'Depression' Narrative Bust: Atlanta Fed 'Adjusts' Away GDP Plunge Forecast

Who could have seen that coming?

Well us, literally!!

One month ago the world was stunned when the Atlanta Fed GDPNow forecast slashed US GDP Q1 estimates to down almost 4%.

This sparked every leftist, establishment talking-head to leap to their feet and decry Trump's policies as heralding the next Great Depression.

There was just a little problem...

As we detailed immediately after The Atlanta Fed's report hit, it's not the economy, it's gold stupid!!!

... we subsequently learned that the plunge in GDP was the direct result of a spike in imports, which subtract from GDP.

As it turns out, and as Goldman economist Manuel Abecasis explained this morning, most of the widening in the trade deficit since November was driven by higher gold imports. 

That's right: the same spike in gold that indicates something is (perhaps terminally) broken with the financial system as we have now seen a record scramble for physical gold, also just happens to be slamming the US economy!

And sure enough, having 'adjusted' for the massive surge in gold imports, The Atlanta Fed quietly revised their forecast for Q1 GDP to just a 0.1% decline...

So, no economic collapse. No financial hellscape. No 'next great depression'?

And just like that, the hue and cry from the academics, politicians, and talking-heads is gone... like Keyser Soze. 

This is alot more insidious than it seems, because every single liberal pundit ran with these numbers to push a narrative. If you wanted to artificially crash an economy, this is how you would try to do it.

— P.T. Ward (@HTWardish) April 16, 2025

Was the data ever that bad? Or did The Atlanta Fed just take its cues from the University of Michigan  and its survey respondents?

Or were The Usual Suspects attempting to manipulate a narrative once again?

Tyler Durden Wed, 04/16/2025 - 14:25

'Staggering' Number Of IRS Employees To Take Buyout: 'This Is Enormous'

25 percent of Internal Revenue Service (IRS) employees are are preparing to take buyout offered by the Trump administration and resign from the agency, according to a report.

CNN, first reporting the “staggering” figure, notes that 22,000 of the IRS’s 90,000 employees plan to accept buyout offers and resign. IRS staff faced a Tuesday morning deadline to opt into the latest “deferred resignation” buyouts.

“This is enormous,” sources told the anti-Trump news outlet.

In the initial round, approximately 4,700 IRS employees, or 5% of the workforce, accepted the buyout offer.

“I’m hearing a lot of people accepted the deferred resignation,” an IRS employee told CNN. “The workplace is toxic these days. Morale is low. People try to come in and think positively, but they don’t make it through a full workday without negativity, even in conversation with other employees, or getting the next email in their inbox with bad news.”

When recently asked by CNN about further staff reductions at the IRS, a Treasury Department said further cuts would be required to offset the “wasteful Biden-era hiring surges.”

“Staffing reductions that are currently being considered at the IRS will be part of — and driven by — process improvements and technological innovations that will allow the IRS to collect revenue and serve taxpayers more effectively,” the spokesperson said.

The IRS buyouts are part of the Trump administration’s broader mission, led by the Department of Government Efficiency, to reduce federal spending by at least $1 trillion and streamline regulations amid a growing bureaucracy.

The CNN report, released on today’s tax-filing deadline, comes as the IRS faces its busiest week of the year.

The IRS announced Monday that Arkansas residents and businesses affected by recent severe storms, tornadoes, and floods have until November 3 to file their income taxes.

“As a result, affected individuals and businesses will have until Nov. 3, 2025, to file returns and pay any taxes that were originally due during this period,” the IRS statement said. “In addition, penalties for failing to make payroll and excise tax deposits due on or after April 2, 2025, and before April 17, 2025, will be abated if the deposits are made by April 17, 2025.”

Tyler Durden Wed, 04/16/2025 - 14:05

China's 'Surprise' New Trade Rep A Likely Effort At Backchanneling 'Breakthrough' With Trump

We reported earlier in the day that China has opened the door for reengaging President Trump in trade talks, which has involved Beijing laying out a set of preconditions for resuming negotiations before the tariff war spirals further.

Key to this last-minute attempt at a reset and rare bright spot of late, as we highlighted, is that China has just appointed a new top trade negotiator in a likely sign Beijing is seeking a final breakthrough moment with Washington. Regional Asian media is confirming that Li Chenggang will replace 59-year-old Wang Shouwen, the latter who became known for deep involvement negotiations for the 2020 US-China trade deal as a former assistant commerce minister.

