Closing Volume and VIX

- NYSE volume 109% above its one-month average

- NASDAQ volume 45% above its one-month average

- VIX index: up 50.93% to 45.31

Breadth

S&P 500 Sectors

% Movers

Nasdaq 100 Heat Map

From Peter Boockvar:

Positives

1) The market is closed for the next two days.

2) In the last jobs report before the global trade earthquake of April 2nd saw 228k net jobs added in March, well above the estimate of 140k with about half of that offset by a downward revision of 48k combined in the prior two months. The household survey saw a job gain of 201k which because it was just below the 232k person rise in the size of the labor force, the unemployment rate ticked up by one tenth to 4.2%. The all in U6 rate which jumped by 50 bps to 8% in February to a multi year high fell one tenth to 7.9%. The participation rate rose one tenth to 62.5% after falling by two tenths last month. The key 25-54 yr olds though saw a drop of two tenths to 83.3% which is the lowest since December 2023. Hours worked was 34.2 for a 2nd month after touching 34.1 in January which was the lowest since 2010 not including Covid. Average hourly earnings were up by .3% m/o/m as expected though the prior month was revised down by one tenth and was up by 3.8% y/o/y. Combining hours worked and hourly wages puts the weekly earnings up by .3% m/o/m after a 5 tenths gain last month and higher by 3.2% y/o/y.

3) Initial jobless claims fell to 219k from 225k and 6k below expectations.

4) The average 30 yr mortgage rate was 6.70% for the week ended 3/28, little changed w/o/w. Purchases lifted by 1.5%.

5) Reflecting the desire to buy a new car now so as to avoid the inevitable price increase, vehicle sales in March jumped to 17.77mm at a seasonally adjusted annualized rate. That was well above the estimate of 16.2mm, vs 15.49mm in March 2024 and vs 17.5mm in March 2019. We’ll of course have a hangover in the coming months.

6) From PVH: "In a challenging macro, we delivered another year of strong profitability in North America, drove sequential improvements in our wholesale order books in Europe while improving our quality of sales, and we achieved our third consecutive year of growth in Asia Pacific, on a constant currency basis."

7) China's March manufacturing Caixin index rose to 51.2 vs 50.8. They said "Manufacturers saw their promotional efforts pay off as the market improved. In March, output grew for the 17th straight month and at the fastest pace in four months, while the subindex for total new orders stayed in expansionary territory for the 6th straight month. The overseas demand growth momentum recorded in February was extended, with the indicator for new export orders rising to the highest point since last April." Also, "Businesses remained optimistic. The majority of surveyed companies expressed confidence in the near term economic outlook, although some remained cautious over a potential escalation in global trade tensions."

8) The March China Caixin services index rose to 51.9 from 51.4 and above the estimate of 51.5. On the outlook from here, "Market optimism was maintained. The indicator for expectations of future activity measured lower than February but remained in expansionary territory. Service providers were hopeful about future policy support at home. However, some expressed concerns over a potentially deteriorating global trade environment."

9) China's economy improved very slightly in March if looking at the state sector focused PMI data. The manufacturing index was 50.5, up from 50.2 and while barely above 50, that is the best read in a year. The non-manufacturing component which includes both services and construction was up .4 pts m/o/m to 50.8. That's the highest since last May.

10) Vietnam’s March PMI rose to 50.5 from 49.2. Australia’s was up to 52.1 from 50.4.

11) The March Eurozone manufacturing final PMI was tweaked to 48.6 from 48.7 initially but up 1 pt from February and the highest level since January 2023.

12) March CPI in the Eurozone rose 2.2% y/o/y as expected and vs 2.3% in February. The core rate was higher by 2.4% vs 2.6% in the month before and one tenth below expectations. This is all before the fiscal spending is about to ramp up in Europe, particularly on defense but also infrastructure in Germany. Services inflation continues to be the main driver of inflation, higher by 3.4% y/o/y while non-energy industrial goods prices were up just .6%.

13) German February retail sales rose by .8% m/o/m vs the estimate of no change. Food, non-food and online retail all drove the increase after a .7% increase in January which was revised up by 5 tenths.

14) The Reserve Bank of Australia kept its policy rate unchanged at 4.10% as expected. The usually hawkish Governor Michele Bullock did not lean in any one direction.

15) From a contrarian standpoint, the CNN Fear/Greed index is down to just 4 and ranges from 0-100.

