President Trump says a U.S. and China agreement is 'done'; Inflation in line with expectations; Small-business sentiment ticks higher; Reader comment on Brown-Forman; A flurry of stock trades from lawmakers amid the 'Liberation Day' chaos

1) Stocks popped higher this morning thanks to two market-moving pieces of news...

First up, overnight the U.S. and China appeared to have reached some kind of a trade deal.

As you would expect, President Donald Trump posted on his Truth Social platform this morning to make the announcement.

In his post, he said that China would supply rare earth materials and magnets up front. He also stated that students from China would be able to attend U.S. colleges. And on the tariff front, he said that the U.S. would set a "total of 55% tariffs."

Here's his full post:

And this new Wall Street Journal article has more details on the trade negotiations: Trump Says Deal Restoring China Trade Truce Is Done. Excerpt:

Trump's post filled in some details of a hastily arranged framework negotiated over two days in London this week, which officials said would get the trade truce back on track and ratchet down tensions between the world's two biggest economies.

Representatives from the U.S. and China said the framework would essentially restore a pact they agreed to in Switzerland last month, a deal that saw both sides lower tariffs and was premised in part on Beijing's promise to speed critical mineral export licenses while negotiators kept talking.

This is another example of what I've been saying all year: Our "Art of the Deal" president doesn't want to tip our economy into a recession... so he's going to make deals to avert this.

2) In another piece of positive news, the U.S. Bureau of Labor Statistics reported that inflation edged up to 2.4% year over year in May (as expected), with the closely watched core inflation index coming in at 2.8% (slightly slower than expected).

Here's the WSJ with more: Muted May Inflation Defies Tariff Fears. Excerpt:

For months, businesses have warned that they will raise prices in response to Trump's tariffs, and economists had expected tariff-related price hikes for items such as cars and clothing to show up in the May numbers of the consumer-price index.

Wednesday's report doesn't provide definitive evidence this happened, with prices of cars and clothing declining rather than rising. The report will raise questions over when a widely anticipated bump in prices this summer, expected by the Federal Reserve and private-sector economists, will materialize – and whether it will be as stiff as some have warned.

I continue to believe that inflation will remain muted, with upward pressure from tariffs offset by slower economic growth due to the same tariffs...

My view is shared by consumers and small businesses, as shown by the charts below (courtesy of Charles Schwab Chief Investment Strategist Liz Ann Sonders)...

Here's one from Sonders' post on social platform X yesterday showing that the five-year consumer expectations for inflation fell to the lowest level since January 2024:

And this one – from another one of her posts on X yesterday – shows that small businesses' concerns about inflation have declined sharply:

3) Along the same lines, Bloomberg reported that small-business sentiment has ticked higher. Here's the article with more details: US Small-Business Sentiment Increases for First Time This Year. Excerpt:

Sentiment among US small businesses rose in May for the first time in 2025 as firms grew more upbeat about the economic outlook.

The National Federation of Independent Business optimism index climbed 3 points to 98.8, the group said Tuesday. Seven of the survey's 10 components improved, led by better expectations for business conditions and real sales.

In this chart from the article, you can see the uptick:

4) I'm grateful to my readers for regularly sharing valuable insights about companies I write about...

The latest example is George R. In response to yesterday's e-mail, he sent me these thoughts about changes Brown-Forman (BF-B) is making to its distribution system, which he says may be impacting sales:

You mentioned three factors contributing to sales declines at Brown-Forman, but a fourth deserves consideration.

They recently changed a lot of distributors around the country, for the most part aligning with Breakthru Beverage in several states, but notably here in California they left Republic National Distributing Company ("RNDC") and aligned with Reyes Holdings, which is a beer distributor. Tito's Vodka also left RNDC earlier this year and as a result RNDC is exiting the California market on Sept 2nd – putting probably over 1,000 employees out on the streets. It's a sad demise for this company.

When a brand as large as Jack Daniel's moves distribution, there are inevitable challenges in the marketplace. True, the customer will still get their Jack Daniel's so ultimately the consumer isn't concerned with these issues, but it can still have an impact. It may be a temporary hiccup – but with a brand as large as Jack Daniel's, a "hiccup" can still impact several thousand cases...

My initial reaction is that this makes me more bullish on the stock, as changes in the distribution system are likely to have only one-time effects. But I'll investigate further...

As I noted yesterday, my team and I at Stansberry's Investment Advisory will dig deeper into Brown-Forman. And if the stock is compelling enough to recommend, as always, our subscribers will be the first to know.

(If you aren't an Investment Advisory subscriber already, learn how to become one by clicking here.)

5) A front-page story in today's WSJ highlights a total outrage that I've been writing about for years: How our political leaders use inside information to profit from stock trades.

Here's the article: Lawmakers Traded Stocks Heavily as Trump Rolled Out 'Liberation Day' Tariffs. Excerpt:

As markets tanked in the wake of President Trump's "Liberation Day" tariffs in early April, members of Congress and their families made hundreds of stock trades, shining a spotlight on a controversial practice that some lawmakers have pushed to ban.

From April 2, when Trump launched the sweeping tariffs, to April 8, the day before he paused many of them, more than a dozen House lawmakers and their family members made more than 700 stock trades, according to a Wall Street Journal analysis of disclosure filings.

Take a look at this chart from the article:

In fairness, many of these trades appear to have been made by financial advisers, and there was a surge in overall trading during this period of high volatility. But the optics here are terrible.

Some kind of ban on trading of individual stocks by our elected representatives might not be a bad idea – thus limiting them to broad mutual funds or index funds.

Best regards,

Whitney

P.S. I welcome your feedback – send me an e-mail by clicking here.