Elaine Chao on the Trump Administration: ‘What you all want is certainty and you’re not going to get it’

As former Commerce Secretary Wilbur Ross noted: “There’s tariff policy, tax reform, regulatory reform. Trump needs the whole package to work. He has a complicated mosaic that he has to put together and he’s got to get it done very quickly.” Ross is personally optimistic that the Administration is addressing issues that matter. He’s also optimistic about the impact of Elon Musk, saying “I can’t wait until he gets to the IT environment. In Commerce, we had 72 different IT systems, no two of which could talk with each other and most of them were from the 70s and 80s. It’s the world’s largest service business that’s using archaic equipment. Musk, I’m sure, is going to address that but he’s wisely doing the easier things first. My own view is that he’s going to find far less corruption than he thinks but plenty of waste.”

Elaine Chao, who served as Transportation Secretary in the first Trump Administration, advised business leaders to lay low and accept that any planning has to be agile. “This is going to be a volatile period. What you all want is certainty and you’re not going to get it.” As for DOGE, she said, “Everyone agrees that there is waste and inefficiencies in the government. Usually, special government employees have to file financial disclosure reports. I think a scalpel rather than a machete would produce a more effective government for the American people.”

Interestingly, Rocket Lab CEO Peter Beck, who competes with SpaceX, was sanguine when I asked about Musk’s potential conflicts of interest. “I think it would be very obvious and very damaging if any sort of funny business was played out,” he said. “At least for now, I’ve got no reason not to trust the system.”

More news below.

Contact CEO Daily via Diane Brady at diane.brady@fortune.com

Top news

Tesla bulls turn on Elon. Longtime Tesla bull Dan Ives released a note this week calling on Elon Musk to leave his role at the Department of Government Efficiency and make the EV company his priority again. Fellow Tesla investor Ross Gerber also criticized Musk this week, calling on him to find a new CEO.

Musk staged an all-hands at Tesla. He urged employees not to sell their stock and painted a bright picture of the future, in which human executives manage teams of robots. See the video here.

Trump denies Musk will be briefed on China war plans. Elon Musk will attend a meeting at the Pentagon where he will be briefed “on the U.S. military’s top-secret war plans for China,” according to the WSJ. President Trump denied that China would be discussed at the meeting. Context: Musk has significant business interests in China, where one of his largest factories is located.

Europe’s busiest airport was closed by a huge fire. A blaze at a power station neighboring Heathrow in London has closed the airport. Thousands of flights were diverted or cancelled. The area around the airport is without power. It is not clear when the facility will be up and running again. Live coverage from the BBC here.

Trump goes after DOE, teachers react. In a statement to Fortune, American Federation of Teachers President Randi Weingarten indicated legal action against the Trump administration is on the way after Donald Trump signed an executive order Thursday that would “begin eliminating the federal Department of Education once and for all.” The executive order claims that the department “does not educate anyone.”

BofA CEO optimistic about consumers. Bank of America CEO Brian Moynihan said consumers are still propping up the economy with spending despite increased consumer pessimism. “If you actually look what they’re doing day to day, they continue to spend, which means the economy ought to be holding up better than people think.”

U.S. out of NATO? European leaders are discussing a transition plan in which the U.S. is eased out of its leadership role in the transatlantic military alliance.

Trump rages against the judges: In a series of posts on Truth Social, the president railed against members of the judiciary:  “Out of control, Radical Left Judges!” … “Judge James Boasberg is doing everything in his power to usurp the Power of the Presidency. He is a local, unknown Judge, a Grandstander, looking for publicity, and it cannot be for any other reason, because his ‘Rulings’ are so ridiculous, and inept. SAVE AMERICA!” … “Unlawful Nationwide Injunctions by Radical Left Judges could very well lead to the destruction of our Country! These people are Lunatics, who do not care, even a little bit, about the repercussions from their very dangerous and incorrect Decisions and Rulings.”

The markets

• The S&P 500 lost 0.2% yesterday to close at 5,662.89. The index is down 3.72% YTD. Europe and China markets were mostly down this morning with a small ray of light from Japan’s TOPIX which was up 0.3% this morning. S&P 500 futures contracts traded down 0.30% premarket.

From the analysts 

• Wells Fargo on federal government layoffs: “The overall economic impact of federal layoffs is likely to be small. Our point on federal budget cuts is that these are a small part of the overall labor market … Other federal consolidations of similar size to today’s occurred under Presidents Clinton and Obama. After these, 50% of those laid-off workers got private-sector jobs and most of the rest ended up either in state or local governments or elsewhere in the federal government,” per Scott Wren.
• Apollo on consumer fragility: “Data from the Fed shows that households’ ability to come up with $2,000 for an emergency expense within the next month is at the lowest level since the survey started in Q4 of 2015,” per Torsten Sløk.
• UBS on “stagflation”: “The media will rush to declare ‘stagflation’—but this is hardly the 1970s. Tariffs will raise inflation and then lower growth, so the pattern is not unexpected, and of course there is considerable uncertainty given erratic government policy,” per Paul Donovan

Around the watercooler