Have You Said "Thankyou" Once?
[2:19 PM | 0 comments ]

Have You Said "Thankyou" Once?

By Benjamin Picton, senior macro strategist at rabobank

US equities tanked yesterday in their most savage one-day selloff since the early days of Covid in 2020. The NASDAQ was hardest hit, down 5.97%, while the S&P500 and DOW gave up 4.84% and 3.98% respectively. European stocks were also savaged. The CAC40 fell 3.31% and the DAX was down 3.01%. The sharp fall in stock prices leaves US equities well in the red for the year to date, while European equities remain in the black. When asked about the market moves President Trump said: “It is to be expected, this is a patient that was very sick. We inherited a terrible economy.”

Bonds rallied across the board yesterday with US 10-year yields falling by 10bps and 2-year yields dropping by 18bps to cause a dramatic bull-steepening of the Treasury curve. The OIS implied path of the Fed Funds Rate now has four further 25bp cuts priced in by January 2026, compared to three at this time on Wednesday.

Gold prices continued to moderate after hitting fresh all-time-highs of $3,166/oz yesterday, and Brent crude is down 6.42% to $70.14/bbl as markets surmise that sweeping US tariffs spell doom for prospects of global growth. Bitcoin - perhaps the best barometer of pure financial risk - sank by almost 4% to be trading just over $82k.

Of course, the price action over the last 24 hours is all about the ‘Liberation Day’ tariff announcements made on Wednesday. Critics are complaining that the method used by the United States to determine trade barriers faced by US producers is simplistic and doesn’t reflect reality. The Administration counters that everyone else has had plenty of time to address trade imbalances and that the duties that are now being imposed are actually the “kind tariffs”. Have you said “thankyou” once?

The United States pursuing US policy goals to the detriment of friend and foe alike has set off outrage around the world. Emmanuel Macron called for a halt on investment into the United States and Ursula von der Leyen said that the EU will first seek to negotiate down the tariffs, but if that fails the EU will impose “countermeasures” and seek to protect its own industry from cheap goods being dumped into the European market by others (read, China). Limitations have already been enacted on imports of duty-free steel.

Von der Leyen said that she “agree[s] with President Trump that others are taking unfair advantage of the current rules”, but she seems to think that the Americans shouldn’t have done anything about it, and should have opted instead for another round fruitless talks. Presumably, ‘others’ does not include the EU in von der Leyen’s eyes, but try selling agricultural products into the European market from abroad and see how far you get.

China has also vowed retaliation. Trump hit China with a 34% reciprocal tariff rate that will stack on top of the 20% tariffs that are already in place. This is a big problem for China, because their economic model is based on subsidising (over)production and then exporting the surplus into the world’s biggest consumer market: the USA. Europe is now understandably terrified that China’s exportable surplus, having been effectively barred from the USA, is going to end up in their market and add to the existing woes of European manufacturers.

The PBOC allowed the CNY to drift lower yesterday to offset some of the pain of the new tariffs. Could we see more currency weakness to come? And would that incur another step up in tariffs from the USA if it were to happen? You can see how a path is being laid for tit-for-tat trade strikes that could all but close bilateral trade between the world’s two largest economies. That will really be curtains for globalization.

The reaction has been different in the antipodes. Australia and New Zealand are grumbling about their exports (principally beef, wine, dairy and sheepmeat) now being subject to a 10% tariff, but there seems to be a grudging acceptance that the outcome could have been worse and that product will still flow into the US market, albeit at less attractive prices than might have been the case otherwise.

The ‘best response’ being countenanced by Australia and New Zealand is to do nothing, because retaliation would likely achieve nothing aside from antagonizing their security guarantor and pushing up prices for consumers. The US has enormous leverage over both countries by virtue of not only their dependence on the US Navy, but the dependence of their banking sector on US capital markets for funding. Close that funding channel down and watch the richly-valued housing markets in both countries implode and take their economies down with it.

Aussie and Kiwi OIS curves are now implying more rate cuts (4.5 in Australia and 4 in New Zealand), but the US administration might take a dim view of any devaluation of the AUD or NZD that results from more aggressive monetary policing easing. Currency manipulation is on the USA’s list of grievances, but so long as devaluation doesn’t result in a structural trade surplus with the USA it may not be a problem, especially since the USA would like Australia and New Zealand to help it contain Chinese ambitions in the South Pacific.

