Low Volume

- NYSE volume 24.3% below its one-month average

- NASDAQ volume 12.2% below its one-month average

- VIX index: down 8.05% to 22.62

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* Broad weakness in fixed income with yields as much as 14 bps higher...

One would think that today's weakness in bond prices would spill over a bit to equities, but the positive price momentum in a world dominated by those that worship at its altar seem to be overwhelming stock prices:

* The yield on the six-month Treasury Bill is +5 basis points to 4.26%.

* The yield on the two-year Treasury note is +14 basis points to 3.85%.

* The yield on the 10-year Treasury note is +10 basis points to 4.33%.

* The yield on the 30-year Treasury bond is +7 basis points to 4.80%.

Wolf Street howls about the jobs market.

From Peter Boockvar:

Positives

1) Within the payroll report, the household survey said jobs grew by 436k, almost matching the rise in the labor force of 518k. The result was no change in the unemployment rate of 4.2%. The all in rate ticked lower by one tenth to 7.8% vs 7.9% in March, 8% in February and 7.5% in January. Hours worked ticked up to 34.3 from 34.2 where no change was expected. Wages were up by .2% m/o/m and 3.8% y/o/y, one tenth under the estimate. Combine the two and we saw a gain of .2% m/o/m and 4.1% y/o/y. The participation rate was 62.6% vs 62.5% in the month before. The key 25-54 yr old cohort rebounded by 3 tenths to 83.6% which is the most since last September.

2) Growing rumblings that both the US and China are eager to have a coffee talk.

3) The March PCE inflation data was as expected both headline and core when including the February estimate.

4) April vehicle sales totaled 17.27mm, about 100k more than expected. This follows the March read of 17.7mm and Wards Automotive said this, "Tariff-related buying lifted sales over the past two months to a seasonally adjusted annual selling rate of 17.6 million, well above the roughly 16.0 million they would have totaled otherwise. There was some indication that the surge was decelerating by the end of the month, probably due to tariff “exuberance” starting to dry up and because of a drain to inventory. There was more strength, in general, in demand for fullsize and luxury-segment trucks than for more affordable vehicles, including cars and small and midsize CUVs and SUVs."

5) The April ISM manufacturing index remained below 50 but was little changed at 48.7 vs 49 and slightly above the estimate of 47.9. Of 18 industries asked, 11 saw growth vs 9 in March while 6 experienced a contraction. The bottom line from the ISM, "Demand and production retreated and destaffing continued, as panelists' companies responded to an unknown economic environment. Prices growth accelerated slightly due to tariffs, causing new order placement backlogs, supplier delivery slowdowns and manufacturing inventory growth."

6) The Apartment List National Rent Report covering April saw the 3rd straight month that new rent prices went up as they typically do seasonally this time of the year. The increase was .5% m/o/m though still down .3% y/o/y. And, "Despite the cooldown, the typical rent price remains 21% higher than its January 2021 level." On the supply side, "our national vacancy index ticked up to 7%, setting a new record high in the history of that monthly data series, which goes back to the start of 2017."

7) Pending home sales in March rose 6.1% m/o/m, well better than the estimate of 1% and helped by the spring selling season.

8) From Amazon: "As always, we're working to keep prices low. And with this being an uncertain moment for consumers, it's even more important than it typically is...I thought I'd share a few thoughts on the prospect of heightened tariffs on our stores business. Obviously none of us know exactly where tariffs will settle or when. We haven't seen any attenuation of demand yet. To some extent, we've seen some heightened buying in certain categories that may indicate stocking up in advance of any potential tariff impact. We also have not seen the average selling price of retail items appreciably go up yet. Some of this reflects some forward buying we did in our first party selling, and some of that reflects some advanced inbounding our third party sellers have done, but a fair amount of this is that most sellers just haven't changed pricing yet." On spending, "Now turning to our CapEx, which was $24.3 billion in Q1. The majority of this spend is to support the growing need for technology infrastructure. It primarily relates to AWS as we invest to support demand for our AI services and increasingly in custom silicon, like Trainium, as well as tech infrastructure to support our North America and International segments."

9) From Microsoft: "It was a record quarter driven by continued strength in Microsoft Cloud, which surpassed $42 billion in revenue, up 22% in constant currency. Cloud and AI are the essential inputs for every business to expand output, reduce costs, and accelerate growth...We continue to see strong demand for our cloud and AI offerings as they help customers drive productivity, increase efficiencies, and grow their businesses. And again this quarter, revenue from our AI business was above expectations." They had a slight step down on CapEx from the previous quarter with spending of $21.4 billion, still a big number but "slightly lower than expected, due to normal variability from the timing of delivery of data center leases...roughly half of our cloud and AI related spend was on long lived assets that will support monetization over the next 15 years and beyond. The remaining cloud and AI spend was primarily for servers, both CPUs and GPUs, to serve customers based on demand signals, including our customer contracted backlog of $315 billion."

