Putin Offers To Halt Fighting Along Current Front Lines In Ukraine: Report

In a huge development, President Vladimir Putin has offered to halt his invasion of Ukraine across the current front line as part of ongoing efforts to work with US President Donald Trump toward reaching a permanent peace deal. This reportedly happened during ongoing dialogue with Trump's top envoys.

This is according to several sources which spoke to Financial Times, which wrote further in a Tuesday report, "The proposal is the first formal indication Putin has given since the war’s early months three years ago that Russia could step back from its maximalist demands to end the invasion."

"The Russian president told Steve Witkoff, Trump’s special envoy, during a meeting in St Petersburg earlier this month that Moscow could relinquish its claims to areas of four partly occupied Ukrainian regions that remain under Kyiv’s control, three of the people said," FT continues.

Via Sputnik/Reuters

The Kremlin side has not publicly acknowledged this, and so the breaking report should be taken with a grain of salt, given this contradicts Putin's public stance that Russia will never relinquish the four territories which were declared part of the Russian Federation after the Moscow-backed referendums of Sept. 2022.

However, if Russian forces did simply halt their advance based on an agreed-upon freeze in fighting, there would be portions of these territories still not under Russian military control.

The FT report goes on, "The US has since floated ideas for a possible settlement that includes Washington recognizing Russian ownership of Ukraine’s Crimean peninsula, the people added, as well as at least acknowledging the Kremlin’s de facto control over the parts of the four regions it currently holds."

All of this is being reported hours after Ukraine's President Zelensky said he has rejected the possibility of ceding over Crimea, after the Trump administration reportedly offered the 'gift' to Putin of US recognition of Russian sovereignty over the strategic peninsula and home to the Russian navy's Black Sea fleet.

According to Ukrainian media:

Ukraine will not legally recognize Russia's occupation of Crimea under any circumstances, President Volodymyr Zelensky said during a briefing in Kyiv on April 22.

"There is nothing to talk about. This violates our Constitution. This is our territory, the territory of the people of Ukraine," Zelensky told reporters.

Zelensky added, "As soon as talks about Crimea and our sovereign territories begin, the talks enter the format that Russia wants — prolonging the war – because it will not be possible to agree on everything quickly."

Kiev has also recently accused Moscow of using negotiations as a smokescreen while in actuality prolonging the war, also coming off the 30-hour Eastern truce, which saw both sides accuse the other of many violations.

The Financial Times acknowledged this possibility, and the fact that Moscow is in the driver's seat related to any potential settlement that would end the conflict, in the following:

But European officials briefed on US efforts to end the war cautioned that Putin would probably use the apparent concession as bait to lure Trump into accepting Russia’s other demands and forcing them on Ukraine as a fait accompli. "There is a lot of pressure on Kyiv right now to give up on things so Trump can claim victory," one of them said.

The reality remains that if Zelensky can't so much as admit that Crimea will be permanently in Russia's hands, with no hope of Kiev ever getting it back, the prospect of a peace settlement happening anytime soon seems very remote.

But clearly Moscow is seeking to show itself willing to compromise by these overtures, but whether there's much substance or genuineness behind the offer to halt all frontline fighting is another question. At the moment, at least 99.5% of Kursk territory is back in Russia's control. Russia's military also still continues to advance in remaining parts of Donetsk still held by Ukraine, but slowly and village by village.

*  *  *

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Tyler Durden Tue, 04/22/2025 - 14:40

'Soft' Data Slaughter Continues As Richmond Fed Manufacturing New Orders Expected To Be The Worst Ever...

In yet more confirmation that propaganda works, two 'soft' data surveys this morning signal the end of the world is imminent... and it's worse than it's ever been before.

First, we saw The Philly Fed Non-Manufacturing Survey plunge to -42.7 (in April) from -32.5 with current conditions and six-month-forward expectations at their worst levels since the peak of the COVID lockdowns...

Under the hood, Sales and CapEx expectations tumbled while Prices Paid soared to two year highs...

Simply put, firms remained pessimistic and continue to expect declines in activity over the next six months at their own firms and in the region.

The same - but worse - picture was evident with The Richmond Fed's Manufacturing Activity survey which tumbled to -13 (-7 exp) with overall Business Conditions plummeting to -30 - just shy of the lowest levels since the COVID lockdowns...

But, under the hood, it was expectations for New Orders that too the proverbial biscuit, collapsing to the worst levels in history... worse than at the very peak of global supply chain closure during the COVID lockdowns!!!

And Prices Paid are also soaring for Richmond Manufacturers...

And so, the trend continues lower in 'soft' data and higher in 'hard data'...

The question is - will we see a replay of Q2 2024 (where 'hard' data caught down to 'soft') or Q2 2023 (where 'hard' data kept rising and 'soft' data finally shrugged off the sentiment cloud)?

Tyler Durden Tue, 04/22/2025 - 14:20

Gold-Backed Vs USD-Backed Stablecoins: Key Differences

Authored by Dilip Kumar Patairya via CoinTelegraph.com,

What are gold-backed stablecoins, and how do they work?

Gold-backed stablecoins are digital currencies pegged to physical gold reserves and designed to maintain a stable value. The concept of gold-backed digital currencies dates back to the early days of cryptocurrency, with developers aiming to create a reliable store of value. 

Each gold-backed stablecoin represents a specific quantity of gold. For instance, one token might be linked to 1 troy ounce of gold. A troy ounce is a unit of weight used explicitly for weighing precious metals like gold, silver and platinum; it is equal to 31.1034768 grams. 

A third party typically holds the gold reserves to ensure security and transparency. The issuing entity is responsible for maintaining an equivalent amount of physical gold for every token in circulation. 

