Stage one: denial. Stage two: acceptance. Stage three: bargaining. Stage four: deals?

While markets spent the last week in a state of upheaval coming to terms with US plans to roll out global tariffs, Treasury Secretary Scott Bessent suggested Tuesday there is now potential for “some good deals.” How fast and where they come could dictate swings in equities.

Trading Places

Since “Liberation Day” last week, the S&P 500 has fallen nearly 12%. Tariffs on about 90 economies, including China and the European Union, kick in today (enjoy your last tariff-free coffee beans this morning). All of which means, amid the market tremors, it’s apparently time to make deals. On Tuesday, Bessent said he’s fielding “a massive number of requests for negotiations” from at least 70 countries to avert prolonged duties on their goods.

That sounds positive — and US stocks kicked off the day higher after Bessent made his remarks and Trump touted a “great call” with South Korea’s acting president — but not enough to get equities out of their funk:

• The S&P 500 ultimately closed 1.6% lower, and the Nasdaq finished down 2%, in large part because until deals roll in, the cyclical revenues of the multinationals that make up the index will remain under duress. As Morningstar put it Tuesday: “It seems likely that there could be a significant amount of negative sentiment in the market until there is greater clarity regarding the impact and duration of tariffs.”
• Morningstar cautioned that “now is not the time for most investors to be reaching too far down the risk spectrum,” and evidence shows foreign indexes are in for similarly bumpy trajectories. Take, for example, Japan, which is facing a 24% across-the-board tariff: after Bessent said the country is “going to get priority” in bilateral negotiations, the Nikkei rallied 6% on Tuesday amid the momentary optimism only to fall 3.9% on Wednesday as the cold, hard reality of tariffs sunk in.

Negotiations won’t be as simple as agreeing to remove trade barriers, which means they could take time. Trump, for example, wants Japan, South Korea, and Taiwan to join a $44 billion natural gas project in Alaska that would supply the East Asian countries starting in 2030.

No Deal: On Wednesday, China announced 84% tariffs on US imports that will kick in Thursday, a day after Trump’s whopping 104% tariffs on the world’s second-largest economy came into effect. One could say the US and China are in a Mexican standoff — but at least Mexico has USMCA.

Better watch your tone: Amazon’s latest AI voice model is a bit of an empath. Amazon debuted Nova Sonic yesterday, an AI assistant the tech company said can tell how the people it chats with are feeling.

Amazon’s head AGI scientist told TechCrunch that Nova Sonic is top-of-class when it comes to conversational flow and knowing what action users want it to take (opening an app, looking up flights online), not to mention quicker-witted. The exec said Nova Sonic is nearly 50% better at listening (it mishears fewer words) than OpenAI’s voice model GPT 4o, quicker to respond, and cheaper to run.

Nova Sonic is already being used to power Amazon’s legacy voice assistant, Alexa. But even without an Echo on their nightstands, people could find themselves chatting with the bot. Nova Sonic is available to third-party developers, who can deploy it for tasks like handling customer service calls or tutoring language-learners.

Chat, Is This Real?

Alexa and Siri have been telling people, “Sorry, I can’t help with that” for over a decade. But now the pressure is building for voice assistants to be more useful. Innovation in the space was spurred on last spring by OpenAI:

• The launch of its voice assistant GPT 4o prompted comparisons with ScarJo’s character in “Her.”
• Following OpenAI’s bot-drop, Google launched Gemini Live to let users chat aloud with its chatbot, Gemini.

The momentum has kept up since: Google added eight new voices to its Chirp 3 AI model last month as tech companies fight to edge out rivals. Also last month, people were unnerved by how lifelike startup Sesame’s AI assistant sounds.

Sesame’s co-founder said it’s still in the uncanny valley, but believes the tech can climb out. Some critics don’t think it should.

Keep it Uncanny: AI audio models are becoming so lifelike that critics are concerned people won’t be able to tell when they’re chatting with a bot. Their fears go beyond callers falling in love with AI customer-service agents: Advanced AI audio tech could be misused for social engineering schemes. Bots could be tweaked to sound like family members, celebs, or politicians, and scammers could use those friendly voices to ask for money and data. OpenAI held back a wide release of its voice-cloning tech over such concerns.

For many, the trade war has felt like a tear in the very fabric of fiscal reality. But for Levi Strauss? Well, it’s gonna take a little more to rip these jeans (unless that’s the style you’re going for, of course).

On Tuesday, 24 hours after a rosy earnings call, the denim giant’s stock scored a somewhat surprising upgrade from “neutral” to “overweight” from JPMorgan. It seems quality never goes out of style, even amid a global financial meltdown.

Zipping Up the Supply Chain

Levi Strauss had one big message in its earnings call: Through at least the next quarter, the latest tidal wave of market-crushing tariffs will have “minimal impact” on the company’s profit margins. That sounds pretty swell, given its stellar first three months of the year: In Q1, Levi Strauss posted gross profits of $947 million, up nearly 9% year-over-year, on an operating margin of 12.5%, compared with 0.04% a year earlier.

The forecast comes as a surprising — or maybe shockingly optimistic — projection for a company whose supply chains run through 25 different countries, including many in the now heavily tariffed southeast Asia region. So what gives? The company says that some planning ahead (and possibly a little belt-tightening) is all it needs to stay one step ahead of the trade war:

• The company has already shipped most of its spring and summer stock into the US, beating out the worst of the tariffs, Chief Financial and Growth Officer Harmit Singh said during this week’s earnings call. Crucially, only about 1% of its products are imported directly from China, among the most heavily tariffed nations.
• Still, the company did not rule out price increases, which CEO Michelle Gass said would be “surgical” if implemented. Gass also pointed to the brand’s pricing power, especially in its higher-end products, saying consumers “buy up into more premium products, so that’s an opportunity.”

Good Jeans: In a note to clients published Tuesday, JPMorgan analyst Matthew Boss agreed with the rosy outlook, specifically citing the company’s diversified supply chains and healthy margins as enough to make the impact of the tariffs “negligible.” Boss’s upgrade comes after Levi’s share price has taken a multi-year beatdown: The stock has fallen some 58% from a 2021 peak, nearly 40% in the past year, and about 28% year-to-date. In denim-speak, this is called an opportunity to buy the rip.