10) From Meta Platforms: "Within ad revenues, the online commerce vertical was the largest contributor to y/o/y growth. On a user geography basis, ad revenue growth was strongest in Rest of World and North America at 19% and 18%, respectively. Europe and Asia Pacific grew 14% and 12%." CapEx was $13.7 billion, "driven by investments in servers, data centers, and network infrastructure...We anticipate our full year 2025 capital expenditures, including principal payments on finance leases, will be in the range of $64 billion to $72 billion, increased from our prior outlook of $60 billion to $65 billion. This updated outlook reflects additional data center investments to support our AI efforts as well as an increase in the expected cost of infrastructure hardware."

11) From Mastercard: "We're operating in an uncertain environment. Consumer and business sentiment has weakened, primarily due to concerns surrounding the impact from tariffs and geopolitical tensions. On the other hand, so far this year, the fundamentals that support consumer spending have been solid and our drivers are generally stable...In the US, we see generally stable spending. Europe, a bit more of a challenging environment, but also generally spending. In Asia, if you look at another big region there, China came a little bit ahead of what they said, what they initially had projected on their economic growth."

12) From Visa: "Our key business drivers were strong. Even with the lapping of Leap day from last year and consumer spending remained resilient in an uncertain and dynamic environment...we have not seen any signs of overall consumer spending weakening. While spending growth differs among consumer spend bands, with the most affluent growing the fastest, all spend bands remain resilient and consistent with past quarters."

13) From MGM Resorts: "April in Las Vegas is shaping up to be a record April for the company."

14) From Live Nation: On broader demand trends in light of everything going on, "it's a question every CEO gets asked and are you feeling the consumer pullback at all. We haven't felt it at all yet...We put a lot of shows onsale in the month of April. Chris Brown sold 1 million tickets this month, Mumford & Sons 300, Suicide Blonde, Lady Gaga sold out, up 18% y/o/y. So any data we have right now up until last week, whether it's a festival onsale or a new tour or show that went onsale, complete sell-through and strong demand and beating last year's numbers. So, we haven't seen a consumer pullback in any genre, pub, theater, stadium, amphitheater, we haven't seen it all happen yet." With sponsorships, "we've got over 80% of our business contracted this year so far. We're up over last year. Again, because we deal on more longer term relationships, we don't feel it."

15) From Airbnb: While less travelers are coming from Canada, they are capturing their travel elsewhere. "At the same time, what we're seeing is within that corridor, guests who would have in a prior year come to the US are simply choosing a different location. So I think Canada is the most obvious example where we see Canadians are traveling at a much lower rate to the US, but they're traveling more domestically. They are traveling to Mexico, they are going to Brazil, they're going to France, they're going to Japan. And I think what that tells you about the distribution is that, in this moment, it's not necessarily that people don't want to travel, they are just using different destinations."

16) From Booking Holdings: "At the start of the 2nd quarter, we are currently seeing stable levels of global leisure travel demand despite rising geopolitical and macroeconomic concerns...Looking at our room nights growth by region in the first quarter, Europe and Asia were up high single digits, Rest of World was up low double digits, and the US was up low single digits."

17) From Royal Caribbean: "as we look across the current macro landscape, we recognize that there is heightened uncertainty. However, research, including the direct surveying of our customers, continue to show that that propensity to cruise remains encouraging...We are certainly not immune to macro volatility, but what we're seeing on the ground in our bookings and the real time spending occurring on our ships is that consumers are still prioritizing experiences, planning to spend more on them this year, and are seeking value that we are well positioned to offer."

18) From Brinker's: "Except for a slight dip in both sales and traffic in February due to weather, Chili's delivered consistent results every period of the quarter, and has maintained this momentum into April. We now believe more than ever, consumers will continue to reward Chili's as a brand that consistently provides great food, service, and atmosphere at an exceptional value."

19) From PPG Industries: "Demand for various general industrial markets improved in the first quarter and we see increasing momentum in the coming quarters. While auto OEM industry demand forecasts were slightly reduced, our share gains are beginning to yield benefits, and we expect to outperform the market beginning in the 3rd quarter."

20) From Vulcan Materials: "On the public side, infrastructure related spending remains a catalyst with 2/3 of the highway dollars yet to be spent. Public construction is poised for continued steady demand growth."

21) The April Eurozone manufacturing PMI was revised slightly higher to 49 from its initial print of 48.7 and vs 48.6 in March.

22) The Eurozone grew by .4% q/o/q, twice the estimate and by 1.2% y/o/y.

Negatives

1) April payrolls grew by 177k, 39k above expectations but the two prior months were revised down by a combined 58k. The average duration of unemployment rose to 23.2 from 22.8 in March, 21.3 in February and 22 in January. The birth/death model overstated today's data very likely as it added 393k jobs vs 363k in April 2024, 378k in April 2023 and vs 281k in April 2019.

2) ADP said just 62k private sector net jobs were created in April vs the estimate of 115k.

