” the International Monetary Fund found in a 2004 review.

After the Supreme Court allowed Trump’s firing of Wilcox and Harris to temporarily stand, Jefferies Group LLC warned in a note that markets were hardly reassured by the exception for the Fed. “The court’s order suggests they’ll likely support expanded presidential power in upcoming decisions, giving credence & support to the Unitary Executive Theory,” the note said. “We believe expanded presidential power is bearish for risk assets & will further erode the concept of American exceptionalism in markets.”

In her dissenting opinion in Seila Law, Kagan rebutted Justice Clarence Thomas's assertion that \

“So year by year by year, the broad sweep of history has spoken to the constitutional question before us: Independent agencies are everywhere,” she wrote.

Source: Bloomberg Europe