Week in Review

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Week in Review

04/12/2025

For the week 4/7-4/11

[Posted 4:30 PM ET, Friday]

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Edition 1,355

Just another depressing week on Planet Earth.  I realize there are a lot of folks in America who don’t care about how the rest of the world views us, because, frankly, the intellectual curiosity of Americans has been drying up for years.

But for those who do care, you recognize that the world we have known for generations has changed.  For the worse, in the span of weeks. 

In an interview with CNBC this morning, BlackRock CEO Larry Fink summed it up perfectly.  Since World War II, the United States has been seen as the “global stabilizer.”  Today, we are the “global destabilizer.”

I saw a poll this week of the perception of the U.S. in Germany, an ally.  The survey, conducted by ARD’s DeutschlandTrend, showed 16% of respondents considered the U.S. to still be a trustworthy partner, down 38 percentage points from October.  Three-quarters of Germans believe their country cannot trust the United States.  And this poll was conducted in late February!

Anti-Americanism around the world is soaring.  I don’t need data to understand that.  Why would you buy American these days?  I feel for companies like McDonald’s and Starbucks who will feel the backlash quickly.  Apple? That’s a different story.  I could show you columns from ten+ years ago where I said they were playing with fire in their reliance on China.

As Gerard Baker notes below in an important piece, “we are witnessing the greatest exercise in brand destruction in history”.  The damage is real and long-lasting.

And it’s all so freakin’ senseless.

After President Trump’s U-turn on tariffs Wednesday, I watched the opening of “Hannity” on Fox and Sean opened with lines like “The Art of the Deal,” “a huge win for the President,” “huge win for the country.”  “This is what America First looks like.”

Thursday, Hannity opened with, “President Trump is wrapping up one win after another.”

Well, Trump himself posted on Truth Social this morning:

“We are doing really well on our TARIFF POLICY.  Very exciting for America, and the World!!!  It is moving along quickly. DJT”

Exciting for the World?!  This is nuts.

But what else was on Trump’s mind this morning?

“The House and Senate should push hard for more Daylight at the end of a day.  Very popular and, most importantly, no more changing of the clocks, a big inconvenience and, for our government, A VERY COSTLY EVENT!!! DJT”

DJT would have been so much better off, and the world, if he had spent his first few month’s laser-focused on his tax cut extension and deregulation original agenda, while freezing government employment for two years and leaving it up to the budget process to take on spending inside individual departments (and this is where Elon Musk could have offered his input).  I wrote that in the very beginning.  A two-year hiring freeze results in a federal workforce reduction of 10-12%, just through attrition and retirements.  But we know why Trump didn’t go down this path.

And then we have the war the president said he could solve in a day.  Trump posted this morning:

“Russia has to get moving. Too many people are DYING, thousands a week, in a terrible and senseless war – A war that should have never happened, and wouldn’t have happened, if I were President!!!”

But while the president puts a tariff on Switzerland, and Lesotho, any punishment for Russia?  Nyet.

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So to go back to last week, the two-day carnage of Thursday and Friday was the fourth largest two-day move since the Second World War, as former Treasury Secretary Larry Summers noted on various weekend shows.  The other three were the 1987 crash, the 2008 financial crisis, and the pandemic.  “A drop of this magnitude signals that there’s likely to be trouble ahead, and people ought to just be very cautious,” he added.

David J. Lynch / Washington Post (last weekend):

“The tariff barrage that President Donald Trump unleashed this week on the world economy marks a decisive end to an era of freewheeling globalization that was shaped by American policymakers, business executives and consumers.

“The United States is now abandoning they system that made it rich and powerful, gambling that it can become more prosperous by waging a global trade war on friend and foe alike.

“Trump’s new protectionism breaks with international economic policies that were pursued by more than a dozen American presidents as the nation grew into a superpower that boasted a $30 trillion economy, the world’s largest and most innovative.

“ ‘This is a historical moment.  Even if there is paddling back by the administration and even if negotiations start to soften the edges, this is the nail in the coffin of globalization,” said Carmen Reinhart, a former chief economist of the World Bank and now a professor at Harvard University’s John F. Kennedy School of Government....

“The globalization that Trump decries for having ‘ripped off’ Americans, in fact, produced remarkable benefits. It lifted 1.5 billion people in the developing world out of crushing poverty, according to the International Monetary Fund. In the U.S., it produced millions of well-paying jobs, made available a wider array of goods and long kept a lid on inflation.

“The nation grew wealthier. The economy more than doubled in size after the North American Free Trade Agreement, which joined the U.S., Canada and Mexico in a trading zone, took effect in 1994.

“ ‘I’m old enough to remember when fruit was seasonal,’ said economist Michael Strain, of the American Enterprise Institute.  ‘I’m not eager to go back to that world.’

“But there were real problems, too.  Workers in basic manufacturing, those with the fewest skills and least education, were hurt.  Labor unions blamed trade deals like NAFTA for encouraging corporations to move their factories abroad to take advantage of laborers who earned perhaps one-tenth of American wages.”

President Trump on Truth Social, Sat. morning:

“China has been hit much harder than the USA, not even close.  They, and many other nations, have treated us unsustainably badly.  We have been the dumb and helpless ‘whipping post,’ but not any longer. We are bringing back jobs and businesses like never before. Already, more than FIVE TRILLION DOLLARS OF INVESTMENT, and rising fast!  THIS IS AN ECONOMIC REVOLUTION, AND WE WILL WIN. HANG TOUGH, it won’t be easy, but the end result will be historic.  We will, MAKE AMERICA GREAT AGAIN!!!”

Editorial / Wall Street Journal

“President Trump’s across-the-board tariffs will change the world order in many ways, and one winner is already emerging: Xi Jinping.  The Chinese President has had an excellent week....

“(China’s) authoritarian system means Mr. Xi probably can ride out whatever political or social pain might result from higher unemployment or slower economic growth in a trade war. Congressional Republicans have to face voters in 18 months following whatever fallout comes from Mr. Trump’s tariffs.  It’ll help that Mr. Xi can rally nationalist sentiment against the U.S.

“What a fabulous change in fortunes for the Chinese leader.  Mr. Trump has taken an ax to the economic cords that were binding the rest of the world into an economic and strategic bloc to rival Beijing – and at precisely the moment many countries finally were starting to re-evaluate their economic relationships with China....

“Japan and South Korea, crucial U.S. partners in North Asia, were slapped with tariffs of 24% and 25%. Anti-Americanism remains a potent political force in many of these places, and expect the sentiment to grow.  Beijing with its giant market is an alternative.

“Ditto in Europe, where the 27 countries of the European Unio face a 20% tariff....

“The U.S. has devoted years of diplomacy to discouraging European countries from economic overreliance on China.  This finally was starting to pay off in greater European skepticism of closer ties with Beijing.  Now it’s only a matter of time before the trade missions to China from France, Germany and elsewhere pick up again.

“Canadian Prime Minister Mark Carney summed up the global mood; ‘Our old relationship of steadily deepening integration with the United States is over.’  Noting the end of an 80-year period of American economic leadership, Mr. Carney added: ‘While this is a tragedy, it is also the new reality.’

“Mr. Xi and his Communist comrades have long believed the West is weak, divided and in retreat.  He will see this week as confirmation, and he won’t have to do much to exploit those divisions.”

On Sunday’s talk shows, administration officials reinforced the talking points that broad tariffs were a necessary reset, emphasizing that 50 countries wanted to talk.

Treasury Secretary Scott Bessent brushed aside worries about the longer-term effects of tariffs, telling NBC’s “Meet the Press,” “I see no reason that we have to price in a recession... This is an adjustment process,” Bessent said.  “We’re gonna hold the course.” 

From the U.S. perspective, other countries “have been bad actors for a long time,” Bessent said, adding that the issues could not be negotiated away in a matter of days or weeks.

“We’re going to have to see what the countries offer and if it’s believable,” he said.  “I think we are going to have to see the path forward.”

Bessent said Trump had maximized leverage on the tariff issue. As to whether he would negotiate to lower tariffs, which could inject some calm in markets, Bessent said it depends on what the countries offer.  Commerce Secretary Howard Lutnick told CBS tariffs would be in place for days and weeks.

National Economic Council Director Kevin Hassett told ABC’s “This Week” that Trump wasn’t deliberately crashing stock markets to convince the Federal Reserve to cut interest rates, though Trump was suggesting such action in social media posts over the weekend.

On Air Force One Sunday night, returning to the White House from Mar-a-Lago, President Trump appeared to close the door to another avenue of relief, as he told reporters on board that the U.S. is not willing to make a deal with China unless the trade deficit of $1 trillion is resolved.

Trump also said, “Sometimes you have to take medicine to fix something.”

“What’s going to happen with the market?  I can’t tell you,” Trump said.  “But I can tell you, our country has gotten a lot stronger, and eventually, it’ll be a country like no other.”

When pushed by a reporter whether there’s a level of pain in the stock market that he’s unwilling to tolerate.

“I don’t want anything to go down, but sometimes you have to take medicine to fix something,” Trump said.  “We have been treated so badly by other countries because we had stupid leadership that allowed this to happen. They took our businesses, they took our money, they took our jobs, they moved it to Mexico, they moved it to Canada, they moved a lot of it to China.”

Trump said: “I spoke to a lot of leaders [over the weekend] – European, Asian from all over the world. They’re dying to make a deal. But I said we’re not going to have deficits with your country. We’re not going to do that because, to me, a deficit is a loss.”

Sunday night Trump posted on Truth Social:

“We have massive Financial Deficits with China, the European Union, and many others. The only way this problem can be cured is with TARIFFS, which are now bringing Tens of Billions of Dollars into the U.S.A. They are already in effect, and a beautiful thing to behold.  The Surplus with these Countries has grown during the ‘Presidency’ of Sleepy Joe Biden.  We are going to reverse it, and reverse it QUICKLY.  Some day people will realize that Tariffs, for the United States of America, are a very beautiful thing!”

Overnight Sunday, Eastern Time, Asian markets collapsed. 

Hong Kong’s Hang Seng -13%...worst day since 1997
Shanghai Composite -7%
Tokyo Nikkei -8%

China’s People’s Daily, the Communist Party’s official newspaper, published a front-page commentary on Monday that explained the rationale behind the Chinese government’s decision to strike back at President Donald Trump’s “reciprocal tariffs.”

The editorial said the country would “resolutely” focus on its domestic homework in a bid to turn challenges from the White House’s tariff measures into a strategic opportunity while signaling a battery of potential policy tools to mitigate shock waves on the world’s No. 2 economy from heightened trade tensions with the United States.

China was the first major U.S. trade partner to hit back against Trump’s “Liberation Day” tariffs, stoking concerns about further return fire from Washington.

America’s “abuse” of tariffs would impact China but “the sky will not fall,” said the article, which was first published on the People’s Daily app on Sunday.

“A decline in U.S.-bound exports will not lead to a disruptive impact on (our) overall economy,” it said.

The commentary argued that China’s economy was stabilizing and improving, which gave the country the confidence and a foundation to counter U.S. tariff shocks.

“In the face of the U.S.’ capricious moves and extreme pressure, we have not closed the door to negotiations but also harbor no illusions.  We are fully prepared for any shocks,” it said.

“Unity of purpose leads to victory and weathering storms together brings prosperity,” the official publication added.

