Every Rose Garden Has Its Thorns, CoreWeave and Newsmax Slip
Let's look at Trump's expected tariff plan from the White House, new GDP models, the SALT tax proposal and more.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
It felt as if financial markets paused for breath on Tuesday. Readers know darn well that something close to panic had been priced in last week. The peak of financial doom and gloom was probably felt overnight as Sunday turned into Monday and futures trading melted into the trade of equities and debt securities that morning. Mid-day Monday, there was a terrific recovery, as if a pretariff announcement bottom of some sort had been found. Algorithmic traders tripped over each other in the pipes that day (a real thing) trying to nail down what seemed like bargain basement (we hope) prices for stocks.
Then came Tuesday. Trading volumes backed off. There was no despair, Just the passage of time. For "Liberation Day" was right around the corner. For those who have looked forward to the event, you do understand that this will likely be disruptive to the U.S. economy in many ways, right? For those that have dreaded the idea, you do realize that America's trading partners, in many cases, have taken advantage of the U.S. for decades in often embarrassing fashion, right? While globalism kept prices down and headline level inflation under wraps, it had the ugly side effect of hollowing out America's middle class.
The ugly truth is that even though the cause of trying to level the playing field is noble, those horses may have possibly left the barn. The U.S. economy evolved into a service-based economy over those decades, leaving the business of manufacturing goods to nations where standards of living were lower as were labor costs. The U.S. labor force, by necessity, evolved with the economy. Service sector jobs, in terms of compensation, range in 2025 from the very good to the not so good. Oh, and now here comes generative artificial intelligence to ultimately thin the ranks and shorten the careers of those in positions that had paid well.
I hope "Liberation Day" turns out well in the medium to long-term future for American workers. I really do. I do not think this president is necessarily in the wrong for taking on this herculean task while also tackling government waste. Those are two incredibly difficult jobs to take on at once and both very likely to be disruptive. If only earlier administrations had realized the necessities of defending the home team in trade and of exercising fiscal discipline.
They did not, and here we are. I am not as sure that the U.S. will head into recession as other economists seem to be. That said, I don't think very many of us are going to enjoy the short-term future and the probabilities for a contraction in economic activity cannot be ignored. At least, by late this afternoon, there should be some clarity, some lucidity. Lucidity is almost never negative. Corporations, even when challenged, can plan and work with certainty. Americans, when challenged, can as well. Always faithful.
I Beg Your Pardon...
Unlike Lynn Anderson in her 1970 hit, I think this administration indeed has promised us a rose garden. Pres. Trump has scheduled a press conference for 4:00 p.m. ET this from the "Rose Garden." The White House Rose Garden borders the Oval Office and the West Wing and is really just 125 feet by 60 feet. A very cozy setting, or if it's warm and humid outside, a little tough on journalists. This is where uncertainty will become certain. At least that's something.
Rose gardens are not always pretty. It's been a long time now (many, many decades), but we had an area in between the barracks at Parris Island that we referred to as the "rose garden." That was where we were punished for things we did and didn't do. That rose garden was just two rows of cement sinks where recruits could wash their gear. Off to the side was a sand filled depression crawling with fire ants. That was where we had to go to "get smoked" (do push-ups and other fun stuff) if we really screwed up. If we just kind of screwed up, we could "get smoked" on the cement and avoid the ants. This rose garden is a much nicer setting.
The debate behind the scenes, according to the Wall Street Journal, Washington Post and several other outlets, has been between an across-the-board tariff, possibly of 20% that would be placed upon all U.S. trading partners in blanket fashion and truly reciprocal tariffs. That option would basically place tariffs on partners equal to what they place on their U.S. imports. There has also been a third option bandied about that was reported on just Tuesday. That option would make exceptions for certain nations and those nations would not face tariffs at the same level as would most other nations. I guess we'll know for sure soon enough.
The Macro
On Tuesday, the ISM (Institute for Supply Management) released their March survey of purchasing managers. The headline print landed at 49.0, down from 50.3. The border between expansion and contraction in this kind of survey is the "50 level." That ended two months in expansionary territory. This survey has spent 25 of the 26 months prior to that in a state of contraction. That's one key reason why rebuilding the US manufacturing sector has been prioritized.
The two-month burst of activity experienced in January and February is believed to have been an attempt by U.S. trading partners to get ahead of the implementation of the president's schedule of tariff increases set for later today. In this survey, new orders, the lifeblood of any manufacturing-based survey, printed at 45.2, while manufacturing-based employment hit the tape at 44.7, both deeply into contractionary territory. Backlogged orders landed at 44.5, a stunning 30th consecutive month of decline. That's unbelievable.
Not everything crossed the tape in a state of contraction. Manufacturing-based prices printed at a tough to look at 69.4, up from 62.4 in February. March was the sixth straight month of accelerating manufacturing-based inflation. You know what they call slowing economic activity coupled with rising prices? Stagflation. Anyone remember the 1970s?
GDP What?
On Tuesday, the Atlanta Fed revised their GDPNow model for the first quarter down to -3.7% from -2.8% (q/q, SAAR) after the above-mentioned ISM Manufacturing survey had been published. This forced the model's estimate for real final sales to private domestic purchasers to be more than tweaked in a downward direction. Even adjusted for imports and exports of gold (which begs the question... why have imports of gold spiked as they have?), the model was revised to -1.4% from -0.5%.
I have not yet seen if Hedgeye Risk Management (already slightly negative) had revised their model, which I trust above the various Fed-created models. I do know that while Hedgeye sees growth continuing to slow for the second quarter, it also sees consumer-level inflation slowing in spite of these tariffs. That may be comforting for some. Atlanta will revise its model again on Thursday after the Bureau of Economic Analysis publishes the U.S. trade balance for February and after the same ISM releases the results of its service sector survey for March.
Please Pass the SALT
Reports have come across my screen that members of the House of Representatives are working on creating a bill that would increase the state and local tax deduction for individuals from $10,000 to $25,000. The bill would also include a renewal of the 2017 tax reductions for individuals and closely held businesses. That break for individuals in overtaxed states would be offset by a reduction in the state and local tax deductions available to corporations.
Incredible
- CoreWeave CRWV is down 2.4% overnight after running 41.8% on Tuesday.
- Newsmax NMAX is down 23.6% overnight after running 179.1% on Tuesday and gaining 496.5% after opening for the first time on Monday. NMAX opened at $14 on Monday after the IPO had been priced at $10 per share. The stock closed on Tuesday at $233. Not joking.
Economics (All Times Eastern)
07:00 - MBA 30 Year Mortgage Rate (Weekly): Last 6.71%.
07:00 - MBA Mortgage Applications (Weekly): Last -2.0% w/w.
08:15 - ADP Employment Report (Mar): Expecting 119K, Last 77K.
10:00 - Factory Orders (Feb): Expecting 0.5% m/m, Last 1.7% m/m.
10:30 - Oil Inventories (Weekly): Last -3.341M.
10:30 - Gasoline Stocks (Weekly): Last -1.446M.
The Fed (All Times Eastern)
4:30 p.m. - Speaker: Reserve Board Gov. Adriana Kugler.
Today's Earnings Highlights (Consensus EPS Expectations)
After the Close: RH (1.91)
At the time of publication, Guilfoyle had no position in any security mentioned.
