When rates get too high and polls too low, we seem to get positive headlines…hmmmm…the US equity market and the USD are up after DJT defused some of the tension by stating he has no intention of firing Powell—and sharing he plans to be 'very nice' to China in any trade talks. 'It will come down substantially but it won’t be zero,' he added….what? (the whisper is 40-50%). Well, even folks on our side of the ocean have been freaking out. UST Sec Bessent earlier noted that the standoff was unsustainable.

After reporting terrible numbers, Musk vowed to pull back 'significantly' from his work with the gov to concentrate on Tesla. Analysts were warning traders about TSLA’s future. Stock is up, and up is down.

History says that if rates are cut due to weaker activity, equities tend to struggle. ASR has this great chart demonstrating this fact. Basically, slower growth translates into lower earnings which translate into lower multiples, which outweigh any potential positive impact from lower rates. There was an average earnings drawdown of -11%.

Intel is planning to cut >20% of its staff. Let that sink in.

First, AAPL and META were hit by relatively modest EU fines totaling €700 mm after warnings of retaliation by DJT. Second, today investors are watching the auction of $70 bn of 5-yr UST for early insight into foreign appetite for US debt. With > 60% of foreigners’ holdings concentrated at that maturity or less, it will be an important sign.

Mainland Chinese investors sold a near-record $2.3 bn of HK stocks, after hopes of an easing of trade tensions spurred a relief rally. They’re selling into strength…smells like a bear market rally.

The EZ-area’s flash composite PMI gauge fell more than expected this month to 50.1, with both the German and French measures missing and the UK figure falling more than expected.

The IMF is warning that global public debt borrowing is going to surge this year, given trade tensions, slower economic growth, and more volatile markets. They are expecting a jump of +2.8%, more than 2x its estimate for 2024, which would push global gov debt >95% of GDP. They expect it to be around 100% by decade-end, past pandemic levels! With more spend on defense, infrastructure, etc—higher spend + potentially higher borrowing costs + FX shifts could be the recipe for real challenges.

Banks fought the capital rules post GFC, but guess what’s keeping them solid right now? They’re in a position to return cash to shareholders with buybacks (Citi announced a massive $20bn one over the next few years). Friend of the firm Charlie Peabody noted this morning that banks will outperform early once this economic cycle bottoms because of their stronger positioning.

Sales of new single family homes in the US increased by +7.4% in Mar, driven by sales in the South. Friend Charlie was short homebuilders but ended that trade and said the new 'flyer' trade is to go long.