Respect & Clarity: China Opens Door For Reengaging Trump In Trade Talks

Nasdaq 100 and S&P 500 e-mini futures trimmed overnight losses after China reportedly laid out a set of preconditions for resuming trade talks with President Trump and his administration, Bloomberg reported, citing a source familiar with Beijing's internal deliberations. 

According to the source:

• Demand for Respect: China wants a more respectful tone from the U.S., particularly reducing disparaging remarks from U.S. cabinet members. Beijing was especially angered by Vice President JD Vance's recent "Chinese peasants" comment. Chinese Foreign Ministry spokesman called Vance's remarks "ignorant and disrespectful."

• Unified U.S. Messaging: Chinese officials are confused by conflicting signals from Washington. While Trump's tone on Chinese President Xi Jinping has been moderate, hawkish comments from other high-ranking White House officials have conflicted. Without a clear and consistent U.S. position, China sees little value in engagement.

• Point Person: Beijing wants the Trump administration to designate a point person to oversee trade talks. 

News of the preconditions crossed the Bloomberg wires at 0427 ET. 

This sent the U.S. main equity index futures surging, trimming earlier losses from European and Asian sessions. 

As of 0630 ET, Nasdaq futures are still down 1.5%, while S&P 500 futures are down around 1%. 

Commenting on the Bloomberg report, Gary Ng, senior economist at Natixis, said these developments of potential trade talks between the U.S. and China might fuel more risk-on sentiment:

"The impact on the dollar will still be mixed for now, but there will be more inflows into equities, both in China and the US."

Ng emphasized that this is not a U-turn in strategy, noting China had already signaled its openness to talks in a white paper published on April 9. However, he cautioned that a deal remains uncertain given the wide range of unresolved issues and the deepening economic and geopolitical rivalry between the two economic superpowers. 

Goldman analyst Rich Privorotsky commented on the latest trade developments and markets: 

China IP and retail sales strong overnight…largely ignored as markets lower on the back of U.S. restrictions on NVDA chip exports to China. This follow's yday's announcement of China halting the import of Boeing plans. Seems like the conflict between the two countries continues to escalate without a clear off ramp.

"US President Donald Trump is willing to strike a trading deal with China, but the latter should reach out first" (RTRS)   The upshot "China has appointed a new top trade negotiator amid the tariff war with the U.S." 

Bar feels low for some face saving exercise to bring both sides to the table (tricky part is who makes the first move). In a sense that could be a short term positive catalyst from here but even if tariffs are reduced they are likely to persist on China at some elevated level. 

The implications on U.S. consumers, global trade and growth remain impaired.

The fate of the global economy and financial markets hinges on a trade deal. The latest effective rate of 145% on Chinese goods entering the U.S. and 125% on U.S. goods entering China have already created ructions in global trade routes (read here and here) that only suggest macroeconomic headwinds are incoming in both China and the U.S. 

Tyler Durden Wed, 04/16/2025 - 11:11

Johnson 'Not A Big Fan' Of Raising Taxes For Wealthy, Supports Tax Cuts For Everyone

Authored by Jack Phillips via The Epoch Times (emphasis ours),

House Speaker Mike Johnson (R-La.) said that he likely will not support a measure to hike taxes on wealthy Americans, saying he and his party prefer tax reduction across the board.

House Speaker Mike Johnson (R-La.) speaks during a news conference after the House Republican Conference meeting at the U.S. Capitol Building in Washington on April 1, 2025. Anna Moneymaker/Getty Images

Johnson was asked Sunday by Fox News host Maria Bartiromo about reports that Republicans may increase taxes on the wealthiest 40 percent to pay for certain initiatives backed by President Donald Trump, including his promise not to tax tips or Social Security payments.

“I’m not a big fan of doing that,” Johnson responded in the interview. “We’re the Republican Party and we’re for tax reduction for everyone. So, I mean, that’s a general principle that we always try to abide by. There’s lots of discussion. There’s lots of ideas on the Hill.”

He added in the Sunday morning interview that “I would say just stay tuned.”

“The next five to six weeks are going to be critical as all these negotiations happen in the committees of jurisdiction. You‘ll hear lots of rumors and lots of talk, but we’ll see where it all lands.”

Johnson added that he wanted to pass the measure by Memorial Day, which is May 26, because of the U.S. government’s debt obligations.

Meanwhile, several top Republicans in Congress appeared to pour cold water on raising taxes for the wealthy.

“That has been proposed by some ... I don’t know how that’s going to land,” Senate Majority Leader John Thune (R-S.D.) told the National Review.

During the 2024 campaign trail, Trump proposed no taxes on tips or on Social Security payments, while pledging to make permanent and expand his 2017 Tax Cuts and Jobs Act.

During his joint address to Congress in March, the president said he is still planning to lower taxes for all Americans.

“We’re seeking permanent income tax cuts all across the board,” he said at one point, adding that he wants to cut taxes for the “middle-class, upper-class, lower-class, [and] business-class.”
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The remarks come days after House Republicans on April 10 approved a Senate-amended budget framework, 216–214, setting up tax reform via the reconciliation process.

Just two House Republicans voted against the budget resolution—Reps. Thomas Massie (R-Ky.) and Victoria Spartz (R-Ind.). Two additional Republicans, Reps. Bob Onder (R-Mo.) and David Valadao (R-Calif.), did not vote.

“If you were trying to hasten financial collapse of our country and bribe voters to go along with it, the strategy wouldn’t look much different than what Congress is doing today,” Massie said ahead of the vote. “The big beautiful bill cuts taxes while keeping spending on an increasingly unsustainable trajectory.”

The House passed its tax reform blueprint back in February, providing the House Ways and Means Committee with up to $4.5 trillion for tax cuts in exchange for a minimum of $1.5 trillion in spending cuts. For Ways and Means to make use of the full $4.5 trillion, however, committees would collectively need to come up with another $500 billion in deficit reductions.

The Senate, meanwhile, passed an amended version of the House budget resolution earlier this month, mandating just $4 billion in spending cuts. The Senate version also provides only $1.5 trillion to the chamber’s tax-writing committee, but assumes the use of a scoring tactic that would treat extending the expiring Tax Cuts and Jobs Act provisions as a continuation of existing spending, rather than new expenditure.

The movement in Congress comes as Americans are due to file their taxes by April 15.

The Epoch Times has contacted the White House for comment.

Reuters contributed to this report.

 

Tyler Durden Wed, 04/16/2025 - 11:05

WTI Extends Gains As Cushing Hub Stocks Hit Lowest For Time Of Year Since 2008

Oil prices are higher this morning on the prospect of US-China trade talks (and after better than expected China macro data last night and an implicit suggestion that Beijing will do 'whatever it takes' to maintain the illusion of 5% growth). Prices shrugged off the surprise build in crude stocks reported by API last night.

Elsewhere, Iran said it won’t be drawn into negotiations with the US over its ability to enrich uranium, reducing the potential of looser restrictions on Iranian crude.

“A bit of risk-on followed” the news of China’s openness to talks, said Ole Hansen, head of commodities strategy at Saxo Bank. 

“Overall, the market seems to be settling into a bit of a wait-and-see mode.”

Will the official data have any more bearing on sentiment than the API build?

API

• Crude +2.40mm (-1.68mm exp)

• Cushing -349k

• Gasoline -3.0mm

• Distillates -3.2mm

DOE

• Crude +515k (-1.68mm exp)

• Cushing -654k

• Gasoline -1.96mm

• Distillates -1.85mm

Crude stocks rose for the 3rd straight week (but only adding 515k barrels - a lot less than the 2.4mm build reported by API) while Gasoline stocks fell for the 7th straight week...

Source: Bloomberg

Even with the 299k barrels addition to the SPR, this was a small crude build...

Source: Bloomberg

Total gasoline stocks are at their lowest since Dec 2024...

Source: Bloomberg

Stocks at the all important Cushing Hub fell to their lowest for this time of year since 2008...

Source: Bloomberg

US Crude production was flat on the week, holding near record highs...

Source: Bloomberg

WTI extended gains after the official report with prices topping $62...

Source: Bloomberg

Crude has recovered from a sharp drop to near the lowest in four years brought about by an onslaught of tariffs and counter-levies between the US and its biggest trading partners. Washington on Tuesday started a probe into the need for import taxes on critical minerals, while trade differences with the European Union persist as White House officials said the bulk of the US tariffs imposed on the bloc won’t be removed.

Meanwhile, Iraq plans to cut its oil exports this month as it faces growing pressure to adhere to its OPEC+ production target. The country aims to reduce shipments by 70,000 barrels a day, an official with knowledge of the matter said.

 

 

 

Tyler Durden Wed, 04/16/2025 - 10:38

Bank of Canada Keeps Rates At 2.75% As Expected, Sees "Significant Recession" In All-Out Trade War

The Bank of Canada kept rates steady at 2.75% as expected, with the central bank saying it would support economic growth while ensuring that inflation remains well anchored.

Here are some more highlights from the decision:

TARIFFS:

• The major shift in direction of US trade policy and the unpredictability of tariffs have increased uncertainty, diminished prospects for economic growth, and raised inflation expectations. Pervasive uncertainty makes it unusually challenging to project GDP growth and inflation in Canada and globally.
• Expects tariffs and supply chain disruptions to push up some prices.
• Major shifts in US trade policy have increased uncertainty and cut prospects for growth and raised inflation expectations.

INFLATION:

• Higher inflation in last couple of months reflects some rebound in goods price inflation and end to temporary suspension of sales tax.
• Starting in April, inflation will be pulled down for one year by removal of consumer carbon tax; lower oil prices will also dampen inflation.
• Will continue to assess timing and strength of both downward pressure on inflation from weaker economy and upward pressures from higher costs.
• Short-term inflation expectations have moved up. as businesses and consumers anticipate higher costs from trade conflict and supply disruptions. Longer term inflation expectations are little changed.

In the policy statement, the central bank provided modest forward guidance. It said the governing Council will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs. 

• Will proceed carefully, and with particular attention to risks and uncertainties facing domestic economy.
• GC will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs.
• GC will proceed carefully, with particular attention to the risks and uncertainties facing the Canadian economy.
• Monetary policy cannot resolve trade uncertainty or offset the impacts of a trade war. What it can and must do is maintain price stability for Canadians.

“What happens to the Canadian economy and inflation depends critically on US trade policy, which remains highly unpredictable,” Governor Tiff Macklem said in prepared remarks. “Given this uncertainty, point forecasts for economic growth and inflation are of little use as a guide to anything.” Some more comments Macklem: 

• "At this meeting, we decided to hold our policy rate unchanged as we gain more information about both the path forward for US tariffs and their impact. Monetary policy cannot resolve trade uncertainty or offset the impacts of a trade war."
• "A lot has happened since our March decision five weeks ago. But the future is no dearer. We still do not know what tariffs will be imposed, whether they’ll be reduced or escalated, or how long all of this will last."
• "Monetary policy cannot resolve trade uncertainty or offset the impacts of a trade war. What we can and must do is ensure that Canadians continue to have confidence in price stability."
• "Our focus will be on assessing the downward pressure on inflation from a weaker economy and the upward pressure from higher costs We will support economic growth while ensuring inflation remains well controlled."
• "Faced with pervasive uncertainty, Governing Council will proceed carefully, with particular attention to the risks. That means being less forward-looking than usual until the situation is clearer. It also means we are prepared to act decisively if incoming information points clearly in one direction."

