Week in Review

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Week in Review

04/05/2025

For the week 3/31-4/4

[Posted 4:30 PM ET, Friday]

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Edition 1,354

Having fun yet?  At least we have Men’s and Women’s Final Four College Basketball this weekend.

Otherwise, it is going to be a critical period, Saturday and Sunday, as markets, and nations around the world, hang on every Truth Social post and interview comment from President Trump, who will be filling the airwaves, including with a rally tonight in Florida.

Many of those who supported the president last November are waiting for the tax cut extension and the deregulation regime he promised.  Instead, while he’s checking off “tariffs” on his to do list, he lost his way, and with all the pain inflicted this week, and rumblings in the red states, with the slim margins the GOP has in the House and Senate, there’s no guarantee what was supposed to be his main agenda is getting passed at this point.

And I can’t help but add that growing anti-Americanism (nationalism) is not going to help Corporate America sell their products overseas.

On top of that, China is openly talking about how their intensifying military drills off Taiwan’s coast are all about a future blockade, and there has been no progress in negotiations between Russia and Ukraine because Vladimir Putin has zero incentive to agree to a ceasefire. And Trump didn’t hit them with a tariff!  [Oh, but he’s such a master negotiator, some would say in reply.]

On to the week that was....

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Speaking from the Rose Garden at 4:00 p.m. ET, Wednesday (after the equity markets had closed in the U.S.), President Trump followed through with his promise to make “Liberation Day” a memorable one.  It just ended up being far more negative than anyone honestly expected.

Trump unveiled his new tariff regime, the steepest tariffs in a century, saying the U.S. had been “looted, pillaged, raped, and plundered by nations near and far, both friend and foe alike.”

Trump said he was placing elevated tariff rates on dozens of nations that run trade surpluses with the United States, while imposing a 10% baseline tax on imports from all countries in response to what he called an economic emergency.  The 10% rate will be collected starting Saturday, and the higher rates will be collected beginning April 9.

Trump confirmed in his speech Wednesday that a 25% tariff on foreign-made automobiles would go into effect on Thursday, April 3.

The most striking fact about the tariffs is they were far bigger than expected, with China now facing apparent total duties of 54% and the European Union 20%.

New tariffs for select countries....

EU +20%
China +34%
Japan +24%
Vietnam +46%
South Korea +26%
Taiwan +32%
India +27%
Switzerland +32%
Thailand +37%
Malaysia +24%

[The new tariffs won’t include products such as copper, lumber, semiconductors, pharmaceuticals, and possibly critical minerals because the administration plans to address them separately, an administration official said. And Canada and Mexico are subject to existing tariffs, not the new ones.]

“We’re going to take care of our people first,” the president said during the Rose Garden event.  “These tariffs are going to give us growth,” he added, before signing an executive order that describes trade as a “national emergency.”

It was the biggest gamble of Trump’s political career.  He wants to bring factories back to the U.S., but experts say it will take years to rekindle U.S. manufacturing, alter supply chains and bring home production, the goals Trump and his supporters suggest his tariffs will achieve.

U.S. executives now face a difficult choice.  Companies such as Apple, Nike, Lululemon have invested billions in moving production out of China to Vietnam and elsewhere.  Do they replicate that stateside, hope for negotiations, or plead for exemptions?

The figures the administration came up with were based on data that they just came up with using a totally bogus formula, pure B.S., deceitful and incredibly hurtful to emerging markets in particular, such as Vietnam, Malaysia, Indonesia....Check the label on any piece of clothing that you have.

Trump called the rates for many nations “discounted reciprocal tariffs,” explaining that the U.S. will be charging half the tariff rate that many nations impose on U.S. products.

Here’s an example of how arbitrary some of the tariffs are.  Trump placed a 32% tariff on Switzerland, stunning politicians and business leaders in the Alpine country. Switzerland has an open trade policy and recently abolished all industrial tariffs, including on goods from the United States, which is also its largest export market.

And it was higher than the EU’s 20% tariff. EconomieSuisse, Switzerland’s main business lobby, said the tax will deal “a severe blow” to the Swiss economy.

Trump was fulfilling a key campaign promise, acting without Congress under the 1977 International Emergency Powers Act.  But his action could jeopardize Trump’s voter mandate in last year’s election to combat inflation.  Several Republican senators, particularly from farm and border states, have questioned the wisdom of the tariffs...and the sentiment is growing.

Longtime trading partners began preparing their own countermeasures.

Trump posted on Truth Social: “THE OPERATION IS OVER!  THE PATIENT LIVED, AND IS HEALING. THE PROGNOSIS IS THAT THE PATIENT WILL BE FAR STRONGER, BIGGER, BETTER, AND MORE RESILIENT THAN EVER BEFORE.  MAKE AMERICA GREAT AGAIN!!!”

Others had a different opinion. 

“Today’s tariff announcement is truly mind-boggling. It is so much larger, faster and more poorly thought out than anything I could ever have imagined Trump doing,” Harvard economist and former chair of the White House Council of Economic Advisers Jason Furman said Wednesday night.

“The good news is that it will be so destructive to wealth and employment while turbocharging inflation that [the administration] will be forced to pare it back,” Furman, who advised former Presidents Clinton and Obama, added.  “I am truly stunned.”

Former Vice President Mike Pence, reacting on social media, said Trump’s moves would cost American families more than $3,500 annually.  Former Treasury Secretary Larry Summers predicted the resulting cumulative U.S. loss could exceed $300,000 per family of four.

Analysts at J.P. Morgan said the tariffs will increase inflation by 1.5 percentage points this year.

Shortly after the announcement, with financial futures falling sharply and European markets reeling, Treasury Secretary Scott Bessent told CNN: “One of the messages that I’d like to get out tonight is everybody sit back, take a deep breath, don’t immediately retaliate, let’s see where this goes.  Because if you retaliate, that’s how we get escalation.”

But European Commission chief Ursula von der Leyen, in a statement, vowed a unified response to the U.S. tariffs, including preparation of countermeasures.  “If you take on one of us, you take on all of us,” she said.  Negotiations among EU member states are set to begin next week, but the bloc is not unified.  Von der Leyen added later that the tariffs are a “major blow to the world economy.”  She said the new tax imports will cause “dire” consequences “for millions of people around the globe.”

Canadian Prime Minister Mark Carney said of his first call with President Trump last week that Trump “respected Canada’s sovereignty,” Carney adding the call was “very constructive.”  [Trump had called it “extremely productive.”]

But then the tariffs came, which could prove devastating for the Canadian car industry.

The U.S. had already partially imposed a blanket 25% tariff on Canadian goods, along with a 25% duty on all aluminum and steel imports.  Canada has retaliated with about $42 billion of tariffs on U.S. goods.

The vehicle tariffs could impact as many as 500,000 jobs in the Canadian auto industry.

Meanwhile, in an interview with NBC News, Trump was asked last weekend if he had warned automakers not to raise consumer prices in response to the 25% tariffs he planned to impose on their products.

“No, I never said that,” Trump said. “I couldn’t care less if they raise prices because people are going to start buying American cars.”

Editorial / Wall Street Journal

“President Trump unveiled his new “liberation day” tariffs on Wednesday, and they are another large step toward a new old era of trade protectionism. Assuming the policy sticks – and we hope it doesn’t – the effort amounts to an attempt to remake the U.S. economy and the world trading system....

“There will certainly be higher costs for American consumers and businesses. Tariffs are taxes, and when you tax something you get less of it.  Car prices will rise by thousands of dollars, including those made in America.  Mr. Trump is making a deliberate decision to transfer wealth from consumers to businesses and workers protected from competition behind high tariff walls.

“Over time this will mean the gradual erosion of U.S. competitiveness.  Tariffs that blunt competition invite monopoly profits while reducing the need to innovate.  This is the story of the American steel and car industries in the 1950s and 1960s before global competition exposed their deficiencies....

“The great irony of Mr. Trump’s tariffs is that he justifies them in part as a diplomatic tool against China.  Yet in his first term Mr. Trump abandoned the Asia-Pacific trade deal that excluded China. Beijing has since struck its own deal with many of those countries.

“Mr. Trump’s new tariff onslaught is giving China another opening to use its large market to court American allies.  South Korea and Japan are the first targets, but Europe is on China’s list....

“Remaking the world economy has large consequences, and they may not add up to what Mr. Trump advertises as a new ‘golden age.’”

Yes, Chinese President Xi Jinping has been handed a rare opening to deepen relationships across the board.  While Beijing faced its third round of U.S. levies, this time longstanding American allies such as Japan, Australia and the UK were also hit with tariffs as high as 24%.

Speaking at the London Stock Exchange on Thursday for the launch of China’s first green sovereign bond sale, Vice Finance Minister Liao Min – one of Xi’s negotiators in the first trade war – hailed the issuance as demonstrating Beijing’s commitment to deeper integration with the international market.

“Protectionism doesn’t work – it’s not a solution,” he said. “China and the UK understand the benefits of globalization, which are anchored by the robust foundation of experience.”

China then announced additional tariffs of 34% on U.S. goods on Friday, the most serious escalation yet in the trade war.

Beijing also announced it was adding several U.S. entities to an export control list and classifying others, eleven in all, as an “unreliable” entity.