But Trump on Air Force One Sunday said he was “not going to make a deal” with China unless the “hundreds of billions of dollars” trade gap between the world’s two largest economies was solved.

Before the market opened Monday morning, JPMorgan Chase CEO Jamie Dimon issued his annual shareholder letter, which was closely followed given last week’s rout.  Dimon expressed concerns about how the tariffs would impact America’s long-term economic alliances.

“The economy is facing considerable turbulence (including geopolitics), with the potential positives of tax reform and deregulation and the potential negatives of tariffs and ‘trade wars,’ ongoing sticky inflation, high fiscal deficits and still rather high asset prices and volatility,” Dimon wrote.

Dimon has run the largest U.S. bank for 19 years and is one of the most prominent voices in corporate America.

“We are likely to see inflationary outcomes... Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth.”

JPMorgan’s economists raised the risk of a U.S. and global recession this year to 60% from 40% after Trump unveiled his tariffs a week ago Wednesday. 

Dimon noted the potential for retaliation by other countries and said tariffs could affect economic confidence, investments, capital flows, corporate profits and the dollar.

“The quicker this issue is resolved, the better because some of the negative effects increase cumulatively over time and would be hard to reverse,” the CEO wrote.

Expectations for modest U.S. growth, known as a soft landing, could also be derailed.

“We enter this time of uncertainty with high equity and debt prices, even after the recent decline...markets still seem to be pricing assets with the assumption that we will continue to have a fairly soft landing. I am not so sure,” Dimon wrote.

Dimon concluded: “America First is fine, as long as it doesn’t end up being America Alone.”

Dimon’s comments came after billionaire fund manager Bill Ackman, who endorsed Trump’s run for president, said the U.S. leader should pause his trade war, specifically calling for a 90-day pause on tariffs, warning Trump is “losing the confidence of business leaders around the globe,” Ackman adding markets could be headed for a self-inflicted “economic nuclear winter.” 

Veteran investor Stan Druckenmiller said he does not support tariffs exceeding 10%, in a rare post on X.

Traders continued to believe the Federal Reserve will come to the rescue, pricing in five quarter-point rate cuts this year. 

Monday morning...Trump on Truth Social:

“Oil prices are down, interest rates are down (the slow moving Fed should cut rates!), food prices are down, there is NO INFLATION, and the long time abused USA is bringing in Billions of Dollars a week from the abusing countries on Tariffs that are already in place. This is despite the fact that the biggest abuser of them all, China, whose markets are crashing, just raised its Tariffs by 34%, on top of its long term ridiculously high Tariffs (Plus!), not acknowledging my warning for abusing countries not to retaliate. They’ve made enough, for decades, taking advantage of the Good OL’ USA!  Our past ‘leaders’ are to blame for allowing this, and so much else, to happen in our Country.  MAKE AMERICA GREAT AGAIN!”

Later Monday morning...Trump on Truth Social:

“Yesterday, China issued Retaliatory Tariffs of 34%, on top of their already record setting Tariffs, Non-Monetary Tariffs, Illegal Subsidization of companies, and massive long term Currency Manipulation, despite my warning that any country that Retaliates against the U.S. by issuing additional Tariffs, above and beyond their already existing long term Tariff abuse of our Nation, will be immediately met with new and substantially higher Tariffs, over and above those initially set. Therefore, if China does not withdraw its 34% increase above their already long term trading abuses by tomorrow, April 8th, 2025, the United States will impose ADDITIONAL Tariffs on China of 50%, effective April 9th.  Additionally, all talks with China concerning their requested meetings with us will be terminated!  Negotiations with other countries, which have also requested meetings, will begin taking place immediately.  Thank you for your attention to his matter!”

[The president has stopped using three exclamation points to end his posts!!!]

Across the pond in Europe, the major averages finished Monday way down....

Stoxx Europe 600 -4.5%
London FTSE -4.4%
Frankfurt DAX -4.1%
Paris CAC -4.8%

Stocks in the U.S. then stabilized, the Dow and S&P 500 falling marginally, the Nasdaq rising a bit by the end of Monday’s market close.  But not before some major volatility, including a social media post around 10:10 a.m. in New York: “HASSETT: TRUMP IS CONSIDERING A 90-DAY PAUSE IN TARIFFS FOR ALL COUNTRIES EXCEPT CHINA,” the headline read, in an apparent reference to words from the National Economic Council’s Kevin Hassett.

Wall Street’s high-frequency trading strategies that react to headlines in seconds can impact asset prices wildly.  Stock indexes soared.  After trading Monday morning as much as 4.7% lower early in the session, the S&P 500 rose to trade up 3.4% in an intraday reversal.

Thirty minutes later, at 10:40 a.m., the gains had been wiped out after the White House quickly denied that such a pause was being discussed. The rest of the day the markets then settled some.

The origin of the report remained unclear, but the headline was circulating on social media by 10:13 a.m., when a widely followed X account known as Walter Bloomberg posted it.  But it’s an anonymous account...with one million followers.  The account isn’t associated with Bloomberg News, nor did the headline come from Bloomberg’s newswires.

Speaking from the White House Monday, where he hosted Israeli Prime Minister Benjamin Netanyahu, President Trump rejected a European Union proposal to drop tariffs on all bilateral trade in industrial goods with the U.S., meaning that his 20% tariff on all EU imports is due to come into force Wednesday.

Trump said the offer from European Commission President Ursula von der Leyen is not enough to reset the transatlantic trading relationship, accusing the EU of maintaining other barriers to trade.

“The European Union has been very bad to us,” he said.  “We’re paying them to guard them militarily and they are screwing us on trade, so that’s not a good combination.”

Trump said: “The EU has been very tough over the years. I always say it was formed to really do damage to the United States on trade.  That’s the reason it was formed. It was formed with all of the countries of Europe, I guess most of ‘em. And it was formed to create a little bit of a monopoly situation, to create a unified force against the United States for trade.”

EU trade officials have been trying to calibrate their response.  On Monday, the commission dropped plans for a 50% retaliatory tariff on American whiskey as part of a separate dispute over Trump’s decision last month to put levies on aluminum and steel imports.  Instead, the bloc’s executive arm is proposing tariffs on a variety of U.S. goods that includes motorcycles, pleasure boats, household appliances, safety glass, tobacco, poultry and other agricultural products.

But there are disagreements on putting a tariff on whiskey after Trump threatened to introduce a 200% tariff on European wine and champagne producers in response.

Speaking at an event at the University of Miami Monday, Billionaire investor Ken Griffin said Trump’s latest tariffs amount to a hefty tax on families and are a “huge policy mistake” by the administration.

It isn’t right to tell a middle-class or economically challenged family making $50,000 a year “it’s going to cost you 20%, 30%, 40% more for your groceries, for your toaster, for a new vacuum cleaner, for a new car,” Griffin said.  “Even if the dream of jobs coming back to America plays out, that’s a 20-year dream.  It’s not 20 weeks.  It’s not two years.  It’s decades.”

Griffin is a Republican mega-donor – giving at least $100 million to pro-Republican political action committees in the last presidential cycle, according to data from OpenSecrets, although none of that money went to support Trump’s campaign.

Griffin added: “We have led the world for 70 to 80 years.  I am really afraid of us abdicating our role of leadership for the free world. That’s the path we’re on.”

Also Monday, in an interview with the Economic Club of New York BlackRock Inc. CEO Larry Fink said most CEOs he talks to think the U.S. is in a recession, warning that stock markets could decline further as Trump’s tariff policies destabilize the world economy.

“The economy is weakening as we speak,” said Fink, adding that he foresees more of an economic slowdown in the coming months.

Inflation is likely to be elevated, Fink said, casting doubt on the Federal Reserve cutting rates multiple times this year.  As an example of worries spiking, Fink said he’s already heard from airline executives about the decline in travel demand.

“Most CEOs I talk to would say we are probably in a recession right now,” Fink said.

But...Fink also said: “I would say in the long run, this is more of a buying opportunity than it is a selling opportunity.  That doesn’t mean we can’t fall another 20% from here, too.”

Tuesday morning, Beijing time, China pledged to retaliate against Trump’s latest tariff threats and stepped up efforts to support the market, raising the risk of a prolonged trade war.

“The U.S. threat to escalate tariffs on China is a mistake on top of a mistake,” the Chinese Ministry of Commerce said in a Tuesday statement.  “If the U.S. insists on its own way, China will fight to the end.”

The escalation in tensions makes any imminent call between Trump and President Xi less likely.  Trump hasn’t spoken with Xi since returning to the White House, the longest a U.S. president has gone without talking to his Chinese counterpart post-inauguration in 20 years.

China’s additional 50% tariffs took effect midnight Tuesday, Eastern time, meaning a total import tax of 104 percent on all Chinese goods.

Gerard Baker / Wall Street Journal

“When I worked in Tokyo in the 1990s, a Japanese colleague told me a story about her father’s defining experience with Americans.

“In the days after Japan surrendered at the end of World War II, he was a young boy living in a small town.  As American troops moved to occupy the country, the mood was one of panicked terror. The Japanese had been told by their leaders that the victorious Americans would murder, rape and pillage just as their own troops had treated their defeated enemies – though of course the Japanese people didn’t know that.

“Eventually American trucks rolled through the town and he and his family cowered indoors, awaiting the inevitable savagery. They watched as GIs jumped down from their vehicles and began placing heavy boxes on the street. At first they assumed the boxes contained some terrible weapon – poison gas perhaps, or booby-trapped bombs – but when the troops were gone and the boxes remained, some of the more curious and braver kids ventured out and began opening them. Inside were layers and layers of chocolate bars, candy, and other treats the near-starving Japanese had not seen in years.

“The memory lived with him his whole life, and the story moved me greatly, as I have traveled across the world and become a proud American myself.  It is one small vignette of how the U.S. has used not only the power of its economic and military strength to advance its interests but the awesome force of its values, the example of its commitment to human dignity, freedom and justice.  As a picture of soft power it is all the more vivid because it came just weeks after the U.S. had undertaken the most terrifying demonstration of hard power in history, incinerating tens of thousands of those same Japanese whose children were now being saved by the American military.

“Getting this balance between hard and soft power right was probably the greatest achievement of American leadership in the long peace that followed that war.  I worry that in our brave new world of American strategy we are on the way to destroying it.

“America’s reputation, built on its ideals and burnished over centuries, is the greatest geopolitical brand ever created.  But as someone put it to me this past week, we may be witnessing the greatest exercise in brand destruction in history.  Brands have real value. It isn’t always easy to calculate, but businesses from BlackBerry to Bud Light know when they have lost it. Destroying geopolitical brand value can be devastating too....

“Allies – staunchly pro-American friends from Canada to Denmark to Poland – are sullen, angry and scared. Adversaries who have long envied our power and tried unsuccessfully to undermine it, are hugging themselves with joy....

“Tariffs on Switzerland, a country that has, in effect, no import duties? Singapore? What are we doing punishing Korea and Japan with duties based on a calculation that isn’t based on tariffs or other barriers to trade?  Add to that the duties on those hapless penguins of the Australian territory of Heard Island and McDonald Islands, and we look not only mean but stupid.

“The same goes for foreign policy....

“Mr. Trump may find all this in-your-face diplomacy satisfying now.  But casting off America’s reputation as a place that reveres freedom, dignity and the rule of law will harm the brand – and not just in the long term.

