Thursday, May 15, 2025

The Morning Call--The upside to tariffs

 

The Morning Call

 

5/15/25

 

The Market

         

    Technical

 

            Wednesday in the charts.

            https://www.zerohedge.com/market-recaps/bonds-bullion-battered-stocks-scattered-usa-sovereign-risk-tops-greece-china

 

                Wednesday in the tech stats.

            https://www.barchart.com/stocks/momentum

            https://www.barchart.com/stocks/sectors/sectors-heat-map

 

            There are still stock bears to throw in the towel.

            https://www.zerohedge.com/markets/there-are-still-stock-bears-left-throw-towel

 

            The latest from Goldman.

            https://www.zerohedge.com/markets/17-again-april-showers-bring-may-vix-collapse-goldman-flows-gurus-warn-dont-let-euphoria

 

            Gold’s brutal fall.

            https://www.zerohedge.com/the-market-ear/gold-slips-below-key-trend-lines-eyes-3150-level

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          Weekly initial jobless claims totaled 229,000, in line.

 

April PPI came in at -0.5% versus consensus of +0.2%, ex food and energy it was -0.1% versus +0.1%.

 

April retail sales rose 0.1% versus projections of 0.0%; ex auto, they were up 0.1% versus +0.3%.

https://www.zerohedge.com/economics/us-retail-sales-surprises-upside

 

The May NY Fed manufacturing index was -9.2 versus estimates of -10.0; the May Philadelphia Fed manufacturing index was -4 versus -11.

 

                        International

 

Q1 EU employment change was +0.3% versus predictions of +0.1%; Q1 (2nd estimate) GDP grew +0.3% versus +0.4%; March industrial production was up 2.6% versus +1.8%.

 

Q1 UK GDP increased 0.7% versus forecasts of +0.6%; the March trade balance was -L3.7 billion versus +L2.7 billion; March industrial production was up 2.6% versus +1.8%; March YoY construction output rose 1.4% versus +1.2%.

 

April German PPI was down 0.1% versus expectations of +0.2%.

 

April Japanese YoY machine tool orders increased 7.7% versus consensus of +11.7%.

 

                        Other

 

Thoughts from Cullen Roche.  While reading this piece, I found it interesting that the note on higher tariffs was followed by one on the shrinking deficit.  It occurred to me that one of my biggest economic concerns is our budget deficit and the morons in congress have a congenital inability to lower spending/increase taxes to alleviate the problem. Yet Trump just raised taxes unilaterally via tariffs.  Granted it is a regressive tax.  And he may never have considered tariffs as a primary way to shrink the deficit versus righting some economic wrongdoing by our trading partners. So, this may be occurring by happenstance.  But the result is the same---shrinking our deficit---which is lot more important to me than correcting any (imaginary) current trading inequities.  Except for China.  Bottom line: if this is a way (barring fiscal responsibility by congress) to have an immediate impact on deficit spending then perhaps my opposition to tariffs shouldn’t be quite so vociferous.

https://disciplinefunds.com/2025/05/12/three-things-this-is-a-big-deal/

 

                          On the other hand, there are still numerous negative side effects.

                          https://www.apolloacademy.com/it-takes-time-to-rebuild-trust/

 

                          A deep dive into the consumer debt.

https://wolfstreet.com/2025/05/13/household-debts-debt-to-income-ratio-serious-delinquencies-collections-foreclosures-bankruptcies-our-drunken-sailors-debts-in-q1-2025/

 

                          April real wages were up.

                          https://bonddad.blogspot.com/2025/05/average-and-aggregate-nonsupervisory.html

 

            Monetary Policy

 

              The Fed is wrong.

              https://talkmarkets.com/content/economics--politics/the-fed-is-wrong-and-its-going-to-cost-investors-a-fortune?post=497537

 

            Fiscal Policy

 

              Draining the swamp---not.

              https://www.nationalreview.com/carnival-of-fools/welcome-to-the-swamp-now-under-new-management/

 

              Part two.

  https://www.bloomberg.com/news/articles/2025-05-13/trump-s-freebie-qatar-jet-is-the-stuff-of-nightmares-in-spyworld?srnd=homepage-americas&sref=loFkkPMQ

 

 

              The fight over state and local tax deductions.

              https://www.bloomberg.com/news/articles/2025-05-13/how-the-salt-fight-threatens-to-derail-the-republican-tax-bill?sref=loFkkPMQ

 

            Inflation

 

              Looking good.

              https://scottgrannis.blogspot.com/2025/05/april-cpi-looking-good.html

 

              But is it as good as it is going to get?

              https://mishtalk.com/economics/the-year-over-year-cpi-is-likely-headed-higher-for-several-months/

 

              Another deep dive; this one into CPI.

                          https://wolfstreet.com/2025/05/13/beneath-the-skin-of-cpi-inflation-services-inflation-bounces-back-no-signs-yet-of-tariffs-getting-passed-to-consumers/

 

            Tariffs

 

This is a prime example of why I make China the exception in Trump’s trade policies.

https://www.zerohedge.com/geopolitical/rogue-devices-found-hidden-chinese-solar-panels-could-destroy-grid

 

    Investing

 

            A word of caution from Goldman’s strategist.

            https://www.zerohedge.com/markets/what-do-after-rally-goldman-sachs-strategist-doesnt-see-much-upside-here

 

    News on Stocks in Our Portfolios

 

 

What I am reading today

 

           

            A few questions.

            https://collabfund.com/blog/a-few-questions-1/

 

            You can drink your weed now.

            https://www.wsj.com/health/wellness/you-can-drink-your-weed-now-what-to-know-about-thc-beverages-e4def753?mod=wsjhp_columnists_pos_2

 

            A short biography of Cyrus the Great.

            Was Cyrus the Great really a tolerant conqueror?

 

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