China’s new tariffs will hit fewer goods than President Trump’s tariffs only because China sells far more to the Untied States than it buys.  China bought $147.8 billion worth of American semiconductors, fossil fuels, agricultural goods and other products last year.  It sold $426.9 billion worth of smartphones, furniture, toys and many other products.

China’s Finance Ministry issued a statement strongly criticizing Trump’s tariffs.  “This practice of the U.S. is not in line with international trade rules, seriously undermines China’s legitimate rights and interests, and is a typical unilateral bullying practice.”

Trump responded on Truth Social as he headed to the golf course, Friday....

“CHINA PLAYED IT WRONG, THEY PANICKED – THE ONE THING THEY CANNOT AFFORD TO DO!”

Trump’s unprecedented decision to impose punitive tariffs on everyone risks alienating the U.S. from a global economic system that it helped build in the wake of World War II, further testing alliances that have endured since then.  Many countries in Asia have already seen China overtake the U.S. as their largest trading partners, and the tariffs will only further increase their dependence on Beijing.

“Liberation Day isolates America from the rest of the world by incentivizing all other countries to trade with each other instead of America,” said Frank Tsai, an adjunct professor at the Emlyon Business School’s Shanghai campus.  “China now has a golden opportunity to beat America at its own game.” [Bloomberg]

How did the markets react Thursday, the first opportunity to respond? 

The Dow Jones fell 4.0%, 1679 points; the S&P 500 lost 4.8%, its worst day since 2020, and Nasdaq cratered 6%, pulled lower by steep declines in the likes of Apple, Nvidia and Amazon.com.

Dozens of household-name stocks posted double-digit declines, including HP, Dell, Nike and Target.

The dollar slipped to its lowest level of the year.

And then Friday, it was worse!  The Dow fell 5.5%, the S&P 6.0% and Nasdaq another 5.8%, the last index in bear market territory, down over 20% from its high (nearly 23%).

French President Emmanuel Macron said Europe is weighing retaliation against U.S. tech firms, while Canadian Prime Minister Mark Carney said his country will match President Trump’s auto tariffs with 25% tariffs of its own.

President Trump brushed off the steep stock plunge, saying he expected a reversal of the brutal impact of his new fees on most imported goods.

“I think it’s going very well.  It was an operation like what a patient gets operated on, and it’s a big thing,” he told reporters on the White House lawn.

“I said this would exactly be the way it is. We have six or $7 trillion coming in to our country, and we’ve never seen anything like it. [Ed. referring to the administration’s projections the tariffs will generate $600 billion in revenue over the coming decade.]  The markets are going to boom, the stock is going to boom, the country is going to boom.”

Trump added: “The world wants to see, is there any way they can make a deal? They’ve taken advantage of us for many, many years. We’ve been at the wrong side of the ball. And I’ll tell you what, I think it’s going to be unbelievable.”

But Trump contradicted his top aides on the purpose of his sprawling new global tariff regime, adding to the uncertainty.

Earlier in the day, top Trump aide Peter Navarro and Commerce Secretary Lutnick said the president was not looking to strike deals over the tariffs.  “This is not a negotiation,” Navarro told CNBC.

Trump then told reporters on Air Force One that he would be open to striking deals with individual countries.

“Every country is calling us. That’s the beauty of what we do,” Trump said.  “We put ourselves in the driver’s seat.  If we would have asked these countries to do us a favor, they would have said no. Now they will do anything for us.”

Trump added: “The tariffs give us great power to negotiate. They always have.”

Then the president posted Friday morning on Truth Social:

“TO THE MANY INVESTORS COMING INTO THE UNITED STATES AND INVESTING MASSIVE AMOUNTS OF MONEY, MY POLICIES WILL NEVER CHANGE. THIS IS A GREAT TIME TO GET RICH, RICHER THAN EVER BEFORE!”

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Trump, Elon, cont’d....

--Following Vice President JD Vance’s trip last Friday to Greenland, the Danish foreign minister on Saturday scolded the Trump administration for its “tone” in criticizing Denmark and Greenland, saying his country is already investing more into Arctic security and remains open to more cooperation with the U.S.

Foreign Minister Lars Lokke Rasmussen made the remarks in a video posted to social media.  Later Saturday, though, President Trump maintained an aggressive tone, telling NBC News that “We’ll get Greenland.  Yeah, 100%,” Trump said.

“Good possibility that we could do it without military force,” he said, adding as a caveat, “I don’t take anything off the table.”

“You have ships sailing outside Greenland from Russia, from China and from many other places. And we’re not going to allow things to happen that are going to hurt the world or the United States,” Trump added.

“Many accusations and many allegations have been made.  And of course we are open to criticism,” Rasmussen said speaking in English.  “But let me be completely honest: we do not appreciate the tone in which it is being delivered.  This is not how you speak to your close allies.  And I still consider Denmark and the United States to be close allies.”

JD Vance on Friday said Denmark has “underinvested” in Greenland’s security and demanded that Denmark change its approach.

“Our message to Denmark is very simple: You have not done a good job by the people of Greenland,” Vance said.  “You have underinvested in the people of Greenland, and you have underinvested in the security architecture of this incredible, beautiful landmass filled with incredible people. That has to change.”

Trump released a video on Truth Social entitled “America Stands With Greenland,” showing footage of U.S. troops there during World War II.

Vance in pushing Greenland to break away from Denmark, said: “I think that they ultimately will partner with the United States. We could make them much more secure. We could do a lot more protection.  And I think they’d fare a lot better economically as well.”

Danish Prime Minister Mette Frederiksen called her country “a good and strong ally.”

Denmark was one of a handful of countries to send troops to fight with the U.S. military in Iraq and Afghanistan – and suffered comparable casualties as a percentage of forces deployed.

But the Danes concede they have to do more on the defense front.  The Danish Defense Intelligence Service has concluded that the high north is “a priority for Russia, and it will demonstrate its power through aggressive and threatening behavior, which will carry along with it a greater risk of escalation than ever before in the Arctic.”

The Danes have announced a new defense spending package, large for such a small country. They’re replacing aging “inspection vessels” with three modern warships, buying two long-range drones, and promising to deploy satellites and other surveillance assets.

But building ships will take years.

Greenland’s new prime minister, Jens-Frederik Nielsen, 33, said on Sunday:

“President Trump says that the United States ‘will get Greenland.’ Let me be clear: The United States will not get it. We do not belong to anyone else. We decide our own future.”

Monday, Nielsen said: “We are in the Kingdom of Denmark right now, and as long as we are in this construction, we need to build our relationship and build our partnership to get it stronger until the day we can be a sovereign nation.”

“We have a strong partnership with Denmark, and that’s what we’re going to build on until the day we can be sovereign,” he added.

Meanwhile, he said Greenland wanted a partnership with the United States that was based on mutual respect.

“Greenland will never be a part of America... We want to trade. We want a strong partnership on national security, of course, but we want it in mutual respect. We will never be for sale and we will never be Americans,” Nielsen said.

The Washington Post reported that the White House has been mulling Greenland takeover options.  One option: offer Greenlanders more than the $600 million annual subsidy provided by Denmark.  “This is a lot higher than that,” said one official familiar with the plans, who like others spoke on the condition of anonymity to discuss plans that remain in the works. “The point is, ‘We’ll pay you more than Denmark does.’”

--Protesters against Elon Musk’s purge of the government demonstrated last Saturday at Tesla dealerships across the country, and in some European cities.  The crowds ranged from a few dozen to hundreds. 

I picked up a pizza and beer and settled in for college hoops and baseball.

--The U.S. military’s border-support missions have cost more than $300 million in just the first six weeks since Trump was inaugurated.  Such a pace would eventually cost more than $2.5 billion annually.

What are the roughly 9,000-plus active-duty troops doing?  “Building barricades, putting up concertina wire, and generally ‘just standing around,’” one defense official said.  [Defense One]

But illegal immigration is at historic lows, and that’s what the people wanted.

However, the administration acknowledged in a court filing that it had wrongly deported an immigrant living in Maryland to a mega-prison in El Salvador, where they were surrounded by armed soldiers and hooded police who shaved their heads and locked them inside high-walled cells.  His removal came six years after an immigration judge found that Abrego had testified credibly that he could be harmed or killed by gang members in that country.

Immigration and Customs Enforcement officers acknowledged in court records that they were aware of internal forms forbidding them from sending Abrego to El Salvador, and called his removal an “oversight.”

The Justice Department, even as it acknowledged its mistake, said it could not use diplomacy or financial pressures to free Abrego because it would threaten U.S. foreign policy and its relationship with an ally in the fight against gangs.

No it wouldn’t.  It’s a phone call between Trump and El Salvador’s president.

--According to the Washington Post, “Members of President Trump’s National Security Council, including White House national security adviser Michael Waltz, have conducted government business over personal Gmail accounts, according to documents reviewed by The Post and interviews with three U.S. officials.”

Gmail is a far less secure method of communication than the encrypted messaging app Signal. This represents yet another example of questionable data security practices by top national security officials already under fire.

President Trump moved to fire several senior White House National Security Council officials soon after he was urged by far-right activist and conspiracy theorist Laura Loomer to purge staffers she deemed insufficiently committed to his Make America Great Again agenda, according to the Associated Press Thursday. 