“The Romans had a saying: Let them hate us as long as they fear us. But part of our superpower has derived from being admired too. In the end, as the Romans discovered, you don’t want to be around when they still hate you but they no longer fear you.”

Tuesday night, speaking at the National Republican Congressional Committee (NRCC) Dinner in Washington, D.C., the president boasted that he had the “most successful 100 days in the history of this country,” despite the slumping stock market and plummeting economy. “I believe that’s right,” Trump added of his alleged achievement.

During his dinner speech, Trump also mocked other countries apparently pleading to negotiate. “‘Please, sir, make a deal.  I’ll do anything.  I’ll do anything, sir.’  And then I’ll see some rebel Republican – you know, some guy that wants to grandstand say, ‘I think that Congress should take over negotiations.’  Let me tell you, you don’t negotiate like I negotiate,” he continued, seemingly alluding to negotiations still being on the table despite mixed messaging from his administration on the tariffs’ permanency over the past week.

On to Wednesday, and in the morning, President Trump posted twice on Truth Social prior to and as the market opened.

“Be COOL! Everything is going to work out well. The USA will be bigger and better than ever before!”

“THIS IS A GREAT TIME TO BUY!!! DJT”

‘DJT’ the symbol for his media company.

Early in the morning, Treasury Secretary Bessent told bankers “We are in pretty good shape on the economy.”  This came after JPMorgan Chase CEO Jamie Dimon said he thinks a recession is a likely outcome from President Trump’s tariffs.  Asked on Fox Business Wednesday morning if he expects a recession, he said, “I am going to defer to my economists at this point but I think probably.”

Dimon added markets were correctly pricing uncertainty.  “I do think fixing these tariff issues and trade issues would be a good thing to do,” he said.  “We have the strongest economy in the world.  It would be good not to add to the uncertainty out there.”

Meanwhile, the yield on the key 10-year Treasury, which was at 3.99% Monday morning, was spiking viciously, the exact opposite of how a ‘safe haven’ acts in a time of market turmoil.  By Wednesday morning, it had risen in a historic move to 4.47%.  Something in the system was amiss.

And then at 1:18 p.m. ET, Trump posted the following on Truth Social.  It took a while to digest the full message:

“Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately.  At some point, hopefully in the near future, China will realize that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable.  Conversely, and based on the fact that more than 75 Countries have called Representatives of the United States, including the Departments of Commerce, Treasury, and the USTR, to negotiate a solution to the subjects being discussed relative to Trade, Trade Barriers, Tariffs, Currency Manipulation, and Non Monetary Tariffs, and that these Countries have not, at my strong suggestion, retaliated in any way, shape, or form against the United States, I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately. Thank you for your attention to this matter!”

What resulted was an epic rally. The S&P 500 index jumped the most since 2008, 9.5%.  Nasdaq, up 12.2%, had it best day in more than 24 years.  And the Dow Jones soared 7.9%, its biggest day since 2020, with the 2,963-pont rally in the blue-chip index its largest point-gain on record.

During a meeting with race-car drivers on the South Lawn of the White House following the Truth Social post and after the market closed, Trump conceded that the decision was driven in no small part by the chaos roiling markets. 

“I thought that people were jumping a little bit out of line,” Trump said. “They were getting a little yippy, you know.  They were getting a little bit yippy, a little bit afraid.”

Trump added of the action in the bond pits: “The bond market is very tricky. I was watching it. But if you look at it now, it’s beautiful – the bond market right now. But I saw last night where people were getting a little queasy.”

Traders are now bracing for prolonged negotiations that could weigh on markets for months, Commerce Secretary Lutnick telling Fox News: “The real deals will take some time.”  Wall Street will face the increasingly complicated task of trying to figure out how shifts in global trade will impact the twin levers of growth and inflation.

After the announcement of the 90-day pause, tariffs currently in place included:

A universal 10% tariff against all trading partners outside of Canada and Mexico.
A 25% tariff on steel and aluminum.
A 25% tariff on imported vehicles and certain auto parts.
Canada tariffs: 25% on most goods that don’t comply with the United States-Mexico-Canada agreement.
Mexico tariffs: 25% on most goods that don’t comply with the USMCA.

The European Union then announced Thursday it would pause retaliatory tariffs on U.S. imports for 90 days.

Editorial / Wall Street Journal

“President Trump says trade wars are easy to win.  Investors think otherwise, and on Wednesday Mr. Trump decided maybe investors are right.  After a flight from U.S. assets and a rout in the bond market, Mr. Trump announced a pause for 90 days on the worst of his ‘liberation’ tariffs on most countries, China expected.

“Markets celebrated with a stock-market rally on hope that perhaps Mr. Trump isn’t entirely oblivious to the damage he’s causing.  The rout in dollar assets reversed, at least somewhat, and the rise in the benchmark 10-year Treasury yield eased.  It would be hard to find better evidence that markets believe the biggest threat to the world economy is Mr. Trump’s tariffs.

“The bond rout was scary, with the 10-year hitting 4.47% at one point Wednesday, capping the steepest three-day yield climb since 2001. This was accompanied by a decline in the dollar against a basket of currencies. The fire sale on Treasurys and the dollar sent a warning about a loss of confidence in Washington.  Investors are demanding higher yields to hold even safe Treasurys, which is the opposite of what usually happens in financial panics.

“The pause is a partial reprieve, but hardly an end to the tariff mayhem. For one thing the Administration can’t get its story straight.  Mr. Trump’s pause came not long after Treasury Secretary Scott Bessent told bankers the economy is ‘in pretty good shape.’  He dismissed the bond rout as normal trading.  But then why the tariff pause?

“Mr. Trump is also escalating his trade war with China, the world’s second largest economy.  He started the latest row with a 34% tariff on top of tariffs already in place, and China responded Tuesday with the same.  Mr. Trump then added 50% more, for a total U.S. tariff of 104% on Chinese goods.  Beijing hit back again with 50% more, or 84% on all American exports to China, plus multiple regulatory barriers set to hit U.S. companies.  Mr. Trump then lifted his China tariffs to 125%. [Ed. we then learned Thursday it was really 145%.]

“This is the closest the two economies have come to a full economic decoupling since China began to rejoin the global trading system in the 1980s.  Chinese mercantilism poses unique trade challenges, but rapid decoupling isn’t possible without considerable economic harm....

“Washington can’t rule out the danger that Beijing will attempt to use a political or military threat – perhaps a blockade of Taiwan or seizure of islands under Taiwan’s control – to force Mr. Trump to the table on trade.

“If decoupling from China is Mr. Trump’s goal, one way to mitigate the damage is by expanding trade with allies.  But Mr. Trump’s tariffs slam friend and foe alike.  Mr. Trump’s pause could give the Administration time to negotiate trade deals with many of his targets.  But he’s not pausing his 10% base tariff on most countries.

“Who knows what Mr. Trump really intends, and it isn’t clear he even knows.  He’s still fixated on erasing the U.S. trade deficit with nearly every individual nation, which makes no sense given the differences in economies.  His 90-day pause means the tariffs could come back with a vengeance if he doesn’t like the concessions countries offer.

“For businesses, this means more uncertainty, which means continuing delays in capital investment crucial for growth.  Consumers will still feel pain because companies price inventory on replacement cost, not average cost, so tariffs are already hitting prices....

“There will always be a market for Treasurys, but the question is at what price? Mr. Trump’s reckless trade policies risk raising the cost of borrowing, inevitably triggering concerns about liquidity and the potential for nasty surprises in capital markets from companies caught by sharp moves in currencies or bonds. Other governments are worried enough that Tokyo is talking about a global effort to bolster financial stability. The U.S. would normally lead this effort, but this time the turmoil is caused by the U.S.

“Never bet against America, it’s said, and normally global investors don’t want to.  It’s a sign of the magnitude of Mr. Trump’s tariff mistake that he’s goading them into doing so.  He needs a policy reversal, not a pause.”

President Trump suggested on Wednesday that he was waiting to hear from China’s leader so the two could broker a deal. China has said it is willing to hold talks, but not under duress.

“China wants to make a deal,” Trump said.  “They just don’t know quite how to go about it.”

Thursday, stocks around the world rallied in response to the ‘Trump pause’ of the day before, but markets in the U.S. fell anew...the Dow Jones falling 2.5%, the S&P 500 3.5% and Nasdaq 4.3%.  The bond market was convulsing again, the yield on the 10-year rising back to 4.40% after a big decline on the pause news of the day before.

Early Friday morning, China then raised tariffs on all U.S. goods from 84% to 125%, effective April 12, according to the Finance Ministry.

“Given that there is no longer any possibility of market acceptance of U.S. goods exported to China under the current tariff levels, if the U.S. side subsequently continues to impose tariffs on Chinese goods exported to the U.S., the Chinese side will pay no attention to it,” according to a statement, adding, “it would be economically meaningless and would become a joke in the history of the world economy.”

Chinese President Xi Jinping, meeting with visiting Spanish Prime Minister Pedro Sanchez on Friday, said China and the European Union should shoulder their international responsibilities and “jointly resist unilateral bullying.” Xi added that if the showdown continued, his country “is not afraid.”

On the broader topic of trade deficits, I have never, ever...in 26 years...written much about it because, broadly speaking, it doesn’t matter!  Bilateral trade deficits crop up for many reasons beyond unfair practices.

“It’s totally silly,” Dani Rodrik, an economist who studies globalization at Harvard University, said of Mr. Trump’s focus on bilateral deficits. “There’s no other way to say it, it makes no sense.”

Yes, the issue is the United States is dependent on manufacturing elsewhere, including in China.  But focusing on imbalances from country to country, like in the case of Vietnam, can be highly misleading.

Last year, for example, the United States ran bilateral trade surpluses with 116 countries globally. It ran bilateral trade deficits with 114 countries, according to World Bank Data.

Matthew Klein, who writes about economics for The Overshoot, points out that the United States runs a trade surplus with Australia because it sends out lots of machinery, transportation equipment and chemicals.  Australia runs a trade surplus with China, sending it iron ore, natural gas and gold. And China runs a trade surplus with the United States by sending it car parts, electronics and batteries. [Ana Swanson / New York Times]

Dani Rodrik, the Harvard economist, said there was “absolutely no relationship between a country’s trade deficit and how well it’s doing.”  He pointed out that both Venezuela and Russia run trade surpluses.  “Does the United States really want to be a Venezuela or a Russia?”

Yes, China is an issue, a serious one, for all kinds of reasons. But having a trade war with them will do far more harm than good.

Thomas L. Friedman / New York Times

“After creating havoc in the markets standing [his] steadfast ‘principles’ – undoubtedly prompting many Americans to sell low out of fear – Trump reversed much of it on Wednesday, announcing a 90-day pause on certain tariffs to most countries, excluding China.

“Message to the world – and to the Chinese: ‘I couldn’t take the heat.’  If it were a book it would be called ‘The Art of the Squeal.’

“But don’t think for a second that all that’s been lost is money.  A whole pile of invaluable trust just went up in smoke as well.  In the last few weeks, we have told our closest friends in the world – countries that stood shoulder to shoulder with us after Sept. 11, in Iraq and in Afghanistan – that none of them were any different from China or Russia.  They were all going to get tariffed under the same formula – no friends-and-family discounts allowed.

“Do you think these former close U.S. allies are ever going to trust getting into a trench with this administration again? ....

