HARD SOFT DATA

CEOs won’t say it face to face but they are fearless with anonymous surveys:

Empire State Manufacturing Survey

Business activity dropped significantly in New York State in March, according to firms responding to the Empire State Manufacturing Survey. The headline general business conditions index fell twenty-six points to -20.0.

The new orders index fell twenty-six points to -14.9.

 

The index for number of employees held steady at -4.1, and the average workweek index was -2.5, pointing to a slight decline in both employment and hours worked.

Both price indexes climbed for a third consecutive month. The prices paid index rose five points to 44.9, its highest level in more than two years, and the prices received index rose three points to 22.4, its highest reading since May 2023.

Firms continued to grow less optimistic about the outlook. After dropping fifteen points last month, the index for future business activity fell another ten points to 12.7. Capital spending plans remained soft. Input price increases are expected to remain significant.

High inventories and declining orders are not a good recipe. The above is for manufacturing. What about services?

• Business Leaders Survey A monthly survey of service firms in New York State, northern New Jersey and southwestern Connecticut

Business activity fell at a substantial pace in the New York-Northern New Jersey region, according to the March survey. The headline business activity index fell nine points to -19.3. Nineteen percent of respondents reported that conditions improved over the month while 38 percent said that conditions worsened. The business climate index dropped sixteen points to -51.7, its lowest level in four years, with nearly 60 percent of respondents saying that the business climate was worse than normal.

The employment index was little changed at -4.7, indicating that employment levels continued to decline slightly. The wages index fell six points to 35.8, indicating that wage increases moderated somewhat.

The prices paid index moved up eight points to 58.8, its highest level in nearly two years, a sign that input price increases picked up. After rising eight points last month, the prices received index held steady at 28.7. The supply availability index was -2.8, suggesting supply availability was slightly lower.

The index for future business activity plunged twenty-five points to -3.3, its first negative reading since 2023, suggesting that firms on the whole do not expect activity to increase in the months ahead.

The index for the future business climate fell twenty-three points to -26.9, part of a cumulative decline of forty points over the past two months, suggesting the business climate is expected to remain worse than normal.

The future employment index fell to its lowest level since December 2020, with negligible employment growth expected over the next six months. The future supply availability index remained firmly below zero at -18.7, with about 31 percent of firms expecting supply availability to be worse in six months. Capital spending edged down

Let’s see how the FOMC deals with such hard soft data. Remember that Powell said “the economy’s fine” two weeks ago.

TARIFFS WATCH: In the Real World

• Last fall, Molson Hart ordered $100,000 worth of stuffed animals from China to sell through his Texas-based company, Viahart Educational Toy Co. In January, the toys were loaded onto ships for voyages across the Pacific Ocean and through the Panama Canal. In February and again in March, President Trump imposed new tariffs on China. The toys arrived in Houston on March 12, days after the 20% tariff took effect. The cost to Hart: an additional $20,000.
• Zach Frew, the co-founder of Boston-based Grounded Labs, contracted to place a container of his company’s devices, which make designs using sand art, on a ship leaving China on Jan. 29. But his shipment was bumped to a different ship at the last minute, a common occurrence in ocean shipping that usually adds time but not cost. Instead, this time, the container ended up departing Feb. 5 at an extra cost of nearly $23,000, as the products inside were by then subject to Trump’s 10% duty on all Chinese imports. Frew now has two more containers on the way that face estimated additional tariffs of $54,000 after the 20% levy kicked in. “It’s investments that we can’t make in the business,” he said.
• Jordan Dewart, president of Mexico operations for logistics provider Redwood Logistics, said one auto-parts shipment was hit with a bill for about $50,000 during the brief period the 25% tariff on goods from Mexico was in effect after the trucker carrying the load was delayed by a flat tire.
• “It’s going to cost me an additional $850,000 in additional tariffs that I did not plan,” said Gregorich, who noted that other levies could be placed on the shipments depending how his products are classified. “That’s a lot of capital it’s eating up.” Gregorich said he plans to raise prices to help cover the costs.
• “I was hoarding,” Shugar said. “I thought, I need to buy this because there’s going to be a tariff coming.” He said he loaded up on black fabric for tuxedo bow ties, bestselling solids like red and navy, and florals for the spring wedding season. He avoided tariffs on that shipment. But he now has less cash on hand to invest in his business. “My eye’s off the ball. I can’t focus on growth,” Shugar said. “It is chaotic for us as a small business.”
• Millions of dollars’ worth of wine is already paid for and on U.S.-bound ships, Fass says.
  If those imports are suddenly hit with 200% tariffs on arrival, most importers simply won’t have the money to pay what they owe.