We then learned that Director of the National Security Agency, Air Force Gen. Timothy Haugh, was reportedly fired Thursday from his post at the head of the agency.  His removal as director of the NSA, the nation’s primary cyber espionage and electronic eavesdropping agency, was ousted by, in essence, Laura Loomer, who had Haugh and his civilian deputy, Wendy Noble, on her list, Noble also let go.

Our intelligence agencies have been gutted beyond belief since Donald Trump took office, at the worst possible time for the United States.

This is nuts.

--According to reports, Commerce Secretary Howard Lutnick “has become the focus of exasperation inside the Trump administration...with one saying the sentiment is so prevalent, it is ‘like being a mosquito at a nudist colony – where do you even start?’”

Lutnick, the former CEO of Cantor Fitzgerald and co-chair of Trump’s transition team, “has rubbed colleagues the wrong way on matters of both substance and style – with critics venting about his recent proclamation that a tariff-induced recession would be ‘worth it,’ his call for the public to buy Tesla stock and his practice of inserting himself into policy discussions,” as the New York Post put it.

One source told the post that the administration wants Lutnick to “think before he speaks.”

--And then there’s Health and Human Services Secretary Robert F. Kennedy Jr., the administration beginning broad staff cuts and the department locking some workers out of federal buildings and reassigning others to new agencies.

The cuts, which will eventually number some 10,000, extend far and wide, from the Food and Drug Administration and the National Institutes of Health to the Centers for Disease Control and Prevention.

Writing on X, Kennedy said what the government had been doing wasn’t working: “We must shift course.  HHS needs to be recalibrated to emphasize prevention, not just sick care. These changes will not affect Medicare, Medicaid, or other essential health services.”

At the CDC, entire offices and divisions were eliminated, including groups focused on HIV prevention, violence prevention, injury prevention, and worker safety.

--Related to the above, the top vaccine official at the Food and Drug Administration, Dr. Peter Marks, was pushed out.

Marks played a key role in the first Trump administration’s Operation Warp Speed to develop Covid-19 vaccines.  He stepped down last Friday, having been given a choice to resign or be fired.

“It has become clear that truth and transparency are not desired by the Secretary, but rather he wishes subservient confirmation of his misinformation and lies,” he wrote in a resignation letter, referring to RFK Jr.

“My hope is that during the coming years, the unprecedented assault on scientific truth that has adversely impacted public health in our nation comes to an end,” Marks wrote in the letter.

Editorial / Wall Street Journal

“Robert F. Kennedy Jr. has been secretary of Health and Human Services for all of six weeks, but he’s already vindicating his critics.  First he downplayed a measles outbreak in Texas*.  Then he reportedly hired a trial-lawyer ally to work on a government study of the link between vaccines and autism. Now he has pushed out a top Food and Drug Administration official because he helped accelerate approval of the Covid vaccines.

“Mr. Kennedy grabbed headlines on Thursday by proposing to consolidate sundry HHS agencies and cut 20,000 jobs [Ed. including those taking buyouts or early retirement.] The bloated department could use some shrinking.  Most of his plan, such as refocusing the Centers for Disease Control and Prevention on its core mission of preparing for and responding to infectious disease outbreaks, isn’t radical.

“What is disturbing are news reports that Mr. Kennedy has tapped David Geier, a longtime vaccine critic, to assist with a CDC study of vaccines and autism.  The White House hasn’t confirmed the reports, but HHS lists Mr. Geier in its staff directory as a ‘senior data analyst.’

“Mr. Geier has spent decades spreading the discredited theory, embraced by Mr. Kennedy, that thimerosal in vaccines causes autism and neurological damage in children.  He has published more than a dozen studies that trial lawyers have cited as evidence of vaccines’ harms, though they have been rejected by judges and the government’s special vaccine courts.

“Mr. Geier has also accused the CDC of concealing vaccine safety data and claimed that better nutrition and hygiene – not vaccines – are responsible for the disappearance of deadly infectious diseases.  If Mr. Kennedy truly wants an independent, impartial review of vaccine data, Mr. Geier is the wrong man for the job. The study’s results look preordained....

“Some Senate Republicans hoped that other Trump HHS appointees – e.g., FDA Commissioner Marty Makary and National Institutes of Health Director Jay Bhattacharya – would keep Mr. Kennedy in check.  It isn’t working out that way.  NIH is now requiring grants or contracts involving mRNA technology to be reported to Mr. Kennedy’s office.  The mRNA platform helped to develop Covid vaccines, and it has shown potential to treat and prevent other diseases including cancer.

“Mr. Kennedy rightly criticized the Biden Administration’s Covid responses for ignoring science, but he won’t restore public confidence if he feeds skepticism about vaccines that have saved countless lives.  Our worst fears about Mr. Kennedy are coming true.”

*On the measles front, Texas has 422 cases as of Wednesday, 42 hospitalized.

--Princeton University became the fourth Ivy League school – the others Columbia, Penn and Harvard – to be targeted by President Trump and see its funding cut for research grants, as part of the administration’s investigation into how schools have handled antisemitism.

At the University of Pennsylvania, Trump paused about $175 million in federal funding for allowing a transgender athlete to compete on the women’s swimming team.

But wait, there’s more!  Brown University is now being targeted as well.

--President Trump told NBC News’ Kristen Welker in a Sunday morning phone call that “he’s not joking” about serving a third term in the White House – and thinks there’s a loophole to make it happen.

Trump said that “a lot of people want me to do it.”

Trump claimed that “there are methods which you could do it,” including having Vice President Vance run for president with Trump as his vice president, Vance would then resign to allow Trump to regain the top job.

“But there are others too,” Trump said, without further elaboration.

The 22nd Amendment, ratified in 1951, says “no person shall be elected to the office of the President more than twice” – allowing for the potential loophole of Vance resigning in Trump’s favor.

“I mean, I basically tell them we have a long way to go, you know, it’s very early in the administration.  I’m focused on the current.”

At the rate he’s going, he’s going to be run out of town long before the midterms.

--President Trump’s sweeping executive order to eliminate what he considers “anti-American ideology” from the Smithsonian Institution cast the world’s largest museum, education and research complex into a state of confusion last Friday.

The “Restoring Truth and Sanity to American History” order also calls for the restoration of “monuments, memorials, statues, markers” around the country that have been removed in the past five years, as noted last week.

Trump’s executive order makes clear that he intends to influence the finances of the Smithsonian, which receives about 60 percent of its funding from congressional appropriations and federal grants and contracts.  [The federal government pays for operations, infrastructure and maintaining collections, while exhibitions are generally funded by private donations.]  The order instructs Vice President Vance, who sits on the board, to work with Congress and the Office of Management and Budget to withhold funding for exhibits or programs that “degrade shared American values” or “divide Americans based on race.”

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Wall Street and the Economy

Fed Chair Jerome Powell gave remarks late Friday morning at an event in Arlington, Virginia, that of course were closely watched.  Powell said the new tariffs will likely lead to higher inflation and slower growth.  He said their impacts on the economy and price levels are “significantly larger than expected.”  He also said that the import taxes are “highly likely” to lead to “at least a temporary rise in inflation,” but added that “it is also possible that the effects could be more persistent.”

Powell made it clear during his remarks that the Fed isn’t in a hurry to take any action on rates due to the uncertainties, saying, “It is too soon to say what will be the appropriate path for monetary policy.”

The markets didn’t want to hear this.

President Trump took the opportunity to chime in on Truth Social, just prior to Powell’s speech.

“This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates. He is always ‘late,’ but he could now change his image, and quickly. Energy prices are down, Interest Rates are down, Inflation is down, even Eggs are down 69%, and Jobs are UP, all within two months – A BIG WIN for America.  CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!”

As markets were roiled, we did have a jobs report for March, the economy adding a far greater than expected 228,000 on nonfarm payroll. The figures for January and February were revised down 48,000. The unemployment rate ticked up to 4.2%, average hourly earnings 0.3%, 3.8% year-over-year, down from 4.0% the month prior.  But this is looking in the rearview mirror.

Trump posted on Truth Social: “GREAT JOB NUMBERS, FAR BETTER THAN EXPECTED. IT’S ALREADY WORKING. HANG TOUGH, WE CAN’T LOSE!!!”

Aside from the jobs report, we had important readings on manufacturing and the service sector.  The ISM manufacturing PMI for March came in at 49.0, below consensus, 50 the dividing line between growth and contraction.  The ISM service sector reading was also below expectations at 50.8, which was versus 53.5 prior, yet another worrisome sign.

The Chicago manufacturing PMI for March was 47.6 vs. 45.5 prior.

February construction spending rose 0.7%, with factory orders up 0.6%, both slightly better than forecasts.

The Atlanta Fed’s GDPNow barometer for first-quarter growth is at minus-2.8% (-2.8%).

Freddie Mac’s 30-year fixed-rate mortgage is 6.64%.  This will look far lower next week.

Next week, consumer and producer price data for March. [In his remarks today, Powell reiterated the Fed isn’t as concerned about the CPI, as it is the PCE (personal consumption expenditures index), their long-preferred inflation barometer.]