“(Instead) of making it the whole industrial world against China, Trump made it America against the whole industrial world and China.

“Now, Beijing knows that Trump not only blinked, but he so alienated our allies, so demonstrated that his word cannot be trusted for a second, that many of them may never align with us against China in the same way.  They may, instead, see China as a better, more stable long-term partner than us.

“What a pathetic, shameful performance.  Happy Liberation Day.”

Greg Ip / Wall Street Journal

“In recent years, the U.S. has boasted faster growth, bigger advances in technology, and more-ample supplies of cheap energy than almost any other major economy.  Investors worldwide flocked to ‘American exceptionalism’ by buying its assets.

“The U.S. is still exceptional, but it is also less predictable, more antagonistic, and more isolated.  For foreign investors, that makes it less safe.”

Editorial / Wall Street Journal

“If Mr. Trump is serious, the best strategy would be to rally allies to the cause of fighting Chinese mercantilism. But he shows no interest in that either. He squandered his best chance to isolate China on trade in his first term by walking away from the Trans-Pacific Partnership that didn’t include Beijing.  China then cut its own deal with many of the countries that the U.S. left in the cold.

“This term Mr. Trump is outright punishing the allies he needs for a coherent China strategy. He’s imposed tariffs on Canada and Mexico and insulted Canadian national pride. He’s hit Japan with 24% tariffs, South Korea with 25%, and Europe with 20%.  He’s hit Vietnam with 46%, though the boom in that country’s exports to the U.S. since his first-term tariffs has come at China’s expense.

“Those tariffs are now paused for 90 days, but all of these countries know Mr. Trump could hit them again at any time. He’s also insulted Japan by refusing to let Nippon Steel buy U.S. Steel despite its pledge to invest billions of dollars in U.S. manufacturing.  Why should these allies trust Mr. Trump now, if he says he needs them to unite to slow China’s advance of artificial intelligence?  They may need China’s market if they can’t access the U.S.

“Mr. Trump’s intellectual problem, or at least one of them, is that he’s fixated on the U.S. trade deficit with friend and foe. The deficit is a non-problem in economic terms.  And if there are trade issues with allies, they can be addressed with bilateral or multilateral trade deals.

“By far the biggest problem in the global trading systems is the abuse of free-trade rules by the authoritarian regime in China.  Mr. Trump’s ad hoc, scattershot tariff policy won’t solve that problem. So far he’s hurting his own cause and country more than he’s hurting the Chinese Communist Party.”

---

Trump, Elon, cont’d....

--Chief Justice John Roberts agreed Monday to pause a midnight deadline for the Trump administration to return a Maryland man mistakenly deported to a notorious prison in El Salvador.

The temporary order came hours after a Justice Department emergency appeal to the Supreme Court arguing U.S. District Judge Paula Xinis overstepped her authority when she ordered Kilmar Abrego Garcia returned to the United States.

The administration has conceded that Abrego Garcia should not have been sent to El Salvador because an immigration judge found he likely would face persecution by local gangs.

But he is no longer in U.S. custody and the government has no way to get him back, the administration argued.

The Supreme Court on Thursday, however, then instructed the government to take steps to return Kilmar Abrego Garcia.

In an unsigned order, the court endorsed part of a trial judge’s order that had required the government to "facilitate and effectuate the return” of Abrego Garcia.

“The district court should clarify its directive, with due regard for the deference owed to the executive branch in the conduct of foreign affairs,” the Supreme Court’s ruling continued. “For its part, the government should be prepared to share what it can concerning the steps it has taken and the prospect of further steps.”

Monday night, the Supreme Court ruled, 5-4, that the Trump administration could continue to deport Venezuelan migrants using a wartime powers act for now, overturning a lower court that had put a temporary stop to the deportations.  A second victory for the Trump administration, although the ruling did not address the constitutionality of using the Alien Enemies Act of 1798 to send migrants to a prison in El Salvador.

The justices said it should have been filed in Texas, where the Venezuelans are being held, rather than a court in Washington.

All nine justices agreed that the Venezuelan migrants detained in the United States must receive advance notice and the opportunity to challenge their deportation before they could be removed, Justice Brett M. Kavanaugh wrote in a concurrence.

The justices ordered that the Venezuelan migrants must be told that they were subject to removal under the Alien Enemies Act “within a reasonable time” for them to challenge their removal before they are deported.  That finding could impose significant new restrictions on how the Trump administration might attempt to use the act in the future.

In a third victory for the president, the Supreme Court then lifted a lower-court order that directed the administration to reinstate about 16,000 federal employees it fired.

The justices on Tuesday said that environmental groups and other nonprofit organizations who say they were harmed by the reduction in public services caused by the layoffs didn’t have legal standing to bring the suit.  The brief order was unsigned, but the vote was 7-2.

The order doesn’t resolve broader legal disputes over the administration’s mass layoffs of federal employees.

--The Trump administration has ended funding to UN World Food Program emergency programs helping keep millions alive in Afghanistan, Syria, Yemen and 11 other impoverished countries, many of them struggling with conflict, according to the organizations and officials who spoke to the Associated Press.

The World Food Program, the largest provider of food aid, appealed to the U.S. to roll back the new cuts in a social media post Monday.  The unexpected round of contract cancellations has targeted some of the last remaining humanitarian programs run by the U.S. Agency for International Development, according to officials.

“This could amount to a death sentence for millions of people facing extreme hunger and starvation,” WFP said on X.

Secretary of State Marco Rubio and other administration officials have pledged to spare emergency food programs and other life-and-death aid from deep cuts to U.S. foreign assistance.

--Over the weekend, White House trade adviser Peter Navarro got into a high-profile social media spat with Elon Musk, who has lost some $20 billion and counting since the tariffs were announced.

Musk launched a barrage of social media posts criticizing Navarro, but he was really going over that official’s head – and making personal appeals to Trump.

As Trump was touting new tariffs, Musk was posting a video to X in which the late conservative economist Milton Friedman touted the benefits of international trade cooperation – “the impersonal operation of prices,” as he put it – breaking down the sources of the materials that go into a simple wooden pencil.  Musk has also disagreed with other members of Trump’s coalition on issues such as H1-B visas for skilled immigrants and on DOGE’s approach to government spending.

But on Saturday, Musk took after Navarro, lighting into his credentials.

“A PhD in Econ from Harvard is a bad thing, not a good thing,” Musk wrote.

In an interview with Italian Deputy Prime Minister Matteo Salvini over the weekend, Musk said he would like to see a “free trade zone” between Europe and the United States: “At the end of the day, I hope it’s agreed that both Europe and the United States should move ideally, in my view, to a zero-tariff situation.”

Musk also said that he would like more freedom for people to move between countries in Europe and the United States and work in either “if they wish.”

“That has certainly been my advice to the president,” he said.

Musk has long seen tariffs as detrimental to the business aims of a company that counts both the United States and China as key manufacturing and consumer hubs.  Other car manufacturers, though, are likely to be hurt more by the new tariffs, analysts have said.

On Tuesday, Musk called Navarro a “moron” in a post on X:

“Navarro is truly a moron.  What he says here is demonstrably false,” Musk wrote, adding in a subsequent post: “Tesla has the most American-made cars.  Navarro is dumber than a sack of bricks.”

“By any definition whatsoever, Tesla is the most vertically integrated auto manufacturer in America with the highest percentage of U.S. content,” Musk continued.  “Navarro should ask the fake expert he invented, Ron Vara.”

Sunday, on Fox News’ “Sunday Morning Futures,” Navarro said, “Elon when he’s in his DOGE lane is great, but we understand what’s going on here. Elon sells cars.  He’s simply protecting his own interests.”

Navarro added that Musk’s Tesla supply chain is clearly set to take a huge hit from the tariff regime.  He pointed out that while Teslas are made at factories in Texas, “they get a lot of their content from China, Mexico, Japan and Taiwan and elsewhere.”

Navarro suggested on CNBC Monday that Musk was “not a car manufacturer” but “a car assembler.”

--Acting IRS Commissioner Melanie Krause is resigning, extending an unusual period of turmoil at the agency as the administration shrinks and reshapes it.

The development comes a week before the individual income tax-filing deadline, in the IRS’s busiest time of year.  Krause is expected to depart the government April 28.

Krause will become the third IRS chief to exit this year, and her replacement would be the agency’s fourth leader in four months.

Since Trump took office, his administration has cut thousands of jobs at the IRS and could be aiming for thousands more layoffs in the months ahead, more than reversing a Biden-era expansion.

--The Wall Street Journal added to the chorus of stories concerning Commerce Secretary Howard Lutnick, who has played a supersize role in Trump’s first months in office, driving tariff discussions, meeting with dozens of business leaders, appearing on television and often standing alongside Trump, including on Air Force One.

But, as the Journal noted, “The former Cantor Fitzgerald chief executive has come to frustrate executives and senior White House officials, who have come away from interactions with Lutnick exasperated, according to roughly a dozen people who have interacted with him....

“Lutnick has been responsible for several of the administration’s most unorthodox ideas – some of them unvetted by staff – and his TV appearances have proven so challenging to White House officials that he was asked to curb them last month, according to senior administration officials....

“Trump has asked why Lutnick is at the White House so often, and he has grown frustrated with his commerce secretary at times, advisers said, particularly when Lutnick grows emotional in White House meetings. White House officials said he is at the White House more than any other cabinet secretary.”

Lutnick is a just a clown.

--Defense Secretary Pete Hegseth says a $1 trillion defense budget is coming soon, the Pentagon chief boasted on social media.

President Trump floated the unprecedented number during Israeli Prime Minister Netanyahu’s visit to the White House. “We’re going to be approving a budget, and I’m proud to say, actually, the biggest one we’ve ever done for the military,” he said.

“$1 trillion, and nobody’s seen anything like it,” said Trump.  “We have to build our military, and we’re very cost-conscious, but the military is something that we have to build, and we have to be strong, because you got a lot of bad forces out there now.”

--Secretary Hegseth vowed to “take back” the Panama Canal from Chinese influence in remarks Tuesday from Panama City.

“China did not build this canal,” the secretary said.  “China does not operate this canal and China will not weaponize this canal. Together with Panama in the lead, we will keep the canal secure and available for all nations.”

But last month, President Trump celebrated a deal led by BlackRock to buy most of the $22.8-billion ports business of Hong Kong conglomerate CK Hutchinson, including its ports on either end of the Panama Canal.  Trump said the purchase was an example of how the United States was “reclaiming” the canal.

But then I told you how Beijing was furious at CK Hutchinson and its 96-year-old founder, billionaire Li Ka-shing, and China’s market regulator said it was carrying out a review of the deal.  And I can’t help but note there has been little news in the U.S. on how an initial April 2 deadline for Hutchinson and BlackRock to seal the transaction passed with no announcements.  And that’s where we stand.  There is no deal yet.

--David Ignatius / Washington Post

“When the legendary CIA Director Richard Helms encountered difficulties at home or abroad, his biographer Thomas Powers wrote, his characteristic response was: ‘Let’s get on with it.’

“But that cold-blooded confidence becomes impossible if intelligence officials are constantly looking over their shoulders, wondering what the White House thinks.  Helms faced the ultimate pressure when President Richard M. Nixon demanded that the CIA cover up the Watergate scandal.  He refused and was asked to resign.