Negatives

1) With the opportunity for a legitimate attempt to convince foreign countries to lower their tariffs in line with what we have on them, so called reciprocity and a benefit to the whole world, we instead get 5th grade math in a formula that results in insane levels of tariffs on all of our trading partners. It begs the following questions, Do we really want to lower global tariff rates? Do we instead want to have high ones as to encourage production back home (though who knows if it comes and some will move overseas) ? Do we want to raise a lot of money via higher tariffs or do we want lower ones instead in the aggregate in order to achieve fairness?

2) We’ve seen a large amount of wealth destruction in just two days and multiple IPOs canceled. Any help with tariffs from a stronger US dollar has slipped away too, for now.

3) Continuing claims rose back above 1.9mm at 1.903mm, up from 1.847mm.

4) Job openings in February, thus dated data, totaled 7.568mm. That’s 90k below expectations and down from 7.762mm in January. The hiring rate held at 3.4% for a 3rd month and the quit rate was unchanged at 2%. The DOGE cuts are slightly reflected here as there are 138,000 federal government job openings vs 132k in January and 138k in December. In October it was 142,000.

5) The March ISM services index fell to 50.8 from 53.5. In terms of industry breadth, 10 saw growth vs 14 in February. The bottom line from the ISM, “There has been a significant increase this month in the number of respondents reporting cost increases due to tariff activity. Despite an increase in comments on tariff impacts and continuing concerns over potential tariffs and declining governmental spending, there was a close balance in near-term sentiment, between panelists with good outlooks and those seeing or expecting declines.”

6) The March ISM manufacturing index fell back under 50 to 49 after two months above and just below the estimate of 49.5. Overall breadth softened a touch with 9 industries seeing growth vs 10 last month. Those seeing a contraction totaled 7 vs 5 in the month before. One saw no change.

7) Refi's fell by 5.6%, and down for a 3rd week.

8) From MSC Industrial: "there remains hesitancy and caution among our customer base around future production levels due to tariff uncertainty, potentially looming inflation, and sustained high interest rates…in pricing, we've taken select tariff related price increases in late March and will continually evaluate additional moves as warranted."

9) From RH: "While we expect a higher risk business environment this year due to the uncertainty caused by tariffs, market volatility, and inflation risk, we believe it's important to separate the signal from the noise. The fact is, we've been operating in the worst housing market in almost 50 years. For context, in 1978, there were 4.09 million existing homes sold when the US had a population of 223 million. Contrast that to 2024, where 4.06 million existing homes sold with a population of 341 million, and it illuminates just how depressed the housing market has been this past year.”

10) Some manufacturing PMI’s: Taiwan 49.8 vs 51.5, South Korea 49.1 vs 49.9, Thailand 49.9 vs 50.6, and Japan 48.4 vs 49.

11) The UK March manufacturing index was revised to a still weak 44.9 from 46.9 in February.

Thanks for reading my Diary today and all week.

I am leaving early for the weekend.

Enjoy your weekend.

Be safe.

Today's "things":

* I covered my KO short at $72.

* I bought the following financials: APO at $112.20, BAC at $35.00, BX at $126.53, C at $58.85, GS at $481.49, JPM at $215.89, KKR at $93.25, MS at $102.71, WFC at $61.74

* Added to SBUX at $83.50

* Purchased more AMZN at $179.40, GOOGL at $149.15, META at $503.41 and MSFT at $366.19.

* And time to buy?

Fear and Greed Index - Investor Sentiment | CNN

From Peter Boockvar:

Rate cut odds in response to Powell

The fed funds futures rate response to Powell doing “a lot of waiting and seeing” rather than leaning towards cutting was to take away the 60% chance of a 5th cut. As of this writing we are still pricing in a 100% chance of four cuts this year but no longer a 5th. As for when the first one will be, odds are at 86% that it happens in June and less so in May which is currently priced at 34%.

With the VIX blowing out to above 40, risk parity and vol control funds are forced to reduce their leverage and sell stocks.

This is the market structure risk I have been writing about this year.

It will bring upon opportunities but for now it is causing a helluva lot of pain.

Based on this morning's adds, Amazon AMZN is my largest individual equity position.

President Trump reported that he had a productive call with Vietnam's Lam regarding a reduction of the respective tariffs to zero.

Sketchers SKX, Crocs CROX and Lululemon LULU have rallied hard on the news.

I did a lot of buying today.

Scott Galloway's Earners vs Owners | No Mercy / No Malice

- NYSE volume is 96% above its one-month average;

- Nasdaq volume is 40% above its one-month average;

- VIX index is up 35.21% to 40.59

Microsoft MSFT, which I added to in premarket trading, has turned green after being -$10.

I covered yesterday's KO short at $72 for a small profit.

From Peter Boockvar:

Jobs report and how does the Fed respond to all of this?

