The stock market tanked yesterday after President Trump declined to rule out taking the U.S. through a recession via tariffs and spending cuts. The S&P is nearly 9% off its all-time high. The Nasdaq Composite has fallen 13% from its peak, according to Fortune’s Greg McKenna. Nvidia was down 5% on the day. Reddit lost 20%.

The bond market is expecting interest rate cuts to ameliorate the flatlining growth that equity market investors are now afraid is on the horizon.

Contagion or containment? The VIX fear index (volatility) is up 56% YTD and has not been this high since the stock market dive of 2022. So the next question is, will the damage suffered in U.S. markets trigger contagion elsewhere around the globe, or will steadier hands prevail in hopes of positive macro data? Europe’s STOXX 600 was up 0.6% in early trading today, but Japan’s TOPIX sunk 1%. U.S. futures on the S&P 500 were up 0.4% this morning … but it’s still early. Expect more drama. 

Tesla car crash. TSLA lost 15% on the day and is now down 50% from its high, amid fears that Elon Musk is too distracted with politics to steer his car company.

Musk blames Soros. Musk accused billionaire George Soros and LinkedIn cofounder Reid Hoffman, both megadonors to the Democratic Party, of funding paid actors to protest Musk at Tesla showrooms across the country. "Just one more of Elon’s false claims about me,” Hoffman said in response.

The president had something to say about it too: “The Radical Left Lunatics, as they often do, are trying to illegally and collusively boycott Tesla, one of the World’s great automakers, and Elon’s ‘baby,’ … I’m going to buy a brand new Tesla tomorrow morning as a show of confidence and support for Elon Musk, a truly great American,” he wrote on social media.

SBF’s pardon chances are “near zero”: Disgraced crypto founder Sam Bankman-Fried is looking for President Trump to pardon his 25-year prison sentence, but a crypto lobbyist who spoke anonymously to Fortune says there is a “near zero” chance Trump will do so. Bankman-Fried recently appeared on the Tucker Carlson Show and has been communicating with a lawyer tied to Trump.

How some retailers are protecting themselves from tariffs: Fortune’s Phil Wahba breaks down why retail CEOs like those at Abercrombie & Fitch and Gap aren’t sweating Trump’s tariffs as much as those in other industries. While chains like Best Buy and Kroger are warning of potential price increases, clothing-based retailers spent Trump’s first term, and the time since, diversifying their supply chains to avoid the tariff problem.

Ukraine launched a heavy drone attack on Moscow, but the damage was light. Peace talks continue in Saudi Arabia today, where Secretary of State Marco Rubio argued Ukraine would have to concede more territory to Russia.

It’s election day in Greenland! The pro-independence Inuit Ataqatigiit party is favored to win.

From the analysts 

• UBS on recession: “Trump … failed to rule out a recession. After the 2024 soft landing, markets are getting more concerned about economic growth risks. As the pandemic illustrated, supply chain disruption can create growth problems. Disruption to trade and government both raise risks,” per Paul Donovan.
• JP Morgan on “ugly” US exceptionalism: “Risks are drifting toward an ‘ugly’ US exceptionalism with US extreme policies undermining confidence and sentiment. There is a rising belief in a US slowdown and positioning remains a risk,” per Fabio Bassi et al.
• Evercore ISI on stagflation: “Stagflation worries appearing as Tariff and DOGE policies could spur inflation higher and weigh on Economic growth. Stagflation would skew risks to EVR ISI’s Bear Case of SPX 5,200,” per Julian Emanuel et al.
• Barclays on DOGE: “With mass layoff announcements by the Trump administration's DOGE attracting plenty of attention, markets are now putting more weight on scenarios with deteriorating demand that warrant multiple rate cuts, and less weight on those involving an extended hold or even hikes,” per Terence Malone et al.

Former Twitch CEO's words of warning to Gen Z interns: Prestigious jobs on paper are ‘mostly a trap’ and money is a ‘constraint’ by Preston Fore

The crypto market continues to stumble as Trump declines to rule out potential recession this year by Catherine McGrath

Appeals from fired federal workers have skyrocketed more than 2,100% at one watchdog since Trump and DOGE took charge by Sasha Rogelberg

ServiceNow buys AI agent company Moveworks for $2.85 billion by Jeremy Kahn 

U.S. tariffs threaten to put European delicacies, from Champagne to Parmigiano, out of Americans’ reach, conjuring a 1960s throwback by Prarthana Prakash

This edition of CEO Daily was curated by Joey Abrams and Jim Edwards.