“Politicization is a special poison for intelligence and national security officials.  It skews judgment and encourages false or misleading reporting. It rewards those who curry favor and punishes those who tell the truth. Eventually, it leads to paralysis, as officials become fearful of taking any step that could get them into trouble.

“This poison is now leaching into the intelligence community, following interventions by the White House over the past week that have derailed experienced professionals at the NSA, the NSC and the CIA.  The victims aren’t part of some imaginary ‘deep state.’ They are veteran officials of the agencies that protect Americans from catastrophe.

“The most senior casualty is Gen. Timothy Haugh, head of the National Security Agency and U.S. Cyber Command.  He was notified Thursday while traveling overseas that he had been fired.  Haugh was a target of right-wing activist Laura Loomer, who had met with President Donald Trump on Wednesday to complain about members of his national security team.  Haugh, who led the nation’s most powerful intelligence agency, was vaporized in what seems to have been a political crusade.

“Haugh’s crime, apparently, was that he had been selected by the Biden administration and recommended by retired Gen. Mark A. Milley, former chairman of the Joint Chiefs of Staff....

“CIA Director John Ratcliffe also seems handcuffed by political pressure. He had selected Ralph Goff, a widely respected retired officer and six-time station chief, to head the directorate of operations, which runs spy activities abroad.  The choice was popular with current CIA officers and the agency’s vocal alumni group.  Several spoke of Goff as a pragmatist and a professional who could help Ratcliffe rebuild operations.  One veteran characterized him as ‘a true patriot’ and ‘not a Trump loyalist.’  But that may have been the problem.

“On Monday, rumors began circulating that Goff was out, and by Wednesday, Politico had published a story that his nomination had been withdrawn.  CIA morale, already shaken, was rocked by the news.  One former officer who spoke with several colleagues at Langley explained that the incident was seen as ‘a reflection that Ratcliffe has absolutely no sway with the White House.  This was a Ratcliffe choice that got publicly derailed.  People are mortified.’....

“Intelligence agencies need competent leaders because a president needs them to act quickly and decisively in a crisis.  George J. Tenet, another former CIA director, said in a 2002 interview, in the aftermath of 9/11: ‘The president of the United States would never tolerate anything other than our most honest judgment.  Our credibility and integrity are our most precious commodities.’

“That’s the way it’s supposed to work. But what you sensed among intelligence community veterans last week was fear – of the next purge, the next political edict, the next step down the road toward disaster.”

---

Wall Street and the Economy

The focus this week, in terms of data releases, was on inflation, but it was the March numbers, pre-tariffs, and while the figures on consumer and producer prices were better than expected, the value of the information is rather limited.  Certainly, it doesn’t help Federal Reserve Chair Jerome Powell and his band of mirth makers, as the Fed is in a no-win situation. A trade war ties the central bank’s hands by pushing up inflation at the same time that uncertainty is sapping growth.  For now, Fed governors, for the most part, maintain their focus is still on combating inflation.

Federal Reserve Bank of New York President John Williams said today in a speech he expects slower economic growth, higher unemployment and a pickup in inflation due to U.S. tariffs policy and reduced immigration.

“The current modestly restrictive stance of monetary policy is entirely appropriate given the solid labor market and inflation still above our 2% goal,” he said.  “Importantly, it gives us the opportunity to assess incoming data and developments.”

Williams said he expects GDP growth slowing to below 1%.  He also expects the unemployment rate to rise to between 4.5% and 5% over the next year, from 4.2% currently.

Increased tariffs will boost inflation this year to somewhere between 3.5% and 4%, he said.

The CPI and PPI numbers were lower than expected across the board.  The CPI for March fell 0.1%, up 2.4% from a year ago, while ex-food and energy (core), it rose 0.1%, and 2.8% year-over-year, the last figure down from 3.0% the prior report.

The PPI fell 0.4% last month, up 2.7% Y/Y, while on core, it was -0.1%, 3.3%, the latter down from 3.6% prior.  All good, but now it’s about the numbers going forward.

I would also add that while the CPI gets the headlines, Fed Chair Powell, in comments last week, made it abundantly clear the Open Market Committee focuses on the PCE (personal consumption expenditures index).

Separately, the University of Michigan’s consumer sentiment index hit its weakest level since June 2022.

The Atlanta Fed’s GDPNow barometer for first-quarter growth is -2.4%.

Freddie Mac’s 30-year fixed-rate mortgage is 6.62%.

Next week we have a key report on retail sales.

--On the budget front, early last Saturday morning, Senate Republicans plowed ahead with their plans for trillions of dollars in tax-cut extensions and new breaks, completing a crucial budget vote to advance President Trump’s legislative agenda just after his tariffs triggered a sharp downturn on Wall Street.

Lawmakers voted 51-48 to adopt a fiscal framework for Trump’s tax reductions and proposed new spending on border security and the military. Sens. Rand Paul (R-Ky.) and Susan Collins (R-Maine) broke with their party to vote against.

But the Senate plan defers important decisions about the depth of spending cuts, and Republicans need to hash them out in binding legislation.  The framework postpones a reckoning in the tug of war between House conservatives who say spending cuts should be tied to tax cuts and Senate Republicans who are wary of how the House plans might harm rural interests, like hospitals, and Medicaid beneficiaries. 

Senate Majority Leader John Thune (R-SD) said any House attempt to change the budget would prolong the process.

“The sooner we get to reconciliation, the better,” he said after midnight Friday.

The Senate plan would allow up to $5.3 trillion in net tax cuts over a decade, but would lock in just $4 billion in spending cuts and aim higher in the actual bill.

The House backs smaller tax cuts of $4 trillion to $4.5 trillion and calls for at least $1.5 trillion in spending reductions.

So then Wednesday, House Republican leaders postponed a vote on the “big, beautiful bill,” throwing the process into temporary uncertainty as the House and Senate look for a path forward.

A handful of hard-right conservatives resisted the pleas from GOP leaders and President Trump, who had urged wavering House members to “close your eyes and get there.”

But Speaker Mike Johnson (R-La.) said a vote could still come Thursday, in advance of a scheduled two-week congressional recess, and the House then narrowly approved the blueprint, 216-214, a major step forward for the president’s legislative agenda, and a big win for Speaker Johnson. The House’s adoption of the measure unlocks a procedural fast track for a bill later this year that would extend expiring tax cuts, lower taxes even further and increase spending for border security and national defense.

But after the recess, you will see a titanic battle among House and Senate Republicans over spending cuts, how long the tax cuts are extended for and the cap on state and local tax deductions, among other details.

House conservatives are putting pressure on Senate Republicans to promise deeper spending cuts, but GOP senators themselves are deeply divided on what to axe.  Senate Majority Leader Thune hasn’t been able to make any concrete promises given the positions his members have staked out on Medicaid, defense and other sacred cows.

Sen. John Cornyn (R-Texas) said that it won’t be easy to get Senate GOP moderates and fiscal hawks on the same page.

“I think it’s going to be hard,” he said. “But we don’t have a choice, and we need to get to work on the reconciliation bills.”

George Will / Washington Post

“As, second by second, the government borrows substantial sums to pay interest on the money it has borrowed, remember: The national debt was $20 trillion when Donald Trump began his first administration, having vowed to eliminate the debt in eight years.  It was $28 trillion when Joe Biden’s presidency began. As Maya MacGuineas at the Committee for a Responsible Federal Budget notes, it reached $32 trillion on June 15, 2023; $33 trillion 92 days later; $34 trillion 105 days after; $35 trillion in another 210 days; and $36 trillion in another 118.  It will reach $37 trillion after Congress raises the debt ceiling sometime this summer.

“All of these numbers reflect the optimistic, perhaps fanciful assumptions that the post-‘Liberation Day’ economy does not sag into a recession.  In any case: This. Will.  Not. End. Well.”

Speaking of budget deficits and the national debt, the former grew to more than $1.3 trillion in the first half of the 2025 fiscal year – the second highest six-month deficit on record, according to Treasury Department data released Thursday.

The deficit for October through March spans the administrations of President Biden and President Trump.  The previous high in the four decades of recordkeeping was $1.7 trillion in the first half of fiscal year 2021, when the government was tackling the Covid-19 pandemic.

Interest expense on the public debt hit $582 billion for the first six months, $60 billion more than the comparable period last year.

The aforementioned Maya MacGuineas said Thursday, “The numbers are undeniable. We are racking up debt at an alarming pace, and it’s unlikely to end any time soon. In fact, lawmakers seem hellbent on adding to that sum with trillions of unpaid-for tax cuts and spending increases.”

Meanwhile, earnings season is here, and for the first quarter, analysts now see earnings growth of 6.7% for S&P 500 companies, down from about 11% in early November when Trump was elected, according to data compiled by Bloomberg Intelligence.  For all of 2025, they see profits rising 9.4%, compared with a projection of 12.5% at the beginning of the year.  But, really, no one knows.

Europe and Asia

After a recent slew of data from the eurozone, just one snippet this week, February retail trade (sales) rose 0.3% over January, and 2.3% year-over-year.

France: Last Sunday, thousands of protesters gathered in support of Marine Le Pen, the National Rally party leader, convicted of embezzling European Parliament funding nearly two weeks ago, and banned from running for public office for five years.

Le Pen was greeted by cheers of “Marine president” as she told the crowds gathered in Paris that the case against her amounted to nothing more than a “witch hunt.”

But the crowd was estimated by police at 7,000, when organizers had hoped for double that amount.

As I noted last week, the Court of Appeals has indicated that her appeal will be heard by the summer of 2026, potentially giving Le Pen enough time to contest the election, if her conviction is overturned.

Turning to Asia...China’s National Bureau of Statistics reported March inflation was -0.1% year-over-year, while producer prices fell 2.5% Y/Y.  The ongoing trade dispute threatens to exert further downward pressure on prices.

Japan reported producer prices for March rose 4.2% Y/Y.

Street Bytes

--For this crazy week, the Dow Jones rose 4.9%, back over 40000 at 40212, the S&P 500 5.7% and Nasdaq 7.3%.

The S&P was on the cusp of a bear market, defined as a 20% decline from the highs, but then we had Wednesday’s stupendous rally.  Nasdaq was down 24% from its record high after Tuesday.

The world’s wealthiest people added $304 billion to their combined net worth on Wednesday – the largest one-day gain in the history of the Bloomberg Billionaires Index.

--U.S. Treasury Yields

6-mo. 4.19%  2-yr. 3.95%  10-yr. 4.47%  30-yr. 4.85%

What a week.  The yield on the 10-year rose from 4.00% last Friday to 4.47% (4.59% intraday, Friday), and on the 30-year, from 4.41% to 4.85%.

--The vicious price declines seen in crude oil, while great for Americans filling up their gas tank, threatens to erase tens of billions of dollars of Saudi revenue, along with a planned drop in dividends from state-controlled energy giant Saudi Aramco.

The International Monetary Fund and economists estimate Riyadh needs oil prices over $90 a barrel to balance its budget.  Benchmark Brent prices slipped below $65 this week, and fell to near $60 (as West Texas Intermediate, that which I quote below each week, hit $57).  The two closed Friday around $64.70 on Brent and $61.50 on WTI.

Saudi Arabia funds its Vision 2030 reform program off budget, the government needs to spend on mammoth infrastructure projects linked to the program, which aims to wean its economy off its self-declared “oil addiction.”

The $925 billion Public Investment Fund, which is steering Vision 2030, also partly relies on oil, including through its shares in Aramco.

