Trump’s Tax Bill Has Nasty Surprise In SALT Fine Print For Some Rich Americans

Earnings season is finally over, and for investors one thing is certain: Corporate executives and Wall Street analysts are deeply concerned about the “uncertainty” sparked by President Donald Trump’s combative trade plans.

“As we look to the rest of the year, there is still uncertainty related to tariff levels, timing and countries involved in addition to the potential actions of others in the industry, as well as the potential reaction of American consumers,” Corie Barry, chief executive officer of Best Buy Co., said during the company’s earnings call Thursday.

She’s hardly alone. Deckers Outdoor Corp.’s chief financial officer said last week that the company can’t give full-year guidance due to “macroeconomic uncertainty related to global trade policy.” And AT&T Inc. is leaving flexibility in its balance sheet so it can respond to “a competitive environment or any uncertain things that occur in the macro environment,” CEO John Stankey said.

Since the beginning of April, the words “uncertain,” “uncertainty” and “uncertainties” have been used about 3,100 times during companies’ earnings calls and other events, according to an analysis of transcripts compiled by Bloomberg. That’s the most in any quarter based on records going back more than two decades, topping even the height of the global financial crisis in 2008 and the beginning of the Covid-19 pandemic in 2020.

The level of uncertainty is rising as the courts challenge Trump’s sweeping global tariffs. On Wednesday, a three-judge panel for the US Court of International Trade declared that the Trump administration had wrongly invoked a 1977 law in imposing levies on dozens of countries and that the move was therefore illegal. Then on Thursday, a federal judge in Washington ruled that a number of Trump’s tariffs on China and other countries were unlawful.

Finally, on Thursday afternoon a federal appeals court temporarily paused the Court of International Trade’s ruling on Trump’s tariffs so it can weigh a longer lasting stay sought by the government. For its part, the Trump administration has vowed to appeal the decision to the Supreme Court if necessary.

All of this lack of clarity on trade and the impact on the economy is weighing on stock-market investors, even as the S&P 500 Index has rebounded from its April lows and is now less than 4% from the all-time peak it hit in February.

“It’s really hard to feel confident that we’re going to surge higher to record highs with this overhang,” said Mark Hackett, chief market strategist at Nationwide.

Meanwhile, a measure of chief executives’ confidence has plunged to the lowest level since 2022. More than 80% of executives said they expected a recession within the next year-and-a-half, according to a May survey by the Conference Board in collaboration with the Business Council.

On Goldman Sachs Group Inc.’s April 14 earnings call, CEO David Solomon said a lack of clarity had constrained clients’ ability to make “important” decisions.

“This uncertainty around the path forward and fears over the potentially escalating effects of the trade war have created material risks to the US and global economy,” he said. “We are hopeful that feedback from companies large and small, institutional investors and ultimately consumers will support an approach that will lead to greater economic certainty and long-term growth.”

Six weeks later, US trade policy is still in flux. Countries are racing to strike deals before Trump’s tariff pauses end, while the president keeps rattling markets with threats on social media.

Meanwhile, the US economy shrank in the first quarter, but other economic data has largely held firm. Companies have by and large kept capital spending plans intact despite fears of a pullback, which is encouraging to investors. However, for corporate executives, the risk of the unknown remains the biggest fear.

“In the longer term, the secondary effects of tariffs, like impacts to global GDP growth and energy demand, are much more complex and remain a source of uncertainty,” Exxon Mobil Corp. CEO Darren Woods said Wednesday. “We’re staying focused on the things we can control.”

Source: Bloomberg Europe

As traditional banks grow more curious and increasingly involved in crypto, not everyone’s celebrating the shift. On Friday, European Central Bank (ECB) policymaker and Bank of Italy Governor Fabio Panetta raised a red flag.

Panetta sees serious risk. His message was clear: banks diving into digital assets could end up paying a price in customer trust. And if that trust cracks, it’s not just crypto that takes the hit - it’s the entire financial system.

So, what’s got the ECB sounding the alarm? And why now, when crypto adoption seems more mainstream than ever? Let’s break it down.

