From the Philly Fed:

The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for January 2025. Over the past three months, the indexes increased in 47 states, decreased in one state, and remained stable in two, for a three-month diffusion index of 92. Additionally, in the past month, the indexes increased in 35 states, decreased in nine states, and remained stable in six, for a one-month diffusion index of 52. For comparison purposes, the Philadelphia Fed has also developed a similar coincident index for the entire United States. The Philadelphia Fed’s U.S. index increased 0.6 percent over the past three months and 0.2 percent in January.
emphasis added

Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed:

The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing by production workers, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

Click on map for larger image.

Here is a map of the three-month change in the Philly Fed state coincident indicators. This map was all red during the worst of the Pandemic and also at the worst of the Great Recession.

The map is mostly positive on a three-month basis.

Source: Philly Fed.

And here is a graph is of the number of states with one month increasing activity according to the Philly Fed. 
This graph includes states with minor increases (the Philly Fed lists as unchanged).

In January, 36 states had increasing activity including minor increases.

Seattle Economic Crisis: Proof That Democrat Wealth Taxes Lead To Disaster

To look at the Pacific Northwest today one would never know that 25 years ago the region was an economic powerhouse at the forefront of technology and business innovation.  At the time Portland and Seattle were known for constant rain as well as raining cash, and the "millionaire density" of the Seattle area was at historic highs.  The tech boom and international trade with Asia had created a Silicon Valley of the northern coast.  

Companies like Nike, Starbucks, Microsoft and Amazon established corporate offices and generated tens of thousands of jobs, and many of those jobs were considered high income.  People can debate the overall effects of the population surge to the region; there are many who would argue that Washington and Oregon were better off when they were considered backwoods fishing and lumber states.  That said, it's undeniable that for a time the Northwest was one of the most desirable and lucrative places to live in the US.  

That's all gone now.  The wealthy are leaving Seattle like it's a leper colony and all that's left are millions of broke activists, poverty stricken residents and illegal immigrants.  Some blame the constant riots or the steady stream of welfare recipients. Others say that the draconian covid mandates caused people to jump ship.  However, a primary factor in businesses (and money) leaving the city was the institution of a progressive "Payroll Expense Tax".  

The PET is a quarterly tax approved by the Seattle City Council in 2020 in the middle of the Covid hysteria.  It increases taxes on businesses depending on how many employees they hire and how much their employees get paid.  In other words, it punishes companies that hire more people and pay them a good salary.  The conditions of the PET are very similar to what Democrats say they want for their "Wealth Tax" - An extra tax on top earners and large companies beyond the income tax.  

Democrats were high on their own supply in the early 2020s and in their fervor to destroy conservatives they instituted every suicidal policy imaginable, from defunding police to near-zero prosecution for property theft under $1000.  It's not surprising that wealth taxes were established at the same time to "stick it to the capitalists".  What they seem to have forgotten, though, is that communist tactics don't work if people and businesses are able to walk away, and that's exactly what has happened in Seattle.

Larger businesses are packing up and leaving the Northwest as quickly as they arrived.  Amazon, Meta, Google and Expedia are the most prominent examples of companies exiting the Seattle labor market and hiring elsewhere to avoid the Payroll Tax, but there are numerous others. 

The Emerald City is facing a dangerous budget shortfall which has the council and the mayor in a panic.  Payroll Tax revenues indicate a surprise decline of over $47 million, far less than expected.  To understand why this is such a big deal, keep in mind that Democrat cities have a habit of budgeting based on projected earnings.  Meaning, they launch various programs based on the money they assume they will get instead of the money they actually have.  

Seattle Mayor Bruce Harrell acknowledged that the drop in payroll tax revenue will significantly impact the city’s budget for future years. He blamed Seattle’s large businesses for shifting employees to offices outside of the city to avoid the tax (everyone warned Democrats that this would happen and they didn't listen). 

“Large corporations should pay their fair share and we should be wary when they use job placements to avoid paying funding that our communities rely on, but we also must recognize businesses will make choices based on their bottom line...We need to design our tax policies with the full context of our economy and a comprehensive view that ensures we raise the revenue needed to support all of our residents in a progressive way, aligned with our values.”

How does the mayor suggest the problem be solved?  Well, Seattle is already stuck with a multitude of programs they slated for funding before revenues were counted.  So, Harrell hinted that "additional sources" may need to be taxed to fill the gap left by the PET.  What does that mean?  Most likely, new taxes on the middle class.  As Harrell notes...

“We will be closely monitoring OERF’s April forecast to understand the full implications and what steps are necessary to maintain a balanced budget. As we develop the City’s 2026 budget, my office will consider all options, including additional revenue sources and appropriate expense reductions, to ensure we are making the priority investments and funding the essential services that matter to our residents..."

When wealth taxes fail, the Democrat Plan B is always to feed off the middle class through methods like new sales taxes or gas taxes.  Seattle is already in the midst of an economic decline and a budget shortfall of this size is a crisis.  Not only did their new taxes cost tens of thousands of jobs for the area, but they increased their spending projections, counting their chickens before they hatched.

Insanely, Democrats in Washington still want to pass a similar Payroll Tax system for the entire state (due to their own budget problems) despite the fact that it has been an unmitigated disaster in Seattle.  The economic events in Seattle and the Pacific Northwest in general are a canary in the coal mine for the entire nation; a warning of what is to come if Democrats are allowed to continue running some of Americas biggest metropolitan areas.  

Tyler Durden Wed, 04/02/2025 - 17:20

"Yeah, Fake News": Musk Denies Politico Musk Report

Update (1605ET): 

Aaand here's the denial. White House spokeswoman Karoline Leavitt has called Politico's scoop "garbage," adding "lon Musk and President Trump have both *publicly* stated that Elon will depart from public service as a special government employee when his incredible work at DOGE is complete."

"Yeah, fake news," Musk replied.

Yeah, fake news https://t.co/nPhTpZj3Fc

— Elon Musk (@elonmusk) April 2, 2025

Though we would note that 'stepping back' (Politico) does not equal 'departing' (WH).

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Shares of Tesla rose on Wednesday following an anonymously sourced Politico report (keeping in mind Musk just yanked millions in government 'subscriptions' from them) that President Trump has told his inner circle that Musk would be stepping back from his advisory role in the coming weeks.

Musk, who Politico describes as "governing partner, ubiquitous cheerleader and Washington hatchet man" (totally not salty), claims that Trump "remains pleased with Musk and his Department of Government Efficiency initiative but both men have decided in recent days that it will soon be time for Musk to return to his businesses and take on a supporting role."

Then Politico gets extra nasty - writing that "Musk’s looming retreat comes as some Trump administration insiders and many outside allies have become frustrated with his unpredictability and increasingly view the billionaire as a political liability, a dynamic that was thrown into stark relief Tuesday when a conservative judge Musk vocally supported lost his bid for a Wisconsin Supreme Court seat by 10 points."