“Saudi Arabia is likely to rely on debt financing, and it will have to delay or scale back some planned contracting awards given 2024 was already in a twin deficit,” said Karen Young, senior research scholar at Columbia University’s Center on Global Energy Policy, referring to fiscal and current account deficits.

Aramco’s dividends are also expected to fall by a third this year, meaning the government and PIF will receive about $32 billion and $6 billion less, respectively, Reuters calculations show.  Oil generated 62% of government revenue last year.

I mention this because as you watch The Masters this weekend, and you see the LIV Golf players in the tournament, the PGA Tour and LIV Golf (owned by the Saudi PIF) in endless negotiations to merge, or come up with some sort of workable deal, my thought is that LIV, which is bleeding gobs of money, isn’t workable for PIF and its Governor, Yasir Al-Rumayyan, whose brainchild was LIV Golf.

IF we enter a global recession, and oil prices stay low as demand dries up, why would the Saudi government allow Al-Rumayyan to continue with such a project? 

[The coffers of other oil-producing nations that need far higher prices to meet their budgets are of course also suffering, ditto oil majors, from Exxon, Chevron and BP on down.]

--We had some big bank earnings today, but while the numbers were important, it was the comments from the CEOs that everyone focused on.

JPMorgan Chase CEO Jamie Dimon warned that the economy faces “considerable turbulence” even as his bank reported a rise in first-quarter profits, and said “we continue to believe it is prudent to maintain excess capital and ample liquidity in this environment.”

The bank’s earnings of $14.64 billion rose 9% from the year-ago quarter, but it also set aside 75% more provisions to cover future loan losses – a sign that it expects borrowers to run into more problems ahead.

Dimon said investment banking “clients have become more cautious amid an increase in market volatility driven by geopolitical and trade-related tensions,” but his bank’s Wall Street operations still performed well during the early chaos of President Trump’s trade war.

JPM’s equity trading operation set a record in quarterly revenue, and all trading pulled in its biggest quarter of revenue since the beginning of the Covid pandemic.  Trading revenue also surged during the quarter at one of its rivals, Morgan Stanley.

In discussing the current economic turbulence roiling markets, Dimon cited “potential negatives” of tariffs and trade wars, sticky inflation, high fiscal deficits and volatility.  He also mentioned “potential positives” of tax reform and deregulation.

“As always, we hope for the best but prepare the firm for a wide range of scenarios,” saying the bank would maintain excess capital and liquidity after buying back $7 billion of common stock during the first quarter.

Dimon also made it clear he is keeping a close eye on the turmoil in the bond market after yields on Treasuries soared in the last week.  “Every minute,” he told reporters.

But he downplayed fears that turmoil could result in the loss of the U.S. status as a traditional safe haven during times of stress.

“America is still a pretty good place in a turbulent world,” he told reporters, saying “this is still the most prosperous nation on the planet.”

BlackRock CEO Larry Fink said in a statement following his firm’s earnings: “Uncertainty and anxiety about the future of markets and the economy are dominating client conversations.  We’ve seen periods like this before when there were large, structural shifts in policy and markets – like the financial crisis, Covid and surging inflation in 2022.”

The world’s largest money manager posted a drop in first-quarter profit, taking a hit from higher expenses, which rose to $3.58 billion in the quarter from $3.04 billion last year.

However, assets under management rose to $11.58 trillion from $10.47 trillion last year, as investors poured into exchange traded funds and other low-risk products.

Adjusted profit in the quarter rose to $11.30 per share in the first three months of 2025, compared with $9.81 per share a year ago.

Wells Fargo CFO Mike Santomassimo told reporters, “We do expect that all these tariffs will have an impact on growth this year in the U.S., and I think many customers are trying to evaluate what that really means to them.”

He expects some customers to “pause at least temporarily as they try to get a better sense of what the course, what the direction is.”

Wells Fargo’s profit rose 6% in the first quarter, driven by robust performance in its wealth management business.

Investment advisory fees and brokerage commissions rose 7% to $3.17 billion in the quarter, driven by higher asset-based fees.

Banks entered 2025 with a bullish outlook, backed by a resilient economy, resurgent dealmaking and business-friendly pronouncements from the new administration.

The optimism unraveled over the last week with President Trump’s fluctuating announcements on tariffs stoking concerns about inflation that could tip the U.S. into recession.

“We support the administration’s willingness to look at barriers to fair trade for the United States, though there are certainly risks associated with such significant actions,” said Wells CEO Charlie Scharf in a statement.

“We expect continued volatility and uncertainty and are prepared for a slower economic environment in 2025, but the actual outcome will be dependent on the results and timing of the policy changes.”

Banks have plenty to worry about if the tariff turmoil continues, and worsens.  Even without a recession, an economic slowdown sparked by a trade war could strangle M&A deals and demand for loans. It could also put more corporate borrowers and consumers under duress, making it difficult for them to pay back their loans.

When asked Wednesday whether he was seeing a rising number of companies default on their loans, Jamie Dimon said, “Not yet, but I expect them.”

Morgan Stanley reported first-quarter earnings of $2.60 a share, beating Wall Street expectations of $2.21. Investment banking revenue in the quarter rose 8%.

The bank reported first-quarter revenue of $17.74 billion, up 17% year-on-year, beating consensus.

Morgan Stanley’s provision for credit losses jumped to $135 million, primarily driven by growth in secured lending facilities and in the corporate loan portfolio and the impact of a weakening macroeconomic forecast.

But CEO Ted Pick didn’t give any trenchant statements, at least that I could find.

--Apple plans to send more iPhones to the U.S. from India to offset the high cost of China tariffs, according to reports.

The adjustments are a short-term stopgap while Apple attempts to win an exemption from President Trump’s tariffs – which CEO Tim Cook obtained during the first Trump administration.  The company sees the current situation as too uncertain to upend long-term investments in its supply chain, which is centered around China, the people said.

The iPhone makes up about 50% of its revenue, and the company’s heavy reliance on China for manufacturing has spooked investors.

Before tariffs were announced, Apple was on pace to make about 25 million iPhones in India this year.  Normally, around 10 million of those would supply the local Indian market.  If Apple were to redirect all India-made iPhones to the U.S., it could meet about 50% of American demand for the device this year, one analyst told the Wall Street Journal.

A full 64% of Apple’s fiscal 2024 revenue came from outside the U.S., a fairly static figure over the last decade.

--Republic Airways and Mesa Air Group agreed to merge, creating a publicly traded regional-airline giant.

The deal is the latest move in a long-running shake-out among regional airlines that fly on behalf of larger carriers.

The Carmel, Ind., and Phoenix companies said Monday they plan to name the merged company Republic Airways and list it under the symbol RJET.  The all-stock deal is expected to close by early fourth quarter.  No financial terms were disclosed.

Mesa, which flies for United Airlines after having parted ways with American Airlines in 2023, has been losing money and has been selling planes, engines and other assets as it has tried to regain its footing and boost liquidity.

Republic flies primarily in the Northeast and Mid-Atlantic for American, United and Delta Air Lines.

The combined company is expected to generate about $1.9 billion in revenue, and will be led by Republic’s executive leadership team, the companies said.  Republic and Mesa anticipate merging will help them grow financially and operationally with a larger, unified fleet.

Bryan Bedford, Republic’s CEO, has been nominated to serve as administrator of the Federal Aviation Administration.

--Delta Air Lines pulled its guidance for 2025 Wednesday as the trade war scrambles expectations for business and household spending and depresses bookings across the travel sector.

“With broad economic uncertainty around global trade, growth has largely stalled,” CEO Ed Bastian said in a statement before the market opened Wednesday. “In this slower-growth environment, we are protecting margins and cash flow by focusing on what we can control.  This includes reducing planned capacity growth in the second half of the year to flat over last year while actively managing costs and capital expenditures.”

In the first quarter, Delta earned $240 million, or 37 cents per share. A year earlier it earned $37 million, or 6 cents per share. Adjusted EPS was 46 cents per share vs. the Street’s 40 cents estimate.

Quarterly operating revenue climbed to $14.04 billion from $13.75 billion, beating Wall Street’s estimate of $13.81 billion.

Delta cut its first-quarter earnings and revenue outlook last month, saying at the time that a recent decline in consumer and corporate confidence amid growing uncertainty over the economy was weakening domestic demand.

For the second quarter, the airline is looking for earnings between $1.70 and $2.30 per share, with total revenue down 2% to up 2%.

“2025 is playing out differently than we expected at the start of the year,” Delta President Glen Hauenstein said. “As a result, we are adapting to current conditions while staying true to our long-term strategy.”

--TSA checkpoint numbers vs. 2024

4/10...117 percent of 2024 levels
4/9...104
4/8...84
4/7...95
4/6...118
4/5...83
4/4...101
4/3...116

--President Trump ordered a new national security review of Nippon Steel’s plan to acquire U.S. Steel, offering new life for a $14 billion deal that was blocked by former President Biden.

The White House on Monday said a fresh look conducted by the Committee on Foreign Investment in the U.S. (CFIUS) would help the president determine whether further action would be appropriate.  The review gives the administration the flexibility to craft an agreement that could allow the companies to complete a deal.

Nippon Steel said that “an objective, fact-based review of our proposed partnership with U.S. Steel will show that it strengthens American economic and national security so that U.S. Steel remains a proud American company.”

“We appreciate and commend President Donald Trump’s leadership,” U.S. Steel said.  “His action today validates our board’s bold decision to challenge President Biden’s unlawful order.”

Both Biden and Trump had opposed the deal over the past year, which I said was incredibly stupid, but since taking office, Trump has encouraged Nippon and U.S. Steel to restructure their deal so that the Japanese company would invest in the U.S. steelmaker, without fully owning it.

Nippon Steel execs said they would discuss options with the Trump administration, but that large capital expenditures would only be possible if the Japanese firm could invest in equity.  Nippon has said a joint venture with U.S. Steel wasn’t appealing, since that would limit the Japanese company from fully deploying its technology and operational strategies.

But then late Wednesday, President Trump said that he does not want the steel producer to go to Japan, suggesting he does not support Nippon’s bid.

“We don’t want to see it go to Japan,” Trump said, adding “We love Japan.”

“We don’t want it to go to Japan or any other place, and we’re working with them,” Trump said.

But there were no details on Trump’s comments or whether they contradicted Monday’s action.  “Everything’s always on the table with the president,” one official said.

U.S. Steel shares fell sharply at the open on Thursday. Trump then made similar comments at his cabinet meeting.

--According to polling released by Gallup Tuesday, the number of Americans who are open to buying an EV has dropped to 51 percent in early 2025, down from 59 percent in 2023.

While EV sales are still on the rise from year to year, the increase has slowed in recent months.  Tesla sales in particular have plummeted as Elon Musk’s push to cut the federal workload as head of DOGE has polarized the country.

The number of Americans who say they already own an EV or are seriously considering buying one dropped from 16 percent in 2023 to 11 percent in 2025.

The poll did find high consumer interest in hybrids.

--Speaking of Tesla, Wedbush analyst Dan Ives, a major bull on the stock for years, slashed his price target to $315 from $550 a share this week, saying CEO Elon Musk’s brand crisis combined with the “double shammy” of President Trump’s tariffs equal a “perfect storm for Tesla.”