3) Initial jobless claims rose to 241k from 223k and that was well above the estimate of 223k. The 4 week average rose to 226k from 221k. Also of importance, continuing claims jumped to 1.916mm from 1.833mm and 50k above the estimate. That is the highest level since November 2021.

4) Challenger said this on the labor market, “Though the Government cuts are front and center, we saw job cuts across sectors last month. Generally, companies are citing the economy and new technology. Employers are slow to hire and limiting hiring plans as they wait and see what will happen with trade, supply chain, and consumer spending,” Andrew Challenger, Senior Vice President and workplace expert for Challenger, Gray & Christmas.

5) The number of job openings in March fell to 7.192mm, down 376k m/o/m to the least amount since last September and the 2nd lowest amount since early 2021. The hiring rate though held at 3.4%, the 4th straight month at this pace. The quits rate ticked up by one tenth to 2.1%.

6) The US economy in Q1 contracted by .3% q/o/q annualized, about as expected but nominal GDP exceeded expectations as the inflation stats ran hotter than anticipated. The price deflator rose 3.7% vs the forecast of up 3.1% and the core PCE was up by 3.5%, 4 tenths above the estimate. There were trade distortions throughout and January/February certainly outperformed March.

7) Where the tariffs most showed up in the ISM manufacturing report was the New Export Orders figure which fell to 43.1 from 49.6 and vs the 6 month average of 49.2. It's the lowest since May 2020 and since April 2009 before then and of 18 industries surveyed, ZERO saw an increase in export orders. Imports fell to 47.1 from 50.1 and compares with the 6 month average of 49.7. Also, The ISM said this on deliveries, "Deliveries continued to be marginally strained as (1) suppliers struggled to meet accelerated delivery requests from panelists’ companies, (2) materials are delayed in processing at ports of entry and (3) suppliers and panelists’ companies negotiate who pays for applied tariffs."

8) The Dallas manufacturing survey comments in particular did not read well, https://www.dallasfed.org/research/surveys/tmos/2025/2504#tab-comments.

9) For the week ended 4/25 according to the MBA, purchase applications dropped by 4.4% w/o/w and lower for a 3rd week. Refi's were down by 3.7% w/o/w, also down for a 3rd week. The average 30 yr mortgage rate was 6.89%.

10) The Conference Board’s index fell to 86 from 93.9 with most of the decline led by the Expectations component which is now at the lowest level since 2011. One yr inflation expectations jumped a full 100 bps to 7% from 6%, the highest since November 2022. Signs of slowing hiring activity was apparent here. Those that said jobs were Plentiful fell to a 7 month low. Those that claim they are Hard to Get rose to a 6 month high. When looking out 6 months, those who expect ‘more jobs’ fell 3 pts to 13.7, the least since last June. Those that expect ‘fewer jobs’ rose to the highest since 2009 during the GFC. Income expectations softened too. The bottom line from the Conference Board not surprisingly, “Write-in responses on what topics are affecting views of the economy revealed that tariffs are now on top of consumers’ minds, with mentions of tariffs reaching an all-time high. Consumers explicitly mentioned concerns about tariffs increasing prices and having negative impacts on the economy. Inflation and high prices remained important for consumers’ views about the economy: while the majority complained about the high cost of living, there were also some references to declines in the prices of gas and some food items. There were also numerous mentions of stock prices and uncertainty.”

11) The March savings rate fell to 3.9%, hovering near the multi year lows.

12) From Apple: "assuming the current global tariff rates, policies, and applications do not change for the balance of the quarter and no new tariffs are added, we estimate the impact to add $900 million to our costs."

13) From McDonald's: "We entered 2025 knowing that it would be a challenging time for the QSR industry due to macroeconomic uncertainty and pressures weighing on the consumer. During the first quarter, geopolitical tensions added to the economic uncertainty and dampened consumer sentiment more than we expected...Our global comp sales in the first quarter declined by 1%, and while we expected global QSR industry traffic would be down in the first quarter, actual industry traffic fell more than we anticipated in several of our large markets, including the US...In the US, overall QSR industry traffic from the low income consumer cohort was down nearly double digits vs the prior year quarter. Unlike a few months ago, QSR traffic from middle income consumers fell nearly as much, a clear indication that the economic pressure on traffic has broadened. However, traffic growth from the high income cohort remains solid, illustrating the divided US economy, where low and middle income consumers in particular are being weighed down by the cumulative impact of inflation and heightened anxiety about the economic outlook."

14) From Starbucks: "our Q2 results are disappointing, especially as measured by EPS. But behind the scenes, we made a lot of progress and have real momentum with our Back to Starbucks plans."

15) From Domino's Pizza: "Our carryout business comps were up 1% while delivery was down 1.5% in the quarter. Our delivery business continues to be impacted by macro pressures that are impacting the low income consumer."

16) From Hershey: "Broader snacking came under pressure in the first quarter due to softening consumer sentiment, weaker trips across channels, and continued value seeking behaviors. However, category growth in non-seasonal candy, mint, and gum outpaced broader snacking trends in the first 12 weeks of the year. Moreover, everyday chocolate growth of nearly 2% remains consistent with historic levels...In the 2nd quarter, we expect incremental tariff expenses of approximately $15 million to $20 million, based on what we know today."