--On the budget front, Senate Republicans rallied behind a fiscal framework that allows more than $5 trillion in tax cuts over a decade, taking a crucial step toward turning President Trump’s agenda – tax cuts, border security and national defense – into law.

The Senate could be voting later today, Friday, but key House members are already objecting, warning that the Senate’s approach doesn’t guarantee the deep spending cuts they see as necessary.

Trump’s tax proposals are a top party priority, and lawmakers view an extension of expiring tax cuts as a must-pass bill.  Getting over the finish line won’t be easy.  The House and Senate must agree twice, first on a budgetary framework and then again on a bill that they can pass without needing any Democratic votes [i.e, “reconciliation.”]

In each chamber, Republicans can lose no more than three of their own members, and lawmakers are divided over the broad strokes of deficits and spending as well as dozens of details.

Trump posted on Truth Social Thursday morning: “Speaker of the House Mike Johnson and Senate Majority Leader John Thune have been working tirelessly on taking the next step to pass the plan for our ONE, BIG, BEAUTIFUL BILL, as it is known, as well as getting us closer to the Debt Extension necessary to continue our great work. The Senate Budget plan gives us the tools that we need to get our shared priorities done, including certain PERMANENT Tax Cuts, Spending Cuts, Energy, Historic Investments in Defense, Border, and much more.  We are going to cut Spending, and right-size the Budget back to where it should be. The Senate Plan has my Complete and Total Support.  Likewise, the House is working along the same lines. Every Republican, House and Senate, must UNIFY.  We need to pass it IMMEDIATELY!”

Well, there are differences between the two versions...and the gulf between the House and Senate appears nowhere near closing.

“THE SENATE VERSION IS DEAD ON ARRIVAL,” Rep. Ralph Norman (R-S.C.), a member of the hard-line Freedom Caucus texted, “among many of our Freedom Caucus members as well as other conservatives who are concerned about the lack of cuts in the Senate bill.”

Europe and Asia

The eurozone PMIs for March were released, courtesy of S&P Global and Hamburg Commercial Bank.  The manufacturing PMI was 48.6 vs. 47.6 in February, a 26-month high.  The services reading was 51.0.  The composite index of 50.9 was a 7-mo. high.

Germany: manufacturing 48.3 (31-month high); services 50.9
France: mfg. 48.5 (26-mo. high); services 47.9
Italy: mfg. 46.9; services 52.0
Spain: mfg. 49.5; services 54.7
Ireland: mfg. 51.5; services 55.3
Netherlands: mfg. 49.6
Greece: 55.0 (11-mo. high)

UK: mfg. 44.9 (17-mo. low); services 52.5

Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank:

“You can’t really call it growth anymore in the Eurozone’s service sector.  Once again, the index is hovering only slightly above the 50-point expansion threshold. New business has even seen a small drop for the second month running, and backlogs of work are continuing their downward trend.  In Germany, we’ll likely soon see some indirect boosts in the services sector due to increased spending on infrastructure and defense.  But for the Eurozone as a whole, the service sector could face tougher times....

“At the end of last year, it looked like the Eurozone was heading into a recession, but things have somewhat stabilized at the start of this year... However, U.S. tariffs could quickly throw the Eurozone’s economy off course again. That’s why the fiscal package planned by the Eurozone’s largest economy, which is mainly aimed at supporting the defense and construction industries but could also indirectly benefit the service sector, is a welcome counterweight.  It significantly reduces the risk of a downturn across the entire Eurozone.”

Dr. de la Rubia posted his comments following President Trump’s formal tariff announcement, but before U.S. and European markets reacted.  The PMI readings in the eurozone for April and May will be fascinating.

Eurostat released a flash estimate on March inflation for the eurozone, 2.2%, down from 2.3% in February. Ex-food and energy, the number was 2.4%, down from 2.6% the month prior.  All positive for the European Central Bank, but then the tariffs came.

Headline inflation....

Germany 2.3%, France 0.9%, Italy 2.1%, Spain 2.2%, Netherlands 3.4%, Ireland 1.8%, Greece 3.1%.

February industrial producer prices were up 0.2% over January, according to Eurostat, up 3.0% year-over-year.

The unemployment rate in the euro area for February was 6.1%, down from 6.5% a year earlier.

Germany 3.5%, France 7.4%, Italy 5.9%, Spain 10.4%, Netherlands 3.8%, Ireland 3.9%, Greece 8.6% (but down from 11.5% a year earlier).

France: The nation has been waiting, literally for years, for a court ruling involving far-right, National Rally (RN) party leader Marine Le Pen and it finally came Monday morning.  Le Pen was convicted of embezzlement and handed an immediate five-year ban from public office, a sentence that will bar her from running in the 2027 presidential race unless she successfully appeals beforehand.

It's a catastrophic setback for Le Pen, who was a front-runner in opinion polls.

Le Pen, the RN and two dozen party figures were accused of diverting more than 4 million euros ($4.33 million) of European Parliament funds to pay France-based staff during a period extending from 2004 to 2016, in violation of the EU’s regulations. They had argued the money was used legitimately and that the allegations had defined too narrowly what a parliamentary assistant does.

Judge Benedicte de Perthuis said Le Pen had been “at the heart” of the scheme.

Le Pen’s removal will fuel a debate in France over how judges police politics.

Since her first defeat to President Emmanuel Macron in 2017, Le Pen has patiently worked to soften her image and to break from that sown by her late father, Jean-Marie Le Pen, tacking National Rally towards the political mainstream and striving to appear as a leader-in-waiting rather than a radical.

RN is the single biggest party in the National Assembly.

The judges also gave her a four-year prison sentence – of which two are suspended – and a 100,000 euro fine.  Le Pen will appeal and the penalties aren’t enforced until her appeals are exhausted.

But the five-year ineligibility sentence kicks in immediately, and can only be lifted if any appeal is upheld before the election.  She retains her seat in parliament until her term ends.

Appeals in France can take years in many circumstances.  But, in a surprise statement late Tuesday, an appeals court said it should be able to rule by mid-2026 on a challenge by Le Pen.

Political experts are calling the sentence “seismic.”

During her nine-week trial that took place in late 2024, Le Pen argued that ineligibility “would have the effect of depriving me of being a presidential candidate” and disenfranchise her supporters.

“There are 11 million people who voted for the movement I represent. So tomorrow, potentially, millions and millions of French people would see themselves deprived of their candidate in the election,” she told the panel of three judges.

RN President Jordan Bardella, Le Pen’s 29-year-old right-hand man, now looks set to become the party’s de facto candidate for 2027.

But while Bardella has been successful in appealing to young voters, he in no way has the experience to win over a broader electorate.

Protests were planned for Sunday.  There have been threats against judges, which Bardella condemned, calling on the protests to be peaceful.

Turning to Asia...China’s official PMI readings for March (courtesy of the National Bureau of Statistics) showed manufacturing at 50.5, services 50.8.  The private Caixin manufacturing figure was 51.2, services 51.9.

Japan’s manufacturing PMI for March was 48.4, the service-sector reading 50.0

February industrial production was up 2.5% month-over-month, just 0.3% year-over-year.  February retail sales rose 0.5% month-over-month, 1.4% Y/Y.  February household spending rose 3.5% vs. January, -0.5% Y/Y, both above consensus.

South Korea’s March manufacturing PMI was 49.1 vs. 49.9 in February...  Taiwan’s manufacturing figure was 49.8 vs. 51.5 prior.

Street Bytes

--What a week...after an OK start, Thursday and Friday’s crash, and that’s what it was, led to losses of 7.9% for the Dow Jones, 9.1% on the S&P 500, and 10.0% for Nasdaq.  It was the worst week for all three since the start of the pandemic in 2020.

And earnings season starts next week.  But all about Trump and what comes out of his mouth the next two days.

The S&P 500 ended March on Monday with a 5.8% decline for the month, its worst month since December 2022, when the Federal Reserve embarked upon a series of sharp interest rate increases as it sought to tame inflation.  The decline in March capped off the S&P’s worst quarter at the start of a president’s term since President Obama took over in 2009 during the financial crisis, down 4.6%, Nasdaq falling 10.4%.

But across the pond, the Stoxx Europe 600 (their S&P 500) rose 5.8%.  The German DAX surged 11.3% in the first quarter.

This week, the Stoxx finished down 8.4%, the DAX 8.1%.

--U.S. Treasury Yields

6-mo. 4.11%  2-yr. 3.67%  10-yr. 4.00%  30-yr. 4.41%

Yields cratered, a classic flight to safety. The yield on the 10-year fell to 4.00% from 4.26% last Friday.  Bond traders were now expecting five Fed rate cuts this year, starting in June, but that was before Chair Powell’s notes of caution.

--Oil prices crashed to the lowest level since August 2021 following the tariff announcement, $61 on West Texas Intermediate (before finishing the week around $62.50), the theme being global demand destruction.  But it didn’t help that OPEC+ countries unexpectedly announced they would increase oil production by 411,000 barrels per day in May, far more than the planned 135,000 bpd.  While oil imports were exempted from tariffs, investors worried they would hurt the economy and stoke inflation.