The uncertainty around Trump’s trade policy prompted the central bank to publish two sets of forecasts, instead of a single projection, to capture different possibilities. It released the scenarios Wednesday as it paused their easing campaign for the first time since last June.

• Scenario 1: Most tariffs imposed since the trade conflict began are negotiated away, but the process is unpredictable. Uncertainty about trade policy continues until the end of 2026.
• Scenario 2: The uncertainty and limited tariffs in Scenario 1 persist, and other US tariffs are added. A long-lasting global trade war and "significant recession" unfolds.

In the first scenario, policymakers assume most of Trump’s tariffs get negotiated away. His 25% levies on steel and aluminum and Canada’s associated retaliation remains, as does a 10% US tariff on Chinese goods and Chinese retaliation equivalent to a 1% increase in its weighted average tariff rate on US products. China’s tariffs on some Canadian agricultural products, pork and seafood also stay in place. But even in this scenario where most tariffs are scrapped, the process is unpredictable and businesses and households remain cautious. The uncertainty around trade policy weighs on activity.

In the second scenario, the central bank assumes the imposition of US tariffs including 25% levies on motor vehicles and parts, with Canada’s associated retaliation. It sees Trump adding a 12% tariff on many Mexican and Canadian goods - the White House outlined this figure on April 2 but exempted the countries for the time being. The scenario sees Canada retaliating with 12% tariffs on C$115 billion of US goods. It also assumes the US puts a 25% tariff on goods imported from all other countries, including China. The "all out" trade war scenario also pitches the globe into a long-lasting trade war, and Canada’s GDP contracts in the second quarter, and the economy spends a year in what the bank called a “significant recession,” which permanently lowers the standard of living in the country.

As shown in the table above, the four straight quarterly contractions average about 1.2%. Exports fall sharply until mid-2026, and tariffs permanently reduce US demand for Canadian products. Canadian exporters reduce production and lay off workers, leading to higher unemployment and a slowdown in household spending. Business investment declines due to weak economic activity. A lower Canadian dollar raises the cost of imported equipment and machinery. Growth gradually returns in 2026 but remains soft through 2027.

Inflation in Canada averages around 2% until early 2026, before rising above 3% because of upward pressures on prices from tariffs. It then returns to the 2% target in 2027 as weak demand limits ongoing inflationary pressures. Globally, tariffs drive up inflation, especially in the US, starting in the second quarter of this year.

Consumers and businesses affected by tariff-related price increases may begin to expect that prices will continue to rise at an elevated pace, leading to an upward drift in longer-term inflation expectations. These expectations can become self-fulfilling if they feed through to wage demands and if businesses change how they set prices - a significant risk, given the recent experience of high inflation, the bank warns.

“As we considered monetary policy, we used these two scenarios to reflect uncertainty about US trade policy,” Macklem said. “What happens with inflation will depend on what happens with tariffs. Monetary policy will ensure inflation remains well controlled and support economic growth as Canada confronts this unwanted trade war.”

In kneejerk reaction, the USDCAD tumbled 0.3% and Canada's 10y yield rose 2bp on the decision to hold vs almost split market pricing heading into the decision between a 25bps cut and a hold. The pair immediately fell from 1.3923 to 1.3886 before extending further to a trough of 1.3873 around four minutes later. Furthermore, the Bank refrained from providing economic forecasts, but instead provided tariff scenarios amid trade tensions with the US, in which annual growth was lowered across both tariff scenarios, whilst 2025 annual inflation lowered was lowered and 2026 inflation forecasts diverge across scenario 1 and 2.

 

Tyler Durden Wed, 04/16/2025 - 10:06

New York Business Leaders Say Economic Outlook Worse Since Lehman

The drastically decoupled trend of hard data improvement and soft data dissolution continued this morning with US Manufacturing improving while NY Fed Business Leaders' survey collapsing.

Source: Bloomberg

Business activity in the region’s service sector declined significantly for a second consecutive month in April, according to firms responding to the Federal Reserve Bank of New York’s April Business Leaders Survey. 

"The business climate was much worse than normal, and firms were the most pessimistic they’ve been about the outlook since 2020," said Richard Deitz, Economic Research Advisor at the New York Fed

The survey’s headline business activity index came in at -19.8, its lowest level in more than a year, with 6-mnth forward expectations plunging to the weakest since COVID...

The business climate index dropped nine points to -50.0, its lowest level since Lehman; as expectations for Prices Paid soared top three year highs...

The stagflationary stench from soft data continues.

So, take your pick - worst since the peak of COVID lockdowns or worse since Lehman & the GFC!?

Tyler Durden Wed, 04/16/2025 - 09:45

US Industrial Production Dipped From Record High In March

US Industrial Production dipped in March from record highs...

Source: Bloomberg

The headline industrial production fell 0.3% MoM (slightly worse than the 0.2% decline expected (after February's jump was revised higher to +0.8% MoM)...

Source: Bloomberg

But, US Manufacturing rose 0.3% MoM - its 5th straight monthly rise...

Source: Bloomberg

Output at utilities declined on warmer weather, while mining and energy extraction rose.

Capacity Utilization also dropped after three straight months of improvement...

Source: Bloomberg

Is Trump's dream of re-shoring of manufacturing about to take us to the moon?

Tyler Durden Wed, 04/16/2025 - 09:26

DHS To Revoke Temporary Protected Status For Afghans, Cameroonians In US

Thousands of Afghans and Cameroonians living in the United States will have their temporary protected status (TPS) revoked in the coming months, the Department of Homeland Security (DHS) said on Monday.

DHS Secretary Kristi Noem has terminated TPS designations for Afghanistan and Cameroon as she determined that the countries’ current conditions no longer warrant protections, DHS Assistant Secretary Tricia McLaughlin said in an emailed statement to The Epoch Times.

As The Epoch Times' Aldgra Fredly reports, the decision will affect about 14,600 Afghans, who are set to lose their legal status in May, and approximately 7,900 Cameroonians, whose protected status will expire by June.

McLaughlin stated that Noem decided to terminate Afghanistan’s TPS designation following a review by U.S. Citizenship and Immigration Services (USCIS), which had also consulted with the State Department.

TPS is a designation that allows individuals from countries affected by armed conflict, natural disasters, or other extraordinary events the ability to remain in the United States.

Global Refuge, a U.S.-based nonprofit refugee resettlement agency, has condemned the DHS move to revoke protections for Afghan nationals and urged the government to reverse its course.

Krish O’Mara Vignarajah, president and CEO of Global Refuge, stated that Afghanistan has been facing a humanitarian crisis under Taliban rule, which seized power in August 2021 following the withdrawal of American troops from the country.

In a statement, Vignarajah called the decision to revoke protections for Afghans “a morally indefensible betrayal,” saying that the individuals could face oppression if deported to Afghanistan.

“Afghanistan today is still reeling from Taliban rule, economic collapse, and humanitarian disaster,” she said. 

“Forcing them back to Taliban rule, where they face systemic oppression and gender-based violence, would be an utterly unconscionable stain on our nation’s reputation.”

CASA—which organizes working-class black, Latino, African-descendant, Indigenous, and immigrant communities—said that ending TPS for Cameroonians would put them at “severe risk” due to the ongoing humanitarian crisis in the Central African nation.

The nonprofit stated that nearly 1 million people have been displaced in Cameroon due to an ongoing armed conflict, and that now is not the right time to force the return of Cameroonians.

“Cameroon clearly meets the statutory basis for the redesignation of TPS,” CASA Executive Director Gustavo Torres stated.

“This termination of TPS is a xenophobic attack that targets our families and neighbors and endangers the economy of the U.S.”

The Epoch Times has reached out to DHS for comment but did not receive a response by publication time.

The move to revoke TPS for Afghans and Cameroonians comes amid the Trump administration’s efforts to enhance border security and review immigration programs it says no longer align with national interests.

Last month, DHS said it would revoke the TPS of more than 530,000 immigrants from Cuba, Haiti, Nicaragua, and Venezuela who entered the United States under the Biden administration’s humanitarian parole program, known as the CHNV program.

The program, launched in 2022, had allowed up to 30,000 immigrants from the four countries into the United States each month, provided they met certain conditions, including having a sponsor in the United States who would provide them financial support.

Noem said in a March notice that such parole programs “do not serve a significant public benefit” and are not effective in reducing the levels of illegal immigration in the United States.

The Trump administration has faced legal pushback in its efforts to deport immigrants. On April 10, U.S. District Judge Indira Talwani agreed to block the government from revoking the temporary legal status of Venezuelans, Nicaraguans, Haitians, and Cubans.

Talwani said that the administration’s plan to expose hundreds of thousands of immigrants to expedited deportation was based on an incorrect reading of the statute overriding the process.

Tyler Durden Wed, 04/16/2025 - 09:05

US Retail Sales Soared Most In 2 Years In March As Auto-Spending Spiked Ahead Of Tariffs

Following two disappointing months, US Retail Sales were expected to rebound strongly in March (despite all the chatter about consumer sentiment collapsing thanks to Trump's tariff policies). BofA's omniscient analysts team were slightly less exuberant than consensus but still expected a big 1.2% MoM jump in the headline (and stronger than expected prints in core data).

Notably, before we dive into the data, this was before the real turmoil of Trump's reciprocal tariffs hit.

Following January's plunge and February's small rebound, March headline Retail Sales rose 1.4% MoM (as expected) - the biggest MoM jump since Jan 2023.

This raised the YoY sales rise to +4.6% - the highest since Dec 2023...

Source: Bloomberg

Ex-Autos, sales jumped 0.5% MoM (better than expected) and February's print was revised dramatically higher. 

Ex-Autos-and-Gas, sales also beat expectations (as BofA suggested), rising 0.8% MoM and also seeing a sizable upward revision for February.

Source: Bloomberg

It appears there was a dramatic front-running impact in Autos buying (ahead of the Auto tariffs) and Building Materials (ahead of Canadian tariffs?). We also note that sales at Gasoline Stations tumbled (as gas prices dropped)...

Source: Bloomberg

Obviously the seasonals help to...

Source: Bloomberg

Adjusted roughly for inflation, real retail sales are up by the most in 3 years...

Source: Bloomberg

Of course this will be dismissed by the 'other' as a one-off pre-tariff surge in spending... while we should take the word of respondents from UMich surveys about their view of inflation as holy writ of course.

Maybe they can shrug off the auto and recreation spending surge, but it's hard to suggest that people piled into restaurants in some tariff front-running form?

In fact this surge makes sense if the Democrats in the UMich survey are truly expecting 6, 7, 8% inflation this year... they should be buying everything with both hands and feet!