Conspicuous among the tariff rates announced by President Trump was the low numbers for many South American economies. This appears to be further evidence of a reinvigoration of the Monroe Doctrine in US foreign policy designed to pull Latin America deeper into the USA’s economic orbit. Relatedly, Marco Rubio recently met with his counterpart from Argentina to discuss trade and security ties aimed at countering Cuba, Venezuela and Nicaragua, and the Pentagon just announced a series of arms sales to Ecuador.

Rubio has also been speaking with counterparts in Europe, who he says need to plot a trajectory towards increasing defence spending to 5% of GDP(!). He assured Europeans that the United States remains committed to NATO, and suggested that the USA would need to increase its own spending on defense. That seems sensible given the geostrategic challenges that the United States faces, but it is also at odds with Trump’s previous direction to Pete Hegseth to find ways to reduce defence spending by 8% each year.

So, while in many respects the US policy renovation of recent days is a throwback to past ways of doing things, the policies being embraced pre-date the institutional settlement that has mostly prevailed since the end of WWII. The Washington Consensus appears to be on its last legs and the policy goal of “GDP for GDP’s sake” is being replaced by “GDP for the sake of state aims”. Making America great again entails a shift from a consumption-driven economy to a production-driven economy. The logical corollary here is that American living standards are going to have to be lower as consumption is taxed (via tariffs) to provide an implicit subsidy to domestic producers. There are winners and losers in this process, but overall this is unlikely to be bullish for American living standards in the short run, especially if your living standards are derived from the financialized economy that has been the ‘winner’ from the policy framework of the last 45 years.

Unnamed Senior White House officials are now being quoted as saying that the post-World War Two institutions are “no longer fit for our times and our economic situation”. If there was any doubt before that Trump meant what he said when he claimed “the future does not belong to globalists, the future belongs to patriots”, there can be no doubt now.

Tyler Durden Fri, 04/04/2025 - 15:40
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Pentagon Watchdog Launches Investigation Into SecDef Hegseth Over Use Of Signal
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Pentagon Watchdog Launches Investigation Into SecDef Hegseth Over Use Of Signal

Authored by Zachary Stieber via The Epoch Times,

The inspector general for the Department of Defense is investigating Defense Secretary Pete Hegseth over his use of the messaging app Signal.

Acting Pentagon Inspector General Steven A. Stebbins said in an April 3 memorandum to Hegseth that the probe would cover whether Hegseth and other military personnel complied with Department of Defense policies and procedures for using a commercial messaging application for official business.

“Additionally, we will review compliance with classification and records retention requirements,” he said.

A Department of Defense spokesperson told The Epoch Times in an email, “Per our longstanding policy, we don’t comment on ongoing investigations.”

Hegseth has not reacted as of yet to the development.

Hegseth and other top U.S. officials in mid-March messaged on Signal about strikes in Yemen against Houthi terrorists.

The Atlantic released the messages after Jeffrey Goldberg, its editor-in-chief, was added to the chat group.

Hegseth and the White House have said no classified information was shared.

Developing...

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Intel, TSMC Tentatively Agree On Chipmaking JV In 'America First' Era 
[3:19 PM | 0 comments ]

Intel, TSMC Tentatively Agree On Chipmaking JV In 'America First' Era 

Intel shares are up 5% late in the cash session following a report from The Information that sheds light on ongoing talks between Intel and Taiwan Semiconductor Manufacturing Co. (TSMC) to form a joint venture to operate Intel's chipmaking facilities. Under the proposed deal, TSMC would take a 20% stake in the new company and offer manufacturing expertise and personnel training. 

Two people familiar with the talks between Intel and TSMC provided additional color about the preliminary agreement to form the new joint venture:

Intel and other U.S. semiconductor companies will hold the majority of the shares in the proposed JV, which would include at least some of Intel's existing chip foundries, said the two people. In exchange for the 20% stake, TSMC has discussed sharing some of its chipmaking methods with Intel and training Intel personnel to use them, insteading of funding its stake with capital, one of the people said.

It isn't clear how the rest of the new entity would be funded. The deliberations are ongoing and no final agreement has been reached, the two people said. There's still resistance from some Intel executives concerned that the deal would cause widespread layoffs at the company while subsuming its own chipmaking technology, according to two Intel employees.

The JV was encouraged by members of the Trump administration and is part of the broader 'America First' effort to revive the U.S. chipmaking sector after decades of decay. It also plays into hemispheric defense, where the U.S. will rely less on foreign adversaries for chips.

President Trump has previously accused Taiwan of "stealing" America's chip industry: "You know, Taiwan, they stole our chip business ... and they want protection." However, TSMC has reversed the tide with additional investments in the U.S. - more than $100 billion.