One anonymous official allegedly told Politico that Musk is likely to retain an informal advisory role and continue to be an occasional face around the White House, while another said that anyone who thinks Musk is going to disappear entirely from Trump's orbit is "fooling themselves."

As we noted above, shares of Musk-owned Tesla rose more than 5% on the report.

While Polymarket odds that he'll be out as the head of DOGE in 2025 spiked as well.

Tyler Durden Wed, 04/02/2025 - 16:05

Will Today Go Down In History As The Beginning Of A New Era?

To paraphrase Michael Every's earlier take, "will today go down in history, marking the end of one era and the beginning of another?" 

That's the question asked by DB's Jim Reid who notes that only time, and subsequent negotiations, will tell. However, as the DB credit strategist notes, "tariff announcements today could well take us into uncharted territory."

According to Deutsche Bank's calculations, the previously announced measures already bring the US to a 12% average tariff rate, the highest since World War II. 

And then, today's announcement could increase this to 18%, and potentially even higher if the reported near-universal 20% tariff option is implemented. 

This would approach the levels seen in the early 1930s after the Smoot-Hawley Tariff Act, though likely remaining below the very protectionist rates of the early 20th century. 

This earlier period has been cited by Trump and Lutnick as a golden era for the US (presumably this excludes the Great Depression that followed the Smoot Hawley protectionism). Reid's points out that the recent Lutnick and Bessent podcasts highlight Lutnick's emphasis on tariffs as the foundation the US economy was built on, noting the absence of income tax until 1913 during what he considers the nation's wealthiest period. 

He argues that post-World War II tariff reductions were a strategic move to aid global reconstruction, with the understanding that other countries would maintain higher tariffs. 

However, he now believes this imbalance has persisted too long, requiring a new approach.

In one respect, we've already returned to McKinley-era levels. Because trade represents a larger share of the economy today, Reid notes that tariff revenue as a percentage of GDP is already set to slightly exceed 1%, based on the announced tariffs on China (20%), Canada and Mexico (partial 25%), and steel, aluminum, and autos (25%). This puts us back in McKinley territory, and we're likely to surpass it today (chart right below).

As such, Reid concludes that "any announcement today will be subject to negotiation, but the starting point will likely be era-defining."

Tyler Durden Wed, 04/02/2025 - 15:40

The post Thomas Friedman on China: One Big Thing Right, an Even Bigger Thing Badly Wrong appeared first on CEPR.

New FAA Rule Allows Private Jet Owners To Hide Travel Information From Public

Authored by Naveen Athrappully via The Epoch Times (emphasis ours),

The Federal Aviation Administration (FAA) is implementing a data privacy policy that allows people with private jets to hide travel information from the public.

Private jets are seen on the tarmac at Friedman Memorial Airport ahead of the Allen & Company Sun Valley Conference in Sun Valley, Idaho on July 4, 2022. Kevin Dietsch/Getty Images

“Private aircraft owners and operators can now electronically request that the FAA withhold their aircraft registration information from public view,” the agency said in a March 28 statement.

“Starting today, they can submit a request through the Civil Aviation Registry Electronic Services (CARES) to withhold this information from public display on all FAA websites.”

In its statement, the FAA said the data protection decision was taken based on a privacy provision included in the FAA Reauthorization Act of 2024.

The provision allows aircraft owners to request that certain personally identifiable information not be made publicly available via FAA websites.

“The FAA will publish a request for comment in the Federal Register to seek input on this measure, including whether removing the information would affect the ability of stakeholders to perform necessary functions, such as maintenance, safety checks, and regulatory compliance,” said the agency.

“The FAA is also evaluating whether to default to withholding the personally identifiable information of private aircraft owners and operators from the public aircraft registry.”

While some say that such trackers allow people to record carbon emission info, there have been concerns that monitoring aircraft movements puts at risk the people who use that mode of transportation, often high-profile individuals.

The new rule could negatively affect jet trackers that use FAA information as a key source to track and report flight details of famous personalities.

In December 2023, attorneys for Taylor Swift issued a cease-and-desist letter to a university student, blaming his automated tracking of her private jet travel for revealing the celebrity’s whereabouts to stalkers.

The letter accused the student of “willful and repeated harassment” as well as “intentional, offensive, and outrageous conduct and consistent violations” of Swift’s privacy.

Attorneys alleged that the student essentially offered “individuals intent on harming her, or with nefarious or violent intentions, a roadmap to carry out their plans.”

In 2022, social media platform X, then named Twitter, suspended several accounts that tracked private planes, including those of Jeff Bezos, Bill Gates, Mark Zuckerberg, and Elon Musk. The platform prohibited the sharing of real-time location data, citing a “risk of physical harm.”

Some cite the high carbon emissions to question the integrity of wealthy celebrities and politicians who advocate fighting climate change while flying around in private jets.

In 2023, Klara Maria Schenk, a transport campaigner for Greenpeace’s European mobility campaign, called the use of private jets at the Davos World Economic Forum (WEF) meeting a “distasteful masterclass of hypocrisy” since the WEF said it is committed to tackling the so-called human-induced or anthropogenic climate concerns.

Tyler Durden Wed, 04/02/2025 - 14:00

Judge Blocks Trump Admin From Firing Federal Employees On Probation In 19 States

Authored by Katabella Roberts via The Epoch Times (emphasis ours),

A federal judge on April 1 indefinitely blocked President Donald Trump’s administration from quickly firing thousands of probationary federal workers in 19 states and Washington, narrowing a nationwide order issued last month.

Protesters hold signs at a rally in support of federal workers at the Office of Personnel Management in Washington, on March 4, 2025. Alex Wroblewski/AFP via Getty Images

U.S. District Judge James Bredar in Baltimore, Maryland, had already ruled on March 13 that the administration should have provided advance notice when it terminated at least 11,000 workers without notifying states and local governments in advance.

The judge had ordered the administration to reinstate the fired workers at 18 agencies by March 17.

Bredar’s latest decision replaces that order but also covers two additional agencies: the Defense Department and the Office of Personnel Management.

In handing down his decision, the judge said that the federal government may “terminate probationary employees en masse (i.e., dismiss them via a reduction in force, or ‘RIF’)” but that when it does, it “must follow certain laws and regulations.”

“Recently, government agencies executed a series of mass terminations, but when they did so, on the record before the Court, they failed to follow mandatory RIF procedures,” the judge wrote.

Bredar found the Trump administration “probably broke the laws that regulate en masse terminations of government employees, and this to the continuing and irreparable harm of the Plaintiff States.”

He noted, however, that his order only applies to employees who either live or work in the mostly Democratic-led states that, along with Washington, D.C., sued over the mass firings.

“Perhaps a broader injunction would be in order if this action were on behalf of the thousands of employees who were laid off, the circumstances of each likely being similar if not identical to those of the others, and there being little doubt that the harms visited on some were representative of those experienced by all, or almost all. But this is not that case,” Bredar wrote.