Tyler Durden Wed, 04/16/2025 - 08:43

Futures Slide After Nvidia Chip Export Curbs Slam Tech Stocks

US equity futures are lower after NVDA unveiled the US government restricted export of its H2) chips to China, sending the stock -6% lower pre-market and dragging the broader market lower; Europe chip giant ASML Holding NV reported disappointing results further denting the semi space. As of 8:00am, S&P futures are down 0.7%, and Nasdaq futures slide 1.5%, with the balance of Mag7 and Semis, all weaker (AMD -6.2%, AVGO -3.3%). Futures had been even lower overnight but bounced shortly after 4am ET after China said to be open to trade talks with some preconditions, including (i) consistency of message and respectful approach; (ii) one person to negotiate that is not Trump but has his authority; with the goal of having a signable agreement before the leaders meet in person. Bond yields are mixed as the curve twists steeper while USD weakness continues, sending the Bloomberg dollar index to a 6 month low. Commodities are rallying today with all 3 complexes higher; WTI crude oil futures are up about 1%, gold futures more than 2%, extending their recent advance. Precious is standing out to the upside, with gold hitting a new record high above $3300. Today’s macro data focus is on Retail Sales.

In premarket trading, Nvidia was the biggest drag for Magnificent Seven stocks after Trump’s administration banned the chip giant from selling its H20 chip in China (Nvidia -6.3%, Tesla -2%, Meta 1.9%, Apple -0.8%, Amazon -1%, Alphabet -2.1% and Microsoft -0.9%). Semiconductor stocks are weighed down after ASML reported quarterly bookings well below estimates (AMD -6.8%, Broadcom -3.8%, Micron -3.7%, Marvell Technology -3.6%, ASML ADRs -4.5%). United Airlines (UAL) climbs 7% after the carrier Tuesday said it expects an adjusted profit of $11.50 to $13.50 a share if the current environment remains stable; But full-year earnings would drop to as little as $7 a share if the US economy enters a recession (peers rise: Delta Air Lines (DAL) +3.2%, American Airlines (AAL) +2.8%). Here are some other notable movers:

• Interactive Brokers (IBKR) drops 8% after the broker’s first-quarter earnings fell short of expectations, with analysts attributing the EPS miss to a slide in net interest income and higher expenses. Peer Robinhood (HOOD) declines 4%
• JB Hunt (JBHT) falls 6% after the trucker reported revenue in multiple segments that fell short of consensus estimates.
• MP Materials (MP) rises 2.9% and TMC the Metals Co. (TMC) gains 3% after President Trump launched a probe into the need for tariffs on critical minerals, the latest action in an expanding trade war that has targeted key sectors of the global economy.
• Omnicom (OMC) slips 2.4% after the advertising company reported quarterly revenue that came in slightly under expectations.
• REV Group (REVG) falls 3% after Morgan Stanley downgraded the manufacturer of specialty vehicles on tariff risk
• Hertz (HTZ) jumps 21% after Pershing Square Capital Management disclosed a 12.7 million share stake in Hertz. Stake value amounts to about $46.5 million

Markets were setting up for another overnight rout after the US government informed Nvidia on Monday that its H20 chip would require a license to export to China “for the indefinite future.” The new rules address Washington’s concerns that “the covered products may be used in, or diverted to, a supercomputer in China,” the company said in a filing. Nvidia warned it will report about $5.5 billion in writedowns during the current quarter, tied to inventory and commitments for the chip.

“This move is unnerving for two reasons,” said Vishnu Varathan, Singapore-based head of economics and strategy at Mizuho Bank, referring to the Nvidia curbs. “First, it conveys the mercurial nature of Trump tariffs in so far that it has revoked earlier concessions extended to Nvidia. Second, this also suggests that the US-China undercurrents are rather abusive, even as there appears to be some calm on the surface.”

However, stocks pared some of the losses in the morning session on signs China may be open to negotiations with the US, sparking some optimism over the possibility of easing trade tensions. China said it wants a number of steps from President Donald Trump’s administration before it will agree to talks, including showing more respect by reining in disparaging remarks by members of his cabinet, according to a person familiar with the Chinese government’s thinking. 

“We’re keeping a defensive stance during this period of uncertainty while being increasingly cautious on tech stocks and industries which have a high share of their value chain exposed to China,” said Francois Antomarchi, a fund manager at Degroof Petercam Asset Management. “There’s the question of knowing when we hit the bottom, geopolitically speaking, of the trade war, and I’m not sure we’re there yet.”

The US government informed Nvidia on Monday that its H20 chip would require a license to export to China “for the indefinite future.” The new rules address Washington’s concerns that “the covered products may be used in, or diverted to, a supercomputer in China,” the company said in a filing. Nvidia warned it will report about $5.5 billion in writedowns during the current quarter, tied to inventory and commitments for the chip.
“This move is unnerving for two reasons,” said Vishnu Varathan, Singapore-based head of economics and strategy at Mizuho Bank, referring to the Nvidia curbs. “First, it conveys the mercurial nature of Trump tariffs in so far that it has revoked earlier concessions extended to Nvidia. Second, this also suggests that the US-China undercurrents are rather abusive, even as there appears to be some calm on the surface.”

Meanwhile, UK bonds rallied after inflation eased more than expected in March, spurring increased bets from traders on Bank of England interest rates.  

Federal Reserve Chair Jerome Powell is expected to give a speech later in the day, and investors will be watching March retail sales data for a reading of consumer sentiment before the tariff turmoil.

In Europe, the Stoxx 600 pares its drop to 0.9%, technology and financial services shares are the worst-performers, while utilities and telecommunications stocks are the biggest gainers. Tech sentiment was further dented by ASML, whose first-quarter orders missed estimates. Here are the biggest movers Wednesday:

• Sartorius shares rise as much as 9.4% after the German lab equipment maker reported better-than-expected results for the first quarter
• Heineken shares gain as much as 3.5%, the most since April 10, after the Dutch brewer’s earnings. Analysts see a beat on Q1 volumes and sales, solid delivery in key markets, and guidance that helped offset FX concerns
• European oil and gas producers drop as much as 1.4%, snapping a two-day winning streak, as crude prices extend their decline
• Bunzl shares plunge as much as 27%, marking a record drop, after the value-added distributor cut its annual guidance due to challenges in North America and paused its share buyback
• EQT shares slide as much as 8.5% as the Swedish investment firm’s cautious guidance on exits and valuations tempers enthusiasm despite a generally solid first-quarter earnings update
• ASML shares drop as much as 7.6% after the chip-equipment maker reported quarterly bookings well below estimates, a sign of weakness in customer demand
• Straumann shares fall as much as 5.3%, worst performer in the Stoxx 600 Health Care Index on Wednesday, after UBS cut its price target on the stock to a Street-low, citing the recent strengthening of the Swiss franc
• Antofagasta falls as much as 2.7% in London after the miner reported copper production for the first quarter 2025 that was 23% lower versus prior comparable period
• WH Smith shares drop as much as 3.3% after UBS said the retailer is closing far more stores than previously expected this year, while others warned a foreign-exchange headwind could also hit consensus estimates
• XPS Pensions shares fall as much as 5.2%, the most since April 7, after the UK benefits consultaning firm issued a trading update which Shore Capital says slightly beat expectations but leaves little room for upward revisions

Earlier in the session, Asian stocks dropped, driven by technology shares following new restrictions on exports of Nvidia’s H20 chips to China. The MSCI Asia Pacific Index declined as much as 1.4%, with TSMC, Alibaba and Tencent among the major drags. The Hang Seng China Enterprises Index led losses among major regional gauges, falling 2.6% on worries around escalation of US-China tensions. Benchmarks in Taiwan, Japan and South Korea also fell.
The latest Nvidia curbs shook investor confidence again after recent signs of stabilization around President Donald Trump’s tariff war. Sentiment was also hurt by disappointing results from Dutch chip-equipment maker ASML and a US probe into the need for levies on critical minerals. Chinese onshore shares eked out small gains toward the end of the day. Some investors remain optimistic on the nation’s efforts to bolster its economy and tech industry. China earlier reported a set of upbeat economic data. Investors will be also be watching for any signs of a cooling in US-Sino tensions.

“Asian stocks found it hard to muster much in the way of forward progress today with the Nvidia news,” said Tim Waterer, chief market analyst at KCM Trade in Sydney. “There is a reliance on the H20 chip from big name players in the Asian tech space, so any moves which could impact supply will be a drag on the broader sector.”

In FX, the Bloomberg Dollar Spot Index is down 0.5% having earlier fell to a six-month low. The Swiss franc outperforms on haven demand although has pared gains to 0.8% amid the bounce in stocks. The euro also adds 0.8% against the greenback. The pound adds 0.3% to around $1.327. 

In rates, treasuries are mixed with outperformance seen in shorter-dated maturities as US two-year yields drop 3 bps to 3.82% and long-dated tenors little changed to cheaper, trailing gains for European bonds after benign UK inflation data. Treasury yields pivot around a little-changed 10-year sector with longer-dated tenors marginally cheaper, steepening 2s10s and 5s30s curves by about 3bp; 10-year is near 4.33% with bunds and gilts in the sector about 3bp richer on the day. Gilts outperform their European peers after UK inflation rose less than forecast in March, with UK 10-year borrowing costs falling nearly 3 bps to 4.62%.  Treasury auctions resume with $13 billion 20-year bond second reopening at 1pm New York. WI yield near 4.83% is ~20bp cheaper than last month’s first reopening, which stopped through by 1.4bp. US session includes March retail sales data, a speech by Fed Chair Powell and a 20-year bond auction.

In commodities, oil prices erased an earlier decline after the report that China is potentially open to trade talks with the US. Bullion gained as much as 2.7% to climb above $3,300 an ounce for the first time, surpassing the previous record set on Monday. Bitcoin is steady just below $84,000.

The US economic calendar includes March retail sales and April New York Fed services business activity (8:30am), March industrial production (9:15am), February business inventories and April NAHB housing market index (10am) and February TIC flows (4pm). Fed speaker slate includes Hammack (12pm), Powell (1:30pm) and Schmid, Logan (7pm).

Market Snapshot

• S&P 500 mini -0.6%
• Nasdaq 100 mini -1.2%
• Russell 2000 mini -0.2%
• Stoxx Europe 600 -0.8%
• DAX -0.5%
• CAC 40 -0.6%
• 10-year Treasury yield -1 basis point at 4.32%
• VIX +1.5 points at 31.57
• Bloomberg Dollar Index -0.5% at 1227.95
• euro +0.8% at $1.1374
• WTI crude +1.1% at $62/barrel

Top Overnight News

• NVDA (-6% pre mkt) filed an 8K last night revealing a more stringent set of export rules around its H20 chip. According to the filing, Nvidia will now require an export license from the US gov’t to sell H20 chips to China and D5 countries (this license requirement will stay in effect for the indefinite future). Nvidia warns it will book up to ~$5.5B in charges in FQ1 related to the H20 because of this requirement. FT
• White House plans aggressive campaign to isolate China economically by forcing countries to limit their dealings w/Beijing in exchange for reduced American tariffs. WSJ
• Japan is set to be the first nation to have trade talks with the US, people familiar with the situation said the US had signalled priorities for the talks, including LNG imports, Boosting Market access to Ags and Japanese auto legislation: FT
• There is more talk in the media about the White House potentially forcing Chinese firms to delist from American stock exchanges. WSJ   
• China is open to talks w/the US but first wants Trump and his administration to show more respect, articulate a consistent position toward Beijing, and appoint a single individual empowered to negotiate. BBG
• China unexpectedly appointed a new int’l trade rep on Wed, installing a fresh person to lead negotiations w/the US (the change could signal that Beijing is hoping to make a breakthrough in talks w/Washington). SCMP
• China’s economic data comes in ahead of expectations, including Q1 GDP (+5.4% vs. the Street +5.2%), Mar retail sales (+5.9% vs. the Street +4.3%), and Mar industrial production (+7.7% vs. the Street +5.9%). RTRS
• BOJ likely to downgrade its growth forecast at the upcoming meeting due to fallout from Trump’s trade war. RTRS
• UAL reported strong Q1 EPS upside at 91c (vs. the Street 74c) w/the beat driven largely by healthy margins (adjusted pre-tax margins rose 360bp Y/Y to 3%) while sales were mostly inline (revenue rose 5.4% w/capacity +4.9% and RASM +0.5%). RTRS
• Donald Trump’s tariffs are forcing private equity groups to pause their dealmaking and focus on managing their existing portfolio companies, in a stark reversal of earlier expectations for a boom in activity under the new administration. FT

Chipmakers

• NVIDIA (NVDA) expects USD 5.5bln in charges in Q1 FY2026 related to H20 products after the US informed the Co. it requires a licence to export those chips to China.
• NVIDIA (NVDA) reportedly did not inform some of its major customers about the new US export restrictions for China-focused H20 chip after the Co. received notice of them, via Reuters citing sources; received around USD 18bln of orders for H20 chips YTD.
• US chip equipment makers calculated that Trump administration tariffs could cost them more than USD 1bln a year, with tariffs estimated to cost Applied Materials (AMAT), Lam Research (LRCX) and KLA Corp (KLAC) USD 350mln each annually, according to Reuters sources.