• According to Bank of America aggregated credit and debit card data, small businesses are slowing their card spending across the board. Notably, for small manufacturing firms with annual revenues of <$500K, their payments growth fell 5.7% year-over-year (YoY) in February. Travel and hardware had a sharp deterioration in the past month, possibly as business looked to cut costs amid weakening demand and growing uncertainty. Across four major industries, manufacturing, finance and construction payments growth per small business client was negative in February while retail was positive.

• Buy Canadian movement starts to take a sizable bite out of U.S. business

(…) U.S. tour operators are reporting booking declines of as much as 85 per cent, while American distilleries are losing major deals. Meanwhile, Canadian grocers are posting a bump in domestic product sales of up to 10 per cent. (…)

“To use some of the words I hear from tour company members of the National Tour Association, the drop-off is ‘astronomical’ when speaking about Canadians booking group travel to the United States,” said Catherine Prather, president of the Kentucky-based organization, which specializes in group tours.

One National Tour Association member operator reported just two bookings for U.S. tours in the past two weeks compared to 39 bookings during the same period in 2024, she said. Another Canadian operator, with 85 per cent of their business focused on tours to the U.S., had to scrap every U.S. departure for March, April and May due to client cancellations.

Ms. Prather said Canadian operators and hospitality businesses represent 7 per cent of NTA’s membership, with many focusing a chunk of their business on tours to the U.S. “One of those tour operators has just responded with the latest cancellations – his business will be down 75 per cent this year,” she said. (…)

Traffic across some major border crossings in tourism states such as New York has dropped by 12 per cent in the first two weeks of February alone, said Mr. Fram. (…)

The U.S. Travel Association warned in February that even a 10 per cent drop in Canadian visitors would lead to more than $2.1-billion in spending losses and a threat to 14,000 jobs. (…)

Sobeys Inc. parent, Empire Company Ltd., also reported a spike in Canadian product sales in its last quarterly results while purchases of U.S. goods as a percentage of total sales were “rapidly dropping,” according to CEO Michael Medline. (…)

Pierre Cléroux, vice-president of research and chief economist at the Business Development Bank of Canada, told The Globe and Mail that if every Canadian household redirected $25 a week from foreign products to Canadian ones, it would boost GDP by 0.7 per cent and create 60,000 jobs.

According to his modelling, if Canadians also cut international travel by 10 per cent and spent that money domestically, the combined effect would raise GDP by 1 per cent and create 74,000 jobs. (…)

• Germany’s Defense Splurge Set to Favor European Companies

• U.S. trade actions have raised questions about validity of USMCA, Carney says “By applying unilateral tariffs for a variety of specious reasons, Trump has violated the very premises of the USMCA,”

BTW:

Import prices rose 0.4% in February, above expectations. Import prices ex-petroleum also rose 0.4%, above expectations. Prices for imports from China rose 0.5 percent in February, after rising 0.2 percent in January. The February advance was the largest 1-month increase since a 0.5-percent rise in March 2022.

Goldman estimates that the core PCE price index rose 0.34% in February (vs. our expectation of 0.29% prior to import prices data), corresponding to a year-over-year rate of +2.75%. Additionally, we expect that the headline PCE price index increased 0.30% in February, or increased 2.50% from a year earlier.

FLOWS MATTER

The Mag-7 companies may be the least fundamentally impacted by the tariff chaos. Yet they tanked the most.

