Markets may not be kept on Trump

Good morning. Tired of uncertainty? Too bad: Trump’s administration has retired its tariffs to Canada and Mexico, giving a one-month return for all goods in accordance with the US-Canadian Agreement (USMCA), the successor of NAFTA, which President Trump negotiated in 2020. All together now: no! One! He knows! All! Send us e -Apost: Robert.armstrong@ft.com and aiden.reiter@ft.com.

Trump’s sensitivity to markets

One of the standard clichés of Trump’s administration analysis is that, if nothing else, markets will provide protection. If it goes through economic destructive policy on, say, tariffs or deportation, supplies or bonds would encourage him to withdraw. This is a “Trump path”.

You could see the confirmation of this idea in the last days. Trump has imposed Tarife Canada and Mexico that, according to the Orthodox economy, he will harm the American economy, and also, according to corporate America, will harm corporate profit. The shares, obviously in response, had unstable and unpleasant for several days. And, as foreseen, the tariffs were repeatedly delayed or modified. Administration Protests – Minister of Finance saying His focus is on Main Street, not Wall Street, the president said, “I don’t even look at the market” – sounds fragile and defensive in this context.

The problem with this reading is that despite a lot of sound and anger, the market just didn’t move much. The S&P 500, the index that everyone watches, reduced only 7 percent compared to its all time less than a month ago. Ten years of treasury yield has dropped sharply since its January, and this decline is almost certainly reduced to reducing the expectation of growth. But the administration loves lower rates and attends a weaker dollar; The President on Tuesday boasted a fall in his speech Congress. Whether it was not aware of the malicious cause of the fall or simply gladly slid over it, it is unknown. Thus, he would insensitively claim that the market-contingering and Trump thesis was not placed on an appropriate test.

But one can look back at Trump’s first expression for the lead. Jeremy Schwartz of Nomura did this and conclude that

The history of Trump’s first term suggests a relatively high pain tolerance for the market weakness in the capital. . . The simplest and broadest evidence is that Trump has decided to escalate a trade war in 2018 (one of the worst non-recession years to perform capital in recent decades). It is significant that it was a year with a medium -term election. . . At multiple micro levels, we also see little evidence that Trump has determined his tariff announcements for capital management.

Interestingly, Rafael CH from Signmum Global Advisors looked at the same history and came to a slightly different conclusion. He found that in most cases in which Trump had made a particularly strong proposal or threat, whether they were tariffs of steel and aluminum on Mexico or meeting with XI Jinping, he withdrew most of the time when the markets were moving against him. But the market move had to be held: a move of more than two and a half percent was maintained on a valid average basis for more than a month. There is little evidence of reacting to short -lived moves on the market. And, as CH points out, we still have not had any permanent falls on the market in the second Trump administration, so we do not know if it will follow the same pattern as the first.

CH makes another important observation. The market is important for the market decline. Down from where?? He points out that the members of the current administration began to talk about how the markets were ranging from the day of the inauguration, but now they have switched to an interview about market effect from the day of the election.

In short: we don’t know if there is Trump.

More about slowing down and examining jobs

In the past two weeks, there has been a change in vibration to economic appearance. Tariffs and the Government Efficiency Department are ventured on the mood of investors and consumers. At the same time, they didn’t get a lot of bad (these are, non-viable) data. And some data that flooded the market are not as bad as it initially appeared.

Although the market was worried about the estimate of the ISM survey two weeks ago, the official edition was not awful. Both production and services continued to expand, and the services were seen in most sub-india. Although survey of feelings in Michigan was about it, it is possible that the market has read too much in it. At a time when emotion is running high, surveys could be deceptive.

The same could be said for recent forecasts. A very bad assessment of GDNOW for the first quarter from Atlanta Feda received a lot of attention:

But the Bdpnow model is a problem here. Companies are anterior tariffs increasing imports, and imports are registered as negative for GDP. But you import will compensate for the increase in stock, which is positive for GDP that does not catch the model, As our colleague Chris Giles explains.

Instead, most of the hard data we were solid or showed weakness in the market segments that have already fought. The market seems to have been worried about low apartments two weeks ago. But housing The market was already broken, and that was not a big change. The initial report on the claim without a job we got two weeks ago was also solid and did not show early damage to Doge’s cuts.

This puts all today’s job report in a sharper focus.

The initial indicators we got this week suggest that it could be a bad report. The ADP’s private payment list, on Wednesday, was rude. It showed that employers only added 77,000 jobs last month, which is significantly under January and just over half of the consensus assessment. The challenger poll, which follows the announcements of cutting JOB, has given a similar gloomy picture. Planned jobs reduce more than doubled to 172,000, and there was a large increase in the announced decrease in the Federal Government. The Bank of America card information showed consumer consumption at the national level last week – but it fell to Washington DC, where Doge is scared of workers.

We should see some influence from Doge in today’s job report. But on the whole, the data are not so bad. The shift of vibrations could still be only vibration.

One good reading

Friendship.