In the last jobs report before the global trade earthquake of April 2nd saw 228k net jobs added in March, well above the estimate of 140k with about half of that offset by a downward revision of 48k combined in the prior two months. The household survey saw a job gain of 201k which because it was just below the 232k person rise in the size of the labor force, the unemployment rate ticked up by one tenth to 4.2%. The all in U6 rate which jumped by 50 bps to 8% in February to a multi year high fell one tenth to 7.9%.

The participation rate rose one tenth to 62.5% after falling by two tenths last month. The key 25-54 yr olds though saw a drop of two tenths to 83.3% which is the lowest since December 2023. Hours worked was 34.2 for a 2nd month after touching 34.1 in January which was the lowest since 2010 not including Covid. Average hourly earnings were up by .3% m/o/m as expected though the prior month was revised down by one tenth and was up by 3.8% y/o/y. Combining hours worked and hourly wages puts the weekly earnings up by .3% m/o/m after a 5 tenths gain last month and higher by 3.2% y/o/y.

The federal government shed 4k jobs but assume it will be more than that when the April jobs report comes out. State and local though added jobs. With respect to services, again private education/health led the job gains, up by 77k, almost half of the 209k private sector jobs added. That was followed by trade/transport of 48k which includes 24k from retail. Leisure/hospitality added 43k after losing a total of 31k over the past two months combined. Financial services and professional/business services added modest jobs while temp jobs were lost for a 3rd straight month and information shed 2k.

On the goods side, construction again drove the gains, hiring 12k people while manufacturing hired a net 1k.

Bottom line, the headline job gain was solid with some continued soft spots in terms of hours worked and an elevated U6 unemployment rate. But everything changed on April 2nd if not quickly reversed and just imagine the number of job offerings/openings were pulled back for those companies procuring goods from overseas.

Yields rose a touch and now everyone is discussing/debating how the Fed will respond to this. Right now the fed funds futures are pricing in 115 bps of rate cuts by year end which implies 100% chance of four and 60% chance of a 5th. Can they save the day? Will they focus more on the labor market and roll the dice that inflation won't jump with tariffs? Will prices rise if the economy rolls over? What happens if the US dollar rolls over with rate cuts and inflation goes higher in response? If dollar goes lower and US importers eat all of the tariffs, how much does this hurt economic growth?

I'd assume for Jay Powell, May 2026 can't come soon enough and how can the Fed have any confidence at all with what they will do with everything going on?

U6

25-54 yr old Participation Rate

Hours worked

Upside:

-CXAI +40% (reports FY24 ARR double-digit growth y/y, EBITDA +30% y/y)

-SGMO +21% (announces Capsid License Agreement with Lilly to deliver Genomic Medicines for Diseases of the Central Nervous System)

Downside:

-NMTC -38% (files to sell public offering of common stock of indeterminate amount)

-QMCO -9.7% (appoints Lewis Moorehead CFO, effective immediately)

-DD -8.5% (China Market Regulator launches anti-monopoly probe in DuPont China)

-AMZN -6.5% (tariff concerns)

-CAT -6.0% (China announces extra 34% tariffs on all US goods, effective from Apr 10th)

-GES -6.0% (earnings, guidance)

-AAPL -5.5% (tariff concerns)

-NVDA -4.2% (tariff concerns; UBS cuts AI stocks to Attractive from Most Attractive)

-XLE -4.0% (tariff concerns)

-XLK -3.7% (tariff concerns)

-WMT -3.4% (tariff concerns)

Most-active premarket ETFs as of 8:14 a.m. ET:

Premarket percentage movers as of 8:36 a.m. ET:

The S&P Index is now -11% year to date (when one includes the sharp fall in stock futures this morning).

This decline compares with my 2025 projected range of +5% to -10% to -15%.

As a result, in only about three trading days the upside reward v downside risk ratio has swung to positive levels - justifying adding to long exposure.

As well, again adjusted for the futures decline, the S&P Index is below its "fair market value" for the first time in a long while.

The last 12 months bear witness that stocks can stay above their "fair market value" for some time (especially in a market dominated by passive investing).

So, it follows, that a discount to intrinsic can also be a condition for some time.

I continue to add to equities in premarket trading.

These are not trades, they are investments.

This morning's add: AMZN $170.41, BAC $36.43, C $61.71, GOOGL $149.12, GS $493, JPM $219.46, META $503.41, MS $104.26, MSFT $365.44 and SBUX $83.5.