The Confidence Risk Banks Can’t Ignore

At the Bank of Italy’s annual report presentation, Panetta made his concerns public. He warned that as more banks strike deals with crypto firms, they risk confusing customers who might assume these products come with the same safeguards as traditional banking.

"Crypto-asset holders might not fully understand their nature and conflate them with traditional banking products, with potentially negative repercussions for confidence in the credit system should losses occur," Panetta said.

To be fair, it’s not just a hypothetical problem. If people lose money thinking their bank-backed crypto is as safe as a savings account, the fallout could do real damage to public confidence.

Europe’s Banks Are Already in Deep!

Despite the risks, some of Europe’s biggest financial institutions are already in the game.

Italy’s Intesa Sanpaolo made a splash earlier this year when it bought one million euros worth of Bitcoin. CEO Carlo Messina called it a “test,” but the move was just one step in a broader crypto strategy. The bank set up its own digital asset trading desk in 2023 and is now handling spot crypto trades.

Meanwhile, over in Spain, Santander is reportedly planning a deeper crypto push. According to Bloomberg, the bank is considering launching a stablecoin and offering crypto access to retail users through its digital platform.

These developments are exactly the kind Panetta is watching closely. They reflect the increasing integration between traditional banks and the crypto world - a shift that’s happening faster than regulators may be ready for. Something to think about.

Stablecoins and Big Tech: A Bigger Threat?

Panetta didn’t stop at crypto-assets. He also called out stablecoins, warning that their growth could undercut traditional payment systems especially if big tech firms decide to throw their weight behind them.

"In the absence of adequate regulation, their suitability as a means of payment is doubtful, to say the least," he said.

His concern is that massive tech platforms could promote stablecoins on a global scale, sidelining central bank money in the process.

Europe’s Strategy: Compete With Crypto, Not Ban It

Still, Panetta isn’t calling for a crackdown. Instead, he sees the solution in catching up - not clamping down. That’s where the European Central Bank’s digital euro project comes in.

“What is needed is a response that matches the ongoing technological transformation,” he said. “The digital euro project stems precisely from this need.”

In short, Panetta’s message is this: crypto’s not going away. But if banks and regulators don’t move carefully and quickly public trust could take a hit.

Source: CryptoSlate

Watching sweaty 13-year-olds lose their minds to a performance by rapper Flo Rida at a bar mitzvah for the son of a finance executive in 2023, Evan Osnos felt something in America had changed.

For decades the richest teenagers have booked big talent for private performances, a splurge disturbingly documented by the MTV reality show My Super Sweet 16. But recent years have seen a proliferation in the number of people who can “blow a hundred and fifty grand on a Thursday” to have the Foo Fighters play in their backyard, drummer Charles Ruggiero tells Osnos.

There are now more than 800 billionaires in the US, up from 66 in 1990, Osnos writes. Between President Donald Trump’s first and second inaugurations alone, the scale of their wealth more than doubled. In The Haves and Have-Yachts: Dispatches on the Ultrarich (Scribner, June 3), Osnos, a staff writer at the New Yorker, peers into these extraordinary fortunes. The collection of his 2017-2024 reporting for the magazine, with new epilogues, illuminates how America birthed a wealth disparity that has destabilized the foundations of the country and now threatens to swallow it whole.

In the wake of the first Trump election, “It was clear that the essential fault line in American politics was inequality,” Osnos writes. But he argues that this rupture was not as new as our outrage about it. The widening wealth gap had been architected by the most affluent over decades through politics, policy and moral concessions made in the name of self preservation.

The US’s 2016 obsession with a disenfranchised working class and a minimum wage that rose just 20% over 25 years was misguided, Osnos writes — or at least oversimplified. “That ignored the effects of seclusion among members of the governing class, who helped disfigure our political character by demonizing moderation and enfeebling the basic functions of the state. We — or they, depending on where you stand — receded behind gracious walls,” he says.