Tesla’s “brand crisis tornado” has lost or destroyed at least 10% of future customers globally, “all self-inflicted by Musk,” Ives said.  The year could be brutal if Musk doesn’t “exit stage left or take a step back” from his Department of Government Efficiency.

--Related to the above on EVs, Chinese auto giant BYD Co. said first-quarter profit may more than double after a bumper start to the year that saw vehicle sales top 1 million.

Net income in the three months ended March 31 will jump to $1.2 billion to $1.4 billion, the company said in preliminary earnings Tuesday. That implies profit growth of between 86% and 119% from last year’s first-quarter profit of $626 million, as reported by Bloomberg.

--Taiwan Semiconductor Manufacturing Co.’s quarterly revenue rose a larger-than-expected 42%, reflecting strengthening demand for AI servers and smartphones before U.S. tariffs kicked in.  That marked TSMC’s fastest pace of growth since 2022. Electronics manufacturers had stockpiled goods in U.S. warehouses in anticipation of potential trade and shipping disruptions.

The main chipmaker for Apple Inc. and Nvidia Corp. reported revenue of $25.5 billion in the first three months of 2025. The company reports full earnings next week, along with its outlook for the current quarter.

Some analysts believe President Trump’s 90-day pause on higher tariffs may mean more stockpiling in the months ahead.

--Similarly, PC shipments grew at their fastest quarterly pace since the pandemic after companies from Apple Inc. to Dell Technologies Inc. hastened product deliveries around the world before tariffs hit.

Laptops led the way as the entire spectrum of desktops, workstations and portable computers rose 9.4% to 62.7 million units in the first quarter, according to market tracker Canalys.  It was the fastest increase for the industry since the spring of 2021, when Covid restrictions were driving demand for electronics to work and play at home.  The surge was especially pronounced with respect to the U.S., but the researchers warned that end-user demand is largely stable and the current quarter will take a hit.

“As the next round of higher tariffs on more countries goes into effect, both direct and indirect impacts threaten global PC market recovery and Windows 10 End of Support induced momentum,” they said. “Subsequent quarters this year are likely to see a slowdown as inventory levels normalize and customers face higher prices.”

And U.S. consumers were flocking this week to Apple stores to grab an iPhone ahead of any potential price hikes in response to the tariffs that just went into effect.

--President Trump’s immigration crackdown has spooked Latino shoppers.  That is hurting sales of America’s No. 1 beer, according to Modelo brewer Constellation Brands.

Modelo Especial, an import from Mexico, rocketed past Bud Light to claim the top spot in 2023, but its sales are now slipping.  About half of Modelo’s U.S. customer base is Hispanic.

“If that consumer has concerns, issues, et cetera, that’s a big deal for us,” Constellation CEO Bill Newlands said in an interview.

Constellation’s beer sales to retailers fell 1% in the latest quarter, the first time they have fallen since the company acquired the U.S. rights to the Modelo, Corona and Pacifico brands in 2013. For more than a decade it has been a bright spot in the struggling U.S. beer industry.

In Southern California and Texas, many immigrants are avoiding liquor stores because they have to show identification to make a purchase.  Some people have stopped shopping at supermarkets after 6 p.m. to avoid evening immigration raids.

--Sales in the international art market declined 12 percent in 2024, according to the Art Basel and UBS Global Art Market Report published on Tuesday.  The annual report, seen as the most reliable indicator of the art market’s size and health, said that sales had fallen for the second year in a row.

“Decline in value was driven by cooling at the top end,” says the report, which describes 2024 as “a year of continuing geopolitical tensions, economic volatility and trade fragmentation.” Auction sales of single works that fetched more than $10 million fell by 39 percent, the report says, and galleries with a turnover of more than $10 million saw sales fall 9 percent.

“People were more risk-averse,” said Clare McAndrew, the economist who wrote the report, in an interview.  “On the supply side, people were waiting to see how things panned out and held on. That impacted what came on to the market.”

“Buyers were looking at this uncertain, volatile picture, and wanted to put money into something that was more liquid, or something that gave them income,” McAndrew said.

The report estimates the total value of global art sales in 2024 at $57.5 billion.  Sales reached a peak of $68.2 billion in 2014, according to the report.

--Chinese bloggers reported Xi Jinping’s government was considering a ban on Hollywood movies, which would drag entertainment companies to the front lines of the trade war, and then Thursday, the China Film Administration said it planned to “moderately” reduce the number of U.S. films shown in the country, as part of its retaliation against President Trump’s moves.

“The U.S. government’s erroneous practice of imposing excessive tariffs on China is likely to further diminish the Chinese audience’s favorable perception of American films,” the administration said.

China remains the second-largest cinema market in the world.

In 2002, China agreed to let 20 revenue-sharing blockbuster films from the United States to be shown in the country each year, a total that it increased to 34 a decade later after Xi Jinping, then vice-president, visited Washington.

As for the current movie scene, “A Minecraft Movie,” the live-action film based on the best-selling videogame of all time, clobbered the domestic box office last weekend, racking up $157 million in ticket sales to become the biggest domestic opening this year.

For Warner Bros. Discovery, it was the largest opening weekend since “Barbie” in July 2023.  The film did another $144 million of tickets internationally for a stupendous $301 million global opening weekend, according to Comscore.

“Minecraft” surpassed Universal’s 2023 hit “The Super Mario Bros. Movie” as the largest videogame adaptation and is the largest global IMAX hit since Disney’s “Deadpool & Wolverine” in July.

--China’s government on Wednesday issued two warnings to its citizens about travel to the United States, noting a deterioration in bilateral relations.

“Due to the deterioration of Sino-U.S. economic and trade relations and the domestic security situation in the United States, the Ministry of Culture and Tourism reminds Chinese tourists to fully assess the risks of traveling to the United States and travel with caution,” the ministry said.

And... “The Ministry of Education reminds all overseas students to conduct safety risk assessments...when choosing to study in relevant states in the United States in the near future,” the notice added.

Foreign Affairs

Russia/Ukraine: Ukrainian President Volodymyr Zelensky claimed at least 155 Chinese citizens are fighting for Russia in the war.

His comments came after two Chinese fighters were captured earlier this week – marking Kyiv’s first official allegation that China was supplying Russia with manpower.

Speaking to journalists on Wednesday, Zelensky reiterated his claim that there are “many more” Chinese nationals engaged in the conflict, based on information gathered by his government.

Responding on Thursday, a Chinese government spokesman said they “advise relevant parties to correctly and soberly understand China’s role and not to make irresponsible remarks.”

“China is neither the creator nor a party to the Ukrainian crisis. We are a staunch supporter and active promoter of the peaceful resolution of the crisis,” said foreign ministry spokesman Lin Jian.

He reiterated an earlier comment that appeared to suggest that Chinese soldiers fighting for Russia were doing so in their private capacity.

Ukraine’s Foreign Minister Andriy Sybiha said: “The participation of Chinese citizens in the Russian army invading Ukraine calls into question China’s declared position on peace and undermines trust in Beijing.”

Russia has enlisted thousands of foreign fighters to bolster its invasion of Ukraine, in addition to deploying a 12,000-strong contingent of North Korean soldiers to defend Russian territory.

Separately, going back to late last Friday night, Ukraine suffered one of its worst single attacks of the war, with 19 people killed in a missile strike in the city of Kryviy Rih, President Zelensky’s hometown, including nine children.

The United Nations said it was the largest verified loss of children’s lives in a single incident since Russia’s invasion in February 2022.

“We are not asking for pity,” Kryviy Rih’s top official, Oleksandr Vilkul, wrote on social media.  “We are demanding the world’s outrage.”

It has been weeks since Ukraine said it would be willing to commit to a full cease-fire, and Russia pledged to pause strikes on energy infrastructure. Russia has pressed on with offensives along the 800-mile front lines, with both sides accusing each other of continuing infrastructure strikes.

President Zelensky said Russian aerial strikes against Ukraine have increased.  He said more than 2,000 missiles, guided bombs and explosive drones hit Ukrainian cities last week.

“The pressure on Russia is still not enough,” Zelensky said in his nightly address Sunday evening.  “Russia is showing its real intentions – to continue the terror as long as the world allows it.”

President Trump has said he is frustrated with Russia for stalling over a cease-fire that Ukraine already agreed to, but gave no indication that he was preparing to pressure the Kremlin, for increasing sanctions.  The Trump administration has also appeared to favor Russia by sparing it from a recent round of trade tariffs and echoing some of the Kremlin’s views.

“We’re talking to Russia.  I’d like them to stop. I don’t like the bombing. The bombing goes on and on and...Every week thousands of young people are being killed,” Trump told reporters Sunday, before repeating his claim that the war wouldn’t have started if he had been president.

The Kremlin, for its part, said Monday that President Putin supported the idea of a cease-fire, but that a series of issues needed addressing.

“These questions are hanging in the air, and no one has given an answer to them yet,” Kremlin spokesman Dmitry Peskov told reporters, state news agencies reported.

Peskov listed some of them, including limiting the strength of Ukraine’s military.  Moscow also demands Ukraine cede territory and give up efforts to integrate with the West.

President Zelensky expressed his dismay at the muted U.S. response to the Friday strike on Kryviy Rih.

Lastly, Zelensky confirmed for the first time on Monday that Ukrainian troops have been active in Russia’s Belgorod region as they seek to protect Ukrainian towns near the border.

In his nightly video address on Monday, Zelensky said Ukraine’s top commander, Oleksandr Syrskyi, had presented a report “on the front line, our presence in the Kursk region and our presence in the Belgorod region.”

“We continue active operations in the enemy’s border areas and this is absolutely justified.  The war must return to where it came from.

“Our main objective remains the same: to protect our land and our communities in the Sumy and Kharkiv regions from Russian occupiers.”

On Sunday, Russia said its troops had seized the village of Basivka in Ukraine’s northeastern Sumy region – opposite Kursk.

Israel/Iran/Syria/Gaza: Prime Minister Benjamin Netanyahu traveled to Washington for a hastily organized White House visit bringing a long list of concerns, from tariffs to Iran’s nuclear program, the war in Gaza and Turkey’s surging influence in Syria.

And the prime minister appears to have left empty-handed.

The visit was billed as an attempt to address the new U.S. tariff regime (this was Tuesday), but other issues were raised, such as Israeli fears that Syria’s new leadership, which has an Islamist past, will pose a new threat along its border.  It has since taken over a buffer zone in Syrian territory and said it will remain there indefinitely until new security arrangements are made.

Turkey’s emergence has prompted concerns in Israel over the possibility of Turkey expanding its military presence inside the country.  Netanyahu said Tuesday that Turkish bases in Syria would be a “danger to Israel.”

Turkish President Erdogan has been an outspoken critic of the war in Gaza.

But Trump lavished praise on Erdogan for “taking over Syria,” positioning himself as a possible mediator between the countries and urged Netanyahu to be “reasonable” in his dealings with Turkey.

In an Oval Office meeting with Netanyahu, President Trump also surprised reporters, and us, in saying the U.S. would hold nuclear talks with Iran this Saturday: “We have a very big meeting on Saturday [with Iran], and we’re dealing with them directly...And maybe a deal is going to be made, that would be great.”

But Trump offered this foreboding news: “If the talks are not successful with Iran I think Iran is going to be in great danger.  And I had to say it.  Great danger.  Because Iran cannot have a nuclear weapon.”