Multiple reports over the last several weeks, including this one from Reuters, have discussed TSMC pitching a JV with Nvidia, Advanced Micro Devices, and Broadcom to operate Intel's factories.

Sources via The Information continued:

White House and Commerce officials have been pressing TSMC and Intel to strike a deal to resolve the long-running crisis at Intel, one of the most iconic U.S. technology firms. Commerce officials who have facilitated the negotiations support the tentative deal, said the two people who have been involved in some of the talks.

. . . 

The proposed joint venture could also help TSMC effectively put down a major, if struggling, competitor and give the Taiwanese government more bargaining power with the Trump administration, which just levied tariffs on goods other than chips from the island.

In February, Robert W. Baird analysts wrote in a note to clients that the Trump administration was working to broker a JV between Intel and TSMC, one which would focus on something we said last August has excess value at the Intel enterprise, namely its fabs... 

In markets, Intel shares are up 5% in late cash trading. On the year, shares are up about 16% on speculation of a deal - shares have been floored around $20 handle. 

Will Intel shares fly in Trump's America First era? 

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Matt Taibbi Files $10 Million Libel Suit Against Dem Rep. For Accusing Him Of 'Serial Sexual Harassment'
[3:19 PM | 0 comments ]

Matt Taibbi Files $10 Million Libel Suit Against Dem Rep. For Accusing Him Of 'Serial Sexual Harassment'

Journalist Matt Taibbi is suing Rep. Sydney Kamlager-Dove for libel, after the California Democrat claimed during her opening remarks in a House Foreign Affairs Subcommittee hearing on Tuesday that he's a "serial sexual harasser."

"To distract from the dumpster fire this administration is pursuing," she said, the Republicans were "elevating a serial sexual harrasser as their star witness."

While Taibbi wouldn't have been able to sue due to lawmaker protections under the Speech and Debate clause of the constitution, Kamlager-Dove was stupid enough to then post those claims on social media; both on X and Blue Sky.

As Taibbi directly notes to Kamlager-Dove via Racket News, "Rep. Kamlager-Dove, no woman has ever accused me of engaging in sexual harrassment once, let alone serially. See you in court. Please do not evade service." 

*  *  *

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Microsoft Scales Back AI Data Center Projects In US, Australia, UK
[2:19 PM | 0 comments ]

Microsoft Scales Back AI Data Center Projects In US, Australia, UK

TD Cowen analyst Michael Elias has explained to clients through multiple notes over the last month that Microsoft has scaled back on data center projects in the U.S. and Europe. This development is unsurprising, as readers have been aware of the emerging risks posed by the cheaper and more efficient Chinese DeepSeek (as noted on Jan. 27), prompting us to question whether AI data capacity will be achieved sooner than initially anticipated.

Another worrying sign for the AI bubble—or rather, a continuation of Elias' reporting on Microsoft scaling back data center projects—comes from Bloomberg, which provides additional color on MSFT supposedly halting data center construction sites in Indonesia, the UK, Australia, Illinois, North Dakota, and Wisconsin. 

Here's more from the report, citing people familiar with talks (list courtesy of Bloomberg):

  • Microsoft recently withdrew from negotiations to lease space between London and Cambridge in the UK at a site being marketed for its ability to host advanced Nvidia chips, according to people familiar with the talks, who requested anonymity to discuss a private matter.

  • The company has also halted negotiations for data center space at a site near Chicago, according to a person familiar with the talks.

  • In some cases, Microsoft is delaying construction. For example, it has paused work on parts of a data center campus it owns about an hour outside of Jakarta, according to people familiar with the situation.

  • Microsoft also has put on hold some planned expansion at a site in Mount Pleasant, Wisconsin, part of a complex visited by then-President Joe Biden, according to another person.

  • In London, Microsoft was negotiating to lease space at Ada Infrastructure's 210-megawatt Docklands data center but has held off on committing to the project, according to people familiar with the matter.

Elias first raised concerns about Microsoft scaling back on AI computing capacity in a note on Feb. 24, in which he stated that Microsoft was terminating AI data center leases. This was followed by a separate note last week, in which the analyst reported that Microsoft had walked away from data center projects in the U.S. and Europe, amounting to a capacity of approximately 2 gigawatts of electricity.

"We continue to believe the lease cancellations and deferrals of capacity points to data center oversupply relative to its current demand forecast," Elias said last week. 