Indeed, Osnos notes how the actual walls around homes in Greenwich, Connecticut — a hedge fund mecca, it has one of the highest concentration of billionaires in the country — grew so high that neighboring municipalities introduced zoning restrictions to prevent the spread of these so-called “f--- you” walls to their towns.

In his final address in the Oval Office, a weary President Joe Biden issued a warning about what he saw as a looming crisis: “Today, an oligarchy is taking shape in America of extreme wealth, power and influence that literally threatens our entire democracy, our basic rights and freedoms, and a fair shot for everyone to get ahead,” he said. At Trump’s inauguration days later, “There were so many billionaires on stage that the leaders of Congress were relegated to the audience,” Osnos writes.

The question that hangs over Have Yachts is whether the US has reached a point of no return. If, as future Supreme Court Justice Louis Brandeis warned in 1913, men have amassed fortunes “so powerful that the ordinary social and industrial forces existing are insufficient to cope with it.”

In the wake of the world wars (whose role in fortifying the middle class Osnos otherwise ignores), some US millionaires took note of discontent roiling Europe. Facing backlash against the inequality forged in the Gilded Age, they “consented to reform,” directing their fortunes toward public good and agreeing to higher taxes.

Many economic corrections made under President Franklin D. Roosevelt, such as fortifying unions and raising the minimum wage, “were borne by the American ruling class,” wrote Peter Turchin in End Times: Elites, Counter-Elites, and the Path of Political Disintegration. Between 1925 and 1950, the US reduced the number of millionaires from 1,600 to fewer than 900, Osnos writes.

But what Osnos notes again and again is the sheer resiliency of fortunes, and of those who aspire to keep them.

While inequality narrowed through the 1970s in a “Great Compression,” by the 1980s the rich had gained momentum and wealth, and — tired of concessions in the name of societal reform — threw their money into politics to push for more favorable taxes, less regulation and less scrutiny. Today, he reports, America finds itself in “a golden age of tax avoidance.” Compared to the 1970s, the marginal tax rate for the richest has been slashed by more than half, and the estate tax was largely dismantled.

Last week, Republicans in Congress advanced a tax bill that includes almost $4 trillion in tax cuts, which would disproportionately benefit wealthier households, according to Yale University’s Budget Lab. The ones who pay taxes, that is. As one jilted wealth manager for a Getty heir found out, the desire to be ethical with their fortune was not as strong as the desire to shield it from taxes: “The system will always do whatever it can to preserve itself,” the wealth manager tells Osnos.

Osnos’ reporting suggests that over the past 60 years, many of the wealthiest Americans have been complicit in the modern conservative agenda, which John F. Kennedy adviser John Kenneth Galbraith in 1963 called, “One of man’s oldest, best financed, most applauded, and, on the whole, least successful exercises in moral philosophy. That is, the search for a truly superior moral justification for selfishness.” For the holy promise of lower taxes and less regulation, the rich embraced “a vision of politics that forgave cruelty as the price of profit,” Osnos writes.

A more equal distribution of wealth and more funding of public benefits such as education, health care and housing could do a great deal to ease the tensions roiling society, the book posits. But the world’s richest instead appear to be increasingly tightening their grips around swelling fortunes, withdrawing ideologically and even geographically.

Some have responded to the feelings that society is growing more unstable by preparing for the end of it. In pockets of Silicon Valley, many are known to have some kind of “apocalypse insurance,” Osnos writes — a bunker or “hideaway” in the event civilization collapses. “The fears vary, but many worry that, as artificial intelligence takes away a growing share of jobs, there will be backlash against Silicon Valley.” Reddit co-founder Steve Huffman, for example, has stockpiled motorcycles, guns and food.

Perhaps the ultimate embodiment of this desire to live separately is the yacht — peak luxury, with an ocean as your moat from the plebes. In 2022, the US lived through the “greatest boom in the yacht business that’s ever existed,” one yacht broker tells Osnos, a consequence of the rich getting much, much richer and practicing social distancing in extremis. And as the enclaves of the rich become increasingly isolated from the rest of the world and its woes, the boats are getting bigger. A gigayacht, Osnos writes, is “the most expensive item that our species has figured out how to own.”