Li Chenggang, a former assistant commerce minister and WTO ambassador

58-year old Li has served as China’s ambassador to the Geneva-based World Trade Organization (WTO) from 2021. He's also held several key jobs in the commerce ministry since 2010.

Has new blood been brought in to break the impasse in negotiations? Time for he and Commerce Secretary Lutnick to sit in a room and drill down?... It appears time for a quicker route of backchanneling the trade crisis... away from the cameras.

One analyst, Alfredo Montufar-Helu, who is senior adviser to the China Center at US-based research group The Conference Board, has observed of Li, "Probably his experience in Geneva means that he has established linkages with key stake holders – their governments including the US." The same analyst also told Reuters:

"It might be that in the view of China's top leadership, given how tensions have continued escalating, they need someone else to break the impasse... and finally start negotiating."

Rather than just a standard or career advancement move, "This is certainly a very abrupt and potentially disruptive change given how quickly trade tensions have escalated," Montufar-Helu said.

Prior to government service, Li obtained a bachelor's degree in law from Peking University and a master’s degree in the economics of law from the University of Hamburg in Germany, SCMP has reviewed. According to more from CNBC:

Chinese Vice Premier He Lifeng is the lead negotiator on China-U.S. trade, according to official documents. Previously, China’s former vice premier Liu He had held a similar role where he facilitated the trade talks with Trump’s last administration and eventually signed the Phase-One deal.

“Wang was a key supporting player last time around because of his position,” said Kenneth Jarrett, senior advisor at Albright Stonebridge Group. “Presumably the same will be true of Li if and when talks get off the ground,” he added.

Meanwhile, on Wednesday in some of the latest heated remarks, China's Sheng Laiyun, Deputy Commissioner of the National Bureau of Statistics (NBS), warned that "We firmly oppose the US practice of tariff barriers and trade bullying."

"It violates the economic laws and the principles of the World Trade Organisation (WTO), has a serious impact on the world economic order, and drags down the recovery of the world economy," he said.

This after on Tuesday White House press secretary Karoline Leavitt declared that "The ball is in China’s court: China needs to make a dal with us, we don’t have to make a deal with them" - and now with China saying it will ignore the Trump White House's "numbers game" and fight till the end amid certain goods reaching a 245% tariff as of Wednesday.

Tyler Durden Wed, 04/16/2025 - 13:45

From Fed Chair Powell: Economic Outlook Excerpt:

Looking forward, the new Administration is in the process of implementing substantial policy changes in four distinct areas: trade, immigration, fiscal policy, and regulation. Those policies are still evolving, and their effects on the economy remain highly uncertain. As we learn more, we will continue to update our assessment. The level of the tariff increases announced so far is significantly larger than anticipated. The same is likely to be true of the economic effects, which will include higher inflation and slower growth. Both survey- and market-based measures of near-term inflation expectations have moved up significantly, with survey participants pointing to tariffs. Survey measures of longer-term inflation expectations, for the most part, appear to remain well anchored; market-based breakevens continue to run close to 2 percent.

Monetary Policy

As we gain a better understanding of the policy changes, we will have a better sense of the implications for the economy, and hence for monetary policy. Tariffs are highly likely to generate at least a temporary rise in inflation. The inflationary effects could also be more persistent. Avoiding that outcome will depend on the size of the effects, on how long it takes for them to pass through fully to prices, and, ultimately, on keeping longer-term inflation expectations well anchored.

Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem. As we act to meet that obligation, we will balance our maximum-‑employment and price-stability mandates, keeping in mind that, without price stability, we cannot achieve the long periods of strong labor market conditions that benefit all Americans. We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension. If that were to occur, we would consider how far the economy is from each goal, and the potentially different time horizons over which those respective gaps would be anticipated to close.
emphasis added

Stellar 20Y Auction Stops Through, Benefits From Solid Foreign Demand

After last week's basis trade collapse (which we now know has already claimed several relative value multistrat hedge funds), many were dreading the outcome of today's 20Y auction, a reopening of 19-Year, 10-Month cusip UJ5. It turned out they have nothing to fear.

The $13BN auction priced at 1:01pm ET at a high yield of 4.810%, up sharply from last month's 4.632% and the highest since February; more importantly it stopped through the When Issued 4.814% by 0.4bps, the second consecutive stop through (if fractionally weaker than last month) and 3rd in the past 4 months.

It wasn't just the headline: the Bid to Cover was 2.63, which while down from last month's 2.78 was comfortably above the six-auction average of 2.57.