China

• China is said to be open to talks if US President Trump shows respect, via Bloomberg sources; China wants Trump to rein in cabinet members and show consistency; wants US talks to address concerns on Taiwan and sanctions "The most important precondition for any talks is that Chinese officials need to know such engagement will be conducted with respect" The source said Trump has been relatively dovish when speaking publicly about Chinese President Xi, but other members of his administration have been more hawkish, leaving officials in Beijing unsure of the States' position.
• US President Trump said, when talking on the tariff pause, that they may want countries to choose between the US or China.
• US intends to use tariff negotiations to isolate China with officials planning to use the negotiations of more than 70 nations to ask them to disallow China to ship goods through their countries, according to WSJ.
• White House Press Secretary said President Trump messaged that the ball is in China's court and that they don't have to make a deal with them but Trump is open to a deal with China.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly subdued following the choppy and rangebound performance on Wall St. amid mixed data releases and as trade frictions lingered, while the mostly better-than-expected Chinese GDP and activity data failed to inspire a bid. ASX 200 clawed back losses amid strength in gold miners, consumer staples and financial but with gains limited by weakness in miners including Rio Tinto which reported a drop in quarterly iron production and shipments. Nikkei 225 trickled lower to beneath the 34,000 level amid the ongoing global trade war concerns and despite encouraging Machinery Orders. Hang Seng and Shanghai Comp underperformed amid US-China trade frictions the US said to intend to use tariff negotiations with other countries to isolate China and will also require a licence for NVIDIA to export H20 processors to China, while mostly better-than-expected GDP and activity data from China failed to inspire given that they were from a period before the US-China tariff escalation.

Top Asian News

• BoJ said to cut 2025 growth forecast in its quarterly Report, according to Reuters sources; no consensus within the BoJ on the extent of Trump tariff damage
• China's MOFCOM issued an action plan to promote service consumption which covers areas including catering, tourism and leisure, while it will support the expansion of sectors including catering, accommodation, health, culture, entertainment and tourism. Furthermore, the plan will focus on coordinating domestic and international dual circulation and insist on exerting efforts on both supply and demand, as well as provide strong support for high-quality economic development.
• China's stats bureau deputy commissioner said the unfavourable impact of the international environment on China's economy is deepening, protectionism is rapidly rising globally and the world economic order has been severely damaged. The official said they resolutely oppose US tariffs which are against economic rules and WTO rules, as well as noted that high US tariffs will bring about some pressures on China's trade and economy. However, the deputy commissioner also commented that Q1 data underscores China's strong resilience and potential, while the official added that macroeconomic policies will become more proactive this year and that China has a rich policy toolkit to support the economy.
• BoJ Governor Ueda said they may need a policy response but will decide appropriately in line with changing developments when asked about a BoJ response if US tariff policy puts downward pressure on Japan's economy, while they will scrutinise without any preconception impact of US tariff policy on Japan's economy which is already affecting corporate and household confidence. Furthermore, Ueda said from February onwards, risks surrounding US tariff policy have moved closer towards the bad scenario the BoJ envisioned and noted the BoJ sees both upside and downside risks to the price outlook, according to Sankei.
• Japan's NHK Spring (5991 JT) is to reconsider plans to cut auto parts production in the US, in response to tariffs, according to Nikkei.

European bourses (STOXX 600 -0.9%) opened on the backfoot, continuing the mostly subdued APAC session. A quiet significant pick-up off lows was seen following a Bloomberg report which noted that China is open to talks if US President Trump shows respect – nonetheless, indices still reside in the red. Sentiment today has been hit due to several factors; 1) US President Trump ordering investigations into critical minerals, 2) NVIDIA expecting USD 5.5bln hit amid US export controls, 3) Latest White House Fact Sheet suggested China now faces up to a 245% tariff on imports to the United States as a result of its retaliatory actions. (awaiting clarity), 4) poor ASML results. European sectors hold a defensive bias, in-fitting with the risk tone. Tech is by far the clear underperformer, with downside today driven by losses in post-earning losses in ASML and NVIDIA export control updates. Autos & Parts and Basic Resources are also on the backfoot given the risk tone.

Top European News

• US President Trump signed a healthcare executive order seeking changes to the US Medicare drug price negotiation process and signed an order restoring common sense to federal procurement by simplifying the process, while the order aims to simplify and streamline federal acquisition regulation.
• A dozen US House GOP members have said no to big Medicaid cuts, according to Punchbowl News.

FX

• USD is softer across the board after a session of slight gains yesterday with the dollar struggling in the current risk environment. Focus remains on the trade war with the White House stating that over 15 trade deal proposals are being considered and some could be announced soon. In recent trade, the USD was provided a modest boost after a more conciliatory report from Bloomberg that China is said to be open to talks if US President Trump "shows respect". Ahead, US Retail Sales and commentary via Fed Chair Powell. DXY is back below the 100 mark and briefly slipped below Tuesday's low at 99.47.
• EUR is firmer vs. the USD and one of the better performers across G10 FX. Fresh macro drivers for the Eurozone have been lacking during today's session after Tuesday's saw woeful ZEW metrics and reports that there has been little progress in trade negotiations between the EU and US. EUR/USD briefly breached Tuesday's best at 1.1378 but ran out of steam ahead of 1.14, topping out at 1.1392.
• JPY has retreated beneath the 143.00 level with flows into the yen amid the downbeat risk tone and after Machinery Orders topped forecasts. Elsewhere, comments from BoJ Governor Ueda failed to have any material sway on the Yen with the policymaker noting the Bank may need a policy response but will decide appropriately in line with changing developments, adding that the BoJ sees both upside and downside risks to the price outlook. USD/JPY has delved as low as 142.05.
• Antipodeans are both firmer vs. the USD but to a lesser extent than peers considering the current risk tone and after a solid showing during Tuesday's European session. Support from better-than-expected Chinese GDP proved to be temporary given the consensus view that growth is set to slow in the coming months on account of the trade war with the US.
• CAD is firmer vs. the USD but to a lesser degree than peers. Yesterday saw softer-than-expected Canadian inflation data which failed to have a sustained impact on pricing for today's BoC rate decision which sees an unchanged rate at around 60% vs. a 25bps cut at 40%.
• Support from better-than-expected Chinese GDP proved to be fleeting for the Yuan with desks dismissing the data as stale and warning of further headwinds to come. In recent trade, USD/CNH was knocked lower by a report in Bloomberg that China is said to be open to talks if US President Trump "shows respect".

Fixed Income

• USTs incrementally firmer and deriving some haven demand from the NVIDIA & ASML updates. However, USTs are failing to benefit to the same degree as core peers across the pond. Most recently, USTs were knocked by around 10 ticks by a Bloomberg source report that China is open to trade talks with the US, but that they have a number of pre-conditions to this; full details on the feed. Whilst the risk-off mood continues to remain at play, the downside in USTs has continued to extend, and more recently has taken US paper to just above the unchanged mark. Ahead, US Retail Sales, Fed Chair Powell and US supply.
• Bunds began bid, as the risk tone has been chipped away by updates from NVIDIA & ASML. Developments specifically for the bloc have been a little light, final inflation data from Italy subject to a modest revision lower but spurred no reaction. Bunds trimmed roughly 30 ticks following the Bloomberg/China reporting, and extended lower into a 2052 & 2056 Bund auction - but no real move on it.
• Gilts initially firmer start to the session given the risk-off tone after NVIDIA’s update and exacerbated by ASML. Further bullish impetus for Gilts came from UK CPI. Altogether, this caused the benchmark to gap higher by 43 ticks and then extend 25 more to a 92.32 peak. The CPI series was cooler-than-expected overall and will be welcomed by those on Threadneedle St. and has seen the odds of a 25bps cut in May tick up to near-enough fully priced vs a c. 80% chance pre-release. Most recently, as outlined above, the risk tone has seen a marked recovery on the China-trade report. A recovery which weighed on Gilts back to the 92.00 mark though the benchmark remains well into the green and is the clear outperformer across the core space.
• Spread for the new Italian 7yr BTP set at +13bps, 30yr I/L set at +36bps, via Reuters citing leads.
• UK sells GBP 1.5bln 0.125% 2028 Gilt; b/c 3.84x, average yield 3.631%.

Commodities

• Crude spent most of the European session in the red, but those losses have since reversed after Bloomberg reported (citing sources) that China is said to be open to talks if US President Trump shows respect. Elsewhere, the mostly better-than-expected GDP and activity data from China failed to inspire given that they were from a period before the US-China tariff escalation. WTI resides in a USD 60.44-61.55/bbl range while its Brent counterpart trades in a USD 64.90-64.31/bbl parameter.
• Firm price action across spot gold and silver amid the risk aversion caused by the aforementioned factors - namely the worsening trade landscape. Spot gold mounted USD 3,300/oz for the first time ever, with momentum continuing - with today's range currently USD 3,230.68-3,317.92/oz.
• Base metals are softer across the board amid the overall downbeat sentiment across the markets amid the aforementioned reasons. 3M LME copper resides in a USD 9,030.00-9,125.15/t range.
• US Private Inventory Data (bbls): Crude +2.4mln (exp. +0.5mln), Distillate -3.2mln (exp. -1.2mln), Gasoline -3.0mln (exp. -1.6mln), Cushing -0.3mln.
• OPEC states that Russia has to compensate for 691k BPD of overproduction.

Geopolitics

• Israel's army said it bombed Hezbollah infrastructure in southern Lebanon, according to Sky News Arabia.
• US President Trump held a meeting on Tuesday morning in the White House situation room about the ongoing nuclear deal negotiations with Iran, according to two sources with direct knowledge cited by Axios.