It isn’t enough to show that you’re better than an average person, one wealthy yacht guest explains to Osnos. It’s about proving you’re of a higher status than even your peers. “You have a driver, and I have a driver. You can fly privately, and I fly privately. So, the one place where I can make clear to the world that I am in a different f---ing category than you is the boat.”

The thing about being megarich is that it feels good. Having so much while so many have naught can make you feel special. There is a subtle but necessary self-delusion required — and the jump from believing yourself worthy of an enormous fortune to believing yourself broadly superior because of it is not a hard one to make. Plus, as Osnos writes, luxury is nice. It might also be a little addictive. A support group for white-collar criminals was described to Osnos by its founder as a meeting for “guys detoxing from power and influence.”

Reporting his feature on yachts, Osnos travelled to the world’s gravitational center for ostentatious wealth: Monaco. Unable to afford a local hotel on a magazine expense budget — but versed enough in wealth to know all actual deals are reserved for those who don’t need them — he asked for help. Put up in a members-only club for visiting yachters, he says, “Inside my cabin, I quickly came to understand I would never be fully satisfied anywhere else again.”

The next morning, eating an omelet on his perfect balcony, staring down at a man on a “mid-tier” yacht in the marina, Osnos identifies a new feeling: “A surprising sensation started in my chest and moved outward like a warm glow: the unmistakable pang of superiority.”

Source: Bloomberg Europe

A junior member of German Chancellor Friedrich Merz’s cabinet proposed a new tax on internet platforms like Alphabet Inc.’s Google and Meta Platforms Inc.’s Facebook, a move that could stoke further trade tensions with the US.

Culture Minister Wolfram Weimer said in an interview with Stern magazine that digital services are on his “agenda” and he sees a tax of 10% as “moderate and legitimate,” adding that his ministry is drafting legislation.

Big US tech companies “do billions in business in Germany with very high margins and benefit enormously from our country’s media and cultural content and infrastructure,” said Weimer, a media entrepreneur prior to his appointment. “But they pay hardly any taxes, invest too little and give far too little back to society.”

The announcement of the initiative wasn’t coordinated with other ministries, according to a government official, who asked not to be identified discussing internal processes. But it aligns with Merz’s coalition agreement, which calls for a taxation of digital companies, the official added.

The proposal comes at a delicate moment in US-European relations. Alleging that the European Union engages in unfair trade practices, including value-added taxes, President Donald Trump’s administration plans to introduce a 50% tariff on all EU imports. The levies are currently on hold until July 9 to give time for a deal to be reached.

Washington is already gearing up to hit back at countries with tax regimes deemed unfair. A package of fiscal legislation that’s making its way through Congress includes a section dubbed a “revenge tax,” which would take aim at countries that levy “digital services taxes” on US companies.

The issue could overshadow Merz’s long-awaited visit to meet Trump. After starting his term earlier this month, the German chancellor has been seeking to secure a spot on the president’s schedule to discuss a range of issues from trade to support for Ukraine.

Earlier this week, Merz raised the prospect of retaliation against US tech companies if the trade conflict with the Trump administration escalates. Favorable tax treatment for US firms like Google “can be changed,” the 69-year-old conservative said Monday in Berlin. “But I don’t want to escalate this conflict. I want to solve it together.”

Weimer’s proposal could complicate efforts to defuse tensions. “We are serious” about the digital levy, he said in the interview that was published on Thursday.

The former editor of the Die Welt newspaper, which belongs to Bild-publisher Axel Springer SE, added that he had invited “the leadership of Google as well as key industry representatives” to hold discussions over alternatives to a tax, “including possible voluntary commitments.”

Source: Bloomberg Europe

Germany’s central bank is under growing pressure to consider repatriating its gold reserves from the United States, as Donald Trump’s return to the White House stokes concerns over the reliability of the Federal Reserve, according to Reuters.

Roughly one-third of Germany’s 3,352 tonnes of gold—the world’s second-largest national reserve—is stored at the Federal Reserve Bank of New York, a Cold War-era arrangement which also helped bolster U.S. ties.