--As noted above, Apple fell sharply Thursday, 9%, shedding $313.5 billion in market value as investor fears grew about the iPhone maker’s greater exposure to China, which has now been targeted with stiff tariffs.

Between 90% and 95% of Apple’s products are made in China.  Taiwan-based Foxconn is the world’s largest iPhone manufacturer.  Apple has expanded production into Vietnam and India, but they are also targeted for Trump tariffs.

Apple was granted exemptions in 2018 to avoid a 15% tariff on its flagship products including the iPhone, iPad, and MacBook, but there are no indications, so far, that it has received a similar exemption from the latest tariffs.

Apple’s plans to invest $500 billion in the U.S. may help it get an exemption.

Apple shares fell another 7% today.

--This afternoon, President Trump delayed a deadline for the forced sale of Chinese-owned TikTok for another 75 days.  Posting on Truth Social:

“My Administration has been working very hard on a Deal to SAVE TIKTOK, and we have made tremendous progress. The Deal requires more work to ensure all necessary approvals are signed, which is why I am signing an Executive Order to keep TikTok up and running for an additional 75 days.”

--Tesla reported Wednesday that its global sales fell 13% in the first quarter, the EV maker delivering nearly 337,000 cars during the period, down from 387,000 in the first three months of 2024 and less than in any period since the second quarter of 2022.  Some analysts were as high as 408,000.

The company’s tepid sales at a time when electric vehicle sales were rising around the world reflected a number of serious problems, not least the consumer backlash against the prominent role that Elon Musk is playing in the Trump administration.

Tesla once set the standard for battery range, software and driver-assistance technology. But traditional carmakers have become more adept at building electric vehicles and have begun to catch up to Tesla in technology.  Competitors like Volkswagen, Volvo, BMW – and, outside the Untied States, BYD, Xpeng and other Chinese manufacturers – offer a diverse selection of luxury sedans, minivans, pickups and compact cars.

“Tesla pretty much all of these years has been alone in Europe and the U.S.,” said Felipe Munoz, global analyst at JATO Dynamics, a research firm. “That’s not the case anymore.”

Meanwhile, Musk sold X to xAI.  In a tweet on X Friday night, Musk wrote that xAI had acquired X for $33 billion, or “$45B less $12B debt.”

Musk said the combination values xAI at $80 billion and X at $33 billion.  “Since its founding two years ago, xAI has rapidly become one of the leading AI labs in the world, building models and data centers.”

In his tweet, Musk explained the rationale behind the deal.  “xAI and X’s futures are intertwined.  Today, we officially take the step to combine the data, models, compute, distribution and talent.  This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach. The combined company will deliver smarter, more meaningful experiences to billions of people while staying true to our core mission of seeking truth and advancing knowledge.  This will allow us to build a platform that doesn’t just reflect the world but actively accelerates human progress.”

xAI has been using information from X to hone its chatbot.  The deal also offers a resolution to X’s other backers following months of uncertainty over the state of their investment as Musk’s changes led to an exodus of users and advertisers.

--TSA checkpoint numbers vs. 2024

4/3...116 percent of 2024 levels
4/2...96
4/1...82
3/31...98
3/30...116
3/29...87
3/28...97
3/27...110

--Johnson & Johnson shares tumbled Tuesday after a bankruptcy judge dismissed J&J’s third attempt to resolve its mass talc liabilities through Chapter 11, rejecting the company’s bid to end one of the largest-ever mass torts.

Judge Christopher Lopez of the U.S. Bankruptcy Court in Houston dismissed a J&J affiliate’s chapter 11 case after finding the company used a flawed process to solicit votes from tens of thousands of personal-injury claimants.

This is a big setback for the company’s yearslong drive to achieve a resolution in chapter 11 of the mass lawsuits linking its iconic talc-based baby powder to cancer.

J&J said it would return to the civil justice system “to litigate and defeat these meritless talc claims.”

At trial earlier this year, J&J said that it had the support of 83% of those who had cast votes out of the roughly 93,500 injury claimants, exceeding the three-quarters threshold required under bankruptcy law.

Judge Lopez there were irregularities in the voting process, including an “unreasonably short voting time for thousands of creditors,” stemming from the company’s push to get to 75% support “at any cost.”

Under J&J’s plan, an ovarian cancer patient would have received an average of $130,000 in compensation, while a claimant with other gynecological cancers would have received $1,500.

--Attorney General Pam Bondi said Tuesday she has directed federal prosecutors to seek the death penalty against Luigi Mangione, the man accused of gunning down UnitedHealthcare CEO Brian Thompson outside a Manhattan hotel on Dec. 4.

Mangione, 26, faces separate federal and state charges for the killing.

I totally agree with the AG.

--In one of the more remarkable stock stories of recent memory, shares in conservative cable news outlet Newsmax soared from last Friday’s IPO price of $10 to $265 on Tuesday, finishing that day at $233. 

Wednesday, the shares collapsed to $52.52.  Amazing.  It finished the week around $46.

Newsmax raised $75 million in the IPO, and in two days the market cap was $20.8 billion.

CEO Christopher Ruddy, a media mogul and friend of President Trump, founded the company in 1998, starting as a digital brand.

Newsmax, which became a cable TV network in 2014, has faced an onslaught of critiques and legal battles for touting conspiracy theories. The company is facing an ongoing lawsuit from Dominion Voting Systems seeking $1.6 billion in damages related to false claims it made in its coverage of the 2020 election, which Newsmax cited among risk factors to its business in its latest 10-K filing to the SEC.

Newsmax settled another lawsuit with another election tech company, Smartmatic, in 2024 for similar claims and has paid $20 million of the $40 million settlement thus far, according to the filing.  The news outlet, seen as a Fox News competitor, also drew criticism when it reported false claims and conspiracy theories about the Jan. 6 attack on the Capitol.

Newsmax reported revenues of $171 million in 2024, up 26%, though the company lost $72 million.  The company also said in its filing that it has identified “material weaknesses” in its financial reporting controls such that there may be “a material misstatement” in its financial statements that it may not detect “on a timely basis.” [Yahoo Finance]

--The Department of Agriculture said Wednesday that national egg prices fell 9 percent last week to an average of $3 a dozen.

“The supply situation at grocery outlets has greatly improved in recent weeks and consumers are once again seeing fully stocked shelves and enjoying a range of choices without purchase restrictions,” the USDA stated.

I agree supply has improved, but I was at two grocery stores Thursday here in New Jersey and they were still $7.99 to $9.99.

--Anger over the Trump administration’s tariffs and rhetoric will likely cause international travel to the U.S. to fall even further than expected this year, according to Tourism Economics.

The forecasting company said it expects the number of people arriving in the U.S. from abroad to decline by 9.4% this year, almost twice the 5% drop the company forecast at the end of February.

At the beginning of the year, Tourism Economics predicted a booming year for international travel to the U.S., with visits up 9% from 2024.

Separately, Ireland tourism officials are very concerned, as the number of overseas visitors has been sliding since September.

“The American market is hugely important for us. They spend a lot of money when they come here,” said one businessman to the Irish Times.

“The worry for me is there might be a follow up on protectionism where Americans are encouraged to holiday at home.  That could be catastrophic for the Irish tourism market.”

Ireland’s Central Statistics Office recorded 304,300 foreign visitors to Ireland in February, a decrease of 30% compared with Feb. 2024.

The largest contingent of visitors came from the UK (49%), and the second largest came from the United States (10%).

And then there’s Canadian tourism to America.  Canadian airlines are eliminating tens of thousands of seats to the U.S. in April, usually a heavy travel season for Canadians seeking warmer destinations.  Air Canada has reduced seats by 7 percent.

One Canadian, Flemming Friisdahl, CEO of The Travel Agent Next Door, a Canadian company with 1,500 travel agents in its network, told the New York Times, “We completely stopped promoting the U.S. because of the backlash from the consumers.”

“It’s such a shame that we’re in this position today because we’ve always been amazing neighbors,” Friisdahl said.

OAG Aviation Worldwide Limited, an analytics company based in the UK, said advance bookings for routes between Canada and the United States from April through October are down by roughly 70 percent, compared to the same time period last year.

But, witness Air Canada, the airlines haven’t seen the decrease in demand OAG speaks of.

That said, Canadian residents took about 586,000 trips to the United States in February, a 13 percent drop from the same month last year, according to Canada’s national census agency.

Airports in Fort Lauderdale, Fort Myers and Orlando, Fla., however, are seeing up to a 30 percent cut in seats on flights from Canada in April.

United Airlines canceled a new daily route between Toronto and Los Angeles that it had planned to begin in May and said it would also reduce the frequency of other existing routes to Canada.

A weaker Canadian dollar isn’t helping matters.

--Hooters officially filed for bankruptcy after changing consumer preferences left it unable to stay good on its debts.

The chain plans to rebound by bringing back its original founders for a new management team that will aim to keep Hooters going and expand it if they can.  Lenders are putting in extra money to fund the reorganization.

Hooters was founded in Clearwater, Fla., in 1983.  It grew during the 1980s and 1990s through the combination of a scantily clad waitstaff and its spicy chicken wings.  But in the 2000s, it faced lawsuits, including allegations of weight discrimination and for not hiring male servers.

Hooters is down to 290 restaurants/stores in the U.S., down from 340 in 2019, according to Technomic.