The rotation out of US and into foreign stocks suggests that global investors have been mostly selling the Magnificent-7. Rather than buying the S&P 493 (as we’d expected), they’ve been buying foreign stocks with lower valuation multiples, especially Chinese technology and German industrial stocks (chart). In addition, thanks to Trump Tariff Turmoil 2.0, recession fears are more widespread in the US than in China and Germany, because the latter two are stimulating their economies.

The forward P/E of the US MSCI stock price index still well exceeds those of the other major MSCI stock price indexes. (Ed Yardeni)

Source: BofA Global Research

• “The extraordinary returns for the US equity market over the past two years has really been driven to a meaningful amount by the seven large companies that go by the sobriquet the Magnificent Seven. Unfortunately from a portfolio management perspective, it’s been Maleficent Seven. It’s been the real source of pain in the market this year.” (Goldman Sachs’ David Kostin)
• “There have been significant inflows from abroad into US equity markets, and foreign investors are now significantly overweight US equities. Combined with the dollar’s decline and the ongoing overvaluation of the Magnificent 7, the downside risks to the S&P 500 as a result of foreigners selling are significant.” (Apollo’s Torsten Slok)

CONSUMER WATCH

Pick your retail sales story:

The WSJ: Retail Sales Edge Up in February but Miss Expectations Falling auto sales dragged down overall figures; ‘people are browsing more than buying’

Retail sales rose modestly last month, offering reassurances that while consumer spending has slowed this year, it hasn’t buckled.

Sales edged up a seasonally adjusted 0.2% in February from the prior month, the Commerce Department reported Monday. That was less than the 0.6% gain expected by economists polled by The Wall Street Journal.

Sales figures for the prior month were revised lower. They fell 1.2% in January.

The slimmer gain in February sales, relative to economists’ expectations, was concentrated in sales at automobile and auto-part dealers, where sales fell 0.4%. Excluding those, overall sales rose 0.3%, in line with expectations. (…)

The parts of the report that feed directly into the Commerce Department’s gross domestic product calculations—a so-called control group—rose 1%. Even with a modest, downward revision to January control sales, that suggests that while GDP appears to have slowed in the first quarter, it hasn’t contracted. (…)

Goldman Sachs: Core Retail Sales Well Above Consensus Expectations

Core retail sales rose 1.0% in February (ex-autos, gasoline, and building materials, month-over-month seasonally adjusted), well above consensus expectations. The level of core retail sales was revised down 0.1% in January, reflecting a 0.1pp upward revision to December but a 0.2pp downward revision to January core retail sales growth. Combining data from the latest retail sales and CPI reports, we estimate that real core retail sales rose 0.9% in February and 2.7% on a three-month annualized basis.

Wells Fargo: Worries in Soft Data Corroborated by Weak Retail Sales

Despite a downward revision that makes last month’s drop in retail sales the biggest monthly decline since 2021, overall retail sales rose a scant 0.2% in February. The 1.0% gain in control group sales offers little consolation as it mirrors a decline of the same magnitude in January. (…)

The key thing to understand in today’s report is that last month’s sales figures were revised sharply lower resulting in what turns out to be the worst month for retail sales since 2021. The 0.2% increase in headline retail sales for February was just a third of the 0.6% increase that had been expected. The fact that this modest bounce comes on the heels of the downward revision makes it all the more disappointing. (…)

Despite the evidence of deteriorating fundamentals for the consumer, control group retail sales actually rose the most in five months in February. The control group excludes sales from some of the more volatile categories to offer an assessment of underlying spending and tends to be a good predictor of consumer spending as it eventually gets tallied in the GDP report.

As it happens, many of the excluded categories were among the big decliners this month (auto dealers, gas stations, bars & restaurants).

February 2024 had 29 days so Feb. 25 was 3.5% shorter in days. Seasonal adjustments should take care of that, we hope. Just in case, using non-adjusted numbers, sales/day were up 2.6% YoY in February after +4.4% in January.