“Only states have sued here, and only to vindicate their interests as states. They are not proxies for the workers.”

Agencies Covered by Court Ruling

The judge noted that while “each state is entitled to decide for itself whether it will seek relief in the present circumstances,” it would “be inappropriate for the Court to fashion relief having the consequence that decisions properly reserved to the non-party states are effectively, and unnecessarily overruled by this Court.”

Bredar’s ruling covers workers at the Departments of Agriculture, Commerce, Defense, Education, Energy, Health and Human Services, Homeland Security, Housing and Urban Development, Interior, Labor, Transportation, Treasury, and Veterans Affairs.

Additionally, terminated probationary workers at the Consumer Financial Protection Bureau, Environmental Protection Agency, Federal Deposit Insurance Corporation, General Services Administration, Small Business Administration, and the U.S. Agency for International Development are covered by the orders, along with those from the Defense Department and the Office of Personnel Management.

The employees covered by the order must work in Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont, Wisconsin, or Washington, D.C.

Bredar’s ruling is in response to a March 6 lawsuit filed by a coalition of mostly Democratic-led states who sued nearly two dozen federal agencies over the probationary worker firings.

In their lawsuit, the states, led by Maryland Attorney General Anthony Brown, argued the move was illegal because the agencies had failed to comply with legal requirements for RIFs, including providing 60 days of advance notice to workers and states.

The Trump administration has appealed Bredar’s earlier decision, claiming the firings were lawful and that the judge lacked the power to require workers to be reinstated.

A U.S. appeals court panel earlier in March declined to put Bredar’s ruling on hold.

The Epoch Times has contacted the White House and the Maryland Attorney General’s Office for comment.

Zachary Stieber and Reuters contributed to this report.

Tyler Durden Wed, 04/02/2025 - 13:20

This graph shows heavy truck sales since 1967 using data from the BEA. The dashed line is the March 2025 seasonally adjusted annual sales rate (SAAR) of 403 thousand.

Heavy truck sales really collapsed during the great recession, falling to a low of 180 thousand SAAR in May 2009.  Then heavy truck sales increased to a new record high of 570 thousand SAAR in April 2019.

Click on graph for larger image.

Note: "Heavy trucks - trucks more than 14,000 pounds gross vehicle weight."
Heavy truck sales declined sharply at the beginning of the pandemic, falling to a low of 288 thousand SAAR in May 2020.  
Heavy truck sales were at 403 thousand SAAR in March, down from 436 thousand in February, and down 12.1% from 459 thousand SAAR in February 2025.  
Year-to-date (NSA) sales are down 10.1%.
Usually, heavy truck sales decline sharply prior to a recession. Perhaps heavy truck sales will be revised up, but this was somewhat weak.
As I mentioned yesterday, light vehicle sales "surged" in March to 17.77 million SAAR as some buyers rushed to beat the tariffs.
The second graph shows light vehicle sales since the BEA started keeping data in 1967.  
Light vehicle sales were at 17.77 million SAAR in March, up 11.0% from February, and up 13.3% from March 2024.

Will Today's Trump Moves Force The Fed To Act?

Authored by Peter Tchir via Academy Securities,

Apparently today at 4:00 pm we will learn the details of this wave of tariffs.

Treasury Secretary said yesterday that this will represent a “cap” on tariffs and basically the starting point of negotiations from here (we will see if that messaging sticks).

What I think we know:

• Relatively little “negotiating” has occurred, which I believe is not what the administration expected. Other countries are “playing” the President differently than they did during Trump 1.0. It also probably doesn’t help that this time around, there is no “divide and conquer”.

• Other countries are already having conversations about trade, bypassing the U.S.  Apparently, Japan, China and South Korea are talking. That makes sense as the U.S. policy toward Taiwan is unclear and that could dramatically impact South Korea and Japan. Canada and Mexico are apparently having discussions. I’m sure Europe (or some countries within Europe) are having a variety of trade dialogues (it is really, really, really important to notice that they do not want to spend their increased military spending on U.S. equipment – to the extent they can avoid it).

• Other countries are likely going through their tariffs, line by line, estimating which ones they can give in on, with minimal impact and which ones are important. Given that the U.S. is fighting with everyone and allegedly still hasn’t finalized its plan, we are likely to not fare well at the granular level.

• The Geopolitical actions so far – from NATO, to Russia/Ukraine, to 51st State, to “take” Greenland, etc., have only added to the questions about dealing with the U.S. that other countries have.

• The U.S. does not have a lot of excess capacity (it will take time to build) and so far no legislation on the deregulation front  

Deliberate/Thoughtful Tariffs :

• Risk Assets can and should rally. If these sort of tariffs had been the starting point, we could probably move on. But they weren’t and coupled with the issues listed above, I think the rally will stall. It will need indications that global tensions with trading partners have eased to reduce. It will be curious to see how his base responds? Will there be any erosion of the aura of “the art of the deal”?

Medium Level of Tariffs:

• Anything less than 15% to 20% across the board tariffs. I expect slight risk asset rally (market seem desperate to rally on certainty) but think that fades quickly and we drift lower, trading on headlines going forward. 

Aggressive Tariffs

• Immediate sell-off in risk assets. Stocks drop 3% or more quickly with ongoing selling pressure. 10-year treasury likely breaks 4%.

I hear a lot of chatter that the policies will force the Fed to act. 

Maybe but, I think the Fed will act late and it will be too small relative to the total revamp of global trade to stop the slide. 

There were a lot of easier ways to get the Fed to cut – like stick to “drill baby drill”, reduce regulations (ideally via legislation as opposed to executive orders), etc. 

The whole “this is all to get the Fed to cut” is incredibly risky (who knows what was set in motion) and only seems to have gotten traction because Wall Street doesn’t want to believe how much this administration believes in the benefits of tariffs.

Hopefully I will be disappointed and wrong and markets can rally and threats to the global economy can be greatly reduced, but I think once we get beyond debating the tariffs, we will be forced to digest the mess that global trade is in, and that cannot be good for corporate earnings or the economy.

For better or for worse, here is Academy on Bloomberg TV this morning, where, the jetlag worked in my favor as I was up at 3 am anyways 

Should be an interesting few days, to say the least!

Tyler Durden Wed, 04/02/2025 - 12:40

Putin Envoy Visits Washington For Talks In First Since 2022 Ukraine Invasion

Earlier this week the Kremlin said it has given the Trump White House formal notification and evidence showing that Ukraine has continued attacking Russian energy sites, despite the US-backed agreement for each side to refrain from hitting this infrastructure.

On Wednesday Putin spokesman Dmitry Peskov said that so far there's been no response from the Trump administration. "So far, there has been no reaction to such actions by the Kiev regime," Peskov said.