US event calendar

• 7:00 am: Apr 11 MBA Mortgage Applications -8.5%, prior 20%
• 8:30 am: Mar Retail Sales Advance MoM, est. 1.35%, prior 0.2%
• 8:30 am: Mar Retail Sales Ex Auto MoM, est. 0.4%, prior 0.3%
• 9:15 am: Mar Industrial Production MoM, est. -0.2%, prior 0.7%
• 9:15 am: Mar Capacity Utilization, est. 77.9%, prior 78.2%
• 10:00 am: Feb Business Inventories, est. 0.2%, prior 0.3%
• 10:00 am: Apr NAHB Housing Market Index, est. 37.5, prior 39
• 4:00 pm: Feb Net Long-term TIC Flows, prior -45.2b
• 4:00 pm: Feb Total Net TIC Flows, prior -48.8b

Central Banks

• 12:00 pm: Fed’s Hammack Speaks in Moderated Q&A
• 1:30 pm: Fed’s Powell Speaks to Economic Club of Chicago
• 7:00 pm: Fed’s Schmid Chats With Fed’s Logan on Economy, Banking

DB's Jim Reid concludes the overnight wrap

After a strong start to the week, the market mood turned more negative again yesterday, as tensions between the US and China showed signs of further escalation. That meant the S&P 500 (-0.17%) posted a modest decline, and futures on the index are down another -0.90% this morning, which follows the news that the US had imposed restrictions on Nvidia’s chip exports to China. On top of that, Trump also launched a probe into whether critical minerals should face tariffs, so that added to fears that further tariffs were on the horizon. So after a brief period of greater stability in markets, that reminded investors about the ongoing risks of escalation, raising fears that the trade war could still get worse from here.

Those concerns about further trade restrictions came on several fronts yesterday. In terms of the Nvidia story, the administration placed new restrictions on the export of Nvidia’s H20 chips to China, which had actually been designed to comply with earlier US export restrictions. As a result, Nvidia said it will report $5.5bn in write downs due to the new rules. Meanwhile, in another sign that the US-China trade war moving beyond tariffs, Bloomberg reported earlier yesterday that China ordered its airlines to halt any deliveries of Boeing jets and purchases of US aircraft equipment. So while there had been optimism after the weekend news on tariff exemptions for electronics, there’s been no sign since of either the US or China backing down and yesterday the White House commented that “The ball is in China’s court. China needs to make a deal with us. We don’t have to make a deal with them”.

Elsewhere, there was also little sign of the US coming to an agreement with the EU, as Bloomberg reported that the EU-US trade negotiations made little progress. The article said that Maroš Šefčovič, the EU’s trade chief, left the talks struggling to determine what the US was aiming for, and also that US officials indicated the tariffs would not be removed outright. So again, this pushed back on the more positive narrative around the weekend, which was generally in the direction of more exemptions on the tariffs (e.g. smartphones) and lots of discussions with trading partners.

With the overnight news, that’s meant Asian markets are struggling this morning, with losses for the Nikkei (-0.86%), the Hang Seng (-2.53%), the CSI 300 (-0.93%), and the KOSPI (-0.66%). Tech stocks have been particularly impacted, and the Hang Seng Tech index is down -4.53%, whilst futures on the NASDAQ 100 are down -1.54%. But it’s not just equities that have been impacted, as fears of an escalation have spread to other asset classes once again. For instance, the dollar index has fallen -0.48% this morning, and gold prices (+1.35%) have surged to another record high of $3,274/oz. Long-end Treasury yields have also crept up a bit, with the 30yr yield (+0.8bps) posting a most gain to 4.79%.

Those overnight losses happened despite a strong Q1 GDP print out of China. However, like a lot of economic data right now, the Q1 numbers aren’t too much of a focus for markets, as they don’t take into account the reciprocal tariff impact, so we’ll have to wait a few weeks before we get concrete numbers on that. Nevertheless, Q1 GDP was up +5.4% year-on-year (vs. +5.2% expected), the same pace as Q4. Moreover, the March activity data was also above consensus, with retail sales up +5.9% year-on-year (vs. +4.3% expected), and industrial production up +7.7% year-on-year (vs. +5.9% expected).

Ahead of the latest trade news, the S&P 500 (-0.17%) was fairly stable, although the index gave up much stronger gains at the open, when it had peaked at +0.82% intraday. The initial optimism was supported by decent earnings releases and the lack of further trade news, which added to growing hopes that the US could still avoid a recession this year. So most assets kept unwinding their tariff-related moves, and by the close, US HY spreads were still -4bps tighter, whilst the 10yr Treasury yield fell back -4.1bps to 4.33%. Even the dollar index (+0.53%) recovered some ground, ending a run of 5 consecutive declines.

In terms of the session, there was a reasonable amount of sectoral divergence. Financials outperformed, with Bank of America (+3.60%) and Citigroup (+1.76%) both seeing strong advances after their earnings results. However, the Magnificent 7 (-0.55%) continued to drag on the rest of the S&P, falling back for a second day running, while Boeing fell by -2.36% following the reporting on China’s pullback. By contrast, European equities put in a much stronger performance, and the STOXX 600 (+1.63%) just about managed to move back into positive YTD territory, now up +0.09% since the start of the year. We even saw the VIX index (-0.77pts) fall back for a third day running to 30.12, although it picked up towards the end of the session, having fallen beneath the 30 mark on an intraday basis at one point.

Meanwhile on the rates side, the Treasury rally saw the 10yr yield (-4.0bps) fall back to 4.34%, with the 30yr yield (-3.1bps) down to 4.78%. Moreover, US Treasuries outperformed their European counterparts, where yields on 10yr bunds (+2.3bps), OATs (+2.2bps) and BTPs (+3.8bps) all moved higher. So again, that unwound one of last week’s big moves, which was a huge widening in the 10yr UST-bund spread, but that tightened again for a second day running. The outperformance of Treasuries was supported by comments from Deputy Treasury Secretary Michael Faulkender that officials were investigating potential changes to the Supplementary Leverage Ratio regulation, which could allow banks to buy more Treasuries. In the meantime, US credit spreads also tightened, with HY spreads down -4bps to 405bps, whilst IG spreads came down -1bp to 111bps.

Finally, looking at yesterday’s data, there was a huge slump in the German ZEW survey’s expectations measure. The component fell back to -14.0 (vs. +10.0 expected), which was a big reversal after its surge the previous month, and also brings it down to its lowest since July 2023. Separately in Canada, the latest CPI reading surprised on the downside, with headline CPI falling to +2.3% (vs +2.7% expected). And in the UK, the number of payrolled employees fell by -78k in March (vs. -15k expected).

To the day ahead now, and US data releases include retail sales, industrial production and capacity utilisation for March, along with the NAHB’s housing market index for April. In the UK, we’ll also get the March CPI reading. From central banks, we’ll hear from Fed Chair Powell, as well as the Fed’s Hammack and Schmid. There’s also a policy decision from the Bank of Canada.

 

Tyler Durden Wed, 04/16/2025 - 08:34

ASML Misses On Orders As CEO Warns Of Trade War; Analysts Call Results "Disappointing" 

Nasdaq 100 futures declined 1.5% early Wednesday, driven by renewed pressure on semiconductor stocks. Nvidia fell about 6% in pre-market trading following the Trump administration's move to block exports of its H20 AI chips to China. Meanwhile, shares of ASML Holding slid around 5% in European trading after the company delivered a weaker-than-expected earnings report, casting a dark shadow over the near-term outlook for the global semiconductor industry amid mounting economic pressures from the trade war.  

Dutch chip equipment maker ASML, which designs and manufactures lithography systems for Intel and Taiwan Semiconductor Manufacturing, reported bookings of 3.94 billion euros in the first quarter, missing the average analyst estimate tracked by Bloomberg of 4.82 billion euros. ASML pointed out that order intake for EUV machines is a "lumpy" metric and doesn't accurately reflect momentum in the industry. 

The key takeaway for the 1Q25 earnings: ASML delivered mixed results, with better-than-expected margins and earnings offset by a sharp decline in bookings. The results suggest solid near-term performance but growing demand uncertainty as the artificial intelligence bubble was 'DeepSeeked' earlier this year, plus mounting macroeconomic headwinds from deepening trade wars already filtering into main shipping channels between Asia and the U.S. 

Here's a snapshot of the first quarter earnings: 

Bookings EU3.94 billion, -44% q/q, estimate EU4.82 billion (Bloomberg Consensus)

Net sales EU7.74 billion, -16% q/q, estimate EU7.75 billion

• Net system sales EU5.74 billion, estimate EU5.69 billion
• Net service & field operation sales EU2.00 billion, estimate EU2.1 billion

Gross margin 54% vs. 51.7% q/q, estimate 52.5%

R&D expenses EU1.16 billion, estimate EU1.14 billion

Operating income EU2.74 billion, estimate EU2.65 billion

Operating margin 35.4%, estimate 33.9%

Net income EU2.36 billion, -13% q/q, estimate EU2.24 billion

Cash and other EU9.10 billion, -29% q/q, estimate EU12.21 billion

Total lithography systems sold 77 units, estimate 100.62

ASML CEO Christophe Fouquet said in the company's quarterly earnings statement that ongoing customer discussions reinforce the company's expectation that both 2025 and 2026 will be years of growth.

"However, the recent tariff announcements have increased uncertainty in the macro environment," Fouquet warned. 

ASML's 2025 financial guidance remains unchanged, but that could change if trade wars deepen... 

Second Quarter Forcast: 

• Sees net sales EU7.2 billion to EU7.7 billion, estimate EU7.66 billion

• Sees gross margin 50% to 53%, estimate 52.3%

• Sees R&D expenses about EU1.2 billion, estimate EU1.16 billion

Full Year Forecast: 

• Still sees gross margin 51% to 53%, estimate 52.1%

• Still sees net sales EU30 billion to EU35 billion, estimate EU32.59 billion

Commenting on the results, Citi analyst Andrew Gardiner told clients that ASML's first-quarter orders were "disappointing," with tariff-related uncertainty "clouding" the outlook. However, he noted that the reaffirmed full-year guidance and the company's expectation of continued growth into 2026 offer investors a partial sigh of relief.

Barclays analyst Simon Coles told clients that ASML would need to hit 3 to 5 billion euros of orders each quarter for the next 3 to 5 quarters to hit consensus expectations: "This seems manageable but our worry is two major customers are unlikely to be ordering significantly any time soon." 

Here are Goldman analysts Alexander Duval and Anant Jakhar's first take on the first quarter results:

ASML's 1Q25 revenue was in-line but EBIT was above Visible Alpha Consensus Data, driven by higher gross profits which benefited from a higher share of 3800E tools in the mix (which have higher ASP) and customer specific performance target rewards. The company's bookings figure in 1Q was €3.9bn, (down qoq from a very strong 4Q24 order intake of €7.1bn and below Visible Alpha Consensus Data of c.€4.8bn), including €1.2bn of EUV orders (below cons estimate of €1.6bn). As such, we note that the 1Q25 order intake of €3.9bn is higher than the order run-rate needed (c.€3-4bn) to hit the 2026 cons estimate. Importantly the company shipped another High NA tool in the quarter which could be taken positively by investors. The company acknowledged macro uncertainty but sees AI as the main driver of its market. Furthermore, the company stated that based on its discussions with customers it sees both 2025 and 2026 to be growth years. The company introduced its 2Q25 net sales guidance of around €7.2-7.7bn and expects 2Q25 gross margins to be around 50-53% (a wider range to reflect macro uncertainty) implying revenue/gross profit/EBIT that is 4%/6%/10% below cons. Further, ASML reiterated its 2025 guidance and expects sales of €30-35bn, with gross margins of 51-53%. Additionally, we note that ASML's 2Q25 guide for GM includes a certain degree of dilution from ramp of high NA but the company remains on track to deliver its FY25 GM target as it expects 3800E to become the main Low NA tool being shipped to customers.