17) From Airbnb: "Today, things feel uncertain once again...We absolutely have seen a decline in popularity of foreign travelers coming to the US. And what we have seen is that, number one, it's less popular to come to the US from a year ago also relative to the beginning of the year. And what we're seeing in that segment is two things. One, that segment is a very small portion of our overall business. As a reminder, US travel is predominantly domestic. And as a result, that corridor of foreign travelers coming to the US is approximately 2% to 3% of our overall business."

18) From Booking Holdings: "In the quarter, we observed notable changes in certain travel patterns. For example, we saw a moderation in trends for inbound travel into the US, particularly from bookers in Canada and to a lesser extent from bookers in Europe. However, we also saw an improvement in trends in other travel corridors, for example, from Canada to Mexico, resulting in stable growth overall...While we saw a y/o/y increase in length of stay on a global basis, we saw a decrease in length of stay in the US, which could indicate that US consumers are becoming more careful with their spending. We also saw some evidence of a bifurcated economy in the US as higher star rating hotels appear to be more resilient than lower star rating hotels. We have not seen either of these dynamics in Europe."

19) From Hilton: They saw 2.5% y/o/y RevPAR growth in Q1 "driven by strong momentum from the end of last year that carried into 2025 and supported solid performance in both January and February. However, broader macro uncertainty intensified in March, which pressured demand, particularly across leisure...They saw 2.5% y/o/y RevPAR growth in Q1 "driven by strong momentum from the end of last year that carried into 2025 and supported solid performance in both January and February. However, broader macro uncertainty intensified in March, which pressured demand, particularly across leisure."

20) From EBAY: On the state of the consumer, "It's clear that the macroenvironment clearly remains uncertain and difficult to predict. We have been operating in a rather choppy environment for the last number of quarters as we've managed through this. I think I'd carve it in between US and international. Demand in the US continues to be more resilient and we've seen healthy volume trends so far in the 2nd quarter...I think as it pertains to Europe and particularly Germany and the UK, leading indicators in the UK like consumer confidence remain depressed. There continues to be concerns over cost of living and inflation, which in our 2nd largest market is obviously quite pertinent. And then when I think about Germany, it continues to remain tough. Consumer confidence was impacted by recent elections and geopolitical events. And I think it's fair to say that German consumers are now concerned about the spillover effects of US trade policy and its government now is predicting a 3rd consecutive year of zero GDP growth."

21) From Caterpillar: "the tariffs, which have been announced and implemented this year, are currently estimated to be a cost headwind of about $250 million to $350 million. This estimate is net of our initial mitigation efforts and cost controls, which represent limited short term actions that we were able to implement quickly. As you would expect, we are evaluating a broad range of longer term mitigation actions."

22) From Stanley Black & Decker: "Price increases will be necessary in the US market due to the current tariffs, and we have implemented a substantial increase in April..."We clearly are entering a dynamic period with reduced visibility, albeit with relatively stable demand based on what we're seeing in the market and across the business. While we don't know the full picture of how tariffs will impact the US economy or demand in our categories, we are preparing ourselves for multiple demand scenarios this year. And even though it's too early to predict all the different direct and indirect impacts, we do believe the current trade policies will prompt significant prices increases for companies in our industry and many others."

23) From Vulcan Materials: "We believe that private demand will continue to face challenges this year while public demand remains a healthy offset. Affordability issues and elevated interest rates persist as headwinds in residential construction activity. Single family starts and permits have been declining recently and multifamily activity remains weak as anticipated...While the trends in private non-residential demand vary across categories, the interest rate environment and macroeconomic uncertainty seem to be delaying the timing of a recovery in starts. Importantly, warehouse activity, the largest category in private non-residential construction, appears to be stabilizing after multiple years of declines and data center activity in our market continues to accelerate."

24) From International Paper: "Industry demand in North America was down 2% in the first quarter, and based on order patterns, we expect that level of demand to continue into the 2nd quarter. Demand across the European markets was soft in the first quarter as expected, and we expect it to remain stable in the 2nd quarter on a q/o/q basis. In both regions, demand has been stable in April, but we're very cautious about the outlook given the strong negative consumer and business sentiment."

25) From UPS: "Starting with the US, while we expected negative ADV growth given our Amazon glide down plan, January's ADV decline was less than expected, marked by positive average daily volume or ADV growth in certain B2B, SMB, and healthcare customers. Then, as we moved into February and March, uncertainty surrounding global trade policies and other matters led to a drop in consumer confidence and muted demand from some enterprise and SMB customers. As a result, the decline in US ADV for the months of February and March was higher than we expected...Looking outside the US, demand for US inbound services surged as customers pulled forward inventory purchases ahead of expected tariff changes."