Previously Foreign Minister Sergey Lavrov described that a list of violations had been handed over to US National Security Advisor Mike Waltz, US Secretary of State Marco Rubio, and Russia’s representatives in the UN and the OSCE, "so that they in their work would present concrete facts demonstrating what the word of the Ukrainian authorities is worth," according to TASS.

Kirill Dmitriev (right) is in Washington this week. Getty Images

But Ukraine has said it has done the same thing, as both sides have lately accused the other of violating the partial ceasefire. "We have passed on all the necessary information about Russian violations in the energy sector," President Zelensky said in a Tuesday evening address.

He has called on Washington to strengthen sanctions on Russia, and as of Thursday the US Treasury has issued some further anti-Russia sanctions on its website.

"I believe we have come to the point of increasing the sanctions impact, because I believe that the Russians are violating what they have promised America. At least what America has told us, and publicly," Zelensky said.

This week for the first time a top Russian negotiator and Putin representative will meet with Trump official Steve Witkoff in Washington. The US has temporarily waved sanctions on the Russian official in order to grant him a visa for the visit.

"His visit will mark the first time a senior Russian official has visited Washington, DC, for talks since Russia invaded Ukraine in 2022 and marks a further step in the marked warming in relations between the two countries since President Donald Trump returned to office in January," CNN writes.

Kirill Dmitriev is a "close adviser to Putin and traveled with top Russian officials to Riyadh in Saudi Arabia in February to start discussing a settlement for the end of the war in Ukraine," the report notes. "He also worked with Witkoff to free American teacher Marc Fogel from Russia, which the Trump administration hailed as a goodwill gesture."

As for where overall negotiations to end the war in Ukraine stand, Russian Deputy Foreign Minister Sergey Ryabkov said Tuesday that current US proposals on ending the war can't be accepted in their current form.

Assuming CNN is accurate, Putin is sending a Harvard-educated financier—not a general, politician or spymaster—to meet Trump’s team in DC. Dmitriev runs Russia’s sovereign wealth fund. Until a month ago, he wasn’t even a Kremlin official. It says a lot about Moscow’s game plan. https://t.co/s6sOwpjJW6

— Brian McDonald (@27khv) April 1, 2025

He complained they don't address the "root causes" and that Kiev doesn't appear ready to get serious about pursuing peace.

“What we have today is an effort to find a framework that would make it possible to ensure America’s vision for a ceasefire. The idea is to then move on to some other models and frameworks, which, as far as we can see, leave no room for Russia’s core demand, that is, the need to resolve the issues stemming from the root causes of this conflict,” he said, as quoted in TASS.

Tyler Durden Wed, 04/02/2025 - 12:00

How Trump's 'Liberation Day' Tariffs Are Set To Reshape Global Trade

Authored by Emel Akan and Andrew Moran via The Epoch Times,

President Donald Trump is set to announce reciprocal tariffs for all nations starting April 2, the date he has dubbed “Liberation Day.”

Companies, markets, and governments are on edge, expecting the move to send shockwaves across the globe.

Liberation Day will impact all countries, Trump told reporters over the weekend aboard Air Force One. However, some countries will be more vulnerable due to their high trade imbalances with the United States and significant trade barriers against American goods, including China, India, the European Union, Canada, Mexico, the United Kingdom, Vietnam, Japan, and South Korea.

The president will reveal details of his tariff plan at a White House Rose Garden event Wednesday afternoon after the stock markets close.

Speaking to reporters from the Oval Office on March 31, Trump stated that his tariff rates will be lower—and in certain instances “substantially lower”—than what other countries have been charging the United States.

“We are going to be very nice by comparison to what they were,” the president said. “We have a world obligation, perhaps, but we’re going to be very nice, relatively speaking. We’re going to be very kind.”

On Feb. 13, the president unveiled the concept, describing it as a “fair and reciprocal plan” for trade by raising U.S. levies to match duties that other nations impose on U.S. products.

He instructed his team to assess and recommend tariffs on countries that impose significant barriers to U.S. products, including tariffs, value-added taxes, and other non-tariff restrictions. The assessment will also consider the foreign exchange policies of America’s trading partners.

Trump’s tariff policies are anticipated to have a significantly broader impact on products, industries, and countries affected by tariffs compared to previous administrations. According to an estimate by consulting firm PwC, the measures could increase U.S. tariff revenues from $76 billion annually to almost $697 billion.

A key objective behind the administration’s tariff plans is to reverse America’s decades-long trade deficit.

The United States has recorded trade deficits every year since 1976. Last year, the U.S. goods and services trade gap surpassed $918 billion—a 17 percent increase from 2023.

Many factors have contributed to this decades-long trend. A low national savings rate, for example, has resulted in a higher dependence on foreign capital to fund investments. Foreign markets’ comparative advantage, mainly in the form of lower labor costs, has also led to cheaper imports, satisfying ferocious domestic consumption.

White House officials, including U.S. Trade Representative Jamieson Greer, believe tariffs could be a part of the solution to undo ongoing trade deficits.

“Part of the question is how large of a trade deficit do we want, because the trade deficit represents, in large part, manufacturing jobs that have [gone] overseas,” Greer told the Senate Finance Committee in February.

He also noted that worsening trade imbalances with particular countries were a “huge problem.”

In 2024, China ranked first, with the U.S. trade deficit reaching $295 billion. This was followed by the European Union ($236 billion), Mexico ($172 billion), Vietnam ($124 billion), Taiwan ($74 billion), and Japan ($69 billion).

Economists argue that the administration’s sweeping trade policy changes will have the greatest impact on industries that have traditionally benefited from low or no tariffs. As a result, these industries will be forced to evaluate the costs and benefits—such as logistics, tax rates, and tariffs—of relocating production to the United States.

Last year, the top U.S. importer jurisdictions were Mexico, China, Canada, Germany, and Japan.

Sectors Most Affected By New Tariffs

Higher tariff rates will impact a wide range of sectors and countries.

Automobile manufacturing in Canada, Germany, Japan, and Mexico could be the hardest hit. The auto industry will navigate potential disruptions from reciprocal tariffs and Trump’s higher import duties on steel, aluminum, foreign vehicles, and car parts.

Canada’s oil and gas sector is also expected to be hammered. The United States imports more than 4 million barrels of crude per day—up significantly from 15 years ago.

Since returning to the White House, Trump has already imposed tariffs on China over its failure to address its role in illicit fentanyl trafficking into the United States. Now, with the introduction of  reciprocal tariffs, China could face major disruptions in its exports of smartphone technology and lithium-ion batteries, the two items most heavily shipped to the United States.

Other industries facing significant impacts include critical medicines and health care equipment, which are primarily sourced from India, Ireland, and Switzerland.

The European Union and emerging markets could take a hit from reciprocal tariffs, says Mary Park Durham, a research analyst at JPMorgan Chase.

First, the E.U. accounts for approximately one-fifth of U.S. imports and registered a trade surplus.

