Tariffs are just negotiating tactics right? Things are fluid on the tariff front with U.S. automobile manufacturers getting a one-month tariff reprieve, but the only fluids I’m focused on are stockpiling maple syrup and tequila. The major equity indexes just ping-pong around based on headlines and the S&P 500 ended the day up 1.1% to 5,842. Markets are optimistic that further tariff exemptions will be in play, but we’ll see. In Trump’s address Tuesday night, he continues to channel his Powell J-Hole persona, indicating that there could be some pain as the economy adjusts to tariffs. In the meantime markets are having hopium with guac.
ADP Flops, Payrolls Loom
Data time! ADP came in at half of estimates, printing 77K vs. estimates of +160K. Nobody trusts it to predict Friday’s BLS jobs report anyway where estimates are for a headline print of +160K with the unemployment rate holding steady at 4.0%. X is all about weather rebounds of course the impact of DOGE, though that impact is expected to be minimal in this reading. Over at Bloomberg, Anna Wong has an article “Why February Nonfarm Payrolls Could Be a Big Bust”, she’s estimating a +65K and blaming Trump’s orders and weather. If payrolls do print poorly Friday morning the real question is will Trump call another drop in bond yields “beautiful”?
Tariffs are the corporate equivalent of a teenage boy’s ‘bruh’
ISM services came in at 53.5, the 8th consecutive month of activity. The internals looked solid, with strong new orders. But on the inside the word “tariff” showed up 12 times in the report. The hospitality and food industry are screaming “chaos” over pricing, agriculture services have “uncertainty” keeping them up at night, the construction is whining about “cost”, and IT and management consulting is worried about “ripple down effects”. Maybe the latter category should just get McKinsey on the case.
Germany’s Wallet Wakes Up - Victory for Trump?
Germany spending money? It’s been a while, but higher defense spending and a EUR 500bln infrastructure plan are on the table. Will it clear the German political machine and become a reality? I don’t know but the 10Y German Bund yield went up 28bps to 2.76%. Trump’s hardball “Europe, pay up” approach to foreign policy might be working….might be.
On Deck: Will Jobless Claims get DOGE’d and 25bps from Lagarde
The impact of DOGE on federal employees could show up in jobless claims, we’ll see. Across the pond, the ECB is expected to cut 25bps to 2.5%, but we’ll all just want to know about tariffs.
We go into the day before Jobs with a 2Y Treasury at 4.01% and the 10Y at 4.28%.
XTOD’s:
XTOD: Feels like a good time to remember this- If you invested in the S&P 500 every time CNBC had a "Markets in Turmoil" special? Your average return after one year would be 40%, with a 100% success rate.
XTOD: Haven't seen a disaster like this in the European debt market since Liz Truss.
If Europe wants to replace the United States in funding Ukraine, it is going to be extremely expensive and very politically costly. How many working class Italians are going to want to fund Ukraine when their variable rate mortgage jumps up $200/month on April 1st?
XTOD: “Nobody spends somebody else’s money as carefully as he spends his own. Nobody uses somebody else’s resources as carefully as he uses his own. So if you want efficiency and effectiveness, if you want knowledge to be properly utilized, you have to do it through the means of private property.” - Milton Friedman
XTOD: Some people, you'll never know that they're lunatics unless they get very rich.
XTOD: Every single thing you want in life is on the other side of something that sucks. That suck might be 100 hard workouts, 100 bland meals, 100 hours of focused work, or 100 hard conversations. Embrace it as the cost of entry. The answers you seek are found in the actions you avoid.
https://x.com/dividendology/status/1896978783095394719
https://x.com/SpencerHakimian/status/1897347257835364794
https://x.com/dailydirtnap/status/1897433731666682365
https://x.com/nntaleb/status/1897358050979414463
https://x.com/SahilBloom/status/1897288028412100707
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