26) From Saia: Going into 2025, "We expected the macro environment to remain somewhat muted or at least consistent with what we've seen over the last two years. As we approach the end of April, the backdrop is notably different. Historically, we've typically seen seasonal increases in shipments and tonnage of approximately 3% to 4% from February to March. In facilities opened less than three years, we saw the 3% sequential improvement. In legacy facilities, shipments were actually down slightly Feb to March. This year, shipments in total for the company were only modestly improved from March to April, which we attribute primarily to the uncertain macro environment."

27) From Sysco: "In addition to the effects of adverse weather in the quarter, consumer confidence has been shaken by the recent trade policy and tariff negotiations...The decline in confidence levels gives us concern for the full year ahead...on our Q2 call we had anticipated nominal improvement in the business macro environment going from the first half into the 2nd half of our fiscal year. Unfortunately, at this time, we have experienced the opposite macro effect, and Sysco's business performance for Q3 reflects the industry traffic deceleration." April has gotten a touch better but "we are cautiously planning our business for the remainder of 2025, given the aforementioned tariff uncertainties and consumer confidence data."

28) From Colgate-Palmolive: "The first challenge is the weaker consumers you've heard throughout the week. While a slowdown in category pricing was always built into our assumptions for 2025, the macroeconomic and consumer uncertainty we saw in Q1, not just in the US, but also in other countries around the world, had a negative impact on volume growth and therefore category growth in the quarter."

29) Most of the April manufacturing PMI's released fell m/o/m not surprisingly. Taiwan 47.8 vs 49.8, Indonesia 46.7 vs 52.4, South Korea 47.5 vs 49.1, Malaysia 48.6 vs 48.8, and Thailand 49.5 vs 49.9.

30) The Eurozone April CPI rose 2.2% y/o/y headline and 2.7% core, both one tenth above expectations. Services inflation continues to lead the way, rising by 3.9% y/o/y while core goods prices were higher by just .6% for a 3rd straight month y/o/y.

31) The April Eurozone Economic Confidence index fell to 93.6 from 95 and below the estimate of 94.5. That is now just .1 pt from matching the lowest level since 2020. Every component weakened m/o/m which includes manufacturing, services, consumer, retail and construction confidence.

32) The Bank of Japan who still only has a rate of .50% was left frozen with policy by the trade wars.

33) The April manufacturing PMI's out of China weakened with the state sector focused PMI falling under 50 to 49 from 50.5. The private sector Caixin was at 50.4 from 51.2. Caixin said, "A renewed fall in new export orders, which was often attributed to the impact of tariffs, led to a slower and only marginal rise in total new work. As a result, production growth likewise eased on the month. Firms also lowered their inventory levels as business optimism fell. Concurrently, reduced capacity pressures led to the resumption of job shedding in April."

S&P cash +94 handles I am adding to my short index calls.

I'm taking off the short put part of my straddles as I have covered my index puts for a profit.

Wendy Johnson

Mr. Kass - I have a likely rookie question. Can you explain the birth/death model that Mr. Boockvar mentions regarding his monthly jobs number analysis? I would be very grateful!

Dougie Kass

WJ

Not a rookie question!

From Peter:

"Every month the BLS estimates the creation of new businesses and the closure of others. It is not with hard data, it is strictly an estimate. Eventually when they get the hard data in coming months, it revises the numbers. Evident in today's April report was a b/d job add that was above levels seen over the past 6 years and clearly hinting at overstatement. "

Thomasfperkins

Yesterday, you posted "Moving Away From This ETF" (MSOS). Find out why on the blog tab of seabreezepartnerslp.com'. Please explain

Dougie Kass

besides reasons below.... i would prefer to construct my own "ETF" in cannabis, produce my own weightings given the unclear legislative outlook and the possible implications on MSOS s that are contained in the MSOS ETF.

e.g. why have a bunch of MSOS s penny stocks that will likely fail under the weight of cannabis price compression, high cost cultivation properties (and uncertain interstate rules ahead), huge liabilities (and a debt cliff) etc.?

the industry is at an existential point where things could go either way - very high debt loads raise large financial uncertainties for almost every company in the cannabis space

again, investors have different risk profiles

MSOS has likely discounted most outcomes, save a continued legislative slog that solves nothing and produces little clarity -- the status quo is negative for the sector esp in front of debt obligations

its not just a buy everything or sell everything sector now - the way investors prefer to look at most spaces

the numerous permutations of future legislative initiatives and industry rules, etc produce a wide range of outcomes - impacting companies differently

Low Volume

- NYSE volume 22.5% below its one-month average

- NASDAQ volume 11.5% below its one-month average

- VIX index: down 6.71% to 22.95

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I have two research meetings with companies from 11 a.m. to 2 p.m. today.

Radio silence.

From Peter Boockvar:

Let's put some trade points on the board already/Pull forward auto sales/Interesting company comments

As the fate of many small US companies are in the hands of politicians that have thrown their businesses under the bus with little time to adjust, we can only hope that not only do the US/China talks start asap but there is an immediate articulation of what the end game will be, a quick deal will be had and tariff rates collapse from current levels. As many holiday ordering needs to be set by around June 1st, I'm guessing that is the soft deadline date for a ratchet down of this war.