“While the U.S. and EU have similar average tariff rates of 3.4% and 4.1% on each other’s imports, respectively, disparities arise at the product level,” she said in a note.

The U.S. government has highlighted the bloc’s value-added taxes (VATs), which it views as tariffs. VATs are consumption taxes absorbed by producers at each stage in the supply chain and consumers at the point of sale. The EU’s VAT rate averages 20 percent, higher than the average U.S. sales tax rate of 6.6 percent.

While the U.S. Trade Representative’s 2025 National Trade Estimate Report did not specify Europe’s VATs, White House officials have rebuked the policy, calling it a “double whammy.”

“No wonder Germany sells eight times as many cars to us as we do to them, and President Trump is no longer going to tolerate that,” an official told reporters in February.

Second, emerging markets such as Brazil and India maintain high average tariff rates on all imports. These countries generally impose higher import duties to shield vulnerable domestic industries from foreign competition.

“The difference in tariff rates between emerging markets and the U.S. in their bilateral trade tends to be wider than that for developed markets,” said Brian Coulton, the chief economist at Fitch Ratings, in a report.

Brazil and India were spotlighted as examples of unfair trade practices in a White House fact sheet.

Brazil charges U.S. ethanol exports an 18 percent levy, compared to the U.S. rate of 2.5 percent. “As a result, in 2024, the U.S. imported over $200 million in ethanol from Brazil while the U.S. exported only $52 million in ethanol to Brazil,” the document stated.

India, meanwhile, imposes a 100 percent tariff on U.S. motorcycles. Conversely, the United States adds a 2.4 percent levy on Indian motorcycles, the White House said.

Countries Offering Concessions

A Bank of America report showed that the United States has the lowest trade barrier of any Group of 20 (G20) nations; the world’s largest economies.

“We’ve been taken advantage of for 40 years, maybe more, and it’s just not going to happen anymore,” Trump told reporters aboard Air Force One on March 28.

However, he said many countries are willing to make concessions and he didn’t rule out making deals with those countries.

“It’s possible if we can get something for the deal,” Trump said. “I’m certainly open to that.”

Some countries have already begun offering concessions. On April 1, Israel announced that it will remove all remaining tariffs on American products.

Prior to his long-awaited reciprocal tariff roll out, Trump has threatened to impose levies on friends and foes alike.

During the campaign trail and shortly after winning the election, the president said he would impose 100 percent tariffs on countries that engage in anti-dollar activities.

He also threatened 25 percent tariffs on Colombian agricultural products over a short-lived spat involving President Gustavo Petro’s refusal to accept its nationals deported from the United States. Trump rescinded the levies once Petro caved and accepted his citizens.

After Ontario Premier Doug Ford vowed to cut off electricity flowing from the Canadian province to several U.S. states, Trump stated he would double tariffs on Canada. He reversed the decision after Ford confirmed he would not shut off the power or add taxes to electricity exports.

Trump recently revealed that he plans to announce tariffs on lumber, pharmaceuticals, and semiconductors.

A car hauler truck makes its way to the Ambassador Bridge to cross into Detroit from Windsor, Canada, on April 1, 2025. President Donald Trump has been referring to April 2 as “Liberation Day,” when his administration will begin implementing sweeping new tariffs on goods imported into the United States from other countries. Bill Pugliano/Getty Images

Days after implementing a blanket 25 percent tariff on cars and light trucks manufactured outside the United States, the president stated that he doesn’t care if automakers raise car prices for Americans.

If prices on foreign automobiles increase, customers will shift their buying preferences to American-made vehicles, he said.

“I couldn’t care less. I hope they raise their prices because if they do, people are gonna buy American-made cars. We have plenty,” Trump said in an interview with NBC’s Kristen Welker.

He added that higher prices would bolster U.S.-based manufacturers.

“If you make your car in the United States, you’re going to make a lot of money,” the president said. “If you don’t, you’re going to have to probably come to the United States, because if you make your car in the United States, there is no tariff.”

Auto tariffs are scheduled to take effect on April 3 and will be permanent.

Various individuals have been integral in crafting the president’s tariff plans.

White House press secretary Karoline Leavitt told reporters on March 31 that Vice President JD Vance has been “deeply involved” in trade discussions.

Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, White House economist Kevin Hassett, U.S. Trade Representative Jamieson Greer, and senior counselor for trade and manufacturing Peter Navarro, have all contributed to shaping the tariff regime.

“All of these individuals have presented plans to the president on how to get this done, and it’s the president’s decision to make,” Leavitt said.

A trader works on the floor of the New York Stock Exchange on April 1, 2025. Stocks opened up low as the market reacts to President Donald Trump's April 2 expected proposal for a round of new tariffs. Michael M. Santiago/Getty Images

Tariffs Fuel Market Volatility

Financial markets have wiped out trillions of dollars in value over the last several weeks. Investors fear that tariffs will revive inflation and slow economic growth—surveys suggest the United States could slip into a recession.

The tech-heavy Nasdaq Composite Index has slumped 5 percent in March. The blue-chip Dow Jones Industrial Average fell about 1 percent last month. The broader S&P 500 has trimmed 3 percent to finish the first quarter.

Gold prices have extended their gains from last year, reaching a record high of $3,100 per ounce. The yellow metal gained 19 percent in the first quarter, fueled by strengthening safe-haven demand amid market turmoil.

U.S. Treasury yields have slumped since reaching a mid-January peak as traders concentrate on the economy’s long-term prospects.

The benchmark 10-year yield has fallen about 65 basis points to below 4.16 percent.

The U.S. Dollar Index (DXY), a metric of the greenback against a basket of currencies, has declined 4 percent this year. Tariffs and structural changes have fueled the recent weakness.

Uncertainty has been a sizable force behind the enormous volatility but April 2 should resolve some of the anxieties plaguing investors, says Jeffrey Buchbinder, the chief equity strategist at LPL Financial.

“April 2 is a big day for the stock market,” Buchbinder said in a note emailed to The Epoch Times. “There will still be trade policy uncertainty after that date but the Trump administration is expected to clear up some of the biggest questions investors have right now.”

Tyler Durden Wed, 04/02/2025 - 11:40

China Restricts Local Firms From Investing In US As Trump's Reciprocal Tariffs D-Day Arrives

Hours before President Trump is set to announce reciprocal tariffs—threatening to unleash a global trade war on what he has called "Liberation Day"—the Chinese Communist Party is already preparing a financial counteroffensive. 

Bloomberg cites people familiar with the matter who say Beijing plans to restrict local companies from investing in the United States. This move would give the world's second-largest economy more economic leverage in trade negotiations as Sino-U.S. tensions deteriorate.

Here's more from the report:

Several branches of China's top economic planning agency, the National Development and Reform Commission, have been instructed in recent weeks to hold off on registration and approval for firms that are looking to invest in the U.S., the people said, asking not to be identified discussing sensitive issues.