But with geopolitical dynamics shifting, that decision is reportedly facing renewed scrutiny.

“Trump wants to control the Fed, which would also mean controlling the German gold reserves in the U.S.,” Michael Jaeger, vice-president of Germany’s Taxpayers Federation, told Reuters. “It’s our money, it should be brought back.”

The organization has formally called on the Bundesbank and the Finance Ministry to repatriate the gold, said Reuters.

Markus Ferber, a member of the European Parliament from the ruling Christian Democrats, echoed those concerns, telling Reuters that “Trump is erratic and one cannot rule out that someday he will come up with creative ideas how to treat foreign gold reserves.”

The Bundesbank responded that it still considers the New York Fed “a trustworthy, reliable partner,” Reuters reported. However, the article notes that public broadcasters ZDF and ARD have recently raised questions about the safety of the U.S.-held reserves.

Germany previously repatriated 300 tonnes of gold between 2014 and 2017. But with new geopolitical uncertainties, Ferber believes the Bundesbank should now prioritize diversification.

Source: Investing

The European Union has gained leverage in trade talks with the United States after a U.S. court cast doubt on the legality of Washington's "reciprocal" tariffs, EU officials said on Friday.

A U.S. federal appeals court temporarily reinstated President Donald Trump's tariffs on Thursday, a day after a U.S. trade court ruled that Trump had exceeded his authority in imposing the duties and ordered an immediate block on them.

"The uncertainty as to the legality of the 'reciprocal' tariffs certainly gives us extra leverage," one EU official close to the talks said. "The talks will continue, as formally we still look for zero-for-zero tariffs."

The EU was willing to discuss some non-trade barriers with the U.S., EU officials said, but would not touch the EU's taxation system -- such as the value added tax or digital tax -- or food safety standards.

The EU officials said the uncertainty created by the court rulings and the Trump administration's tariff policy had a positive aspect for Europe, which was seen by markets as an oasis of stability in comparison.

"This is the watchword: uncertainty. It is impossible to know what the status of the tariffs will be next week, not to mention next month," one of the EU officials said.

"If you want sane, stable, even boring, rules-based order and predictable business environment, Europe is the place for you."

Meanwhile, some European companies, worried over the uncertainty and possible major hits to their business, are holding their own talks with U.S. authorities.

Volkswagen CEO Oliver Blume said his company was holding "fair" and "constructive" talks with the U.S. government on tariffs and wanted to make further investments in the country.

Blume, speaking to German newspaper Sueddeutsche Zeitung, said that Volkswagen's main contact in Washington was U.S. Commerce Secretary Howard Lutnick.

Earlier this week, sources told Reuters that Germany's carmakers were in talks with Washington over a possible tariff deal.

The European Commission conducts all trade negotiations on behalf of the 27-nation bloc and companies, or even individual EU countries, cannot legally get a deal outside that framework.

EU-US TRADE TALKS

The European Commission would not comment on the U.S. court rulings because they were internal U.S. procedures.

But it said trade talks between Brussels and Washington would continue, with Europe sticking to its offer of mutual zero tariffs on industrial goods.

"There's no change in our approach, we proceed as planned with both technical and political meetings next week," a Commission spokesperson said.

EU Trade Commissioner Maros Sefcovic in a post on the X social media platform said he held a phone call with Lutnick on Friday.

"Our time and effort fully invested, as delivering forward-looking solutions remains a top EU priority. Staying in permanent contact," Sefcovic said on X.

More trade talks between the U.S. and the EU are scheduled for next week, on the sidelines of the OECD Ministerial Council Meeting in Paris on June 3-4.

The EU officials said the U.S. courts' rulings validated the EU view that the sweeping "reciprocal" tariffs, imposed on all goods from the EU and many other countries around the world on April 2, were unjustified.

They also said that while U.S. courts did not question Washington's 25% tariffs imposed on European steel, aluminium and cars, the rulings could also play a role in the EU's efforts to get those tariffs lowered or removed.

Source: Reuters