In terms of other deals, I saw comments from the Japanese lead negotiator who said he sees a deal done in June. What was really interesting about these talks was the comment today from Japan's Finance Minister who said they can use their $1.2 trillion holdings of US Treasuries as leverage. He said, "It does exist as a card. Whether or not we used that card is a different decision."

Before I get to earnings calls, April vehicle sales totaled 17.27mm, about 100k more than expected. This follows the March read of 17.7mm and Wards Automotive said this, "Tariff-related buying lifted sales over the past two months to a seasonally adjusted annual selling rate of 17.6 million, well above the roughly 16.0 million they would have totaled otherwise. There was some indication that the surge was decelerating by the end of the month, probably due to tariff “exuberance” starting to dry up and because of a drain to inventory. There was more strength, in general, in demand for fullsize and luxury-segment trucks than for more affordable vehicles, including cars and small and midsize CUVs and SUVs."

From Amazon who saw revenues up 10% y/o/y:

"As always, we're working to keep prices low. And with this being an uncertain moment for consumers, it's even more important than it typically is."

"I thought I'd share a few thoughts on the prospect of heightened tariffs on our stores business. Obviously none of us know exactly where tariffs will settle or when. We haven't seen any attenuation of demand yet. To some extent, we've seen some heightened buying in certain categories that may indicate stocking up in advance of any potential tariff impact. We also have not seen the average selling price of retail items appreciably go up yet. Some of this reflects some forward buying we did in our first party selling, and some of that reflects some advanced inbounding our third party sellers have done, but a fair amount of this is that most sellers just haven't changed pricing yet."

AWS saw revenue growth of 17% y/o/y. "During the first quarter we continue to see growth in both generative AI business and non-generative AI offerings as companies turn their attention to newer initiatives, bring more workloads to the cloud, restart or accelerate existing migrations from on-premises to the cloud, and tap into the power of gen AI."

"Now turning to our CapEx, which was $24.3 billion in Q1. The majority of this spend is to support the growing need for technology infrastructure. It primarily relates to AWS as we invest to support demand for our AI services and increasingly in custom silicon, like Trainium, as well as tech infrastructure to support our North America and International segments."

"The external environment remains complex."

From Apple:

"assuming the current global tariff rates, policies, and applications do not change for the balance of the quarter and no new tariffs are added, we estimate the impact to add $900 million to our costs."

"in terms of the pull forward in demand, if you look at the March quarter, we don't believe that we saw obvious evidence of a significant pull forward in demand in the March quarter due to tariffs. If you look at our channel inventory, from the beginning of the quarter to the end of the quarter, the unit channel inventory was similar, not only for iPhone, but for the balance of our products."

I'll say in contrast, based on what I've heard from many friends, there was plenty of pull forward of buying Macs and iPhones.

From McDonald's:

"We entered 2025 knowing that it would be a challenging time for the QSR industry due to macroeconomic uncertainty and pressures weighing on the consumer. During the first quarter, geopolitical tensions added to the economic uncertainty and dampened consumer sentiment more than we expected."

"Our global comp sales in the first quarter declined by 1%, and while we expected global QSR industry traffic would be down in the first quarter, actual industry traffic fell more than we anticipated in several of our large markets, including the US."

"In the US, overall QSR industry traffic from the low income consumer cohort was down nearly double digits vs the prior year quarter. Unlike a few months ago, QSR traffic from middle income consumers fell nearly as much, a clear indication that the economic pressure on traffic has broadened. However, traffic growth from the high income cohort remains solid, illustrating the divided US economy, where low and middle income consumers in particular are being weighed down by the cumulative impact of inflation and heightened anxiety about the economic outlook."

From Mastercard:

"We're operating in an uncertain environment. Consumer and business sentiment has weakened, primarily due to concerns surrounding the impact from tariffs and geopolitical tensions. On the other hand, so far this year, the fundamentals that support consumer spending have been solid and our drivers are generally stable."

"In the US, we see generally stable spending. Europe, a bit more of a challenging environment, but also generally spending. In Asia, if you look at another big region there, China came a little bit ahead of what they said, what they initially had projected on their economic growth."

From Hershey:

"Broader snacking came under pressure in the first quarter due to softening consumer sentiment, weaker trips across channels, and continued value seeking behaviors. However, category growth in non-seasonal candy, mint, and gum outpaced broader snacking trends in the first 12 weeks of the year. Moreover, everyday chocolate growth of nearly 2% remains consistent with historic levels."

I am certainly helping with my contribution to the chocolate growth, particularly dark chocolate.

With tariffs, they are getting hit as they import cocoa. "In the 2nd quarter, we expect incremental tariff expenses of approximately $15 million to $20 million, based on what we know today."

From MGM Resorts:

Vegas doesn't yet seem to be impacted by any dip in foreign travel. "April in Las Vegas is shaping up to be a record April for the company."