. . .

There's no sign that existing commitments by Chinese companies in the U.S. and elsewhere, or China's purchases and holdings of financial products including U.S. Treasuries, would be affected, the people said. It's unclear what prompted the NDRC to halt the processing of applications or how long this suspension might last.

The economic decoupling between the U.S. and China continues to accelerate, driven by trade wars and President Trump, who believes, as he said over the weekend to NBC: "The world has been ripping off the United States for the last 40 years and more ... and all we're doing is being fair."

Source Bloomberg

Trump's planned reciprocal tariffs and China's reported move to restrict outbound investment from local companies into the U.S. signals a new phase of superpower decoupling. This decoupling has been happening across multiple areas:

• Technology 

• Capital Flows

• Trade  

Goldman analyst Chloe Garber commented on the BBG report, noting:

BBG reported this morning that China has taken steps to restrict local companies from investing in the U.S. ahead of new tariffs, people familiar said. Several branches of China's top economic planning agency have been instructed in recent weeks to hold off on registration and approval for such firms. Simply put – there are a lot of unknowns here still and mkts hate the uncertainty.

With just hours to go before Trump's "Liberation Day" announcement—expected around 4 p.m.—here's everything you need to know to stay on top of the tariff news cycle (read: here).

Tyler Durden Wed, 04/02/2025 - 11:20

WTI 'Steady' Near 5-Week Highs As 'Drill Baby Drill' Lifts US Crude Production

Crude prices continue to tread water above $70 (WTI) this morning (holding Monday's gains on potential sanctions on Russian oil), drifting modestly lower aftr API reported a large crude build overnight ahead of new supply coming this month as OPEC+ begins to unwind 2.2-million barrels per day of production cuts.

However the new supply is being offset with tightened U.S. sanctions on Iran and Venezuela, while Trump this week threatened to impose secondary tariffs on U.S. imports from countries buying Russian oil.

"Crude prices paused last month's rally, with Brent finding some resistance above USD 75, with the focus-for now-turning from a sanctions-led reduction in supply to Trump's tariff announcement and its potential negative impact on growth and demand," Saxo Bank noted.

DOE

• Crude +6.165mm

• Cushing +2.373mm - biggest build since Jan 2023

• Gasoline -1.551mm

• Distillates +264k

The official data confirmed API's report that Crude inventories saw a large build last week. Stocks at the Cushing hub also soared (most since Jan 2023) as Gasoline stocks fell for the 5th straight week...

Source: Bloomberg

Including a 285k barrel addition to the SPR, last week saw the largest total crude inventory build since the last week of January...

Source: Bloomberg

US Crude production was steady at record highs as Trump's 'drill baby drill' plan appears to be working with the rig count rising notably...

Source: Bloomberg

WTI is holding above $71 for now (near 5-week highs)...

Source: Bloomberg

Finally, we note that the tariffs add to a deluge of conflicting drivers from energy markets since Trump came into office. Sanctions threaten to curb supply from Russia and Iran, even as a production boost by OPEC and its allies starting this month exacerbates concerns a glut is looming later this year.

“We expect a wait-and-see stance in the oil market today until more clarity emerges on Trump’s tariff plans,” said Arne Lohmann Rasmussen, chief analyst at A/S Global Risk Management. “That said, there is a risk that the oil price may decline today, driven by concerns that tariffs will significantly hinder growth.”

Oil prices continue to hover near five-wek highs after the Trump administration threatened to impose steep tariffs of 25% to 50% on buyers of Russian crude, Rystad Energy reported in an analysis piece.. The move, aimed at pressuring Moscow into a ceasefire with Ukraine, added a new layer of geopolitical uncertainty to the market.

'The market is still digesting what these newly proposed tariffs mean for peace negotiations,' said Janiv Shah, Rystad’s vice president of oil.

Shah noted that if the tariff strategy proves effective in encouraging a Russia-Ukraine truce, the measures could be short-lived. However, he warned the tariffs could have diverging effects: “bullish for crude oil and bearish for products.”

Tyler Durden Wed, 04/02/2025 - 10:45

Why The Global Recession Will Be Deeper And Longer Than Pundits Anticipate

Authored by Charles Hugh Smith via OfTwoMinds blog,

The global recession will be deeper and longer than those relying on models based on the past two decades of hyper-globalization and hyper-financialization anticipate.

While everyone focuses on conflicts between nations, few look at the problems shared by nations. Richard Bonugli and I discuss both sets of problems in our latest podcast.

The conflict sphere is dominated by the trade wars that are bubbling up here in the first inning of the global rebalancing of national interests and global trade/financial frameworks. Supporting these frameworks benefits participating nations until they don't, at which point they're jettisoned.

The conviction that these frameworks, linch-pinned by the U.S. since the end of World War II in 1945, no longer serve America's core national security interests, is reaching a rough consensus, and as a result some describe the U.S. as a "rogue superpower." In other words, now that the U.S. is no longer the dumping ground for global surpluses of production, it's seen as "going rogue."

There's a certain naivete in the notion that any nation acts selflessly for the good of all. All nation-states act in their own interests, just as global corporations act to optimize shareholder value and profits while proclaiming the wonderfulness of their products and services. Nations support cooperative arrangements when it benefits them, and exit those arrangements when they morph from benefit to burden.

This rebalancing of cooperation and self-interest is taking place in the larger context of non-trade problems shared by all developed nations. Developing nations share many of these same problems as well: soaring debt loads, resource scarcities, corruption, mal-investment, high inflation, stagnating economies, aging populations, shrinking workforces, rising social costs and massive public health issues, many of which have been expanding rapidly behind the focus on trade and conflicting interests.

The ubiquity of these issues is striking. In some ways, developed nations share more problems than they seem to realize. Consider the global rise of lifestyle diseases generated by dramatic shifts in diets and fitness. These manifest as metabolic disorders (prediabetes, diabetes) and a broad range of other chronic diseases such as heart disease and cancers.

Metabolic disorders generated by changing lifestyles are now weighing heavily on nations around the world, from the U.S. and Mexico to China, India, the Mideast and beyond.

The problems generated by aging populations and declining birthrates are also shared by many nations. The same is true of rising debt levels, both public and private, which threaten to destabilize economies via either ruinously high inflation or fiscal frugality, i.e. austerity. Here is total credit in the U.S., a sobering chart that mirrors the debt loads of many other nations--debt that is outstripping GDP and income as interest rates rise in the new era of global inflationary forces.

The world's nations have awakened to the risks of becoming dependent on other nations for essential commodities, manufactured goods and markets. Tariffs may well be merely the at-bat players in the first innings. If history is any guide, outright bans on imports from selected nations will eventually be viewed as the only available option to rebalance national security priorities.