But like last week, the internals were most closely watched because in a time when there was virtually no Direct demand for US paper (amid the basis trade unwind), the composition of today's takedown distribution was sure to be a buzz if there were any outliers. In the end, there would be no buzz because there were no surprises: Indirects took down a decent 70.7%, the highest since August and naturally above the six-auction average; As for Directs, unlike last week's collapse, today they took down a healty 12.3% - yes still the lowest since November, but hardly a single digit affair like we saw last week. Finally Dealers were left holding 17.0%, just fractionally above the 15.3% average, and in line with recent auctions.

Overall, this was a remarkable solid 20Y auction, and one which certainly brushed away concerns that foreigners are boycotting US Treasury auctions, if only for now. As for the secondary market, that's a different story.

Tyler Durden Wed, 04/16/2025 - 13:29

Bessent's Grand Strategy: Use Tariff Negotiations To Isolate China From The Rest Of The World

Yesterday, president Trump laid out the stakes in the ever-escalating trading war between the US and China, in typical laconic fashion: "We may want countries to choose between us and China" (a topic discussed further here), with the White House adding that "The ball is in China’s court. China needs to make a deal with us."

This strategy, of forcing the world into "us (or US) vs them" camps first emerged last week when Trump reduced reciprocal tariffs for all countries except China, something we highlighted at the time.

This is actually a very smart move: clubbing the entire world against China https://t.co/fsBagdFRRR

— zerohedge (@zerohedge) April 9, 2025

A few days later, this now appears to be the official strategy in the global trade war.

As the WSJ reports, the Trump admin plans to use ongoing tariff negotiations to pressure U.S. trading partners to limit their dealings with China, according to people with knowledge of the conversations.

The idea, as we laid out in not so many words, is to extract commitments from U.S. trading partners to isolate China’s economy in exchange for reductions in trade and tariff barriers imposed by the White House. US officials plan to use negotiations with more than 70 nations to ask them to disallow China to ship goods through their countries (the so-called "transshipment" loophole), prevent Chinese firms from locating in their territories to avoid U.S. tariffs, and not absorb China’s cheap industrial goods into their economies.

Those measures are meant to put a final stake in China’s already sinking economy (which somewhat ironically got a boost in the first quarter as its export partners front-loaded purchased goods ahead of the tariff price surge which is already in place and which will put a deep freeze on China's manufacturing empire) and force Beijing to the negotiating table with less leverage ahead of potential talks between Trump and President Xi Jinping. The exact demands could vary widely by nation, given their degree of involvement with the Chinese economy.

US officials have already presented the idea in early talks with some countries according to WSJ sources, who added that Trump himself hinted at the strategy on Tuesday, telling the Spanish-language program “Fox Noticias” he would consider making countries choose between the US and China in response to a question about Panama deciding not to renew its role in the Belt and Road Initiative, China’s global infrastructure program for developing nations.

Trump gives ULTIMATUM to Latin America:

Choose between USA and China

‘They SHOULD do that’

What should Latin America do? pic.twitter.com/MWVq2AJXJj

— RT (@RT_com) April 15, 2025

According to the WSJ, the brain behind the strategy is Treasury Secretary Scott Bessent, who has taken a leading role in the trade negotiations since Trump announced a 90-day pause on reciprocal tariffs for most nations—but not China—on April 9.

Bessent pitched the idea to Trump during an April 6 meeting at Mar-a-Lago, the president’s club in Florida, said people familiar with the discussion, saying that extracting concessions from U.S. trading partners could prevent Beijing and its companies from avoiding U.S. tariffs, export controls and other economic measures.

The tactic is part of a strategy conceived by Bessent to isolate the Chinese economy that has gained traction among Trump officials recently. Debates over the scope and severity of U.S. tariffs are ongoing, but officials largely appear to agree with Bessent’s China plan.

It involves cutting China off from the U.S. economy with tariffs and potentially even cutting Chinese stocks out of U.S. exchanges. Bessent didn’t rule out the administration trying to delist Chinese stocks in a recent interview with Fox Business. Still, the ultimate goal of the administration’s China policy isn’t yet clear.

Bessent has also said there is still room for talks on a potential trade deal between the U.S. and China. Such talks would have to involve Trump and Xi. White House press secretary Karoline Leavitt read a new statement from Trump during Tuesday’s press briefing suggesting a deal with China isn’t imminent.

“The ball is in China’s court,” Leavitt said when reading Trump’s statement. “China needs to make a deal with us. We don’t have to make a deal with them. China wants what we have…the American consumer.”

