Silver banana goes to…

In this issue of the peel:

• 🙌Treasury Secretary Scott Bessent expects a “de-escalation” between the US and China in the near future.

• 📈 Markets clawed their way back on a potential trade deal in the works.

• 😅The IMF slightly cut its 2025 US growth outlook amid recent trade tensions.

Market Snapshot

Banana Bits

• Trade tensions could be simmering very soon, according to Treasury Secretary Bessent.

• The IMF slashed its US growth target to 1.7% from 2.8%, citing rising costs and potential recession.

• NYC’s most expensive home ever hits the market for a chill $110 million. Maybe next year’s bonus can cover it.

• Senator Rubio is planning a massive overhaul of the entire State Department.

• Gold is breaking away from being that boring investment your grandfather owned and surging to record highs.

• Airbnb is doing away with sneaky fees, vowing to list the total price on its website moving forward.

• Tesla reported a 20% drop in auto revenue and short sellers got a rare W, racking up $11 billion in profits over the last couple of months.

The Daily Poll

Previous Poll:

What should the Fed prioritize right now?

Crush inflation, no mercy: 28.6% // Cut rates before the economy breaks: 33.1% // Hold steady and pray: 38.3%

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Macro Monkey Says

US Gets Downgraded   

The International Monetary Fund (IMF) has significantly downgraded its 2025 US economic growth forecast to 1.8%, a pretty sharp decline from the previous estimate of 2.7%. This revision is attributed to the potential economic uncertainty resulting from a change in tariff policy.

The IMF's latest World Economic Outlook highlights that the global economy is projected to grow by 2.8% in 2025, down from the earlier forecast of 3.3%. The report highlights that the US tariff policy has a far-reaching impact and the potential to disrupt global supply chains and increase the cost of goods. ​

Inflation in the U.S. is expected to rise to 3% by the end of 2025, driven by higher import costs due to the tariffs. The IMF warns that this inflationary pressure, combined with slowing growth, could lead to stagflation—a period of stagnant economic growth and high inflation. ​

The probability of a U.S. recession has increased to 40%, up from 25% in October, according to the IMF. This heightened risk is attributed to reduced business investment and consumer spending amid the ongoing trade tensions. ​

IMF Chief Economist Pierre-Olivier Gourinchas emphasized the need for policy clarity, stating that the current uncertainty is causing businesses to delay investment decisions. He also highlighted that while protectionist measures aim to protect domestic industries, they often lead to unintended economic consequences. 

The Takeaway?

The IMF's revised forecasts serve as a stark warning about the potential economic fallout from escalating trade tensions. 

As tariffs disrupt global trade and increase costs, both the U.S. and global economies face heightened risks of slower growth and higher inflation. Policymakers are urged to seek resolutions that promote stability and sustain economic expansion.

Career Corner

Question

Hi, I was wondering if in interviews for IB internships, the interviewers ask questions about Excel? Do we need to know Excel well and how to build models or DCFs in Excel for interviews?

Answer

Unlikely you'll get a question about Excel specifically. I would focus more on understanding the concepts behind modeling, DCFs, LBOs, etc.

You may get a case study, in which case Excel work and speed will matter, but it is unlikely in a face-to-face interview.

Head Mentor, WSO Academy

Check out WSO Academy!

What's Ripe

Solar Stocks (CLSK) 17.4%

• ​Solar stocks fared well yesterday as the US finalized tariffs as high as 3,521% on solar panel imports from several Asian countries. 

• The steepest tariffs target Cambodian suppliers due to non-cooperation, while companies like Jinko Solar and Trina Solar face duties ranging from 41% to 375%, depending on the country of origin.

CoreWeave (CRWV) 8.7% 

• After struggling a bit post IPO, Nvidia-backed CoreWeave is getting a boost from mostly bullish analyst initiations on the stock. ​Wall Street brokerages are highlighting their strong position in the AI infrastructure market. 