My proxy for retail inflation (.35x CPI Durables + .65x CPI Non-Durables) was up 0.6% and 0.4% YoY in January and February respectively. Real sales were thus up 3.8% YoY in January and 2.2% in February. Still decent growth but a marked slowdown, especially after +4.2% in December and +4.4% in November.

The most worrying indicator is the sharp decline in restaurant spending: adjusted for days, January was up 5.4% YoY and February 1.2%. In real terms: +2.0% and –4.9%.

Restaurant outings are often the first casualties of cautious or squeezed consumers.

The FT reported yesterday that “Traffic to US fast-food restaurants was down 2.8% in February, according to Revenue Management Solutions, with visits at breakfast time dropping by double digits. “It’s the easiest meal to make at home or skip entirely,” the consultancy said.”

The FT also had early March stats:

• Footfall to US stores fell 4.3% YoY in early March, according to RetailNext, a consultancy — extending declines that began at the start of the year.
• Placer.ai, which aggregates signals from consumers’ mobile devices, has recorded fewer visits to big-box stores including Walmart, Target and Best Buy in recent weeks.
• Sales of discretionary general merchandise fell by 3% in the week ending March 8 compared with last year, continuing a string of annual declines in February, data from Circana showed.

America Airlines president said at a conference: “Economic uncertainty is a big deal, and we have really seen some weakness in March.”

Gleaned here and there yesterday:

• TSA Throughput: For the week ended March 13th, passenger throughput declined 3% y/y,
• Hotel occupancy was 62% (-90 b.p. y/y) for the week ended March 8.
• ISI company surveys fell from 48.4 to 47.3 last week on softer data across consumer and industrial surveys.

Services are the biggest job providers in the U.S.. Leisure and hospitality companies have been the third best job creators in the U.S. in the past 2 years.

Ed Yardeni, blaming the weather for much of the retail weakness, “still expect to see strong sales numbers in March and April.” I would not bet on that. Ed also would not bet that we have seen the bottom in equities:

So we doubt that Thursday marked the bottom in the stock market correction. On April 2, the Trump administration will reveal its reciprocal tariffs on all of America’s major trading partners. That event might cause further turmoil before the Fed Put is activated and makes the bottom.

U.S. Tariff Increases to Slow Global Economy, Boost Inflation, OECD Says Its largest growth-forecast downgrades were for Mexico and Canada

(…) Its largest downgrades were reserved for the two economies that trade most heavily with the U.S. and face significantly higher barriers to their exports. The OECD now expects Mexico’s economy to contract by 1.3% this year and 0.6% in 2026, having previously forecast growth of 1.2% and 2.8%.

For Canada, it now expects growth of 0.7% in both 2025 and 2026, having previously forecast expansions of 2%.

The OECD said the U.S. economy will now likely grow by 2.2% this year and 1.6% next. It previously forecast growth of 2.4% and 2.1%. (…)

The global economy is now forecast to grow by 3.1% in 2025 and 3% in 2026, having previously been projected to expand by 3.3% in each year.

Those forecasts assume that tariffs on almost all imports to the U.S. from its North American neighbors will be increased by 25 percentage points from early next month, while an increase in tariffs on Chinese imports of 20 percentage points will remain in place, as will higher duties on aluminum and steel imports.

However, future increases in tariffs are likely. President Trump has threatened to impose so-called reciprocal duties on any trading partner that charges tariffs or imposes other trade barriers on U.S. products, with an announcement due April 2.

The OECD said fresh increases in taxes on imports would do further harm to the global growth outlook and U.S. prospects. It said an increase in tariffs of 10 percentage points that provoked retaliation would reduce global economic output by 0.3% from 2026.

With consumer prices rising at a faster rate, the OECD said real incomes in the U.S. would be 1.25% lower three years after the fresh tariff increase, equivalent to a loss of $1,600 for the average household.

While the tariffs would raise additional revenue for the U.S. government, the OECD warned that would be more than offset by lower revenues from other taxes as the economy slows, “implying that additional tax increases or lower fiscal expenditure are needed to keep the overall budget deficit unchanged.”