Indeed it does, as do all the countries that China uses for tolling and/or transshipment, so if the White House truly cracked down on all possible ports of entry to US consumers, who account for 70% of the roughly $30 trillion in US GDP, then China will have no choice but to either concede, or pursue two other approaches which we laid out before: devalue the currency or unleash a massive fiscal stimulus.

China has three options:

1. Concede defeat to whatever terms Trump demands
2. Devalue the yuan by 20-40%
3. Unleash biggest fiscal stimulus in its history (talking $2-3 trillion) which will push its debt off the chart

— zerohedge (@zerohedge) April 4, 2025

It also isn’t clear that the anti-China line has entered into negotiations with all nations. Some countries haven’t heard demands from U.S. negotiators related to China, although negotiations remain in early stages. Many expect the Trump administration to raise China-related demands sooner or later.

Bessent has shown his desire for anti-China pledges from U.S. trading partners before. In late February, he said that Mexico had offered to match U.S. tariffs on China as part of negotiations over Trump’s tariffs on Mexico imposed because of the fentanyl trade. Bessent called Mexico’s offer a “nice gesture,” but the idea didn’t find much traction with the administration.

Since then, Bessent has taken a more central role in trade negotiations, assuming a lead in talks over reciprocal tariffs after Trump announced his 90-day pause on April 9. The Treasury secretary is slated to meet with Japan’s economic revitalization minister today and has laid out a list of nations he thinks could soon reach deals with the U.S., including Japan, the U.K., Australia, South Korea and India.

Of course, China isn't waiting for the trap to close in on it, and is conducting its own trade diplomacy. This week, Xi traveled to Vietnam, a key U.S. trading partner hard-hit by Trump’s tariffs, and signed dozens of economic pledges with the Hanoi government, although at the same time Vietnam has hinted it could balance out its trade balance with the US by purchasing substantial military equipment from the US.

China views Trump’s reciprocal trade gambit as an opportunity, Peter Harrell, the former senior director for international economics on former President Joe Biden’s National Security Council, said on a panel discussion Tuesday at Georgetown Law.

But China’s ability to counteract U.S. trade policies is limited, Harrell said. While the U.S. remains a “massive net importer,” China is reducing its imports from the rest of the world and focusing on self-sufficiency. The problem, as Michael Pettis has laid out, is that China is years if not decades behind having a vibrant consumer class of its own. Which only leaves mercantilism for now.

1/4
Because the only sustainable way to rebalance the Chinese economy towards a greater role for consumption in driving demand requires that household income, including transfers, rise faster than GDP, it is good news that...https://t.co/W9sv8XBx15

— Michael Pettis (@michaelxpettis) April 16, 2025

And that's why Beijing is scrambling to inflict as much financial damage on the US as possible - up to and including dumping US Treasuries in hopes of sending the dollar tumbling and prompting narratives about "the end of the US dollar reserve status" while maintaining the impression that all is well domestically as discussed here.

China “isn’t going to replace the U.S. as a source of demand for the products that a bunch of these developing countries…make,” Harrell said. “So the economics of this are going to prove challenging for China, but I think we see them playing the politics of this reasonably savvily.”

Tyler Durden Wed, 04/16/2025 - 13:05

Carney Capitulates: Canada Waives Retaliatory Tariffs On US-Made Cars And Trucks

The first skirmish in the US-China trade war just concluded and John Carney is left licking his wounds.

Canadian Prime Minister Mark Carney said his government will allow automakers to import US-manufactured cars and trucks without tariffs, as long as the companies continue to build cars in Canada, and continued with previously announced expansions. Which of course, they all will vow to do - after all, there is no downside to a promise - meaning Canada just conceded to a key Trump demands.

Last week, Carney put retaliatory tariffs of as much as 25% on vehicles made in the US, effectively matching an earlier move by US President Donald Trump on foreign autos.

The move provides relief from the trade war to companies including General Motors and Stellantis that have assembly plants in Ontario but still export large quantities of vehicles from the US into Canada.

Commenting on the capitulation, Rabobank's Michael Every writes that "Canada will now let automakers import US-assembled cars and trucks tariff-free if they preserve domestic manufacturing. This isn’t being heralded as a Carney “retreat” and “fold”, of course. But in economic statecraft terms, it’s clear Canada had, and has, no real choice."

“Our counter-tariffs won’t apply if they continue to produce, continue to employ, continue to invest in Canada,” Carney told reporters at a news conference. But if a manufacturer cuts production or investment in Canada, the number of tariff-free vehicles it will be permitted to import will be reduced, Canada’s Finance Department said in a news release.