The degrees of national dependence will become increasingly consequential as mercantilist nations that have relied on exports for growth will find markets for their exports shutting down, crippling domestic growth. Nations that attempt to become self-sufficient will find the demands for capital investment will pressure consumer spending, even as the decline of cheap imports institutionalizes inflation and price increases that outstrip wage increases.

Stagflation will hinder both investment and consumer spending. Austerity will crimp fiscal borrowing and spending, and capital sloshing around the world seeking low-risk returns will face unprecedented challenges as capital controls proliferate and nations change the rules overnight.

I often focus on scale because this is a limiting factor. While there may well be growth opportunities for investing in developing nations, the scale of capital sloshing around global markets will find the investment pipelines the equivalent of a straw: there is no way to deploy $100 billion in small markets and economies, never mind $1 trillion or $10 trillion.

As Immanuel Wallerstein observed, Capitalism may no longer be attractive to capitalists as all these dynamics play out in a vast, inter-connected, unpredictable rebalancing of global interests and increasingly destabilizing attempts to solve complex, intractable problems with cobbled-together expediencies or doing more of what's already failed.

There won't be any "saves" in this rebalancing, and so the global recession will be deeper and longer than those relying on models based on the past two decades of hyper-globalization and hyper-financialization anticipate.

New podcast: The Coming Global Recession will be Longer and Deeper than Most Analysts Anticipate (42 min)

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Tyler Durden Wed, 04/02/2025 - 10:20

US Factory Orders Surge Near Record Highs In Feb (Ignoring 'Soft' Data Slump)

Despite all the 'soft' data slumping and legacy media narrative creation that a recession is imminent, US Factory Orders (hard data) surged for the second month in a row (beating expectations). Headline factory orders rose 0.6% MoM (+0.5% MoM exp) in March and February's 1.7% MoM jump was revised up to +1.8% MoM. This left Factory Orders up 2.5% YoY...

Source: Bloomberg

Core Factory Orders (excluding the more volatile Transportation sector) rose 0.4% MoM - accelerating on a MoM basis for the sixth straight month...

Source: Bloomberg

Finally, February's rise lifted US Factory Orders very close to record highs...

Source: Bloomberg

So much for the 'soft' data-driven recession talk?

Tyler Durden Wed, 04/02/2025 - 10:11

Today, in the Calculated Risk Real Estate Newsletter: Moody's: Q1 2025 Apartment Vacancy Rate Highest Since 2010; Office Vacancy Rate at Record High

A brief excerpt:

From Moody’s Analytics Economists: Q1 Moody’s CRE Preliminary Trend Analysis

The national multifamily market has been under supply-side pressure over the past two years. Steady demand finally paused the vacancy climb after a banner year with record-level inventory growth. Average vacancy stalled at 6.3%, the highest since 2010.

Moody’s Analytics reported that the apartment vacancy rate was at 6.3% in Q1 2025, unchanged from an upwardly revised 6.3% in Q4, and up from 5.8% in Q1 2024. This is the highest vacancy rate since 2010.

This graph shows the apartment vacancy rate starting in 1980. (Annual rate before 1999, quarterly starting in 1999). Note: Moody’s Analytics is just for large cities.

There is much more in the article.

Meta To Expand Ray-Ban Smart Glasses Lineup With Display-Enabled Model

Since late summer or fall of 2024, Ray-Ban Meta Glasses have surged in popularity with US consumers, a trend we previously highlighted citing several Goldman reports. The data was primarily based on app downloads worldwide. 

Source: Goldman's Jack McFerran

Building on this momentum, Mark Zuckerberg's Meta's Reality Labs division is preparing to capture further market share in the smart glasses segment by releasing a new iteration of its Meta Glasses later this year. The glasses will feature an integrated screen for displaying photos and applications, according to a Bloomberg News report. 

These glasses are expected to be priced between $1,000 and $1,400, positioning them as an affordable offering in the smart glasses realm, considering Apple's Vision Pros cost more than $3,000. 

Ray-Ban Meta Glasses have been a hit with consumers considering that many other smart glasses options are unaffordable: Apple Vision Pro. As we previously noted, Tim Cook's space goggles have bombed:

• Vision Pro's Success Hinges On Cheaper Version As Consumers Balk At $3,500 Price Tag

• Apple Reportedly Halts Work On Vision Pro 2, Focuses On Cheaper Version As Demand Falters

• Apple "Might Wind Down" Vision Pro Production Next Month Due To "Weak Demand"

• Number Of Apple Vision Pro Apps Hit By "Significant Slowdown" As Demand Plunges

For months, readers have been briefed on the shift to Meta Glasses...

• Popularity Of Meta Smart-Glasses Erupt As Apple Vision Pro Demand Vanishes

Bloomberg provided further color about the Meta prototype version of the Hypernova glasses ahead of commercialization:

• When they are turned on, the display shows a "boot screen" with logos for Meta and other partners — such as chipmaker Qualcomm Inc. — on the product.

• Once the device is on, the user will see a home screen comprised of circular icons laid out horizontally, similar to the app dock on Apple devices or Meta's Quest mixed-reality headset.

• The glasses include dedicated apps for taking pictures, viewing photos and accessing maps. There is also support for notifications from phone apps, including Meta's Messenger and WhatsApp.

• The glasses will otherwise work similarly to the current Wayfarer-style Ray-Ban Metas, focusing on capturing images and video, accessing AI via built-in microphones and pairing with a phone for calls and music playback. The new version will continue to rely heavily on the Meta View phone app.

• Like Meta's other new devices, the glasses will run a highly customized version of the Android operating system from Alphabet Inc.'s Google. The company isn't currently planning to include an on-board app store.

• Users will be able to control the glasses using capacitive touch controls on the sides of the glasses, meaning they can scroll through apps or photos by swiping against the temple bars and then tapping to open something specific.

• Meta also plans to begin offering a so-called neural wristband for the first time, which will allow a wearer to control the glasses with gestures, such as rotating their hand to scroll through apps and photos and pinching their finger and thumb to select items. Meta is currently planning to bundle the accessory, codenamed Ceres, in the box with the glasses

"The Hypernova glasses are still months away from being introduced, and the company's current plans could change," Bloomberg noted. 

Tyler Durden Wed, 04/02/2025 - 09:50

T-Day

By Michael Every of Rabobank

"I have also to announce to Congress that during the night and the early hours of this morning the first of the series of tariffs in force upon the European Continent has taken place. In this case the liberating assault fell upon the coast of France. An immense armada of upwards of 4,000 tariffs, together with several thousand smaller tariffs, crossed the Channel. Massed airborne tariffs have been successfully effected behind the enemy lines, and tariff landings on the beaches are proceeding at various points at the present time... The Americans are sustained by about 11,000 first line tariffs, which can be drawn upon as may be needed for the purposes of the battle. I cannot, of course, commit myself to any particular details. Reports are coming in in rapid succession. So far, the Commanders who are engaged report that everything is proceeding according to plan. And what a plan! This vast operation is undoubtedly the most complicated and difficult that has ever taken place. It involves tides, wind, waves, visibility, both from the air and the sea standpoint, and the combined employment of land, air and sea tariffs in the highest degree of intimacy and in contact with conditions which could not and cannot be fully foreseen.”