I wish all the girls well.

Foreign Affairs

Russia/Ukraine: Ukraine said last month it was willing to accept a full 30-day ceasefire but Vladimir Putin declined to agree to that, questioning how it would be monitored and raising concerns that Ukraine would use the breathing space to mobilize more soldiers and acquire more weapons from the West.  The supposed 30-day cessation of attacks on energy infrastructure has been a farce.

Russian negotiator Grigori Karasin said a positive outcome of ceasefire talks “won’t happen this year, or maybe at the end of the year.”

“This is a drawn-out process because of the difficulty of its substance,” Kremlin spokesman Dmitry Peskov said Monday in a conference call with reporters.

Meanwhile, the invasion continues: “Russia continues to pursue logistics infrastructure projects in occupied Ukraine in order to maximize economic control over occupied territories,” analysts at the Washington-based Institute for the Study of War wrote in an “occupation update” published Monday.  “Russian occupation authorities also continue efforts to incentivize Russian citizens to relocate to occupied Ukraine from Russia in a clear violation of international law,” ISW added.

“Russia is playing games and not really wanting peace,” the European Union’s foreign policy chief Kaja Kallas said Monday.

As to Donald Trump’s remarks over the weekend that he’s “very angry” and “pissed off” with Vladimir Putin, which he made to NBC News, while threatening to place tariffs of up to 50% on countries that import Russian oil if a ceasefire deal is scuppered by Moscow, Kremlin spokesman Peskov downplayed any deterioration in relations with Washington.

Peskov suggested parts of the statement were paraphrased, rather than “direct quotes,” and said work on a Ukrainian peace process is “ongoing,” and called talks about a potential maritime ceasefire in the Black Sea a “work in progress.”

President Zelensky said on Sunday that Putin “does not care about diplomacy,” and called for further pressure on Russia to end the war.

Russian drones hit a military hospital, shopping center and apartment blocks in Ukraine’s second-largest city of Kharkiv, killing two people and wounding dozens.

President Zelensky said Sunday that over the past week “most regions of Ukraine” came under Russian attack.  Writing on X, he said “1,310 Russian guided aerial bombs, over 1,000 attack drones – mostly ‘Shaheds’ – and nine missiles of various types, including ballistic ones” had been launched against his country.

An attack on the central Ukrainian city of Dnipro late last Friday killed four and injured another 21.

--Russia says it will conscript 160,000 more troops for its ongoing Ukraine invasion, state-run media Interfax reported Monday.  “This conscription campaign may also indicate that, despite official statements about peace, Russia actually seeks to prolong the war,” Ukraine’s State Center for Countering Disinformation said in a statement.

--Friday, Britain and France accused President Putin of dragging his feat in ceasefire talks to bring a halt to fighting in Ukraine and ramped up pressure on Moscow by insisting that he owes the United States an immediate answer.

“Our judgment is that Putin continues to obfuscate, continues to drag his feet,” British Foreign Secretary David Lammy told reporters at NATO headquarters in Brussels, standing alongside his French counterpart Jean-Noel Barrot in a symbolic show of unity.

Lammy said that while Putin should be accepting a ceasefire, “he continues to bombard Ukraine.  It’s civilian population.  It’s energy supplies.  We see you, Vladimir Putin.  We know what you are doing.”

Barrot said that Ukraine had accepted ceasefire terms three weeks ago, and that Russia now “owes an answer to the United States.”

Secretary of State Marco Rubio said NATO allies should spend up to 5% of their economic output on defense, a goal he said wouldn’t need to be met immediately and would require greater American spending, too.

--European countries are already providing more than half of Ukraine’s ammunition needs, recently put at two million rounds by Ukrainian president Volodymyr Zelensky, the EU’s Kaja Kallas said on Thursday.

“These things are moving very well...we need to get the help to Ukraine as fast as possible.  President Zelensky has said that they need five billion to have at least two million rounds,” Kallas said ahead of an EU defense ministers summit in Warsaw.

--Finland says it’s withdrawing from a 1997 treaty against the use of land mines, Prime Minister Petteri Orpo announced Tuesday in Helsinki.  “Withdrawing from the Ottawa Convention will give us the possibility to prepare for the changes in the security environment in a more versatile way,” he told reporters.

Just last month, Poland, Estonia, Latvia and Lithuania each announced they, too, were exiting the treaty because “Military threats to NATO member states bordering Russia and Belarus have significantly increased,” the four Baltic states said in a joint statement. “In light of this unstable security environment marked by Russia’s aggression and its ongoing threat to the Euro-Atlantic community, it is essential to evaluate all measures to strengthen our deterrence and defense capabilities,” the four nations’ defense ministers said.

Separately, Norway is restoring two of its Cold War military bunkers.  As the BBC reported: “At the peak of the Cold War, the sparsely populated, mountainous country had around 3,000 underground facilities where its armed forces and allies could hide and make life difficult for any invader.”

Israel/Gaza/Lebanon: The Israeli military on Monday issued sweeping evacuation orders covering most of Rafah, indicating it could soon launch another major ground operation in the southernmost city in the Gaza Strip.

In early March, Israel ended its ceasefire with Hamas and renewed its air and ground war. At the beginning of the month, it cut off all supplies of food, fuel, medicine and humanitarian aid to the territory’s roughly 2 million Palestinians to pressure Hamas to accept changes to the truce agreement.  It is now the longest aid blockage since the war began.

Hamas accused Israel of violating the original deal they had agreed to in January.

Israeli Defense Minister Israel Katz said the military will expand its operation in Gaza and seize “large areas” of the territory – incorporating them into what he described as “security zones.”

In a statement on Wednesday, Katz said the expanded operation aimed to “destroy and clear the area of terrorists and terrorist infrastructure,” and would require a large-scale evacuation of Palestinians.

There have been reports of extensive Israeli air strikes and shelling along the Egypt border, and there is a growing sense that a new major Israeli ground offensive is looming.

Israel has already significantly expanded a buffer zone around the edge of Gaza over the course of the war, and seized control of a corridor of land cutting through its center.

The Hostages and Missing Families Forum in Israel said they were “horrified to wake up” to the news of the expanded military operation.  In a statement, the group urged the Israeli government to prioritize securing the release of all hostages still held in Gaza.

In his statement announcing plans to seize more territory, Katz also urged Gazans to act to remove Hamas and free remaining Israeli hostages, without suggesting how they should do so.

Last weekend, the UN announced it was reducing operations in Gaza, one day after eight Palestinian medics, six Civil Defense first responders an a UN staff member were killed by Israeli forces in southern Gaza.

Friday, Israel sent soldiers into parts of northern Gaza, reiterating it wants to expand a buffer zone as it escalates operations against Hamas.

At least 27 Palestinians have been killed in an Israeli air strike in northern Gaza that was serving as a shelter for displaced families, the Hamas-run health ministry said.

The Israeli military said it struck “prominent terrorists who were in a Hamas command and control center” in the city, without mentioning a school.

The health ministry earlier reported the killing of another 97 people in Israeli attacks over the previous 24 hours, as Israel expanded its ground offensive.

In Lebanon, an Israeli airstrike in Beirut’s southern suburbs killed at least three people, Lebanon’s health ministry says, putting further pressure on a fragile ceasefire between Israel and Hezbollah.

The attack was on the Hezbollah stronghold of Dahieh.  Israel said it was targeting a Hezbollah operative who had helped Hamas plan an attack against Israeli civilians.

Lebanon’s President Joseph Aoun condemned the strike, while Lebanese Prime Minister Nawaf Salam said it was a “flagrant violation” of the ceasefire.

And Syria has strongly condemned a fresh wave of Israeli strikes on airbases and other military sites this week as an “unjustified escalation.”

The foreign ministry said the attacks almost destroyed Hama airbase and injured dozens of people.  A monitoring group reported that four defense ministry personnel were killed.

The attacks came amid reports that Turkey was moving to station jets and air defenses at Syrian airbases.

Israeli Defense Minister Katz warned Syria’s interim President al-Sharaa on Thursday that he would “pay a very heavy price” if he allowed “forces hostile to Israel” to enter the country.

Israel has carried out hundreds of strikes across Syria to destroy military assets – including jets, tanks, missiles, air-defense systems, weapons factories and research centers – since former President Assad’s regime was overthrown by rebel forces in December.

Lastly, Prime Minister Netanyahu began a visit to Hungary on Thursday, confident that Europe’s self-declared bastion of “illiberal democracy” would ignore an arrest warrant issued against him in November by the International Criminal Court.  Hungary then said it was withdrawing from the treaty that established the court in 1998.

China: I’ve been writing for weeks how China is worrisomely stepping up its military exercises around Taiwan and this Tuesday, the People’s Liberation Army appeared to have deployed its new hypersonic anti-ship missiles during the drill, in what analysts said was a signal to the U.S. against any potential interference amid the rising tensions.

Video of the YJ-21 missiles – also known as Eagle Strike-21 – were visible on board an H-6K strategic bomber seen taking off from an unidentified airfield, as posted to the PLA Eastern Theatre Command’s social media account.