• Analysts have set price targets ranging from $40 to $55, acknowledging both the company's potential and the risks associated with its concentrated customer base and the current volatile market conditions.

What's Rotten

Northrop Grumman (NOC) 12.7%

• ​Northrop Grumman dropped an all-around “L” of a report. The defense company had a 49% drop in first-quarter profit, largely due to a $477 million charge from higher manufacturing costs on its B-21 Raider stealth bomber program. 

• Revenue also fell 7% year-over-year to $9.4 billion, missing analysts' expectations of $9.9 billion, and adjusted earnings per share came in at $6.06, below the projected $6.26. 

• Despite these setbacks, the company reaffirmed its annual sales forecast, anticipating improved profitability as B-21 production scales up.

Halliburton (HAL) 5.6%

• Sometimes you’ve gotta take the good with the bad, but Haliburton investors decided they would take neither. The company reported first-quarter revenue of $5.4 billion, surpassing analyst expectations, but its net income dropped sharply to $204 million from $606 million a year ago. 

• The decline was primarily driven by a 12% year-over-year decrease in North America revenue, attributed to reduced shale activity and tighter capital budgets among operators. 

Thought Banana

Green Day for the Market

We haven’t seen a nice day in the green for a while, and it hasn’t been common recently for markets to pop off because of a de-escalation of the trade war instead of a flare-up. But Scott Bessent might just be the man of the hour. 

In a private investor meeting hosted by JP Morgan in Washington D.C., Treasury Secretary Bessent offered what could be the most calming words markets have heard in months: he sees the ongoing situation “unsustainable” and expects a “de-escalation” coming in the U.S.-China trade tensions. 

And boom—Wall Street collectively breathed a sigh of relief loud enough to shake the S&P 500 into a 2.6% rally.

He clarified that the U.S. isn’t trying to completely cut off economic ties with China (a relief, since most of your electronics still say “Made in China”). Instead, the goal is a "big, beautiful rebalancing"—yes, that’s the actual phrase used. 

The idea is to revitalize U.S. manufacturing and encourage Chinese domestic consumption, which honestly sounds like a win-win to investors, causing retail traders to buy the dip and hedge funds and other institutional money managers to cover their shorts.

NASDAQ led gains, up 2.7%, with the S&P up 2.5%. And I guess we have to mention that boomer index (The Dow), which was up 2.6% as well.

Still, some parts of the market are continuing to bet on further tariffs. Solar stocks, for example, ripped yesterday as the government is finalizing tariffs of up to 3,500% on solar panel imports from some Southeast Asian countries. 

This should make US solar products more competitive. Stocks like First Solar, Sunnova, Enphase, and other US solar companies ripped on the news. 

The Takeaway?

Scott Bessent may as well have waved a magic wand, because he spoke life into the stock markets. 

While no official U.S.-China trade talks are on the books just yet, the vibe is shifting, and investors are picking up what Bessent is putting down. 

Just remember, even if this is the beginning of a beautiful friendship, international diplomacy is more of a marathon than a sprint. But hey, sometimes a few kind words and some tariff fatigue are all it takes to spark a rally.

The Big Question: Can sweet words and a “big, beautiful rebalancing” actually soothe a trade war—or are investors jumping the gun (again)?

Banana Brain Teaser

Previous

Seed mixture X is 40% ryegrass and 60% bluegrass by weight; seed mixture Y is 25% ryegrass and 75% fescue. If a mixture of X and Y contains 40% ryegrass, what % weight of the mixture is X?

Answer: 33.33%

Today

Of the 150 houses in a certain development, 60% have air-conditioning, 50% have a sun porch, and 30% have a swimming pool. If 5 of the houses have all the 3 of these amenities and 5 have none of them, how many of the houses have exactly 2 of these amenities?

Send your guesses to [email protected]

How Would You Rate Today's Peel?

Happy Investing,
Chris, Vyom, Ankit & Patrick

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