Even without further increases, the OECD forecast that inflation across the world’s largest economies will be a third of a percentage point higher this year and next as a result of higher tariffs. That could lead central banks to cut borrowing costs more gradually than would otherwise have been the case, another headwind for growth.

“If some countries face additional pressures, we would not be surprised if central banks become more cautious,” said Pereira.

The OECD now expects the Federal Reserve to keep its key interest rate at current levels of 4.25% to 4.5% until “well into 2026.” It had previously expected the Fed to lower its key rate to between 3.25% and 3.5% by the first quarter of 2026.

The research body raised its growth forecast for China in 2025 to 4.8% from 4.7%, since it expects recent efforts by the government to stimulate activity will more than offset the impact of higher tariffs on the country’s exports to the U.S..

The OECD lowered its growth forecasts for the eurozone, and Germany in particular. But those new projections don’t take into account plans to increase spending on defense and infrastructure under an incoming government that is likely to be led by Friedrich Merz. Should those plans come to fruition, the outlook for the currency area’s economy would improve.

“Germany has had an infrastructure gap for a long time,” said Pereira. “They definitely need to spend more.”

More China Consumers Feel Better Off, Deutsche Bank Survey Shows

(…) Some 54% of respondents polled this quarter said they feel financially better off than a year ago, up from 44% on average in 2024, according to a report released by the German bank on Tuesday. The results also showed the proportion of those anticipating an income increase in the year ahead rose for the second straight quarter to 60%. (…)

Still, the shift in sentiment doesn’t mean people have grown more hopeful when it comes to real estate, with the share of respondents who cited property volatility as a reason to cut spending reaching 63% from 60% earlier. (…)

The poll found 52% of respondents are willing to increase their discretionary expenditures, the highest share in a year. (…)

April Fools Coming!

Trump has dubbed April 2 “the big one,”

Discussions are ongoing about what exactly Trump and his team will announce early next month and final decisions have not been made. Developing levies on hundreds of countries designed to match their tariffs and other trade barriers, including wages and tax regimes, on US exports is a complex endeavor unprecedented in modern American history. Lutnick said earlier this month on Bloomberg Television that some duties can be announced right away and others could come weeks or months later.

One likely outcome is for USTR to create a formula for a single rate for each country based on that nation’s average tariff level and other measures the Trump team considers discriminatory, according to people familiar with the plans. The rates, though, could be adjusted based on Trump’s perception of whether a country has been cooperative or combative, one of the people said.

Meanwhile:

While American car makers get wrapped around a protectionist cape and try to figure out Trump`s chaotic tariff “strategy”, Chinese entrepreneurs are investing on R&D and developing smarter cars at lower costs.

Cheap Chinese Cars Are Taking Over Roads From Brazil to South Africa Trump’s tariffs look powerless to stop the incursion of inexpensive cars from China — and may speed it up.

Donald Trump wants to keep Chinese carmakers out of the US, but that won’t stop them from taking over the rest of the world. They already are.

From Bangkok to Johannesburg to Sao Paulo, the streets are increasingly jammed with inexpensive compacts, crossovers and SUVs made by companies like Great Wall Motor Co., BYD Co., Chery Automobile Co. and SAIC Motor Corp.

While the Trump administration is expected to shield the US’s Big Three from Chinese rivals at home, and Canada and the European Union have placed tariffs on Chinese-made electric vehicles, buyers in emerging markets have welcomed Chinese cars and trucks with open arms — posing a new threat to growth-hungry global automakers. (…)

“I get to have all the tech that are extras on known brands,” Mabuela said.

Mabuela isn’t alone. Buyers like him have helped Chinese automakers grab market share at astonishing speed. In South Africa, China-made vehicles account for nearly 10% of sales, or about five times the volume sold in 2019. In Turkey, Chinese brands claimed an 8% share in the first six months of 2024, up from almost none in 2022. In Chile, they have accounted for nearly a third of auto sales for several years running.

“Chinese automakers have pushed into lots of global markets with high quality and competitively priced vehicles,” said Abby Chun Tu, a Shanghai-based auto research analyst at S&P Global Mobility. “It’s the same strategy that worked for South Korean and Japanese brands, but they also have the advantage of advanced software and lots of features — even in their mass-market models.”