News of the cheaper Chinese DeepSeek—a response to OpenAI's ChatGPT—in late January, which is allegedly 40–50 times more efficient than other large language models, had Goldman's Rich Privorotsky at the time proposing a new theme that spelled bad news for the AI bubble: "If you can do more with less, it naturally raises the question of whether so much capacity is necessary."

The whole "do more with less" theme produced by DeepSeek sparked a debate that AI peak demand capacity could be reached much sooner than Goldman's forecast of late 2026. 

Capex revisions next?

Year to date, Goldman's AI and power baskets have gotten the memo...

Goldman's China AI basket leads US AI baskets.

. . .

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If You Needed Any More Evidence Leftism Is A Mental Disorder...
[2:19 PM | 0 comments ]

If You Needed Any More Evidence Leftism Is A Mental Disorder...

Authored by Steve Watson via Modernity.news,

Social media users have alerted the FBI after a clearly deranged leftist woman posted a video ‘joking’ about assassinating President Trump with an assault rifle.

The bespectacled Karen declares in the video that board games can help “if you’re struggling with your mental health,” before pulling out some sort of Super Mario game and flashing ‘Luigi’ at the camera.

She then weirdly labours the declaration that “We love Luigi,” clearly referring to Luigi Mangione, the guy who is charged with murdering the CEO of United Health Care.

Someone is definitely struggling with their mental health, and it’s her.

The weirdo then pulls out Cards For Humanity, perhaps the most unfunny cringe dross game ever invented, so naturally absolutely adored by NPC leftists. 

She then holds up several cards that ‘joke’ assassinating the president of the United States with an assault rifle makes “life worth living.”

The woman then slurs about how it’s “shocking”awful” but “just comedy, and not serious”… or something.

These people are completely mental and dangerous.

*  *  *

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Fifty Achievements In Fifty Days
[3:19 PM | 0 comments ]

Fifty Achievements In Fifty Days

Authored by Jeffrey Tucker via The Epoch Times,

Many friends of mine are frustrated at what they consider slow progress from the Trump administration. Whatever the pet issue, they want results now, and are otherwise ready to declare failure or betrayal.

This is a reflection of the high hopes of the incoming administration. There was never a way to keep up.

That’s why we should take a few moments to consider the achievements of this administration, which have gone some distance in restoring popular government over whatever we had before.

One feature I noticed on my travels is just how suddenly nice the TSA is at the airports. I could not understand why. Employees very quickly explained their absolute exuberance that the public-sector union that used to be in charge no longer is.

The Trump administration removed collective bargaining privileges and restored normal management. This led to a wave of firings of lazy, troublesome, and incompetent workers, absolutely thrilling everyone else.

This is a massive change that was hardly announced at all. But it has made a dramatic difference.

Prompted by this example, I’ve chronicled 50 changes that the Trump administration has made that have made life dramatically better in record time.

1. Defanged the public-sector unions. This happened with hardly any announcement. It pertains to nearly the whole of the government’s workforce. It has emancipated the employees from their terrible unions and led to the almost immediate elevation of merit over DEI as many employees have explained to me. This is very obvious when you travel. You can actually have a human conversation with TSA employees and passport control.

2. Stopped BOIR. The Biden-era mandate was for all businesses to file a Beneficial Ownership Information Report with the Financial Crimes Enforcement Network of the U.S. Treasury, and do so annually. The mandate added wholly unnecessary bureaucracy. Even more, it was just really strange and scary for every sole proprietor to be required to file this thing as if everyone was a criminal in waiting. The Trump administration stopped it.

3. Ended the hen slaughter. Wholesale egg prices have collapsed from $8 per dozen to only $3 in a matter of weeks, mostly driven by the end of the Department of Agriculture’s work to mandate slaughtering hens in the name of controlling bird flu. Trump’s change of policy has resulted in a big supply boost. The DOA has also stopped the vaccine that was ready for distribution, which would likely have made the chickens sicker.

4. Ended the war on crypto. Since 2013, the federal government has tried to control this sector with reporting requirements, regulations, taxes, investigations, and jail time. Trump has ended this with a new embrace and a favorable push toward the entire sector.

5. The clean-up of the FDA. The main vaccine scientist who had purged the agency of doubters in the past has now announced his resignation, upon pressure from the Trump administration. This has cleared the path for some transparency and an end to the use of this agency as an advertising bureau for Big Pharma.

6. Restoration of free speech. Since 2016 and onward, we have documented proof that government agencies were intervening with media and tech companies to push one political way of thinking and exclude all others. That practice is now fully banned by executive order.