François-Philippe Champagne, Canada’s finance minister, did not specify in his statement exactly how many U.S.-made cars and trucks each of the five major automakers would be allowed to import without tariffs. But his statement suggested that those numbers would be linked to Canadian manufacturing: “The number of tariff-free vehicles a company is permitted to import will be reduced if there are reductions in Canadian production or investment.”

While the great majority of Canadian-made cars and trucks end up in the United States, Trump has repeatedly said that he wants carmakers to move all of their manufacturing to the United States, a move widely seen in Canada as a direct assault on the country’s largest export aside from oil and gas.

Auto trade between the United States and Canada has become tightly integrated since the two countries signed a trade deal 60 years ago that eased the flow of vehicles and related goods across the border.

Only Toyota and Honda, which account for about two-thirds of Canadian auto production, are currently operating at or near full capacity in Canada.

Stellantis recently stopped renovating a factory in the Toronto suburb of Brampton that would have made gasoline and electric Jeeps, in what the company described as a pause. Its larger plant, in Windsor, Ontario, is in the middle of a two-week shutdown that was induced by the U.S. tariffs.

Ford’s factory in Oakville, Ontario, was closed for a now-abandoned plan to convert it for electric vehicles. It is now retooling to make large pickups. And General Motors announced that it would largely shut down production of a poor-selling electric van made in Ingersoll, Ontario, until October.

But the winning blow in this particular trade war battle came from Japanese media outlet Nikkei which reported that Honda Motor is looking at shifting some of its auto production from Canada and Mexico into the US, with a goal of having 90% of its US vehicles sales produced locally.

Honda currently builds CR-V and Civic vehicles at a plant in Alliston, Ontario, and last year it announced a C$15 billion ($10.8 billion) long-term plan to build out an electric-vehicle supply chain in Canada — with significant help from taxpayers.

Anita Anand, the industry minister, was scheduled to meet with the head of Honda’s Canadian division on Tuesday, according to a statement. “We are in close contact with the company, and Honda has communicated that no such production decisions affecting Canadian operations have been made, and are not being considered at this time,” her office said by email.

A Honda spokesperson said by email that the plant “will operate at full capacity for the foreseeable future and no changes are being considered at this time.”

Carney, currently campaigning for the national election on April 28, told reporters that he and other government ministers have had a number of conversations with the executives of global automakers.

“We are very seized with the issues” around the auto tariffs, Carney said, pointing to a campaign promise he made to set up a C$2 billion fund to help strengthen the Canadian auto supply chain. Whoever wins the election will need to negotiate with Trump on a broader strategy to resolve the tariff war, he said.

Canada currently has 25% counter-tariffs on about C$60 billion worth of US products, aside from autos. Those taxes are hitting a wide range of US steel and aluminum products, plus items such as tools, computers and consumer goods.

The exemptions announced Tuesday will provide a break to Canadian businesses that rely on US inputs, as well to institutions such as hospitals, long-term care facilities and fire departments, the government said.

Tyler Durden Wed, 04/16/2025 - 11:55

"Markets Have To Choose Between The US And China"

By Michael Every of Rabobank

John Authers at Bloomberg just ran a piece titled ‘This Passover, Everyone Has Questions’. His annual tradition of asking four questions, as in that ancient ceremony, didn’t start with the obvious one: “Why is this market different from all other markets?” But when the 30-year Japanese bond can fall 11bps on the day, most traditional takes on what is going on look, well, ‘unleavened’. In keeping with the Passover theme, it’s also important to stress we have four kinds of analysts’ takes on what’s going via the questions they ask about it: the Wise (“Why is this happening?”); the Wicked (“What has this got to do with me/my view?”); the Simple (“What?”); and the Ones Who Don’t Know How to Ask. Which analyst are you?

To the answer: this market is different from all other markets because in all other markets we assume there is one global economy within which all goods, services, and capital flow, with one single global reserve currency, the US dollar. Now, we might be witnessing an Exodus from it.

President Trump just said: “The ball is in China’s court. China needs to make a deal with us,” thrilling Bloomberg, which interpreted this as a trade-war off-ramp. Not noted by them, because it doesn’t fit that narrative, is he added, “We may want countries to choose between us and China.”

Of course, nobody wants to choose. But that doesn’t mean you don’t then become the chosen people via your inaction. And some are choosing without thinking about the consequences.

As Russia and the US talk about joint energy projects in the Arctic, Greenland says it wants to move closer to China on trade, snubbing both the US and Europe. Ironically, that shows it’s culturally European, not North American, in being bewilderingly out of touch with the realpolitik around it and playing poker with no hand at all.