The meeting was confirmed by Iran’s foreign minister, Abbas Araqchi, who wrote on X: “It is as much an opportunity as it is a test. That ball is in America’s court.”  The meeting will be in Oman.

In 2015, then-President Obama made an agreement with Iran under which it would limit its nuclear activities and allow international inspectors into the country to ensure facilities were being solely used for civilian purposes and not weapons production.

In return Iran was to be offered relief from sanctions that had crippled its economy.  That agreement was co-signed by China, France, Germany, Russia and the UK.

But in 2018, President Trump unilaterally pulled the U.S. out of the deal.  In the years that followed, Iran increasingly breached its terms, and the International Atomic Energy Agency has warned Tehran has built up large stockpiles of enriched uranium, which can be used to make nuclear bombs.

Israel has reportedly been contemplating striking Iran’s production facilities in recent months.

Last year, Israel said it had hit an Iranian nuclear site in retaliation for Iran’s earlier missile attack on Israel.

Speaking at the White House, Netanyahu said: “We and the United States are both united in the goal that Iran does not ever get nuclear weapons.  If it can be done diplomatically in a full way, the way it was done in Libya, I think that would be a good thing.”

Back to Syria, the New York Times reported Wednesday that Islamic State is growing in Syria, according to the United Nations and U.S. officials, adding to the volatility of a country still reeling since the fall of President Bashar al-Assad.

“The group is still nowhere near as strong as it was a decade ago, when it controlled eastern Syria and a large part of northern Iraq, but there is a risk, experts say, that the Islamic State can find a way to free thousands of its hardened fighters who are held in prisons guarded by U.S.-backed Syrian Kurdish forces....

“Between 9,000 and 10,000 Islamic State fighters and about 40,000 of their family members are detained in northeastern Syria.  Their escape would not only add to the group’s numbers, but also provide a propaganda coup.

“ ‘The crown jewel for the Islamic State is still the prisons and camps,’ said Colin Clarke, the head of research for the Soufan Group, a global intelligence and security firm.

“ ‘That’s where the experienced, battle-hardened fighters are,’ he said.  ‘In addition to whatever muscle they added to the group, if those prisons are open, the pure propaganda value’ would serve the group’s recruitment efforts for months.”

The United States announced late last year that it had doubled the number of its troops on the ground in Syria to 2,000.

In Gaza, Israel’s army admitted its soldiers made mistakes over the killing of 15 emergency workers in southern Gaza on March 23.

A convoy of Palestinian Red Crescent Society ambulances, a UN car and a fire truck from Gaza’s Civil Defense came under fire near Rafah.

Israel originally claimed troops opened fire because the convoy approached “suspiciously” in darkness without headlights or flashing lights.  Movement of the vehicles had not been previously coordinated or agreed to with the army.

But mobile phone footage, filmed by one of the paramedics who was killed, showed the vehicles did have lights on as they answered a call to help wounded people.  The Israel Defense Forces (IDF) insists at least six of the medics were linked to Hamas – but has so far provided no evidence.  It admits they were unarmed when the soldiers opened fire.

When an aid team found the bodies, they also discovered Rafat Radwan’s mobile phone containing footage of the incident.

The IDF promised a “thorough examination” of the incident. The Red Crescent and many other international organizations are calling for an independent investigation.

China: Beijing lashed out at Vice President JD Vance for comments he made about “Chinese peasants,” adding a personal dimension to the tensions between the world’s biggest economies.

“It is surprising and sad to hear such ignorant and disrespectful remarks from the vice president,” Foreign Ministry spokesman Lin Jian said Tuesday at a regular press briefing in Beijing.

The remarks were a rare instance of China directly rebuking a U.S. leader.

Last week Vance complained about the China-U.S. economic relationship in an interview with Fox News, saying it amounted to “incurring a huge amount of debt to buy things that other countries make for us.”

Then he added: “To make it a little more crystal clear, we borrow money from Chinese peasants to buy the things those Chinese peasants’ manufacture.  That is not a recipe for economic prosperity.”

Internet users in China hit back at the “peasant” line, pointing to tech advances that their country has made in recent decades, such as 5G communications and high-speed trains.

Just an incredibly stupid choice of words by Vance.

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: 48% approve, 50% disapprove (April 11).

A new Wall Street Journal poll had the president’s approval rating at 46%, 51% disapproving.

The survey was conducted from March 27 through April 1, so pre-major market chaos, but for this poll, 54% of voters opposed Trump’s tariffs, 12 points more than those who supported his plans.  Three quarters of voters say that tariffs will raise prices on the things they buy, up from 68% who said so in January.

The survey found 44% approve of Trump’s handling of the economy, 52% disapproved.

A Quinnipiac University poll, conducted April 3-7 and released on Wednesday, had President Trump’s approval rating at 41%, 53% disapproval.  The president stood at 46%-43% approval/disapproval in a Quinnipiac survey conducted during his first week back in the White House.

--A second school-aged child in West Texas died from a measles-related illness, a hospital spokesman confirmed Sunday, as the outbreak continues to swell.

Aaron Davis, a spokesperson for UMC Health System in Lubbock, Texas, said that the child was “receiving treatment for complications of measles while hospitalized” and was not vaccinated.

There were 541 identified cases of measles in Texas as of this afternoon since last January, 56 hospitalized.

Health and Human Services Secretary Robert F. Kennedy Jr., a longtime anti-vaccine expert, had delivered a tepid message on the importance of vaccination against measles, saying it should be encouraged while also sowing doubt in the vaccine’s safety.

Dr. Peter Marks, the Food and Drug Administration’s former vaccine chief, said responsibility for the death rests with Kennedy and his staff.

“This is the epitome of an absolute needless death,” Marks told the AP in an interview Sunday.  “These kids should get vaccinated – that’s how you prevent people from dying of measles.”

The measles, mumps and rubella vaccine has been used safely for more than 60 years and is 97% effective against measles after two doses.

Dr. Marks also said the health secretary’s team has sought nonexistent data to justify antivaccine narratives and pushed to water down regulation of unproven stem-cell treatments.

“I can never give allegiance to anyone else other than to follow the science as we see it,” Marks said.  “That does not mean that I can just roll over and take conspiracy theories and justify them.”

In an interview with CBS News Tuesday (aired Wednesday), Kennedy told chief medical correspondent Dr. Jon LaPook that he encourages people to get vaccinated against measles.

“We encourage people to get the measles vaccine,” Kennedy said, marking the first time he has publicly urged people to get the vaccine since becoming HHS secretary.

Asked by LaPook what the federal government’s official position on the vaccine is, Kennedy reiterated, “The federal government’s position, my position, is that people should get the measles vaccine,” but added, “The government should not be mandating those.”

--Separately, Secretary Kennedy said he plans to tell the Centers for Disease Control and Prevention to stop recommending fluoridation in communities nationwide.  Kennedy also said he’s assembling a task force to focus on the issue.

Also on Monday, the Environmental Protection Agency announced it is reviewing “new scientific information” on potential health risks of fluoride in drinking water.  The EPA has primary authority to set the maximum level of fluoridation in public water systems.

Kennedy cannot order communities to stop fluoridation, but he can tell the CDC to stop recommending it and work with the EPA to change the allowed amount.

Utah last month became the first state to ban fluoride in public drinking water, pushing past opposition from dentists and national health organizations who warned the move would lead to medical problems that disproportionately affect low-income communities.

--Attorney General Pam Bondi on Wednesday announced the seizure of roughly $510 million worth of illegal narcotics on vessels headed for the United States, seeking to highlight the government’s efforts to take down sophisticated cartel drug networks.

Ships, aircraft and drones were used to intercept the traffickers off the coasts of Peru, Ecuador and the Galapagos Islands, according to Bondi, who said the seizures have led to sealed indictments against 11 people.

--The governing junta reported the death toll from the Myanmar earthquake was 3,649 as of Wednesday.  Secretary of State Marco Rubio, speaking to reporters at a NATO meeting in Brussels, dismissed accusations that Washington was left unable to help in the rescue effort due to the Trump administration’s shuttering of the U.S. Agency for International Development.  Former officials at USAID said the U.S. was left unable to send rescuers and dogs due to the agency’s dismantling.

Routinely in such earthquakes, the U.S. can deploy up to 200 rescue workers and sniffer dogs, along with specialist equipment, and is often the biggest and best equipped foreign response team on the ground.

Rubio blamed the military regime in Myanmar for the lack of access, even though the state department said earlier the country had made a formal request for assistance.

--The catastrophic flooding in parts of the Midwest and Southeast suffered the past week is historic, many communities seeing up to 16 inches of rain in four days, but it seems like we’ve been using “historic” every year the past decade or so.  Rivers along the Ohio Valley were surging out of their banks at major to record-setting flood stages.

In all, there were at least 22 storm-related deaths as of Wednesday, at least 10 of which were in Tennessee, which also had a number of devastating tornadoes.  Tornadoes and flooding were also a serious issue in Kentucky, Arkansas, Missouri, Indiana, Mississippi and Georgia.

--The death toll in the Dominican Republic nightclub disaster hit a staggering 221 on Thursday.  The collapse of the roof at the Jet Set club during a merengue concert claimed the life of former major league pitcher Octavio Dotel, who pitched for 13 big league teams in a 15-year career.  Among the other victims was Nelsy Cruz, governor of the Monte Cristi province and the sister of Nelson Cruz, a former MLB player and current MLB special adviser to baseball operations. 

--And then Thursday afternoon, we had a depressing event in the New York City area as a tourist helicopter plunged into the Hudson River just off Jersey City, N.J., across from the West Village in Manhattan, killing the pilot and five on vacation from Spain.

We then learned that the head of the Spanish branch of the German conglomerate Siemens and his family were the victims.

There was a haunting, incredibly sad photo of the smiling family before they boarded the helicopter.

--To end on a brighter note, Russia released Ksenia Karelina, a dual national who lived in Los Angeles but was arrested while visiting her grandparents in the city of Yekaterinburg for donating less than $60 to a New York-based nonprofit called Razom for Ukraine, in exchange for a Russian citizen, who was arrested in Cyprus in August 2023 at the request of the U.S. on charges of smuggling sensitive microelectronics to Russia and extradited to the U.S., a year later.

Ksenia was convicted of treason for her donation, which U.S. authorities called “absolutely ludicrous.”

CIA Director John Ratcliffe is credited with negotiating on behalf of the U.S. [President Trump wants to credit UFC CEO Dana White...I’m just glad she was freed.]  

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Gold $3246...back to record highs
Oil $61.70

Bitcoin: $83,868 [4:00 PM ET, Friday]

Regular Gas: $3.21; Diesel: $3.61 [$3.63 - $4.05 yr. ago]

Returns for the week 4/7-4/11

Dow Jones  +4.9%  [40212]
S&P 500  +5.7%  [5363]
S&P MidCapm +2.8%
Russell 2000  +1.8%
Nasdaq  +7.3%  [16724]

Returns for the period 1/1/25-4/11/25

Dow Jones-5.5%
S&P 500  -8.8%
S&P MidCap  -12.8%
Russell 2000  -16.6%
Nasdaq  -13.4%

Bulls 23.6...fewest since November 2008!
Bears 34.6

Hang in there.

*I posted a piece on the Smoot-Hawley Tariff Act of 1930 that I first wrote in 2002.  See my Wall Street History link.

Brian Trumbore

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