7. The end of DEI. The Trump administration now correctly regards systematic discrimination in the name of DEI to be illegal discrimination; that is, the law is now being consistently applied and DEI programs across government and industry are coming to a quick end.

8. Stopped the migrant invasion. As a long champion of the freedom to migrate, I was shocked to see evidence that the entire system was being gamed to bring about a skewing of voter demographics to keep one party in power. We have the receipts. That is now stopped.

9. RFK at HHS. The leading champion of freedom against lockdowns and vaccine mandates now holds the most powerful position in health in the world, as head of Health and Human Services. He is completely restructuring all agencies under his control.

10. Restoring Science. Jay Bhattacharya is a lead author of the Great Barrington Declaration and a champion of real science. As head of the National Institutes of Health, he is in a position now to restore real science as a priority for this powerful funding source.

11. Busting the Treasury Payment Monopoly. The Treasury’s payment portals have been off-limits to outsiders since 1946, with not a single non-agency person or institution permitted access. DOGE gained that access to reveal some $4.7 trillion in untagged payments in addition to another dozen money printers operating throughout the government.

12. Ferreting out Social Security Fraud. DOGE also discovered millions of people on the Social Security rolls who were too old to be alive, in addition to millions of illegal immigrants who had Social Security numbers and were receiving benefits. That is ending.

13. Ending USAID. This powerful agency has long subsidized far-left causes all over the world, operating as a kind of slush fund with little oversight. That entire agency has been gutted.

14. Gutting the U.S. Institute for Peace. This nonprofit was created by Congress but has long served as a clearing house for compromised diplomats and mostly a welfare state for has-been players in deep-state circles. Having had personal experience with the place, I was thrilled to see the Trump administration fire the entire staff and gut the budget.

15. Stopping the NGO Fraud. DOGE and others have discovered an amazing little racket that consists of putting nongovernment organizations on agency payrolls for billions in funding that have served partisan political ends, including the funding of legacy media. That little money-laundering operation is now under serious pressure.

16. Exposing the press. We have to appreciate what it means that the Trump administration is now longer deferring to the power of legacy media, calling out false stories by the day and refusing to grant exclusive access to the fourth estate. This has been a wake-up call to many not to trust something just because it appears in formerly prestigious venues.

17. Boosting traditional architecture. The Trump administration has pledged to sell off hundreds of ugly federal buildings and bring back architectural grandeur to Washington, D.C. This might be the final nail in the coffin of the Brutalist style, a form of architecture developed as an homage to the prison camp.

18. Bringing together MAHA and MAGA. For generations, crunchy liberals and American patriots had no real connection with each other politically or culturally. Now these teams have joined forces against a common enemy, forming new friend circles and modes of community action.

19. Reducing inflation. Almost to the day, the intensity of inflation diminished from the inauguration. This is due to many different factors, including a change in the velocity of money and also Fed policy which has kept the money stock flat for some six months. In addition, inflation expectations were reduced and thus the prophecy became self-fulfilling. Trump deserves some credit there for making a compelling case that higher productivity is on the way.

20. Stopping the regulatory tsunami. The Trump administration has stopped by executive order all bureaucratic lawmaking. The executive order permissions in a range of products that were ruled out by regulatory edict. It will probably require litigation to make it real but this is extremely promising.

21. Defunding the Green New Deal. The science behind climate change and the support for Green New Deal policy was completely unquestioned in public life for a very long time. Trump has put an end to this, pulling the funding and stopping the march of deindustrialization. This needs to be written into law but it is an excellent start.

22. Ending gender confusion. At some vague moment over the last 5 or 10 years, there was actual confusion in legislation over the biological difference between men and women, as incredible as that sounds. But during this time, men began to refashion themselves as women and compete as such in sports, to the amazement of everyone. Trump had the courage just to announce the truth that there are only two sexes.

23. Stopping the war on gas and oil. For many years, oil and gas, among America’s greatest resources and one of our few remaining competitive industries, faced absurd restrictions. Trump has repealed them all and stopped the absurd subsidies for wind and solar power. The entire “fossil fuels” industry is excited about the future for the first time in perhaps decades.

24. Freeing the prisoners. My good friend Ross Ulbricht, sentenced to more than two lifetimes in jail for creating a website, has been freed. Many more besides: hundreds of people who did nothing wrong were languishing in prison for having protested on January 6. These people are now free, thanks to the Trump administration.

25. Push back on legacy media. The White House now has a competent press secretary who takes on the legacy media, and the 100-year monopoly of the White House Correspondents Association has been shattered, allowing podcasters and new media to have access.