In the Middle East, it’s clear which way the energy-rich Saudis and UAE lean (to the US), but things are fluid as the Pentagon speeds up munitions deliveries to Israel while stating it will withdraw its troops from Syria, and White House envoy Witkoff offers Obama-esque framing of a proposed new nuclear deal to Iran.

Australia and New Zealand say they don’t have to choose… as following a PLA-Navy cruiser sailing round the Tasman, a Russian request for the use of an Indonesian airbase placing Oz in striking distance was rejected by Jakarta rather than any Antipodean ability to project power in their own backyard. So, who can do it for them, and for what quid pro quo? (Meanwhile, panic over and back to election policies targeting higher house prices for the main parties in Australia.)

US Vice President Vance gave a speech in which he came out as a Gaullist(!), arguing Europe should have helped the US see it was stupid to invade Iraq in 2003, and said it can’t be a ‘permanent security vassal’ of the US. Just an economic one?

Vance also stated he expects a “great” UK trade deal because President Trump loves the place. Yet the UK -- which just bailed out British Steel from a Chinese owner, then heard a minister propose it could be sold to another Chinese firm(!) -- saw PM Starmer agree to mirror EU trading standards which will clash with those the US will insist on in any US-Anglo deal. The British and Greenlanders apparently went to the same card school.

Meanwhile, the EU reportedly expects most US tariffs to stay as trade negotiations make little progress. Perhaps the US is expecting Europe to see things differently after others sign up, with Japan aiming for early results from its US trade talks starting today. That would be a US ace.

At the same time, Canada will now let automakers import US-assembled cars and trucks tariff-free if they preserve domestic manufacturing. This isn’t being heralded as a Carney “retreat” and “fold”, of course. But in economic statecraft terms, it’s clear Canada had, and has, no real choice.

On the other hand, China halted planned deliveries of Boeing planes and Hong Kong Post has stopped sending mail to the US… as the US launched a trade probe on critical minerals and placed export controls on Nvidia selling chips to China (how will they stop them getting there via transshipment?) while flagging a 21% tariff on Mexican tomatoes. That sounds like a salsa significant trade conflict ahead.

On the planes front, China can of course buy from Airbus – and increase US-EU trade tensions with it. Or Beijing can push forward the roll-out of its domestic COMAC planes – which may then mysteriously ‘struggle’ to get safety certification for flights to the US/West (**cough** non-tariff barriers **cough**)… and the skies will, like the Red Sea past and present, be parted.

Liberalising trade, yet still hitting markets, President Trump also signed an executive order directing the FDA to allow more states to import medicines directly from countries that sell them at lower prices, following the lead set by Florida buying from Canada in January 2024. With the US paying around 3 times more for branded medicines than other OECD members, this could bring down prices significantly. Of course, looming 25% tariffs run in the other direction while aimed at incentivizing the build-out of domestic production… presumably alongside other economic statecraft measures to explain to firms that “because markets” and three-times multiples are no longer how this will work ahead.

Moreover, underlining that what starts with tariffs and trade spreads to capital and other areas, Congressional Republicans are proposing legislation that would penalize holders of US financial assets for anyone from a country that imposes a “discriminatory” tax, like the Canadian —and proposed EU— digital services tax. A withholding tax of 5% would be imposed, rising by 5 percentage points for next three years to a maximum of 20%.

Overarching this all, a recently released White House statement from the ‘Endless Frontiers Retreat’ notes:

“American progress in critical technologies will make us the global partner of choice… [but] we must safeguard US intellectual property… [and] prevent rival nations from infiltrating our infrastructure and supply chains, as well as from embedding themselves in the infrastructure of our allies… [and] enforce export controls and other measures that keep American frontier technologies out of competitors’ hands… The Golden Age of American innovation is on our horizon, if we choose it… the task ahead of us is to adapt to new realities without destroying the American way of life or disinheriting the American worker. We seek, in the most basic terms, to secure our economy, restore our middle class, and uphold America as the planet’s best home for innovators.”

Can the US keep innovating and deregulating its way out of its current problems?

On the other hand, Chinese data showed Q1 GDP +5.4% y-o-y vs. 5.2% expected despite the q-o-q figure only being 1.2% vs. 1.4%, with retail sales 5.9% vs. 4.3% expected (even as imports were sharply lower!), industrial production 7.7% vs. 5.9% consensus, and property investment -9.9%. Of course, markets rallied despite this picture of a mercantilist policy that doesn’t add to global growth.