While leaders in the US and Europe have long been concerned that China could become a dominant seller of electric vehicles, the Chinese automaker association’s data show gas-powered vehicles accounted for nearly 80% of total vehicle exports last year.

Many underdeveloped markets don’t have charging stations or a reliable enough electrical grid to support fully electric models. But Chinese automakers have found in those places a ready market for gas-powered cars that they can no longer sell at home in large volumes.

Global market share for Chinese automakers outside their home country is expected to climb to 13% in 2030 from 3% today, according to AlixPartners. Including China, that worldwide share jumps to 33%, and in Africa and the Middle East it’s projected to hit 39% by then. (…)

“The moment I got into the car I thought: It’s in line with BMWs, Audis, with top-notch car finishing,” he said. “It has everything I want.” (…)

BYD and Great Wall are now building plants in Brazil — on sites where Ford and Daimler once ran facilities. (…) “From Brazil, it’s easier to reach other South American markets: Argentina, Chile, Colombia and even Peru.” (…)

Asia’s biggest automakers are also trying to fend off Chinese upstarts. Toyota Motor Corp. enjoys a 17.4% share in the Middle East and Africa, but is being chased by Chery and Geely, which have claimed shares of 5.3% and 2%, respectively, according to Jato Dynamics. Toyota is feeling similar pressure in Southeast Asia, where it controls 35.7% of the market but Geely and SAIC grabbing respective shares of 5.1% and 1.4%.

As in Brazil, China has taken advantage of policies designed to encourage sales of electric vehicles to expand its presence in Thailand’s auto market. The Chinese brand share in the country, long known as “the Detroit of Southeast Asia,” has grown to 13.3% as of the last quarter of 2024, up from just 5.5% two years earlier, according to S&P Global Mobility. More telling: China’s share of Thailand’s EV market in that same timeframe has mushroomed to 71%, up from 22% in 2022. (…)

Toyota and other Japanese carmakers, which spent decades building up gas-powered vehicle production investment and infrastructure, were slow to adapt. Subaru Corp. stopped making cars in the country last year and Suzuki Motor Corp. plans to shutter its Thai plant by the end of 2025. Nissan Motor Co. also will close one of two vehicle assembly lines in Thailand this year. That has left an opening for lesser-known Chinese rivals. (…)

• BYD Shares Touch All-Time High After Unveiling New Charging Tech

(…) BYD unveiled its new charging technology, which it said is capable of providing 400 kilometers of range in five minutes of charging time. That means users can charge their EVs as quickly as it takes conventional cars to refuel, BYD said.

The charging system will be available on the company’s new Han L sedan and Tang L sport-utility vehicle models, which will go on sale next month, BYD said. (…)

BYD remained the top EV seller in China with total deliveries of 318,233 units for February. Meanwhile, rival Tesla has seen its market share erode in China, the world’s largest EV market, with its February sales sliding 49% from the prior year to 30,688 units. (…)

Bloomberg:

From ‘more features for no more price’ and ‘smart driving for all,’ BYD can now add ‘charging as fast as refueling’ to its marketing slogans, helping it to capture further share from legacy automakers and more direct rivals like Elon Musk’s Tesla Inc. (…)

For BYD, the real competition is probably more on its own doorstep from rival Chinese brands. Li Auto Inc., for example, uses a battery from Contemporary Amperex Technology Co. Ltd., or CATL, in one of its vehicles that offers 500 kilometers of range from a 12 minute charge.

BYD says it has made such leaps that its Han L, one of the EVs that will now come with the new Super e-Platform, is comparable to a Formula E racing car.