26. Vaccine mandate rollback. Federal employees are no longer required to get the COVID-19 vaccine, which has been proven to be ineffective and potentially harmful.

27. Ending COVID shots on green cards. Many families were separated by this vaccine mandate for green card holders. That is now gone.

28. EV Mandate pause. Automakers have long been forced to devote a portion of their production to making cars that people do not want. That mandate is now gone.

29. Critical Race Theory ban. This theory attacks America in its history and present meaning and was being taught in schools at all levels. The Trump administration has withdrawn all funding for this project, which is designed to spread guilt and shame and tell a false version of history.

30. Transgender military ban. Until recently, transgender people have ascended to great heights within the U.S. military. That has been completely stopped. It is no longer permitted that men can pretend to be women and visa-versa.

31. IRS hiring freeze. The previous administration had hired some 80,000 new tax collectors who are all now fired, to the great celebration of the oppressed middle class.

32. Leaving WHO. The World Health Organization had spent years promoting fake science and lockdowns at U.S. taxpayer expense. The U.S. is now fully out of this organization and the NGOs that backed it are now defunded.

33. Climate accord exit. You remember the fake science of COVID? It turns out that the fake science of climate change was just as bad or worse. The Unites States was actually party to an accord that mandated the Green New Deal. That is now gone.

34. Union dues opt-out. No federal employee is required to pay union dues anymore and most have declined to continue doing so, thanks to a change initiated by the Trump administration.

35. Fisheries deregulation, easing Magnuson-Stevens conservation rules, aiding 10,000 fishermen. This is a technical change but it matters to the heroic people who work daily to bring us food.

36. Small Business tax break. The new 20 percent deduction on new businesses was set to expire but is now back again.

37. Foreign aid audit. Fully $5 billion in foreign aid has been frozen pending a full review of whatever was behind this.

38. Title IX reversal. The previous administration had ruined this regulation by blurring the difference between men and women. The old rule has been restored, which particularly impacts sports.

39. Many JFK files released. Not all the files have come out but the ones we have reveal deep involvement of the deep state in the assassination that rocked the country. We still await many promised releases.

40. Federal land drilling. The Trump administration has opened up 1.5 million acres in Alaska, projecting 50,000 barrels daily.

41. Sanctuary City funding cut. The Trump administration has withheld $200 million from noncompliant cities, pressuring cooperation with the migrant/criminal crackdown.

42. Clean up voter roles. For years, Trump claimed that the 2020 election was compromised. We doubted this. Now we know for sure, based purely on math. Voter ID is now the law of the land. Without verifiable citizen voting, there is no democracy, no freedom, no society run by the people. Trump deserves every credit for seeing this problem and sticking his neck out to defend democracy.

43. Dignified new media. Thousands of citizen journalists have been working for years to cover politics and government but have been denied access and legitimacy. The Trump administration has seen the value they add and treated them with dignity and respect. This is actually huge for information systems and the public mind.

44. Empowered new employees. Trump has not gone along with the usual system of hiring cabinet officials who get chewed up by the bureaucracy. Instead, he has trusted them with massive decisions over their realms, enabling them to hire and fire and determine policy. This is probably the first time this has happened in my life or perhaps 100 years.

45. Focus on Ending international conflicts. The Trump administration has put the cause of peace in the Ukraine war with Russia as a first priority. His insistence on this might have prevented World War III, which is rather important.

46. Dramatic cuts in civil service. In the first days of the administration, Trump invited every employee of the federal government to resign with full severances. About 5-7 percent accepted and all of them have been paid. Then the firings started, just as promised. The downsizing must happen. This process needs to go much further but it has been started.

47. Push for food cleanup. Under the great influence of Robert F. Kennedy, Jr., the U.S. food system is starting to be cleaned up. We have some of the most dangerous food in the world, as anyone who travels internationally can tell you. Maybe this can change, along with the empowerment of local farmers.

48. Banned CBDCs. An executive order has banned Central Bank Digital Currencies and made it clear that America will never have a Chinese-style social credit system linked to our personal financial lives. This has been a gigantic relief, particularly in light of all the debanking that has taken place.

49. Spotlight on the Fed. DOGE is sparing no institution in D.C., not the Pentagon and not even the Federal Reserve, which is to be subjected to a real audit. We shall see how long the power of the central bank lasts but this is the first real challenge it has made since its founding in 1913.