There are a lot of bitter herbs, and pills, for countries, industries, firms, individuals, and markets to swallow in having to choose between the US and China; and in getting economic statecraft, not ‘free markets’ policy, telling us what we ‘matzah’ do.

Regardless, it may be choose or be chosen, people.

Tyler Durden Wed, 04/16/2025 - 11:40

From CoStar: US inbound international travel takes 12% hit as economists postpone pre-pandemic recovery to 2029

Whatever hopes the travel industry had in a full recovery to 2019 levels of travel bookings this year have officially been dashed, according to one economist.

"Our pre-inauguration forecast expected international travel to nearly fully recover in 2025 to 2019 levels. We're now pushing that out to 2029," Adam Sacks, president at Tourism Economics, said on a webinar Tuesday. "Now we're looking at a full 10 years between pre-pandemic and what will be full recovery. And, of course, that comes with significant economic losses."
...
The U.S. is already seeing a decline in international travelers, Sacks said. According to National Travel and Tourism Office data, overseas visitor arrivals into the U.S. in March dropped 11.6% year over year.

"What we see is that the things that have really affected international [travel] — it has as much to do with words as it does with action," Sacks said. "It's not only policy, it is rhetoric, the trade war itself, it needs to be said, it's intrinsically combative. It's called a war."

Not only are Trump's tariffs effecting global sentiment, but the way he speaks of commandeering other countries, reduced support for Ukraine and enforces deportations is driving off travelers.

While domestic travel should still remain strong, maybe even buoyed by Americans staying closer to home, the drop in international travel is "not going to fully compensate for the losses," Sacks said.

Teen Murder Suspect Karmelo Anthony Released On Reduced Bail, Claims "Self Defense"

Public outrage over the Karmelo Anthony case is growing with a recent court decision to dramatically reduce the teen suspect's bail from $1 million to $250,000, of which only 10% must be paid to secure the suspect's release. 

Judge Angela Tucker of the 199th District Court in Collin County (pictured below) significantly reduced track meet stabbing suspect Karmelo Anthony's bond and placed him under house arrest.  Anthony, a 17-year-old student at Frisco Centennial High School, was then released from jail Monday afternoon.   Anthony was arrested and charged with murder in the death of 17-year-old Austin Metcalf at the UIL District 11-5A championship track meet at Frisco ISD's Kuykendall Stadium.

The teen was represented by Dallas defense attorney Mike Howard at the hearing. Howard initially asked the court to reduce the bond amount to $150,000. After the hearing, Howard said the $250,000 bond imposed by the judge was "fair," in a press conference. 

"Bond, as the judge said, is not supposed to be an instrument of oppression, it's not supposed to keep people in jail, it's not supposed to punish," Howard said. "It is to ensure that a person shows up to court, complies with all conditions and it's supposed to keep the community safe. This is a large and substantial bond and I think the judge has rightly imposed reasonable conditions that will ensure both Karmelo's and the Anthony families' safety but also the safety of the community..."

The reduced bail came as a shock, primarily because Anthony already confessed to the stabbing of Austin Metcalf to police, though he claims he was "acting in self defense".  Police reports indicate that Anthony entered the tent of the opposing team and was asked to leave by Austin Metcalf.  Anthony refused, unzipping a bag and telling Metcalf to "touch him and see what happens..."  Metcalf reportedly pushed or grabbed the suspect, who then pulled a knife from the bag and stabbed Metcalf in the chest.  He died soon after from blood loss in the arms if his twin brother.

Rumors swirled online after the incident, with race activists quickly coming to the defense of Karmelo Anthony and spreading rumors that he had been persistently bullied by Metcalf (this claim was later debunked, the two teens had never met before).

According to the evidence available so far, Anthony intruded upon the private tent of another team, made threats when he was asked to leave, then, instead of fighting like a man when confrontation ensued, he pulled a knife and stabbed Austin Metcalf in cowardly fashion. 

Unless there is some piece of crucial evidence being withheld, such as Metcalf threatening Anthony with a weapon, there is simply no legal standing for a self defense plea.  Online and armchair "legal experts" claim that Metcalf's supposed touching or grabbing of Anthony constitutes an action that justifies deadly force. In reality the suspect is required to demonstrate that he faced an imminent threat of death or great bodily harm. 

If the roles were reversed, there would be riots in the streets across America and the very same activists would claim "systemic racism".   It is a pattern seen over and over again in the US since the George Floyd case, with minority violence being spun as self defense and the response of police or any white bystander painted as racist oppression.  The CRT faction of the political left seems intent on making Karmelo Anthony into a black Daniel Penny or Kyle Rittenhouse reacting to save himself.  The available evidence simply doesn't support this narrative.