(…) BYD has self-developed a next-generation automotive-grade silicon carbide power chip. The chip has a voltage rating of up to 1500V, the highest to date in the car industry. (…)

There’s also a mass-produced 30,000 RPM motor. Luo Hongbin, BYD senior vice president, said the motor “not only significantly boosts a vehicle’s speed but also greatly reduces the motor’s weight and size, enhancing power density.” (…)

Some EV makers, like Xpeng Inc., which is also working on super fast charging technologies, have unique energy storage units at their charging stations to help manage the elevated power demand. (…)

The Han L starts from 270,000 yuan while the Tang L sport utility vehicle starts from 280,000 yuan. Both also boast the company’s latest God’s Eye smart driving features.

That’s about $40k with free self driving software that Tesla sells for $8k.

• Trump Forces Carmakers to Game Out Calculus on American Plants Manufacturers, suppliers cite confusion and rising costs

(…) The shift in plans at Volkswagen is emblematic of the disarray within the auto and auto-parts industries as the sector tries to anticipate the fallout from new US tariffs. While the end result is far from clear, the impacts are immediate: Investment decisions are being postponed as executives wait for clarity, while costs are beginning to climb in an industry where affordability is already limiting demand. (…)

Joe Perkins has been working in the auto industry for 35 years, but even that hasn’t fully prepared him for the stress of navigating the situation. As the CEO of Paslin, he says last year was tough for the Michigan-based supplier because the slowdown in electric-vehicle demand led automakers like Ford and General Motors Co. to cancel orders. Now, an onslaught of tariffs and on-again, off-again threats for more have paralyzed decision making at Paslin’s customers, leaving orders on hold and Perkins unable to plan.

“It’s a real challenge of leadership,” Perkins said in an interview. “I am thinking day and night, how do I manage my cost structure today, without impacting my ability to really hit the ground running when sourcing opens up?”

Perkins says he has cut back on employee hours and prohibited overtime to rein in costs while he waits for things to pick up. (…)

“The industry is in paralysis,” said Michael Robinet, vice president of forecast strategy for S&P Global Mobility. “No one has any idea where to invest or how to invest. This is worse than Covid in the sense that there is a lack of a stable planning environment.” (…)

“In reality, he’s hurting American jobs,” said D’Agnolo, referencing Trump’s threats to tariff Canadian car parts. “This is going to devastate our industry, sure, but it will devastate the American industry, too.” (…)

Aznavorian of Clips & Clamps Industries, a third-generation company in Plymouth, Michigan, said the cost of carbon steel started going up right after Trump’s inauguration, long before the administration’s 25% tariff on steel and aluminum took effect.

An industry benchmark for hot-rolled carbon steel has surged more than 35% since Trump’s inauguration. (…)

He dismissed the notion that adding the tariffs will bolster US steel production and help bring down domestic prices.

“When the tariff kicks in and domestic producers raise their prices because they can, all that does is reset it to exactly where you were before,” said Aznavorian, who has 49 employees and an average of $15 million in revenue a year. (…)

“Most of what we’re focused on with our supplier clients is cost recovery — passing it on. Who’s going to pay for it?” she said. “Are there going to be some consolidations, are some of the smaller ones going to go under and go away? Probably. But it hasn’t led to an ongoing dialogue about bringing the business back from Mexico.” (…)

But no worries, Trump said it’s only “a little distortion, and it won’t be long”. “But we’re OK with that”.

Some people are not OK with that:

BofA Survey Shows Biggest-Ever Drop in Exposure to US Equities

Fund managers’ allocation to US stocks sank to about 23% underweight, the lowest since June 2023. A net 44% of respondents in the survey conducted in March said they expected global growth to deteriorate, rising sharply from the previous month.

“Pessimism on global growth outlook is bad news for stocks,” strategist Michael Hartnett wrote in a note.

Global investors are hunting for opportunities elsewhere after US stocks tipped into a correction earlier this month. Chinese tech stocks are in hot demand and Europe has also benefited due to a brighter regional economic outlook. (…)

The survey was conducted from March 7th to March 13th and canvassed 171 participants with $426 billion in assets under management.

FYI: Looking ahead 12 months in the future, CEOs’ business optimism fell to 4.99 this month, a 28% decline from January and the lowest recorded level since the spring of 2020, when the pandemic shut down the global economy. (U.S. Global Investors)

AI CORNER

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