In terms of end market trends, ASML expects continued strength in advanced Logic, with customers ramping 2nm technology nodes, strong memory at same level as last year, and growth in installed base management driven by more EUV. The company believes the Memory market will remain robust at the same level as last year, as confirmed by customer activity. Furthermore, we note ASML's growing Installed Base, driven by a stronger mix of EUV versus DUV. Finally, the company reiterated its LT 2030 revenue and GM guidance. More broadly, we expect investors to seek more colour of the recent tariffs on semiconductor equipment and end market demand, latest expectations for order intake from Foundry/leading-edge customers, demand dynamics in the trailing-edge end markets. Reiterate Buy.

Goldman's view:

We expect an initial mixed reaction in the shares, in light of a beat on the current quarter KPIs versus consensus, and commentary around 2025/26 to be growth years offset by below cons order intake as well as below-cons 2Q25 guide. That said, we note that ASML has underperformed by 6% vs EU Tech in the last 3 months, and is down 11% abs YTD. We expect investors to seek more colour of the recent tariffs on semiconductor equipment and end market demand, latest expectations for order intake from Foundry/leading-edge customers, demand dynamics in the trailing-edge end markets.

Goldman = Buy-Rated ASML: 

We are Buy rated on ASML with a 12-month price target of €1,010 based on a 32x CY26E P/E multiple. Key risks to our view and price target include EUV delays, capex cyclicality and unfavourable market share shifts.

More institutional commentary on the first quarter results and outlook: 

Stifel (hold)

• 2Q guidance is soft, below consensus with a 10% miss at the Ebit level, says analyst Juergen Wagner

• Both EUV and overall orders missed estimates for 1Q; 2025 guidance was confirmed, but "with a tariff disclaimer"

• With 2Q guidance a miss, the year now looks increasingly back- end loaded

Morgan Stanley (equal-weight)

• Net bookings suggest that only six low-NA EUV tools were ordered in the March quarter, showing weakness, says analyst Lee Simpson

• Implied DUV bookings of €2.7b confirms a decent China order book

• Firm still sees AI as a key demand driver and has seen demand for 2026 starting to solidify, but it also notes potential tariff impact. Its weak 2Q guidance reflects some of this caginess

ASML's shares fell 5% to 575 euros in the early afternoon trading hours in Europe. Shares are down 42% since peaking at around 1,000 euros in mid-July last year. 

The key question is whether the deepening trade war will derail the global race for AI, or if the U.S. and China can reach a resolution in the near term to defuse the trade war bomb that could sent the global economy into a downward spiral.

Tyler Durden Wed, 04/16/2025 - 08:20

The Dollar Bubble Just Burst: Peter Schiff Warns "This Is The Collapse I've Warned About For Years"

Via SchiffGold.com,

In an interview last week on Kitco News, Peter joined Jeremy Szafron to offer his latest insights into the unraveling U.S. economy, surging gold prices, and rapid inflationary pressures. Peter explains the Fed’s precarious position, the imminent threat of a U.S.-centric financial crisis, and why he thinks we’ve already entered serious economic decline, despite the government’s denials.

Peter kicks off by noting the troubling and self-inflicted nature of the current economic turmoil, pointing directly at misguided actions by former President Trump, whose tariff policies were based on fundamentally flawed reasoning:

Well, I mean, this is something that I’ve been predicting for quite some time now. It was inevitable. I always thought it would be an external dollar crisis that would set these events in motion. I didn’t realize that we would do it to ourselves, but we have. We’ve pricked our own bubble and there’s a lot of air that’s going to come out of it. You know, Donald Trump looked at our huge trade deficits and just concluded that the trade deficits themselves were the problem and that they must be the result of foreigners cheating us and ripping us off.

As economic uncertainty has grown, gold prices have surged significantly. Peter emphasizes gold’s recent notable momentum, a rally that many investors overlooked due to their fixation with cryptocurrencies like Bitcoin:

Well, gold’s up over $250 in the last three days. So we’re accelerating. Two days, the last couple of days, we were $100 a day, and maybe we’ll be up again. Maybe we’ll be up another 100 by the time they close today’s trading. But what’s happening, and what I’ve been telling people was happening all last year as the price of gold went from 2000 to 3000 and nobody cared and nobody was buying it because everybody was sidetracked by Bitcoin and all the talk about digital gold.

Turning to the inflation outlook, Peter sharply criticizes the Fed’s claims that inflation expectations remain anchored at their so-called 2% target. He argues that the actual inflation outlook is far worse than the Fed admits and set to climb higher:

Yeah, well, the year ahead inflation expectations now are 6.7%. I mean, the Fed keeps saying that long-term expectations remain anchored at 2%. What are they talking about? Nothing is anchored at 2%. We’ve been adrift for a long time and now we’re at 6.7%. And you know what? It’s going to be a lot higher than that. The Fed is completely wrong.

Peter believes the Federal Reserve will eventually be forced to reverse rate hikes and resume quantitative easing (QE), but only after recognizing clear systemic deterioration. He foresees a painful and widespread economic contraction, particularly affecting employment within the service sector:

I think the Fed is eventually going to cut rates and go back to QE, but they’re waiting for everything to collapse. Because they don’t even know that it’s going to collapse. But they’re waiting for some signs that the financial system is buckled. Maybe they want to see big layoffs, which are coming. We’re going to have widespread layoffs in the United States because the whole service sector economy is going to shut down because all the imports are going to be cut off.

Finally, Peter cautions listeners that the U.S. economy is heading toward a severe crisis—one he considers far worse than the global financial crisis of 2008. Crucially, he points out that the brunt of the damage will impact America specifically, emphasizing the international shift away from reliance on the U.S. dollar and American markets:

Well, I think that there is going to be a massive loss of confidence because it’s been a confidence game the entire time. But look, this is going to be a financial crisis much worse than 2008, but it’s not going to be global. It is a U.S. crisis. It’s not a global crisis. It’s actually liberation for the rest of the world because they’re going to be liberated from the burden of supporting the U.S. economy. That means more for them.

If you missed it, be sure to watch Peter’s debate tariffs with Spencer Morrison and George Gammon!

Tyler Durden Wed, 04/16/2025 - 08:05

The post Donald Trump Wants His Backers to Have Lousy Jobs appeared first on CEPR.

 

 

I had a fun and wide-ranging conversation with Felix Salmon, Emily Peck, and Elizabeth Spiers to unpack all of the wildest tariff news. We discuss the “uniquely unpredictable situation” where markets are trading based on the whims of a single person. This mercurial unpredictability is having a huge effect on prices.

I try to help the hosts understand investing in this environment with lessons and ideas from How NOT to Invest.

For laughs, in Slate Plus, we discuss Hugh Grant, HOAs, whether leaf blowers are a necessary evil, and why adult males in suits should not wear their high school backpacks on subways…

 

 

 

Source:
The Economy’s ‘One Guy Problem’
Felix Salmon, Emily Peck, and Elizabeth Spiers
Slate, April 12, 2025

 

 



 

The post Slate: Economics on a Whim… appeared first on The Big Picture.

Attention Homeowners: Here's Where Your Imported Home Goods Are Actually Made

Although President Trump rolled back some reciprocal tariffs last week (ex-China), U.S. imports still face an average effective tariff rate of 27%—the highest since 1903. These elevated duties, hitting just as the spring housing and remodeling season gets underway, complicate the sourcing of overseas building materials and home goods from high-tariff countries and may even force sourcing from low-tariff countries or even domestically. 

Goldman analysts Susan Maklari, Charles Perron-Piche, and Rhea Bhatia cited United States International Trade Commission data to help clients understand where the most basic imported home goods and building materials were sourced from in 2024.

Maklari provided clients with a country-by-country breakdown of the top U.S. imports of home goods and building materials, including washers, dryers, water heaters, cabinets, vinyl tile, ceramic tile, carpets, lighting, mattresses, and lumber.

The note serves as a guide for identifying alternative sourcing options in countries with lower tariffs and a robust manufacturing base should these products be tariffed higher in top-producing countries at a cost-prohibitive rate:

Exhibit 9: Share of Washer Imports by Market (2024, in units)

Exhibit 11: Share of Dryer Imports by Market (2024, in units)

Exhibit 13: Share of Electric Tank Water Heater Imports by Market (2024, in units)

Exhibit 15: Share of Electric Tankless Water Heater Imports by Market (2024, in units)

Exhibit 17: Share of Gas Tank Water Heater Imports by Market (2024, in units)

Exhibit 19: Share of Gas Tankless Water Heater Imports by Market (2024, in units)

Exhibit 21: Share of Cabinet Imports by Market (2024, in units)

Exhibit 23: Share of Vinyl Tile Imports by Market (2024, in units)

Exhibit 25: Share of Ceramic Tile Imports by Market (2024, in units)

Exhibit 27: Share of Carpet Imports by Market (2024, in units)

Exhibit 29: Share of Lighting Fixture Imports by Market (2024, in units)

Exhibit 31: Share of Mattress Imports by Market (2024, in units)

Exhibit 33: Share of Nonwoven Glass Imports by Market (2024, in units)

Exhibit 35: Share of Framing Lumber Imports by Market (2024, in units)

Exhibit 37: Share of OSB Imports by Market (2024, in units)

Exhibit 39: Share of Plywood Imports by Market (2024, in units)

We wouldn't even be having this conversation if America had a robust manufacturing base capable of producing even the most basic home goods. Time to re-shore some of these supply chains.  

Tyler Durden Wed, 04/16/2025 - 07:45

Europe Wants New 'Half-Fuhrer' In Ukraine, Lavrov Warns

Both the United States and Russia have been calling for new elections in Ukraine, also after President Putin has branded Zelensky as 'illegitimate' due to previously canceling presidential elections, citing martial law amid the war.

Russian Foreign Minister Sergey Lavrov has issued some interesting new comments weighing in on the 'what's next' from Moscow's perspective after Zelensky is eventually out, and a new president steps in. The top Russian diplomat expressed skepticism that things will actually change substantially in Kiev.

If Zelensky gets ousted, Lavrov began in the interview with Kommersant, then the Kremlin believes it likely someone else will simply carry on the "Russophobic" regime in Ukraine with a new "half-Fuhrer".

Via Associated Press

"Europe will do everything to ensure the regime does not change in its essence," Lavrov stated, before asserting provocatively, "They’ll find some new half-Fuhrer… but the essence of the regime will remain."

He further weighed on current French and British-led efforts to forge a 'coalition of the willing' to provide European boots on the ground, ostensibly as a 'peacekeeping' force for Ukraine.

"They have come up with a 'resilience force'... In other words, in order to maintain Ukraine’s resilience, they are not going to send blockade troops... but the military of ‘civilized’ Western countries," Lavrov said sarcastically, as cited in English-language Russian media.