Unwanted physical contact alone is not legal justification for the use of a deadly weapon.  

What was Anthony doing at a school track meet with a knife?  Why was he in another team's tent and why did he refuse to leave?  Anthony also allegedly ran before police arrived (truly the act of an innocent person). Witness reports suggest an angry young man hoping to start a confrontation while he had a knife close at hand.

Perhaps adding insult to injury, the suspect's family has raised nearly half a million dollars through crowdfunding for Anthony's legal defense with many donators saying they support Anthony purely because he's black.  His father, however, revealed that they may use the money to purchase a new home in a gated community for "Karmelo's safety". 

He argues that "racist threats" have made the move necessary. Anthony's lawyers insisted the money raised online "is not a bond fund" and that the family needs the money to get by because Anthony's dad is currently on leave from his job. The decision is rather familiar; very similar to BLM leaders also buying $6 million houses using crowdfunded money originally intended to help the organization's activist efforts. 

The trend within minority communities of applauding violence then crying victim when a suspect is punished continues to perpetuate racial divisions and prevents said communities from learning anything of value.  If a group thinks they are always right, or always oppressed, then they will never change for the better and they will grow ever more childish and hostile.  It is a cultural path to disaster.  

Tyler Durden Wed, 04/16/2025 - 11:20

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

The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 40, up from 39 last month. Any number below 50 indicates that more builders view sales conditions as poor than good.

From the NAHB: Builder Confidence Levels Indicate Slow Start for Spring Housing Season

Growing economic uncertainty stemming from tariff concerns and elevated building material costs kept builder sentiment in negative territory in April, despite a modest bump in confidence likely due to a slight retreat in mortgage interest rates in recent weeks.

Builder confidence in the market for newly built single-family homes was 40 in April, edging up one point from March, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released today.

“The recent dip in mortgage rates may have pushed some buyers off the fence in March, helping builders with sales activity,” said NAHB Chairman Buddy Hughes, a home builder and developer from Lexington, N.C. “At the same time, builders have expressed growing uncertainty over market conditions as tariffs have increased price volatility for building materials at a time when the industry continues to grapple with labor shortages and a lack of buildable lots.”

“Policy uncertainty is having a negative impact on home builders, making it difficult for them to accurately price homes and make critical business decisions,” said NAHB Chief Economist Robert Dietz. “The April HMI data indicates that the tariff cost effect is already taking hold, with the majority of builders reporting cost increases on building materials due to tariffs.”

When asked about the impact of tariffs on their business, 60% of builders reported their suppliers have already increased or announced increases of material prices due to tariffs. On average, suppliers have increased their prices by 6.3% in response to announced, enacted, or expected tariffs. This means builders estimate a typical cost effect from recent tariff actions at $10,900 per home.
...
The HMI index gauging current sales conditions rose two points in April to a level of 45. The gauge charting traffic of prospective buyers increased one point to 25 while the component measuring sales expectations in the next six months fell four points to 43.

Looking at the three-month moving averages for regional HMI scores, the Northeast fell seven points in April to 47, the Midwest moved one point lower to 41, the South dropped three points to 39 and the West posted a two-point decline to 35.
emphasis added

Click on graph for larger image.

This graph shows the NAHB index since Jan 1985.

This was slightly above the consensus forecast.

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

From the Fed: Industrial Production and Capacity Utilization

Industrial production (IP) decreased 0.3 percent in March but increased at an annual rate of 5.5 percent in the first quarter. The March decline was led by a 5.8 percent drop in the index for utilities, as temperatures were warmer than is typical for the month. In contrast, the indexes for manufacturing and mining grew 0.3 percent and 0.6 percent, respectively. At 103.9 percent of its 2017 average, total IP in March was 1.3 percent above its year-earlier level. Capacity utilization stepped down to 77.8 percent, a rate that is 1.8 percentage points below its long-run (1972–2024) average.
emphasis added

Click on graph for larger image.

This graph shows Capacity Utilization. This series is up from the record low set in April 2020, and close to the level in February 2020 (pre-pandemic).

Capacity utilization at 77.8% is 1.8% below the average from 1972 to 2023.  This was below consensus expectations.

Note: y-axis doesn't start at zero to better show the change.

The second graph shows industrial production since 1967.

Industrial production decreased to 103.9. This is above the pre-pandemic level.

Industrial production was at consensus expectations.

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