Trump-Xi Beijing Summit Delivers Reset Signal; Warsh Confirmed as Fed Chair; China Permits NVIDIA H200 Sales

The Trump-Xi summit in Beijing on May 14 marked a carefully choreographed reset in US-China relations, with both leaders emphasizing stability and dialogue after months of tariff escalation. Trump extended an invitation for Xi to visit the White House in September, and the two discussed trade, investment, and strategic cooperation. The summit delivered tangible wins: China renewed import permits for hundreds of US beef plants, signaling trade normalization; the US approved H200 chip sales to 10 Chinese companies, easing semiconductor export restrictions; and Xi and Trump discussed US oil purchases by China to reduce Middle East reliance. The tone was cordial, though Xi later warned Trump about Taiwan, reframing the reset as fragile.

Simultaneously, the Senate confirmed Kevin Warsh as Federal Reserve Chair, replacing Jerome Powell. Warsh, viewed as more crypto-friendly and growth-oriented than Powell, is expected to take a dovish tilt on rate cuts and quantitative easing. His confirmation removes tail risk of a hawkish Fed pivot and opens room for a more accommodative stance as inflationThe rate at which prices rise across an economy. moderates. The confluence of geopolitical de-escalation and dovish Fed leadership creates a powerful risk-on backdrop.

Markets responded with enthusiasm, driving multi-day rallies in tech, equities, and currencies. The offshore yuan posted its best win streak since 2017 as investors rotated into risk assets. US stock futures surged, with the S&P 500 and Nasdaq poised to extend records. Tech mega-caps (MSFT, GOOGL, AAPL, NVDA, TSLA) saw call buying surge above $249 million in single-leg premiums. The CLARITY Act markup in the Senate also progressed, promising clearer SEC/CFTC jurisdiction over digital assets and crypto exchange regulation. This trifecta of Fed dovishness, US-China stability, and crypto clarity fuels the risk-on narrative through mid-year.

The downside scenario hinges on Taiwan. Xi's warning about mishandling the Taiwan issue suggests the reset is conditional and fragile. Further escalation or a misstep by either leader could flip sentiment rapidly. Additionally, the H200 approval is narrowly scoped to 10 firms and could face Congressional pushback if tensions re-escalate. Market pricing of this summit as durable peace may be premature.