Among the chief complains Moscow has long presented before the world is that the Ukrainian government suppresses the rights of Russian-speakers in Ukraine. Kiev authorities have also been persecuting the largest Orthodox Church of Ukraine, because it maintains spiritual communion with Moscow.

For example, a regional church media source reports the following violent incident from last week:

At least four churches were attacked by these schismatics and nationalists in just one day this week, Tuesday, April 8. They assaulted several people, leaving at least one young woman bleeding, reports Foma, with reference to Ukrainian outlets. In some cases, they managed to seize the churches, and in some they were driven away by the Orthodox parishioners.

Early in the morning, St. Michael’s Church in the village of Svetilnya, Kyiv Province, was seized. Police officers sat in a parked car idly watching as an unknown man cut through the church doors with an angle grinder.

Lavrov in the interview called out Western capitals for continuing to support this harsh crackdown on religious freedom and language rights. Much of the population of the east and south of Ukraine has long spoken Russian as their first language.

"All these peacekeeping schemes drawn up by the Macrons and Starmers are based on the need to preserve at least a piece of land where a Nazi, openly Russophobic regime will remain, geared towards preparing another war against Russia, as was done with the Minsk agreements," Lavrov said.

Tyler Durden Wed, 04/16/2025 - 02:45

Cultural Factors Drive 'Disproportionate' Crime Among Migrant Groups: Renowned Swiss Psychiatrist

Authored by Thomas Brooke via Remix News,

Following the release of his new book, The Dark Sides of Migration, Swiss forensic psychiatrist Frank Urbaniok has called for European asylum policy to finally take migrant crime statistics into account, claiming that certain migrant groups are “disproportionately criminal” due to cultural factors.

Urbaniok, one of Switzerland’s most prominent forensic experts with over three decades of experience analyzing violent offenders, suggests that cultural influences from countries such as Afghanistan, Morocco, and Tunisia contribute significantly to higher crime rates among migrants from these regions.

“Afghans are reported more than five times, Moroccans more than eight times, and Tunisians more than nine times more often than Swiss nationals for serious violent crimes,” Urbaniok stated in an interview with Swiss newspaper Neue Zürcher Zeitung, citing his analysis of crime data from Germany, Austria, and Switzerland.

“The disproportionate crime rate has a lot to do with cultural influences. It is about how violence is dealt with, the image of women, or the role of the rule of law in these countries. I have been dealing with criminals for 33 years and have seen thousands of cases at close range. That’s why I know how strong and relevant these imprints can be. Sometimes, they persist for generations,” he said.

The cover of his book has drawn some criticism for prominently featuring a knife, which he insists is a “good symbol” as it “reflects the growing sense of insecurity in public spaces.”

While careful to clarify that he does not condemn all migrants — he explains why he preceded “Migration” in his book title with “The Dark Side of” — Urbaniok makes no secret of his belief that the cultural background of asylum seekers should influence immigration decisions. “There are countries that are unproblematic, those that are problematic, and those that are highly problematic… and I don’t understand why that doesn’t play a role in the question of who we let into the country.”

Urbaniok proposes an explicit quota system that would limit asylum admissions from countries with high crime rates. In his view, the absolute right to asylum is unrealistic and harmful to public safety: “Hundreds of millions of people would theoretically be entitled to seek asylum in Switzerland, but we could never take them all in.”

The renowned psychiatrist rejected accusations of exaggeration in his book, countering that much of the public discourse on foreigner crime amounts to “targeted disinformation” designed to downplay uncomfortable truths. “Many fear that citizens will not be able to deal with the facts,” he said.

In several European nations, foreign crime data is obscured by the fact that naturalized citizens in their respective countries are categorized as, for example, “German” or “Austrian,” even if they are foreign-born or of a historic migration background.

“Too many problematic people remain here,” Urbaniok said.

“I see them in the statistics and every day in my profession for thirty years. That’s unpleasant. What is really unpleasant is the realization that these problems can still exist a generation later. That’s why you can’t say that we have the matter under control. On the contrary, the problems are huge.”

Urbaniok has appeared at events hosted by the right-wing Swiss People’s Party (SVP), a party known for its hardline stance on immigration. While acknowledging that the SVP identifies the scale of the issue, Urbaniok criticized the party for what he considers to be a too simplistic solution. “It is a sign of their perplexity when they believe that all you have to do is control the borders and everything will be fine.”

He also spoke of the firewall against the Alternative for Germany (AfD), which he believes prevents the party from becoming more moderate and mainstream and enables radicals with pro-Russia and unpalatable, overtly xenophobic views to ride its coattails.

“The AfD does not distance itself enough from right-wing radical and xenophobic forces. It represents positions, for example vis-à-vis Russia, that I consider unacceptable. I don’t like their agitational language, but I think it is wrong to try to contain a party that has over 20 percent of the vote with firewalls. This only promotes the radical forces in this party,” he told the Swiss newspaper.

Despite the backlash against the issues raised in his book, Urbaniok remains defiant and optimistic about its release later this month. 

“The publishers were afraid for their image,” he said, revealing that several publishers declined to publish his book. “They try to have an educational effect on the population, and I think that is wrong and harmful to our democracy.”

Read more here...

Tyler Durden Wed, 04/16/2025 - 02:00

Peace Through Technological Strength: How Trump's America Tames The Chinese Dragon

Authored by Shane Festa and Brent Sadler via The Daily Signal, a publication of The Heritage Foundation,

In the days around the U.S. presidential election, dozens of People’s Liberation Army warplanes cruised through Taiwanese airspace. Such behavior is a microcosm of China’s audacity and confidence to act with increasing impunity.

During President Joe Biden’s tenure, the Chinese military consistently probed Taiwan’s readiness and Washington’s leadership. Data from the Taiwanese Ministry of Defense indicates Chinese activity around Taiwan has spiked by over 30 percent compared to the same period last year, potentially a calculated jab to see how Trump 2.0 will respond to cross-strait antagonism.

As 2024 came to an end, the communist Chinese turned up the heat on Taiwan, flexing their muscles whenever opportunities arose. On Oct. 15, China’s Joint Sword 2024B exercise saw 111 aircraft cross the Taiwan Strait‘s median line—a record high. In December, coinciding with Chinese leader Lai Ching-te’s return from a visit to the U.S., naval activity surged again. Between Dec. 9 and Dec. 11, over 90 warships and dozens of aircraft were detected around the island nation.

In recent weeks, the People’s Liberation Army has returned to sending provocative signals. As typical, China’s military activities ebb and flow to send specific strategic messages or in reaction to perceived provocations, such as when the USS Ralph Johnson and USNS Bowditch transited the Taiwan Strait earlier this year.

That operation triggered an abnormally intense response for early February—30 Chinese aircraft were detected in Taiwan’s northern, southwestern, and eastern air defense identification zones in a single day. By comparison, the last transit of the Taiwan Strait by a U.S. Navy vessel, the USS Higgins on Oct. 21, 2024, saw China deploy only 14 aircraft in response.

Unlike the situation under the Biden administration, Beijing recognizes Trump 2.0’s focus on it hinders China’s absorbing Taiwan on a timeline of its choosing.

Moreover, shortly after Chinese Lunar New Year celebrations wrapped up, the Chinese military conducted unannounced live-fire drills on Feb. 27—unprecedented for that time of year when operational levels are typically lower and during less-than-ideal weather. The drills spanned from 40 nautical miles off Taiwan’s coast to the Tasman Sea between Australia and New Zealand, fomenting some consternation in Canberra and Wellington.

By mid-March, the 10-day average of median line crossings by Chinese aircraft showed a significant rise, almost doubling from six on March 17 to 11.8 by March 21—largely attributable to one day’s spike in activity on March 18.

Chinese Ministry of Foreign Affairs spokesperson Guo Jiakun explained the activity by citing a recent change to a State Department fact sheet that eliminated language opposing Taiwan‘s independence, stating, “This is yet another example of the United States’ stubborn adherence to the erroneous policy of using Taiwan to suppress China.” The surprise drills in February and March produced unexpected spikes in activity, indicating that even under President Donald Trump, China is still keen on testing boundaries.

To better ascertain China’s evolving military strategy and intent, the U.S. must leverage its forward-looking approach to intelligence, surveillance, and reconnaissance. In February, Adm. Samuel Paparo, commander of U.S. Indo-Pacific Command, warned that China’s heightened activity near Taiwan was in fact rehearsal for an attempt at forced reunification. This activity aims to desensitize Taiwan and its partners through sustained high military presence and gray-zone tactics that obfuscate preparations for kinetic conflict.

Project Overmatch, the Navy’s contribution to the Joint All-Domain Command and Control initiative, is accelerating anticipated development timelines, arming the Navy with artificial intelligence and advanced drone technology. That said, a potential demonstration of the return on investment here could become available with spring exercises coming in the Pacific. With this in mind, the fielding of operationally useful mass data analytics and artificial intelligence-assisted decision-making systems can be achieved in part by emulating Task Force 59’s success in the Arabian Gulf.

There, autonomous vehicles and associated information networks served as the connective tissue between machines and manned vessels, enabling a wider and persistent sensor coverage previously unseen, which could soon be made lethal as demonstrated in November’s Digital Talon exercise. The drills showcased Central Command’s prowess in testing aerial autonomous launches and recoveries, as well as identified challenges for the group dubbed “the pioneers” to overcome in the future.

In the Pacific, this approach could give the U.S. a critical edge in countering China’s tactics and deter aggression. The private sector has matched this movement toward activity-based intelligence. Predictive models and sensors suites from companies like Windward track anomalous behavior using automated information systems, capable of subverting bad actors who seek to conceal their identities while at sea.

Data streams from platforms such as Northrop Grumman’s Manta Ray could create a sensor-heavy ecosystem capable of identifying, tracking, and predicting targeted activities like dark ships involved in sanctions avoidance, Chinese maritime militia activities, illicit narcotics trafficking at sea, and clandestine operations all in near real-time.

China is now seeking to check America’s—and Trump’s—response to its intimidation of Taiwan. Lawmakers must act without delay to equip the Indo-Pacific Command with the resources to field the appropriate technologies to pace rising Chinese provocations.

Done well, perhaps the next time China or Russia seeks to snip undersea cables in Asia or harass partners in the region, by detecting anomalous or illicit activities through cutting-edge monitoring, the United States could better position forces to preempt such moves before they become a confrontation at sea. To achieve this, our naval forces must have robust maritime domain awareness necessary to stay one step ahead.

*  *  *

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Tyler Durden Tue, 04/15/2025 - 23:25

Lincoln Was A 'Threat To Democracy'

Authored by Al Perrotta via The Daily Signal,

One hundred sixty years ago tonight, at Ford’s Theater, John Wilkes Booth put a bullet in the head of President Abraham Lincoln. 

What motivated the 26-year-old actor? 

Fame?  

No, he had plenty of that. His photos were outsold only by Honest Abe himself.  

Acclaim?  

No, contrary to tales told in school that he was jealous of the critical raves afforded his father Junius and brother Edwin, Booth earned reviews any young actor would die for. He even refused to perform under his real name until he earned reviews worthy of the name.  

To avenge the Confederacy’s defeat? 

You’re getting closer. Booth raged and despaired over the suffering incurred by the South. 

Actually, John Wilkes Booth told us his motivation. 

