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In today’s big story, we’re looking at when the stock market sell-off could force President Donald Trump to drop his trade war.
What’s on deck
Markets: Ross Gerber predicted Tesla’s stock crash. Now he’s doubling down.
Tech: After 10 weeks of Amazon’s full RTO, some employees feel energized. Others quit.
Business: State and local governments across the US are looking to adopt their own DOGE.
But first, when is enough, enough?
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The big story
Breaking point
Getty Images; Jenny Chang-Rodriguez/BI
When will the losses become too steep to ignore? It could be soon.
Trump’s unflinching pursuit of his protectionist agenda has come at a cost: The S&P 500 officially entered a correction on Thursday, down 10% from its February peak.
So far, Trump’s team has shown that they’re willing to tolerate stock market pain — but at some point, that pain may become unbearable.
Marko Papic, the chief strategist at BCA Research, thinks Trump might not be far away from his breaking point. He said a 15% to 20% decline in the S&P 500 could force the president to start walking back his trade war.
Economist Desmond Lachman, meanwhile, says the issue is less about a specific drop and more about how quickly and severely the sell-off unfolds: “What’s occurred over the last couple of weeks, if that continues at this kind of pace, he’ll have to cave.”
As BI’s William Edwards writes, with top earners propping up consumer spending, a significant stock market decline could start to weigh on their willingness to open their wallets.
Investors can blame the trade war.
The latest development came on Thursday when Trump threatened a 200% tariff on wine and other alcohol products coming from the EU — a retaliatory measure against the EU’s new tariffs on $28.4 billion worth of US goods that included a quintessential American drink: whiskey.
Businesses, from wine shops to restaurants, are now on the rocks. One couple who run an Italian-Croatian restaurant told BI that they’re alarmed: “How does an Italian restaurant pivot away from European wine?”
3 things in markets
Emma McIntyre/Getty Images; Apu Gomes/Getty Images; Chelsea Jia Feng/BI
1. An early Tesla investor-turned-bear doubles down. In late February, Ross Gerber predicted Tesla stock would drop 50% this year. Since then, the stock has tanked. BI followed up, and Gerber doesn’t think a rebound is on the horizon.
2. The S&P 500 is officially in a correction, and all signs point to the trade war. The prevailing view is that President Trump’s tariffs have rocked investor confidence and triggered recession alarm bells. Following the announcement of a 200% tariff on alcohol from the EU, the S&P 500 finished Thursday 10% down from last month’s peak.
3. But JPMorgan thinks the worst is over. The bank thinks a corner of the hedge fund sector — not recession fears — may be to blame for the market’s recent weakness. Now that equity quant funds have reduced their positions, the worst of the correction may be over, it said in a recent note.
3 things in tech
4×6/Getty, Ava Horton/BI
1. Checking in on Amazon’s RTO rollout. It’s been 10 weeks since the tech giant instituted its five-day return-to-office mandate. Eleven employees told us how they’re doing — including two who quit.
2. Did Apple bite off more than it can chew? The tech giant doesn’t tend to overpromise and underdeliver, but some onlookers are noticing a shift. Apple teased some glitzy AI features back in June, but they haven’t come to fruition. BI’s Peter Kafka broke down Apple’s game of catch-up.
3. Meta is trying to silence a former executive. She told BI why. Sarah Wynn-Williams made headlines this week when she released her explosive memoir detailing her time at Meta. BI sat down with the “Careless People” author hours before an arbitrator ruled in Meta’s favor, barring Wynn-Williams from promoting it.
3 things in business
Klawe Rzeczy for BI
1. Little DOGEs everywhere. Republican and libertarian leaders in at least 18 states are copying Elon Musk’s slash-and-burn playbook. They’ve even adopted quirky names, too. (Hello, GOAT and FLOGE.) Meanwhile, the OG DOGE is hiring more staff to pore over death records in search of benefits fraud.
2. Would you rather: PIP or severance? That’s the choice some TikTok staffers face after receiving low-performance review scores. Three current employees told BI they thought accepting a performance improvement plan over severance was rare because it’s challenging to survive one.
3. You may be footing Big Tech’s electricity bill. Companies building data centers are striking secretive electricity deals with utilities, potentially raising the average American’s bills, Harvard researchers found. But it’s hard to know the exact price tag when the contracts are hidden from the public.
In other news
What’s happening today
- Latest deadline for new funding deal to avert US government shutdown.
- Mark Carney sworn in as Canada’s prime minister.
- Lunar eclipse visible across North America, beginning about 2:26 a.m. EDT.
The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York (on parental leave). Grace Lett, editor, in Chicago. Ella Hopkins, associate editor, in London. Hallam Bullock, senior editor, in London. Amanda Yen, associate editor, in New York. Elizabeth Casolo, fellow, in Chicago. Lisa Ryan, executive editor, New York.