50. Challenged the judges. There are more than 100 cases extant against the Trump administration’s attempt to be the real executive department rather than just a headline group of temporary managers. These lower court judges have presumed to be more powerful than the president that the people elected. They are facing foundational challenges that will surely land in the Supreme Court.

Am I thrilled about everything that the Trump administration has done? No. I have objections on many fronts about which I could write another column. But here is what is critical: these are legitimate differences one might expect in a democracy, which is precisely what Trump is restoring.

I’m fine with argument and disagreement. What is not fine is an administrative state that runs all things from behind the scenes while elected rulers just pretend to be in charge.

All Americans regardless of their political differences should celebrate the enlivening of the democratic imperative, which is what the Trump administration has done, with spectacular results in only three months. Let us hope there is much more to come.

Tyler Durden Tue, 04/01/2025 - 16:20
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The Best And Worst Performing Assets Of The "March Meltdown" And "Queezy Q1"
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The Best And Worst Performing Assets Of The "March Meltdown" And "Queezy Q1"

The first quarter was an incredibly tumultuous period for markets, with the S&P 500 posting its biggest quarterly decline since 2022. 

The main driver of the market volatility according to DB's Jim Reid, was an aggressive round of tariffs, as President Trump launched measures going well beyond his first term, with reciprocal tariffs still looming on April 2. Otherwise, the release of DeepSeek’s AI model early in the quarter led to growing questions about big tech valuations, and the Magnificent 7 ended the quarter in bear market territory. 

But it wasn’t all bad news, and European equities saw a significant outperformance thanks to a huge fiscal regime shift towards higher defense spending. In fact, Q1 marked the biggest quarterly performance gap between the STOXX 600 and the S&P 500 in a decade, and the biggest underperformance of the US vs the rest of the world in 23 years.

Nevertheless, the overall tone was generally risk-off for markets, and as the conversation turned increasingly towards stagflation, gold prices posted their biggest quarterly gain since 1986.

Quarter in Review - The high-level macro overview

Despite the disappointing overall performance, "Queasy Q1" actually got off to a decent start in January. For instance, data over the first couple of weeks pointed to robust growth and demand pressures, including in the US. For instance, the ISM services print was up to 54.0 in December, exceeding expectations, and the prices paid indicator moved up to 64.6, the highest in nearly two years. Then the US jobs report for December showed nonfarm payrolls up by +256k, a nine-month high. And that’s since been revised up to +323k, making it the strongest month since February 2023 on current revisions. Indeed, it also meant there was a sizeable bond selloff in early January, with the 10yr Treasury yield surpassing 4.80% intraday for the first time since late-2023. But that rapid rise in yields reversed course after the US CPI print wasn’t as bad as some feared, raising hopes that the Fed would still cut rates this year.

However, after a strong start in January, markets began to show signs of wobbling towards the end of the month. One of the most important developments was the release of DeepSeek’s new AI model, which raised questions as to the sustainability of big tech valuations in the US. The initial market impact was felt on January 27, with the NASDAQ down -3.07% that day, while Nvidia fell -16.97%. And even though that sharp selloff for the NASDAQ quickly unwound, it raised doubts about the narrative of US tech exceptionalism that had powered the equity market’s advance for the last couple of years. Then in February, Nvidia’s earnings showed the smallest revenue beat in two years, which was underwhelming for investors used to much bigger upside surprises.

Late-January also saw one of the biggest stories of the quarter begin, which was the widespread imposition of tariffs by the United States, after the new Trump administration arrived in office on January 20. Initially, they said that 25% tariffs would be imposed on Canada and Mexico, which led to a risk-off move on February 3, but those were extended by a month at the last-minute, and investors became increasingly relaxed about how things might develop. Indeed, the S&P 500 moved up to an all-time high on February 19, at which point it was up +4.6% in total return terms on a YTD basis.

But as the tariff uncertainty began to mount, markets began to experience much larger risk-off moves. For example, the extension for Canada and Mexico ended, and 25% tariffs were imposed on both on March 4, whilst the additional tariff on China was raised from 10% to 20%. Separately, tariffs on steel and aluminium were imposed at 25% on March 12. And looking forward, investors are still awaiting the reciprocal tariffs, which have been scheduled for April 2.