Apologies to Winston Churchill for misusing his D-Day speech: “We shall tariff on the beaches, we shall tariff on the landing grounds, we shall tariff in the fields and in the streets, we shall tariff in the hills; we shall never surrender,” would have been snappier, but historically, the above is the correct one for today.

Because it’s T-day, or “Liberation Day”, or Make America Wealthy Again (MAWA) Day. That’s all we know so far. One rumor is we may get a 20% universal tariff, which would say a lot about ‘state’ and not so much about ‘craft’; or a targeted scheme; that may or may not then be negotiated down. We all still have to wait and see. (Of course tomorrow we start 25% US auto tariffs, on which please see our latest report.)

Ahead of that last-second US decision, last-minute countermoves are being made. Israel (where not much work was needed) and Vietnam (where more was) have both cut all their tariffs on US goods in the hope of a better outcome, and India is reportedly considering the same. Europe (and Canada and Mexico) are instead preparing to fight back, the former even floating escalation into new areas like services and tech that will surely guarantee a furious US response.

The Wall Street Journal hopes tariff clarity today will calm markets, and that’s the White House view too. However, then we all have to wait and see what happens re: counter-tariffs, which seem inevitable --Europe is talking in suitably Churchillian terms again-- and then what the US does in the trade space in response, and outside it to those who don’t see trade is now connected to things like US security umbrellas. In short, we need to quote Winnie again: “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

Yet while D-Day was a very brave and uncertain exercise, the underlying dynamic of US and Soviet military production vs. German and Japanese made the ultimate outcome of WW2 inevitable, just as the ideological split between the US and the Soviets would always then split the world in a different way afterwards. You can’t focus on just one front, no matter how dramatic, but always need to see the entire theatre of operations.

Place US tariffs in the context of a ‘grand macro strategy’ to retain global hegemony as it is now massively outproduced by China, which is allied with Russia and Iran, and you can again see the risks: global bifurcation that makes any one US tariff like a pebble on a Normandy beach.

Economic models that project the rest of the world trading more with each other in the absence of the US market are just that – models. The actual world economy will not work like that. As such, if the US goes it alone today, it implies certain uncertainty; and if it tries to lever others to join it against China, it implies different but equally certain uncertainty. That’s as:

• China just rehearsed encircling and blockading Taiwan again with more ships and jets. Recall the US Department of Defence memo leak said this is now its national security focus. Europe’s Von der Leyen, talking about fighting on the beaches vs the US tariffs, said nothing, but has spoken very bluntly on this in the past: but what would the EU do in a worst-case scenario if it’s also preparing to fight Russia and shooting back in a US trade war?
• Russia won’t accept US peace proposals on Ukraine in their current form; the US may impose secondary sanctions on buyers of Russian oil or even interdict the shadow fleet operating out of the Baltic as a response.
• The US CENTCOM chief was in Tel Aviv for 10-hour discussions, as the Pentagon orders more firepower to the Middle East. Russia says bombing Iran's nuclear infrastructure "will have repercussions for the entire region." And, depending on what Iran might do to others under any attack, not only for that region.
• US National Security Advisor Waltz, with the Signal scandal still swirling round him, is accused of conducting government business over his personal Gmail account. Is this a shotgun to his own foot, again, or friendly fire? How much longer will Waltz be around, and who might replace him if he goes?

Even the current data are uncertain. After yesterday’s US ISM data showing weak new orders and employment and a surge in prices paid, the Atlanta Fed now sees US GDP in Q1 at -3.7%. It’s not as bad stripping out recent gold imports, or all the other imports surging into the US to front-run tariffs. But it isn’t good.

Once again, central banks have no idea what to do and are clearly just hoping for the best. The Fed’s Goolsbee warned about a slowdown in consumer spending and business investment due to tariff uncertainty, which he sees may have a longer-lasting impact on prices than expected due to retaliatory tariffs and their effect on intermediate goods. That sounds like a long way to say “stagflation.”

Meanwhile, Eric and Donald Trump, Jr. launched a Bitcoin mining firm and talked crypto up. Is this all-American speculation, Trumpian grifting, or a signal on a future US policy pivot towards a neutral reserve asset? Moreover, gold prices hit a new nominal record high of $3,133, up 37.5% over a year in which some were/are still thinking about “rate cuts!” If that doesn’t underline the structural uncertainty we are dealing with, not a lot does.

Let’s finish by paraphrasing Winston once more: markets are drunk on uncertainty today, and tomorrow they may be sober, but the global backdrop will still be ugly.

Allow me to add: “By diligent effort, they must learn to like it.”

Tyler Durden Wed, 04/02/2025 - 09:30

Is Trump's Plan Working? ADP Shows Biggest Jump In US Manufacturing Jobs Since Oct 2022

Despite the ongoing strength in jobless claims data, fears are growing in the soft data that Friday's payrolls print might be a game-changer. Today, we get a glimpse of what's possible as, following last month's 'weak' report, ADP's Employment shows the US economy added 155k jobs in March (more than the 120k expected and almost double the 77k added in February)...

Source: Bloomberg

So, once again, the soft data and constant mainstream narrative of recession is crushed by the hard data.

"Despite policy uncertainty and downbeat consumers, the bottom line is this: The March topline number was a good one for the economy and employers of all sizes, if not necessarily all sectors," said Nela Richardson, Chief Economist, ADP

Is it just us, or can you sense the disappointment in her statement that the US economy didn't implode?

Service industry jobs showed a major rebound from weakness in February while goods-producing job additions slowed...

Source: Bloomberg

Manufacturers added 21k jobs in March - the biggest addition since Oct 2022...

Source: Bloomberg

The other piece of 'good' news is that wage growth slowed for both job-stayers and job-changers...

Source: Bloomberg

So much for runaway inflationary pressure and recessionary labor market stagnation... and the surge in manufacturing jobs suggests Trump's plan is working?

Is Trump's plan to reshore manufacturing already working: biggest increase in manufacturing jobs since October 22, which was followed by a 2 year manufacturing recession. pic.twitter.com/7iyA11BSRr

— zerohedge (@zerohedge) April 2, 2025

Tyler Durden Wed, 04/02/2025 - 08:26

From ADP: ADP National Employment Report: Private Sector Employment Increased by 155,000 Jobs in March; Annual Pay was Up 4.6%

“Despite policy uncertainty and downbeat consumers, the bottom line is this: The March topline number was a good one for the economy and employers of all sizes, if not necessarily all sectors,” said Nela Richardson, chief economist, ADP.
emphasis added

This was above the consensus forecast of 119,000. The BLS report will be released Friday, and the consensus is for 135,000 non-farm payroll jobs added in March.