‘BIG THING’: China AGREES to buy major ‘PHYSICAL COMMODITY’ from the US

Añadido: 2026-05-15

[00:00:02]Welcome back. Markets this morning are lower. Take a look at futures indicating a triple digit decline at the start of trading this morning. The Dow down 297 right now. That's twothirds of a percent. The NASDAQ is down one and a half% right now. A decline of about 411.

[00:00:15]This after a major melt up these last couple of months. And yesterday once again a record finish uh with the uh president's historic trip to China with Xi Jinping. The Dow was up better than 300 points. It finished back above 50,000 with tech stocks leading the way after Cisco posted strong earnings and the announcement of the Nvidia H200 chips now being sold to 10 Chinese companies. Uh the Nasdaq finished at another record high. It was up 232 points at 26,635.

[00:00:43]And the S&P 500 also in record territory this morning up 57 points at 7501.

[00:00:50]7,501 on the S&P 500. This market is nonstoppable. The president departed China earlier this morning. He wrapped up his two-day summit, this highstake summit, saying that he and Xi Jinping made quote unquote fantastic trade deals for China to uh potentially buy US oil.

[00:01:05]China committing to buying soybeans and Boeing airplanes, among other things. Xi Jinping, however, still warned President Trump right at the outset of the meeting that mishandling Taiwan could lead to an extremely dangerous situation between the US and China. Joining me now is CFR research director Ken Leon. Ken, good to see you. Thank you so much for being here. And I know we're coming off of a very strong earning season, but let me get your reaction to all of this, including the China chip uh trip, rather. How how does this fit into your expectations for corporate earnings?

[00:01:37]>> Well, it's great for besides corporate earnings, it's it's really hard to find the bare case or a doomsday scenario, especially after uh a great trip and also what could happen in the Middle East with Iran. So I think uh what the market is looking at is really anticipating that the tail risk from a prolonged war with Iran uh may not be in the cards and uh what we're seeing as a risk on environment. To your question about earnings, u 85% had earnings beat and Maria, we have spoken before about this market in terms of not moving the needle to speculative is the ability to earn through and we're seeing upward earnings uh revisions which give strategists more comfort about the valuation of the overall market or the S&P 500. Yeah, I mean it's a great backdrop and don't forget the president's big beautiful bill had a whole host of things in there that are helping corporate earnings here with all those write offs in terms of uh the tax changes in the tax code. But I was surprised to to to not hear expectations of higher expenses from corporate America, right? I mean, look where oil prices are this morning. They're higher once again this morning. And President Trump said that he and Xi Jinping agreed that Iran uh should never be able to have a nuclear weapon. even u claiming that he wants to help the president to end the conflict. The president said that China made an agreement to purchase American oil and the price of oil is at 10455. U the president said that he expects them to carry through on this.

[00:03:10]He spoke with Sean Hannity last night.

[00:03:12]Watch this.

[00:03:15]>> We're going to make a deal on he's they've agreed they want to buy oil from the United States. They're going to go to Texas. we're going to start sending Chinese ships to Texas and to Louisiana and to Alaska. And I think that was another thing that was agreed to. That's a big thing. So I told him, I'd love to see you buy oil from Texas and Louisiana, from the United States, Alaska. We've got so much of it. And he said he likes the idea. Like to talk about that. I think it'll happen.

[00:03:44]>> So we'll see if it actually u happens, Ken. But that would be a big victory on the president's side given the fact that you know Xi Jinping has been buying oil at below market uh prices from Iran buying 90% of their oil exports. If if they buy oil on the open market from Louisiana and Texas they'll be playing paying market prices with the dollar Ken.

[00:04:05]>> Yeah, that's right. But you know oil is a physical commodity and it's going to take time for these markets uh really to stabilize. Uh so the tail risk that economists are going to be watching is really uh its impact on the cost of living, input costs for manufacturing, something China is very keen on even though they have reserves. And we'll see that you know percolate in areas like fertilizer and other key raw materials.

[00:04:31]But overall, you're right. Um, if we have China as a trade partner, not only just for oil, but the ability maybe where President Trump uh eases on tariffs, that can open up tremendous trade that we never had before.

[00:04:47]>> Ken, look at this market. We've got the numbers on the screen right now.

[00:04:49]NASDAQ's up 28% since the end of March.

[00:04:52]The Dow industrials up uh 10.7% since March 31st. The S&P up 18%. What a what a market to go public in, huh? I mean, look at AI company Theabus yesterday, surging in the NASDAQ debut. Market cap now $95 billion after posting one of the largest US tech IPOs in years. The chipmaker raised $5.5 billion. It sold 30 million shares. It closed up 68%. And we know that a whole host of others are not far behind. SpaceX uh is likely going to go public soon. It could reportedly release disclosure documents as soon as next week. That means that deal is coming. It's going to be the largest deal we've ever seen. chat, GPT maker, OpenAI, and Anthropic also not far behind, aiming for 2026 IPOs. What's your sense of uh IPOs and the impact uh on on this market this year? I mean, if you've got a firmer market with with the NASDAQ up 28% since the end of March with companies, this is the this is a ripe period to go public, is it not? And do you think that those three biggies um mean that others will be uh behind and and and actually also use this opportunity to raise funds and go public?

[00:06:02]>> Yeah, that's a great lead and something I personally watch very closely and it's bigger than these three IPOs is if we have uh the IPO market open, there's $1 trillion of private equity investments uh that are sitting there trying to find a way to monetize. you either sell the business or you go public. Opening up the markets would be tremendous uh for private equity firms and good for Wall Street. So again, uh these are highprofile IPOs. These are real businesses. They're not speculative. And um you know, again, to my first point, it's hard to construct the doomsday or bare case scenario right now.

[00:06:42]>> Yeah, I agree with that. The IPO market is open. Thank you very much, Ken. It's good to see you this morning. Thank you, Ken Leon joining us on the macro markets this morning. Stay with us. We'll be right back.