The YJ-21 has an estimated range of 1,000km to 1,500km (620-930 miles) with an average speed of Mach 6.  No existing anti-missile system is capable of intercepting the YJ-21.  I imagine some U.S. commanders in the Pacific have had a few sleepless nights over this missile.  It will no doubt play a primary role in the event of any combat situation that might arise.

China said the latest military drills off Taiwan’s north, south and east coasts were a “stern warning” against separatism and called Taiwanese President Lai Ching-te a “parasite,” as Taiwan sent warships to respond to China’s navy approaching its shores.

China is practicing blockading the island, while testing forces coordination in combat, as Beijing’s Eastern Theatre Command said in a statement.  In a video from the command, China depicted Lai as a green bug cartoon figure held by chopsticks over a burning Taiwan.  If you haven’t seen it, it’s beyond appalling.

Meanwhile, Defense Secretary Pete Hegseth said the U.S. military has begun to upgrade its operations in Japan to a new “war-fighting” command, highlighting the Trump administration’s focus on China as its primary security challenge.

Speaking from Tokyo after a meeting with Japanese Defense Minister Gen Nakatani, Hegseth said: “America and Japan stand firmly together in the face of aggressive and coercive actions by the communist Chinese.”

But then we throw on excessive tariffs on Japan, which is forcing Tokyo and Seoul to begin to work with China on a new trade arrangement, as alluded to at the top. That was happening this week.

Iran: Supreme Leader Ayatollah Ali Khamenei said on Monday the U.S. would receive a strong blow if it acts on President Trump’s threat to bomb his country unless Tehran reaches a new nuclear deal with Washington.

Trump reiterated his threat on Sunday that Iran would be bombed if it does not accept his offer for talks outlined in a letter sent to Iran’s leadership in early March, giving Tehran a two-month window to make a decision.

Switzerland’s ambassador, who represents U.S. interests and acts as an intermediary between Washington and Tehran, was summoned on Monday by the Iranian foreign ministry, which expressed Tehran’s determination to respond “decisively and immediately” to any threat.

“The enmity from the U.S. and Israel has always been there.  They threaten to attack us, which we don’t think is very probable, but if they commit any mischief they will surely receive a strong reciprocal blow,” Khamenei said.

“And if they are thinking of causing sedition inside the country as in past years, the Iranian people themselves will deal with them,” he added.

“An open threat of ‘bombing’ by a head of state against Iran is a shocking affront to the very essence of international peace and security,” Foreign Ministry Spokesperson Esmaeil Baghaei tweeted on Monday.

“Violence breeds violence, peace begets peace. The U.S. can choose the course and concede to consequences.”

In his first term, Trump withdrew the U.S. from a 2015 deal between Iran and world powers that placed strict limits on Tehran’s disputed nuclear activities in exchange for sanctions relief.  Trump also reimposed sweeping U.S. sanctions.

Since then, Iran has far surpassed that deal’s limits on enriched uranium.

Separately, the Pentagon is rapidly expanding its forces in the Middle East as the U.S. military continues airstrikes against Houthi militants in Yemen and steps up its pressure on Iran, the Defense Department said Tuesday.

While Trump has threatened to bomb Iran, the aim of the additional forces could be to bolster the campaign in Yemen and deter Iran.

The buildup includes F-35 combat jets, which are joining B-2 bombers and Predator drones in the region, according to officials.

The two carrier strike groups will include cruise missile-carrying destroyers and other warships.

The campaign against the Houthis began on March 15 and has continued with daily strikes around the Yemeni capital of San’a and other locations, targeting the group’s leaders and military assets.

On Tuesday, the Houthis claimed to have shot down a Reaper done. The Pentagon declined to comment.  There were then reports today that the Houthis shot down another Reaper.

The costs for the operation against the Houthis are soaring, and the use of precision munitions is draining the U.S. stockpile, which, for one, could hamper a U.S. defense of Taiwan.

South Korea: The Constitutional Court ousted President Yoon Suk Yeol over his short-lived declaration of martial law, clearing the way for a snap vote to elect a new president who will contend with deep divisions at home and rising friction with the U.S.

The Constitutional Court’s eight judges voted unanimously in favor of upholding the impeachment of Yoon by the country’s legislature.  Yoon, who did not attend Friday’s hearing, cannot appeal the ruling.

The court rejected Yoon and his lawyers’ claim that martial law was an act of governance, not an impeachable offense or crime.

The challenges faced by Yoon “must be resolved through political, institutional and judicial means – not by mobilizing the military,” said Moon Hyung-bae, acting chief of the eight-judge court.

An election must now be held within 60 days.  The clear front-runner is opposition head Lee Jae-myung of the left-leaning Democratic Party, a popular though divisive politician who survived a brutal knife assault last year.  The ruling conservatives remain bitterly divided over Yoon’s actions and have yet to agree on a candidate.

Turkey: Hundreds of thousands of pro-democracy demonstrators returned to the streets of Istanbul last Saturday to show support for the city’s jailed mayor.  I watched the demonstration on BBC News and the crowd was truly mammoth.

The chairman of Mayor Ekrem Imamoglu’s Republican People’s Party (CHP) addressed demonstrators, reading out a letter from the jailed politician who is being held in solitary confinement.

“I have no fear, you are behind me and by my side. I have no fear because the nation is united. The nation is united against the oppressor,” Imamoglu said in the letter.

Imamoglu has served as Istanbul’s mayor since 2019 and won a resounding victory in mayoral elections last year.

He has been named as the CHP’s candidate for the presidential election due in 2028 and is widely viewed as the only politician capable of challenging Erdogan and his Justice and Development Party at the ballot box.

President Erdogan has been in power for more than two decades, first as prime minister and then as president from 2014.  He cannot run again for the presidency after 2028 – unless he changes Turkey’s constitution.

Saturday’s protest was peaceful but other demonstrations have turned violent and police have arrested nearly 2,000, including some journalists who were covering the protests.

There are concerns Imamoglu will not face a free and fair trial when his case is heard in court.

Random Musings

--Presidential approval ratings....

Gallup: 43% approve of President Trump’s job performance, while 53% disapprove.  35% of independents approve (Mar. 3-16). 

Rasmussen: 49% approve, 50% disapprove (April 4).

A new CBS/YouGov survey (March 27-28), had Trump with a job approval rating of 50%, 50% disapproving, a tick lower than a prior 51-49 survey had it.

But on the issues...64% said the Trump administration was not focusing enough on lowering prices.

On the question, are Trump’s policies making you financially ‘better off’ or ‘worse off’....

In January, 42% said better off.  Now it is 23%.  In January, 28% said his policies were making them worse off.  Today that is 42%.

Should Federal Judges be allowed to review Trump’s policies?

‘Should’...Democrats 93%, Independents 81%, Republicans 56%.

On Trump’s efforts to cut staff at government agencies...

50% approve, 50% disapprove

The Signal messaging App matter is....

44% very serious
31% somewhat serious
25% not too/at all serious

Trump having U.S. take control of Greenland....

33% approve, 67% disapprove

A new Associated Press-NORC Center for Public Affairs Research poll has President Trump with a 42% approval rating, 56% disapproval; independents at 33-62.

On the question of whether the country is on the right or wrong direction, 38% said ‘right,’ up from 27% in January (Jan. 9-13...pre-inauguration).  Sixty-one percent said ‘wrong’ direction, down from 72% prior.

On the economy, 29% say it is ‘good,’ 70% ‘poor,’ which is down from a 32-67 split back in December.

On President Trump’s handling of immigration, 49% say it’s ‘good,’ 50% ‘poor.’

Elon Musk is viewed favorably by just 36%, while 55% view him unfavorably.

A new Reuters/Ipsos survey, released Wednesday, has President Trump’s approval rating falling to 43%, down from 47% approval shortly after he took office on January 20.

--The most expensive judicial battle in U.S. history unfolded in Wisconsin, Tuesday, as voters went to the polls to cast their ballots on whether the state’s Supreme Court could retain its liberal majority.

The race drew more than $90 million in funding – including over $22 million from Elon Musk and groups affiliated with him – as it turned into a proxy war over the president’s agenda.

It was Susan Crawford, the liberal judge, facing off against Brad Schimel, a conservative judge and former Republican state attorney general.

The Wisconsin Supreme Court will determine the future of abortion rights in the state and is considering a case on an 1849 law that has been broadly viewed as banning nearly all abortions, along with one that asks whether the state’s constitution guarantees a right to abortion.

Redistricting is another big issue, with the current map giving Republicans six of the state’s eight seats.

A lawsuit involving Tesla could also eventually end up at the Wisconsin Supreme Court.

On Sunday evening, Musk handed out $1 million checks to two Wisconsin voters in an effort to help conservatives win the election.

And the winner is.... Crawford, 55%-45%, a bitter defeat for both Trump and Musk.

--And then there were the two special elections in Florida, two House races to replace former Congressmen Matt Gaetz and Mike Waltz.

In the 1st District, won by Gaetz 66%-34% in 2024, Republican Jimmy Patronis defeated Democrat Gay Valimont 57%-42%, Donald Trump having won the district by 68%-31% in 2024.

In the 6th District, won by Mike Waltz 67%-33% in 2024, Trump taking it 64%-34%, Republican Randy Fine defeated Democrat Josh Weil, 57%-43%.