FED SPEAKERS: 

9 a.m.: New York Fed Bank Director of Research Athreya speaks at 2025 New York Fed Innovation Conference, New York; 

11:25 a.m.: Federal Reserve Chair Jerome Powell speaks on the economic outlook before the Society for Advancing Business Editing and Writing (SABEW) Annual Conference, Arlington, VA (Text available. Q&A from moderators. Webcast available); 

Noon: Fed Board Governor Barr (Voter) speaks on "Artificial Intelligence and Banking" before the Federal Reserve Bank of San Francisco, San Francisco State University, and University of California Santa Cruz 2025 Fintech Conference, San Francisco, CA (Text available. Q&A from moderator and audience. Webcast at https://vimeo.com/event/4911428/f44df95389); 

12:45 p.m.: Fed Board Governor Waller (Voter) participates in "Payments" discussion before the 2025 New York Fed Innovation Conference (No text. Q&A from moderator and audience)

From Peter Boockvar:

The first lawsuit has been filed and I'm sure the first of many

China will not roll over and its retaliation of 34% is on about $150b worth of our goods, including soybeans and energy products. China will just buy these particular items from someone else.

The lawsuits are now coming for the administration over tariffs on the basis that there is no National Emergency that is being claimed that would empower the President to implement such tariffs. According to a Reuters story, the "New Civil Liberties Alliance, a conservative legal group, on Thursday filed what it said was the first lawsuit seeking to block Donald Trump's tariffs on Chinese imports, saying the US president overstepped his authority." Trump has used the International Emergency Economic Powers Act of 1977 as his legal basis.

Andrew Morris a senior litigation counsel member of the NCLA said in a statement, "By invoking emergency power to impose an across-the-board tariff on imports from China that the statute does not authorize, President Trump has misused that power, usurped Congress's right to control tariffs, and upset the Constitution's separation of powers."

The lawsuit was filed on behalf of Simplified which is a Florida based retailer of "home management products." And, "The lawsuit says presidents can only impose tariffs with Congress' permission and under complex trade statutes spelling out how and when they can be authorized."

https://www.reuters.com/legal/trump-administration-sued-over-chinese-import-tariffs-2025-04-03/

We should expect a lot more of this as there is no emergency that would precipitate what is going on. I only went to law school for one year but it seems pretty obvious. It could end up being the courts over the next week that freeze what is going on rather than the result of trade negotiations.

Broadly on tariffs, just a few thoughts. Bringing more manufacturing jobs home sounds great but with a higher embedded cost structure, especially if more vertical integration takes place here like in autos, are US consumers going to be able to afford to buy these products? How are US manufacturers going to compete against international competitors in the export markets? Are robotics the only thing you will find in a US manufacturing facility anyway outside of a few employees making sure they are working?

Separately, I want to point out that I saw many estimate guesses on what the GDP impact will be from all of the tariffs but the thing that is really tough to quantify, though real and hugely an important factor here is what a decline in the stock market will mean for upper income consumer spending. I keep harping on this as if we lose that upper income spender at the same time government spending is going to be less of a fiscal lift, the odds of a recession approach 100% because they've been the only thing keeping the economy growing, in addition to AI capital spending.

And with the stock market, not only should we expect a decline in earnings estimates for this year, likely confirmed by what we're going to hear in the coming month plus but also I have to believe the P/E multiple must contract into the teens.

MSC Industrial is a major distributor of manufacturing and industrial products and is smack in the middle of what is going on with global trade and tariffs. They reported earnings yesterday and said this:

"there remains hesitancy and caution among our customer base around future production levels due to tariff uncertainty, potentially looming inflation, and sustained high interest rates."

"in pricing, we've taken select tariff related price increases in late March and will continually evaluate additional moves as warranted."

One, two, three, hey, look at Mr. Lee

Three, four, five, hey, look at him jive



Mr. Lee, Mr. Lee, oh, Mr. Lee

Mr. Lee, Mr. Lee, oh, Mr. Lee

Mr. Lee, Mr. Lee, oh, Mr. Lee, Mr. Lee

- The Bobbettes, "Mr. Lee"

From Wikipedia:

Released in 1957, Mr. Lee was written about a schoolteacher several of the members of The Bobbettes had.

Contrary to popular belief, the song was originally written not to ridicule but to describe their former teacher factually. 

Earnings are likely to hold up better than expectations, says Fundstrat's Tom Lee

Bonus — Here are some great links:

Credit Spreads Don't Lie

Post-Election Year Woes Persist

Pulling Global Markets Together

Wolf Street howls about the Fed's balance sheet. 

We recently had been cautioning that changing conditions and inept policy could make volatility great again:

The S&P Short Range Oscillator grew more oversold at -3.14% vs. -1.35%.