After shooting Lincoln and making his dramatic leap to the stage, Booth shouted “Sic Semper Tyrannis!” (“Thus always to tyrants.”) Or to put it another way, “Lincoln was a threat to democracy.” 

Threat to Democracy 

Twice last summer, amid a daily drumbeat from former President Joe Biden, Democrats, and the media that Donald Trump was a “threat to democracy,” a budding tyrant, two would-be assassins came very close to killing him. Ryan Routh was charged Thursday in Florida for his attempt.  

A recent study indicates 55% of self-described leftists think the assassination of Trump would be “justifiable.” Given the rhetoric, given the vast numbers with a similar heart, it’s no wonder Routh thought he was doing the world a favor.  

“Everyone across the globe from the youngest to the oldest know [sic] that Trump is unfit to be anything, much less a U.S. president,” Routh wrote in a letter found after his arrest. “U.S. presidents must at bare minimum embody the moral fabric that is America and be kind, caring and selfless and always stand for humanity.” 

So did Booth, who wrote while on the run: 

Our country owed all her troubles to him, and God simply made me the instrument of his punishment.

A country that groaned beneath this tyranny, and prayed for this end, and yet now behold the cold hands they extend to me. 

Booth grew increasingly dismayed at being vilified and rejected. 

I am here in despair. And why? For doing what Brutus was honored for. What made Tell a hero? And yet I, for striking down a greater tyrant than they ever knew, am looked upon as a common cutthroat. 

In a letter attempting to justify his actions, Booth wrote: 

When Caesar had conquered the enemies of Rome and the power that was his menaced the liberties of the people, Brutus arose and slew him. The stroke of his dagger was guided by his love of Rome. It was the spirit and ambition of Caesar that Brutus struck at. 

Oh, that we could come by Caesar’s spirit, 
And not dismember Caesar. 
But, alas! 
Ceasar must bleed for it. 

Booth, a man steeped since birth in Shakespearean drama, sought the death of Lincoln as Shakespeare’s Brutus did Caesar’s. This fear stemmed not from what the president had done, but from the belief that with his enemies conquered, Lincoln would keep his war powers and reign as a tyrant. 

This gets to one of the most tragic elements of Lincoln’s assassination, positively Shakespearean in its awfulness. 

John Wilkes Booth failed to realize that with the war over, Lincoln was the best friend the South had. And Booth had a role to play. The greatest of his life. 

A Terrible Missed Opportunity? 

Lincoln wanted a gentle reconciliation between North and South, “with malice toward none, and charity for all.” Many powerful forces around him had plenty of malice toward the Confederacy, and no mood for charity. Those in the South whose towns had been laid waste and their sons laid to rest by the hundreds of thousands, would also have trouble with reconciliation.  

Lincoln’s mission of unifying the country in peace looked to be as difficult as winning the war. He would need all the help he could get.

Author Michael Kauffman discovered an intriguing tidbit when researching his book “American Brutus.” A worker at Ford’s Theater saw Booth hand an attendant a card, and the attendant bring the card into the Presidential Box.  

What happened next is not known. But is it not possible that Lincoln received Booth’s card, and knowing Booth’s fame, his oratory gifts and his sympathies, realized the actor could prove very valuable in helping “bind the nation’s wounds”? Who better than America’s First Family of Theater to help bring the nation together? Perhaps the theater-loving president even knew the three acting Booth brothers would be sharing the stage at a benefit the following week.  

With the war over and the comedy romp “Our American Cousin” playing out beneath him, did Lincoln see in Booth’s card a golden opportunity? Is it not likely an excited Lincoln told the attendant, “Yes, send Mr. Booth in”? 

Rather than summon a potential partner, Lincoln summoned his own executioner. Booth killed not only the president, but all hope for a gentle reconciliation.  

How much better for his beloved South had Booth pulled up a chair instead of a pistol? 

How much better for our nation and their own dreams if liberals sought Trump’s cooperation rather than destruction?

The future is in their hands. The 55% who believe Trump’s assassination would be justified would heed well the lesson of John Wilkes Booth.  

After being cornered in a barn in Port Royal, Virginia and shot, Booth looked down at his hands and uttered his final words: “Useless. Useless.”

Tyler Durden Tue, 04/15/2025 - 22:35

Bye Letitia? Criminal Referral Filed Against NY AG Over Real Estate Fraud Accusation

A criminal referral against New York Attorney General Letitia James has been filed with the DOJ, alleging that James had "falsified records" to get home loans for a Virginia property that she claimed was her "principal residence" in 2023 - while she was serving as a New York state prosecutor.

Federal Housing Finance Agency (FHFA) Director William Pulte sent the missive to Attorney General Pam Bondi and Deputy AG Todd Blanche, claiming that in late August 2023 - weeks before she launched her civil fraud trial against the Trump Organization for inflating the values of its properties.

In 2021, James also purchased a 5-family Brooklyn property, but has "consistently misrepresented the same property as only having four units in both building permit applications and numerous mortgage documents and applications," the letter noted.

Loans secured for this property could have reduced her mortgage interest rate by as much as 1% - leaving James with lower monthly payments under the federal Home Assistance Modification Program (HAMP) since it was listed as containing just four units, according to Pulte.

Federal Housing Finance Agency Director Bill Pulte refers New York Attorney General Letitia James for potential prosecution over alleged mortgage fraud. pic.twitter.com/VyGGEtndQe

— Josh Caplan (@joshdcaplan) April 16, 2025

Documents from the NYC Department of Buildings show a pattern of inconsistencies about a Brooklyn property James owns—inconsistencies that mysteriously received special treatment when reported.

As White Collar Fraud noted last month; 

The Certificate of Occupancy for 296 Lafayette Avenue in Brooklyn—issued January 26, 2001—clearly states the property is a five-family dwelling regulated under NYC housing laws. James purchased this property on February 14, 2001, just two weeks after this Certificate of Occupancy was issued. This official classification has been on the books for more than two decades.

Yet James repeatedly filed permit applications identifying the same property as a four-family dwelling—a classification subject to different regulatory requirements under New York City building codes. Under NYC building code classifications, her property with five units would be classified as C2 (which applies to buildings with 5+ units), while her filings list it as C3 (which applies to 3-4 unit buildings). This fundamental contradiction between the long-established Certificate of Occupancy and her permit applications raises serious questions about regulatory compliance.

"While this was a long time ago, it raises serious concerns about the validity of Ms. James representations on mortgage applications" wrote Pulte, attaching several documents showing James had purchased another property with her father as a co-signer, but falsely listed the pair as "husband and wife" in 1983 and 2000.

James also granted power of attorney to Shamice Thompson-Hairston, a relative, to sign an Aug. 17, 2023, document authorizing the purchase of the first property, according to WCF.

"Ms. James, for both properties listed above, appears to have falsified records in order to meet certain lending requirements and receive favorable loan terms," Pulte wrote, adding that James could be charged with wire fraud, mail fraud, bank fraud and making false statements to a financial institution.

Its perfect. pic.twitter.com/hBQpTL3q1r

— Benny Johnson (@bennyjohnson) April 16, 2025

Tyler Durden Tue, 04/15/2025 - 22:10

Gold Soars As Beijing Lowers Yuan Fix Ahead Of Chinese Econ Data Beating On Tariff-Frontrunning

Ahead of tonight's grand unveiling of what Beijing wants the world to think about its economy, the market was active with Gold soaring at the China open for the third day in a row...

...and the Yuan fix notably lower again...

Ugly yuan fix: PBOC set CNY reference rate at 7.2133, much weaker than yesterday's 7.2096 and the weakest since Sept 2023, approaching weakest on record pic.twitter.com/XKjcn2Mwf7

— zerohedge (@zerohedge) April 16, 2025

Ahead of the GDP print, we saw both new and existing home prices released by the statistics bureau for March showing price drops have slowed on a month-on-month basis...

• China March New Home Prices Fall 0.08% M/M

• China March Existing Home Prices Fall 0.23% M/M

Of course, tonight's data tsunami is pre-Liberation Day Tariffs so no excuses (aside from the 10% tariffs that Trump put on China at the start of February).

However, GDP was expected to show the economy slowing ahead of the tariffs given March's unevenness.

In reality, it didn't... China GDP growth beat expectations, rising 5.4% (+5.2% exp)...

The growth was in line with China’s growth rate in the fourth quarter and exceeded Beijing’s full-year growth target for 2025.

In the first quarter China’s trade surplus was over $270 billion, just below the record in the final three months of last year and almost 50% larger than a year ago. The record surplus last year of almost $1 trillion drove a third of China’s growth and the boost last quarter is likely to have been large.

Beijing has set a target of 5 per cent growth for this year and has backed this up with pledges to increase stimulus measures, setting a record budget deficit target for the central government.

And just like the GDP figure, the rest of the data beat (or met) expectations too

• China Retail Sales BEAT +4.6% YTD vs +4.3% exp vs +4.0% prior

• China Industrial Production BEAT +6.5% YTD vs +5.9% exp vs 5.9% prior

• China Fixed Asset Investment BEAT +4.2% vs +4.1% exp vs +4.1% prior

• China Property Investment MEET -9.9% vs -9.9% exp vs -98% prior

• China Unemployment BEAT 5.2% vs 5.3% exp vs 5.4%$ prior

Presumably these much better than expected data are due to tariff front-running.

“The most pleasant surprise is retail sales which shows that consumption subsidies are working,” said Michelle Lam, Greater China economist at Societe Generale SA. 

“Industrial production was a beat but understandable after the strong export data. But that’s all in the past now.”

China is the world’s largest importer of oil, natural gas and coal, and Beijing has been putting pressure on energy firms in recent years to boost output and reduce the nation’s dependency on imports. 

Diggers and driller responded in March, with output rising 9.6% for coal, 5% for natural gas and 3.5% for crude oil. Output increases in coal and oil are particularly higher than expected.

Of course, it's what happens next that really matters as US tariffs on China are now high enough to wipe out Chinese shipments to the US, according to Bloomberg estimates. 

“Even with temporary exemptions, US duties will still be high enough to crush most of China’s exports to the US,” said Chang Shu and David Qu at Bloomberg Economics.

UBS this week cut its China GDP forecast with the most pessimistic outlook forecast among major banks, predicting the economy will expand just 3.4% this year as US tariffs choke exports.

Goldman Sachs and Citigroup are among global banks that cut their outlook for China in recent days, with most economists doubting Beijing can achieve the official target of about 5% growth this year.

“With the trade war with the US escalating sharply, the economy will face stronger headwinds. We expect policymakers to expedite stimulus," said Shu and Qu.

The NBS struck a note of caution even as it released the upbeat data, emphasizing the need for greater support for the economy.

“We should be aware that the external environment is becoming more complex and severe, the drive for growth of effective domestic demand is insufficient, and the foundation for sustained economic recovery and growth is yet to be consolidated,” the bureau said in a statement. 

“We must implement more proactive and effective macro policies.”

Beijing is placing high hopes on domestic demand - particularly consumption - to drive economic growth this year, as external pressures mount under Donald Trump's second presidency.

In a bid to spur spending, leading bodies of China's state apparatus and the ruling Communist Party issued a 30-point plan aimed at stimulating consumer demand.

Tyler Durden Tue, 04/15/2025 - 22:05