Kind of obvious there was some backlash against President Trump...much narrower margins.

These two seats are safe for 2026, but Democrats can take heart, nationally, including from the Wisconsin win.

Speaker Mike Johnson now has a 220-113 margin in the House once Patronis and Fine are seated.

--Democratic Senator Cory Booker (N.J.) held the Senate floor with a marathon speech that lasted all Monday night and into Tuesday evening, setting a historic mark to show Democrats’ resistance to President Trump’s sweeping actions.

Booker took to the Senate floor on Monday evening, saying he would remain there as long as he was “physically able.”  More than 24 hours later, the 55-year-old former college football player at Stanford was still going, setting the record for the longest continuous Senate floor speech in the chamber’s history, though Booker was assisted by fellow Democrats who gave him a break from speaking by asking him questions on the Senate floor.

It was a rather remarkable feat, with Booker breaking a record set 68 years ago by then Sen. Strom Thurmond of South Carolina, a segregationist, to filibuster the advance of the Civil Rights Act in 1957.

Booker centered his speech on a call for his party to find its resolve, saying, “We all must look in the mirror and say, ‘We will do better.’

“These are not normal times in our nation,” Booker said as he began the speech Monday evening.  “And they should not be treated as such in the United States Senate.  The threats to the American people and American democracy are grave and urgent, and we all must do more to stand against them.”

Senate rules mandated he stand the whole time, and he appears to have had nothing more than a couple glasses of water to sustain him.  Yet his voice stayed strong.

A few more people in the country now know who he is, should he decide to run for president in 2028 (or be a good Veep pick).

[Because this wasn’t formally a ‘filibuster’ of a piece of language, Thurmond would still have that record.]

--Last Friday, President Trump said that the U.S. was going to help with the response to Southeast Asia’s catastrophic earthquake. But the effects of his administration’s deep cuts to foreign assistance through the U.S. Agency for International Development and the State Department are being tested in any response to the first big natural disaster of his second term.

China and Russia quickly rushed teams into Myanmar, Vietnam sent 100 people, and the U.S. had just a handful in country, as of early this week.  We’ll see how this develops, the death toll soaring.

The military regime fired on a Chinese Red Cross convoy trying to deliver food and medicine to desperate survivors, highlighting the dangers aid groups face from the country’s ongoing civil war.  Armed rebel groups said the military has launched scores of airstrikes since Friday’s 7.7-magnitude temblor.

Senior Gen. Min Aung Hlaing, the chief of Myanmar’s junta, said in a statement on Tuesday night that military operations will continue as “necessary protective measures” despite the earthquake.

The junta then declared a unilateral, temporary ceasefire on Wednesday to facilitate rescue efforts, the death toll rising to over 3,100.

The death toll in Thailand was 22, with 72 missing.

--A new study found the shingles vaccination cut older adults’ risk of developing dementia over the next seven years by 20%.

The research, published Wednesday in the journal Nature, is part of growing understanding about how many factors influence brain health as we age – and what we can do about it.

“It’s a very robust finding,” said lead researcher Dr. Pascal Geldsetzer of Stanford University.  And “women seem to benefit more,” important as they’re at higher risk of dementia.

The study tracked people in Wales who were around 80 when receiving the world’s first-generation shingles vaccine over a decade ago.  Now, Americans 50 and older are urged to get a newer vaccine that’s proven more effective against shingles than its predecessor.

The virus “is a risk for dementia and now we have an intervention that can decrease the risk,” said Dr. Maria Nagel of the University of Colorado Anschutz Medical Campus, who studies viruses that infiltrate the nervous system.

I got my shingles vaccine in the past year. 

--Storms across the United States, particularly the Midwest and South, killed at least five early in the week, including three children in Michigan who died when a tree fell on their minivan, Sunday.

Wednesday/Wednesday night, at least seven more were killed across the Midwest and South and then flooding became a big story.  Tornadoes were reported overnight in Mississippi, Arkansas, Illinois, Kentucky, Missouri and Tennessee. A good friend who lives in the Nashville area said Wednesday night was a bit horrifying, the tornado warning siren blasting for three hours straight. 

--According to the New York Post, violent crime in New York City has nosedived in the early months of 2025 under new NYPD Commissioner Jessica Tisch’s no-nonsense leadership.

Murders dropped to 63, compared to 96 in the first quarter of last year – whopping 35% decrease, according to sources.

There have been 140 shootings, with 164 victims, so far this year – a 23% dip from the same period in 2024, the data showed.

If the Big Apple stays on this trajectory, New Yorkers could see the lowest number of murders and shootings on record in nearly a decade – since 2017, when there were 267 murders and 2018, when there were 754 shootings.

“Tisch is running this like a business, and the bottom line is crime reduction,” a Manhattan detective said.

Meanwhile, a judge on Wednesday dismissed federal corruption charges against Mayor Eric Adams, ending the first criminal case against a New York City mayor in modern history and underscoring how President Trump’s Justice Department is using prosecutorial power to advance his agenda.

In his ruling, the judge, Dale E. Ho of Federal District Court in Manhattan, refused to allow the government to keep open the option of reinstating the charges, as Trump’s Justice Department had sought.  DOJ officials had said that the prosecution was hindering Adams’ assistance with the administration’s mass deportation plans.

“Everything here smacks of a bargain: Dismissal of the indictment in exchange for immigration policy concessions,” the judge wrote in his 78-page decision.

The case had been set for trial this month.

Adams then announced Thursday that he will not seek the Democratic nomination for mayor – instead pushing his chips on a longshot run as an independent candidate.

“More than 25,000 New Yorkers signed my Democratic primary petition, but the dismissal of the bogus case against me dragged on too long making it impossible to mount a primary campaign while these false accusations were held over me,” Hizzoner said.

--I learned this afternoon that Theodore McCarrick, the former cardinal and spiritual leader of the Catholic Archdiocese of Washington (and Newark, NJ, before then) who, more than a decade into retirement, was expelled from the priesthood after the church found him guilty of sexual abuse – died at 94.

For years I was proud to display a cherished picture of the two of us in Rome, February 2001, after he was appointed to the College of Cardinals.  We had communicated over the years and then I got the special invitation to attend the Consistory because of my contact with Avery Cardinal Dulles, who was appointed at the same time (and I have a terrific picture of the two of us as well).

But years later came the revelations about McCarrick, and I stopped displaying the photo.

--New Jerseyans (and Pennsylvanians and New Yorkers) learned this week that a large stretch of I-80 won’t be reopened for both east and westbound traffic until perhaps May, as transportation officials have discovered yet another “void,” potential sinkhole, under the highway.

This situation has been ongoing for months.  We need to find some Romans...they knew how to build roads that lasted, like the Appian Way.

--A key date for measuring California’s snow and water season is April 1, when researchers push their trusty tubes down into the snow covering the Sierra Nevada mountains to see how much accumulated just as the wet season peaks.

And it was a solid winter, with a near-average 96% snowpack, including 118% of average in the northern Sierra Nevada.

This sets up the Golden State for a third straight year of ample water supplies in the mountains after three years of historic drought.  California’s snowpack provides almost a third of the state’s water supply.

Northern California saw more snow and wetter conditions that helped push statewide precipitation to 103% of average for this time of year.

But in Southern California, the vast majority of coastal counties from Santa Barbara to San Diego are experiencing “severe drought” conditions.  Many inland communities are in “extreme drought.”

Major state reservoirs have reached 117% of average level, thanks to back-to-back-to-back wet years; more water, at least in the short term, being allotted to farms and communities in Central and Southern California. [Los Angeles Times]

---

Pray for the men and women of our armed forces...and all the fallen.

Our prayers go out to the families, and the U.S. Army, over the death of four soldiers who died during a training exercise in Lithuania last week, their bodies then being recovered after a long search.

The M88A2 Hercules armored vehicle they were in while conducting a maintenance mission to recover another Army vehicle at a training area, sank into a peat bog, 15 feet underwater and in heavy mud.  It was an incredible effort, with literally hundreds of soldiers involved not just from the U.S. military, but also Lithuania and Poland’s, as well as a U.S. Navy dive crew, to recover the vehicle out of bog...and then the bodies. 

Truly heroic. It was also touching to see thousands in Lithuania attending a funeral Thursday for the four Americans before their bodies were flown home.

Slava Ukraini.

God bless America.

---

Gold $3050...after hitting a new high over $3160 earlier
Oil $62.57

Bitcoin: $84,000 [4:00 PM ET, Friday]

Regular Gas: $3.26; Diesel: $3.64 [$3.56 - $4.03 yr. ago]

Returns for the week 3/31-4/4

Dow Jones  -7.9%  [38314]
S&P 500  -9.1%  [5074]
S&P MidCap  -9.1%
Russell 2000  -9.9%
Nasdaq  -10.0%  [15587]

Returns for the period 1/1/25-4/4/25

Dow Jones  -9.9%
S&P 500  -13.7%
S&P MidCap  -15.1%
Russell 2000  -18.2%
Nasdaq  -19.3%

Bulls 28.8
Bears 28.8...don’t see this often.  Back on Feb. 18, the spread was 49.2 / 25.4.

Hang in there.

Brian Trumbore

 

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