And, "on the higher end, it's not really having any impact at all. Actually, we just had an amazing event in April with our higher end component of it. It's really the leisure type business, the Canadian business that is down, but we've been able to make it up in our Marriott blocks and in our casino blocks"

Fron Live Nation, a stock we still like and own and where live entertainment continues to be a spend of choice by the consumer fan:

To a question of why Ticketmaster sales were down, "what we had was more Live Nation concerts activity, less other promoters, and less non-concert activity...concerts were up 4%, but other categories, sports, arts, family were down 9%...Everything that we've seen points to supply, not demand issues. It's just less supply y/o/y."

On broader demand trends in light of everything going on, "it's a question every CEO gets asked and are you feeling the consumer pullback at all. We haven't felt it at all yet."

"We put a lot of shows onsale in the month of April. Chris Brown sold 1 million tickets this month, Mumford & Sons 300, Suicide Blonde, Lady Gaga sold out, up 18% y/o/y. So any data we have right now up until last week, whether it's a festival onsale or a new tour or show that went onsale, complete sell-through and strong demand and beating last year's numbers. So, we haven't seen a consumer pullback in any genre, pub, theater, stadium, amphitheater, we haven't seen it all happen yet."

With sponsorships, "we've got over 80% of our business contracted this year so far. We're up over last year. Again, because we deal on more longer term relationships, we don't feel it."

From Airbnb:

"Today, things feel uncertain once again."

"In the US, we've seen relatively softer trends, which we believe is largely driven by broader economic uncertainty."

"We absolutely have seen a decline in popularity of foreign travelers coming to the US. And what we have seen is that, number one, it's less popular to come to the US from a year ago also relative to the beginning of the year. And what we're seeing in that segment is two things. One, that segment is a very small portion of our overall business. As a reminder, US travel is predominantly domestic. And as a result, that corridor of foreign travelers coming to the US is approximately 2% to 3% of our overall business."

"At the same time, what we're seeing is within that corridor, guests who would have in a prior year come to the US are simply choosing a different location. So I think Canada is the most obvious example where we see Canadians are traveling at a much lower rate to the US, but they're traveling more domestically. They are traveling to Mexico, they are going to Brazil, they're going to France, they're going to Japan. And I think what that tells you about the distribution is that, in this moment, it's not necessarily that people don't want to travel, they are just using different destinations."

Shifting overseas, most of the April manufacturing PMI's released today fell m/o/m, I guess not surprisingly. Taiwan 47.8 vs 49.8, Indonesia 46.7 vs 52.4, South Korea 47.5 vs 49.1, Malaysia 48.6 vs 48.8, and Thailand 49.5 vs 49.9. The Philippines was a bright spot at 53 vs 49.4.

The April Eurozone manufacturing PMI was revised slightly higher to 49 from its initial print of 48.7 and vs 48.6 in March.

Also of importance out of Europe was the Eurozone April CPI which rose 2.2% y/o/y headline and 2.7% core, both one tenth above expectations. Services inflation continues to lead the way, rising by 3.9% y/o/y while core goods prices were higher by just .6% for a 3rd straight month y/o/y. I think the ECB, with REAL rates now back to zero, will be on hold for a bit until some trade deals are announced. European bond yields are slightly higher in response as is the euro.

From Peter Boockvar:

Payrolls about in line when including lower revisions and gets boost from birth/death model plug-in

April payrolls grew by 177k, 39k above expectations but the two prior months were revised down by a combined 58k. The household survey said jobs grew by 436k, almost matching the rise in the labor force of 518k. The result was no change in the unemployment rate of 4.2%. The all in rate ticked lower by one tenth to 7.8% vs 7.9% in March, 8% in February and 7.5% in January.

Hours worked ticked up to 34.3 from 34.2 where no change was expected. Wages were up by .2% m/o/m and 3.8% y/o/y, one tenth under the estimate. Combine the two and we saw a gain of .2% m/o/m and 4.1% y/o/y. The participation rate was 62.6% vs 62.5% in the month before. The key 25-54 yr old cohort rebounded by 3 tenths to 83.6% which is the most since last September.

Private education/health continued to drive much of the job growth, adding 70k (in contrast to what ADP said that they declined). Transportation and warehouse added 29k and I have to believe that maybe this was in response to the front loading going on with incoming trade because many of these jobs are going to be lost if trade with China doesn't resume soon. Retail lost 2k jobs.

Leisure/hospitality added 24k and financial services hired a net 14k. The federal government shed 9k jobs due to DOGE.

On the goods producing side, manufacturing lost 1k jobs led by a 5k job cut in motor vehicles/parts, offset by an 11k rise in construction and 1k in mining.

A fly in the data was the average duration of unemployment which rose to 23.2 from 22.8 in March, 21.3 in February and 22 in January and squares with the elevated level of continuing jobless claims.