The tariffs also meant investors became increasingly concerned about higher inflation, which exacerbated existing fears given inflation was still lingering above target across the major economies. For example, the US 1yr inflation swap moved up +72bps in Q1 to 3.25%, its highest level in two years, and the biggest quarterly jump in three years. Moreover, consumers’ inflation expectations also moved higher, and the University of Michigan’s long-term measure moved up to 4.1% in March, the highest since February 1993. Matters weren’t helped by the latest PCE inflation data, which is the Fed’s preferred measure of inflation, where the 3m annualised rate of core PCE was running at +3.6% in February, the highest since March 2024. And at the same time, there were also growing concerns about the US growth outlook, and even mounting speculation about a recession. For instance, the Conference Board’s consumer confidence measure fell to just 92.9 in March, the weakest since January 2021. And the expectations measure fell to 65.2, the lowest since March 2013.

These fears about stagflation led to a clear risk-off move, which gathered pace towards the end of the quarter. So the S&P 500 was initially up +2.8% in January in total return terms, but in February it was down -1.3%, and then in March it fell -5.6%, marking its worst monthly performance since 2022. And for the quarter as a whole, the index was down -4.3%, marking its worst quarterly performance since Q3 2022, back when the Fed were still hiking by 75bps per meeting to deal with rapid inflation. 

Those losses were particularly concentrated among tech stocks, and the Magnificent 7 ended the quarter down -16.0%, having shed -20.7% since its December peak. The US Dollar itself also struggled, with the dollar index down -3.9% in Q1, whilst the Euro was up +4.5% against the US Dollar to $1.08. 

While all that was going on in the US, Q1 also saw an incredible fiscal shift in Europe as the continent moved towards significantly higher defense spending. That followed the German election on February 23, where the incoming coalition proposed a reform of the constitutional debt brake to permit higher defense spending, alongside a €500bn infrastructure fund. Meanwhile at the EU level, the Commission proposed that member states could significantly increase defense spending without triggering the EU’s deficit rules.

The prospect of a significant fiscal stimulus had an immediate impact among European assets. In fact, the announcement saw the 10yr bund yield post its biggest daily jump since German reunification in 1990, moving up +29.8bps in a single day on March 5. Over the quarter as a whole, the 10yr bund yield rose +37bps to 2.74%, and the German DAX was one of the strongest-performing European indices, up +11.3% in total return terms. Significant outperformers included the STOXX Aerospace and Defense Index, which surged +28.9%, whilst the German firm Rheinmetall was up +114.6%. Another result was a notable steepening in yield curves, with the German 2s10s curve moving up +41bps on the quarter to 69bps. And given the sharp policy divergence, Q1 saw the biggest quarterly performance gap in local currency terms between the STOXX 600 (+5.9%) and the S&P 500 (- 4.3%) in a decade.

Finally from central banks, Q1 saw a continued policy divergence across countries. The Fed kept rates unchanged in Q1, and continued to signal two cuts for 2025 in their March dot plot, just as they’d done in December. However, they did slow the pace of QT, with the runoff in Treasury holdings to slow from $25bn to $5bn from April 1. Over at the ECB, they delivered further 25bp rate cuts in both January and March, taking their deposit rate down to 2.50%. Meanwhile in Japan, the Bank of Japan delivered another hike in January, taking their policy rate up to 0.5%, and signalling further hikes ahead.

Which assets saw the biggest gains in Q1?

  • Gold: With inflation concerns mounting, gold prices surged up to an all-time high of $3,124/oz, and their quarterly increase of +19.0% was the most since 1986. 
  • US Treasuries: The risk-off move and mounting speculation of a recession helped to support US Treasuries in Q1, with a total return of +2.9% over the quarter. The 10yr yield itself also moved down -36bps to 4.21%.

Which assets saw the biggest losses in Q1?

  • US equities: In Q1, the S&P 500 was down -4.3% in total return terms, marking its worst quarterly performance since Q3 2022. Those losses were particularly clear for the Magnificent 7, which fell -16.0%.
  • US Dollar: With investors moving out of US assets, the US Dollar struggled in Q1, and the dollar index itself weakened -3.9%. Conversely, the Euro strengthened +4.5% against the US Dollar to $1.08, marking its biggest quarterly jump since Q4 2022.
  • Euro sovereign bonds: The prospect of higher spending led to a selloff among European sovereign bonds, with bunds down -1.8% in total return terms. That included a +37bps rise in the 10yr yield, which ended the quarter at 2.74%.
  • Cryptocurrencies: The risk-off move meant it was a weak quarter for cryptocurrencies, and Bitcoin fell -12.1% to $82,421.

Here are the best and worst performing assets during the March Massacre...

... and here is Queesy Q1:

Source: Deutsche Bank

Tyler Durden Tue, 04/01/2025 - 15:45
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