Also, I do need to point this out because it definitely goosed today's figure. The birth/death model added 393k jobs vs 363k in April 2024, 378k in April 2023 and vs 281k in April 2019. This is a plug in estimate and after seeing this, I really have to somewhat discount today's figure. On inflection points in the labor market, and I do believe we can consider right now an inflection point, the B/D model overstates job gains when things inflect lower and understates it when things are inflecting higher.

Bottom line, with the revisions lower, today's figure was a touch below expectations but still pretty good. That said, the birth/death model plug in as said is responsible for at least 30k of these jobs (if it were to equal last year's figure and that is likely overstating it because of the different economy this April than last April for reasons we know).

The truth lies somewhere between Wednesday's ADP private sector job gain of 62k and what the BLS said today of 167k for the private sector (and yes, helped by the birth/death model).

US Treasuries are weaker with yields higher in response to the headline data but as the day progresses maybe under the hood analysis will settle things out.

As noted in earlier column I moved to net short in response to the +65 Spoos rip.

As described in recent "Tales," I have observed the use of shell companies and other tricks to evade export controls on Nvidia NVDA chips, using various forms of distribution, as well as even putting the parts into a data center in the Middle East and then accessing them that way.

But prosthetic baby bumps and live lobsters? I am wondering if Pablo Escobar’s guys are involved in this operation? Anyway, for Anthropic to go out with this publicly, they must really think the supply of chips has loosened up.

Read: 'Nvidia says Anthropic is telling 'tall tales' in its defense of U.S. AI chip restrictions on China" and "Anthropic's AI Export Controls Framework Response."

I didn’t double check this, but even though Meta Platforms META raised capex guidance, it appears that in actuality, it underspent capex again in the quarter, and just back-end loaded the capex guidance for the year (business vs. optics?).

Meanwhile Microsoft MSFT said the bulk of their cloud growth mostly came from non-AI stuff.

Then, of course, there was Super Micro SMCI guiding down, which might be more reflective of the current demand environment as their revenue is much less a function of order backlog or recurring payments.

Post Script: Both of these threads below are interesting. Seems there continues to be real questions about the revenue side and earnings quality side of a lot of the companies in this space, as well as the overall economics that the system is delivering, which seem quite poor at best, until you start reporting earnings before expenses like Coreweave (CRWV) and even the hyperscalers themselves as it relates to their depreciation schedules:

Most active premarket ETFs as of 8:34 a.m. ET:

Premarket percentage movers as of 8:50 a.m. ET:

Upside:

-TWLO +8% earnings

-FLR +4% earnings

-CI +2% earnings

-PRLB +4% earnigns

-XOM +1% earnings

-DUOL +9% earnings

-RDDT +8% earnings

-CART +6% earnings

-FLGT +3% earnings

Downside:

-ETN -5% earnings; guides Q2 $2.85-2.95 v $3.02e

-AMZN -1% earnings

-AAPL -3% earnings

-CVX -2% earnings

-XYZ -20% earnings

-ARDX -18% earnings

-TEAM -18% earnings

-CYTK -11% FDA extended PDUFA action date

-ABNB -5% earnings

-CRTO -4% earnings

-TTWO -7% delays GTA release until May 2026

-TDS -6% earnings

Equities sold off last night, right in front of the Amazon AMZN and Apple AAPL earnings releases, similar to the rally near the Wednesday close right in front of MSFT and Meta META.

Someone always seems to know.

Post Script:

Anyone blaming tariffs at this point for less revenue, is full of crap. Especially companies like Apple, if they try it. Tariffs, if anything, over the short term, INCREASE revenue, because people buy things now to get ahead of potential price increases. Heck, I just pre-ordered a new cell phone last month, to get the good price!

On the better jobs report I am shorting more IWM at $199.03

Should futures stay high into the opening I will be shorting index calls.

Next week, when I return from my current trip, I am going to, I hope, finish and deliver an important column, Rethinking American Exceptionalism.

Here is an excerpt:

The umbrella of an exceptional America as a safe haven and the U.S. dollar as the world's reserve currency -- have been pivotal to rapid progress of U.S. innovation and has facilitated the financing of our economic engine.

This worrisome development weighs on my view that, over the next five to ten years, investment returns in the U.S. will be substandard, at best.

This is a big and complicated subject that I am trying to distill into less than 2,500 words.

Stay tuned.

I reshorted Apple AAPL last night on the weak results.

Apple's services revenue are really slowing now and should ultimately grow closer to handset sales.

The AAPL services line couldn’t outpace hardware by multiples forever. Moreover, the company still has legal risk on the services fee too. (Note: it was revealed yesterday that the company lied in court).

Bonus — Here are some great links:

Tech Is Back

How to Trade a 'Sell in May and Go Away' Symbol

What to Know About Leverage

Money Is Leaving the U.S.

Last night on the China news ramp in futures (S&P futures rose by as much as 60 handles from the 4:30 p.m. levels) I shorted a small position in IWM at $19.20.

The S&P Short Range Oscillator moved to a more overbought reading at 6.05% vs. 5.13%.

We are now in a rather deep overbought.