The token’s price remains closely aligned with the market value of gold. Buyers pay gold's spot price for a token. Similarly, if the stablecoin fails, the tokenholders can redeem their tokens for the gold. Practically, the gold is liquidated for electronic fiat transfers.

Regulators classify gold-backed stablecoins as commodity-backed stablecoins or asset-referenced tokens (ARTs), depending on jurisdiction. Examples of gold-backed stablecoins include Tether Gold , Paxos Gold PAXG and Alloy (aUSDT).

Did you know? On April 1, 2025, Tether Gold (XAUT) traded at $3,165. Its market capitalization was about $780.3 million, with a daily trading volume of $11.03 million.

Advantages of gold-backed stablecoins

Gold-backed stablecoins combine the stability of gold with the flexibility of digital assets. Their blockchain-based nature offers benefits beyond traditional paper gold. 

Here are a few advantages of gold-backed stablecoins:

• Flexible alternative to physical gold: Gold-backed stablecoins function as blockchain-based representations of gold, offering a more efficient and flexible alternative to holding physical bullion. 

• Instant global trading: Unlike traditional gold ownership, these tokens can be stored in cryptocurrency wallets from which you can transfer instantly and trade globally with a nominal transactional fee.

• Access to DeFi applications: They also enable decentralized finance (DeFi) applications, expanding their usability beyond traditional gold investments.

• Better security: Physical gold is vulnerable to theft, loss and damage. Gold-backed stablecoins, stored on blockchain networks, can be more secure.

• Programmability: Gold-backed stablecoins are programmable because they exist on blockchain networks such as Ethereum. This allows them to interact with smart contracts and work with decentralized apps (DApps).

• Divisibility: Splitting physical gold or even paper gold is challenging. However, you can split a single token into several decimal places, which can be recorded on the blockchain.

• Make gold more accessible: Gold-backed tokens enable you to easily access gold. An ounce of gold may be expensive, but you can easily buy 0.001 of a token. 

• Interoperability: When you release a token on a widely used network like Ethereum, it is instantly operable with DApps, DeFi platforms and wallets supported by the network.

Diversification of funds: Investing in gold-backed stablecoins enables you to diversify your funds. It is a unique type of asset that protects you against currency value drops.

What are USD-backed stablecoins, and how do they work?

USD-backed stablecoins are cryptocurrencies designed to maintain a stable value by being pegged to the US dollar. Each token is typically backed by an equivalent amount of US dollars or cash-equivalent assets held in reserve by a financial institution or trust.

For every USD-backed stablecoin issued, the issuing entity must maintain a corresponding reserve amount to guarantee its value. This ensures that holders can always redeem their tokens for an equivalent dollar amount. Examples of USD-backed stablecoins are Tether, USD and Binance USD (BUSD), all of which are used in trading, payments and DeFi.

You can buy and sell stablecoins through crypto exchanges like Binance or Coinbase. To purchase, create an account, complete verification, deposit fiat or crypto and choose a stablecoin such as USDt or USDC. To sell, go to the trading section, select your stablecoin, and exchange it for fiat or another crypto. Some wallets and peer-to-peer (P2P) exchanges also support stablecoin trading.

Did you know? The EU's Markets in Crypto-Assets Regulations (MiCA) have forced crypto exchanges to delist USDT and other non-compliant stablecoins, resulting in a growing market for Euro-backed stablecoins. USDC continues to be a prominent USD alternative in the region.

Advantages of USD-backed stablecoins

USD-backed stablecoins offer several advantages, making them a critical part of the crypto ecosystem. By combining the reliability of fiat currency with the efficiency of blockchain, USD-backed stablecoins play a vital role in digital finance. 

Here are a few advantages of USD-backed stablecoins:

• Steady value: Unlike traditional cryptocurrencies, which experience high volatility, stablecoins maintain a steady value, making them an ideal unit for payments, particularly in exchange for goods and services.

• Liquidity and accessibility: USD-backed stablecoins are widely accepted across crypto exchanges, payment platforms and DeFi applications. This allows traders to move funds quickly between assets without converting crypto back to fiat currency, reducing transaction costs and delays.

• Transparency: Issuers generally provide regular audits and reports on their reserves, which enables users to verify that actual USD holdings back each token. This transparency builds trust among users, issuers and regulators.

• Fast, low-cost international payments: Operating on blockchain networks, USD-backed blockchain networks facilitate fast, low-cost international payments without relying on traditional banking systems. This makes them a preferred option for remittances and cross-border trade.

• Safe haven during market downturns: USD-backed stablecoins offer stability during periods of market volatility. Investors and traders often convert volatile crypto holdings into stablecoins to protect their value without exiting the crypto market entirely.

Still, please note that stablecoins may depeg occasionally because of several macro and microeconomic factors. 

Macro factors include changes in economic conditions, such as inflation or an increase in interest rates. Micro variables involve differences in market conditions, such as changes in the underlying collateral and problems with liquidity. 

When Silicon Valley Bank failed in March of 2023, the USDC stablecoin deviated from its peg because $3.3 billion of its reserves were held there.

Did you know? Stablecoins are of four types: fiat-collateralized, crypto-collateralized, algorithmic and commodity-collateralized. Algorithmic stablecoins have gradually gone out of favor.

Key differences between gold-backed and USD-backed stablecoins

Gold-backed and USD-backed tokens are stablecoins, yet they differ in several ways. This comparison explores the fundamental differences, focusing on their backing assets, price stability, liquidity, adoption and primary use cases:

Backing asset: Physical gold vs fiat reserves

Gold-backed and USD-backed stablecoins differ primarily regarding the collateral that supports their value. Gold-backed stablecoins are tied to physical gold, usually at a fixed ratio, while some USD-backed stablecoins are backed by a reserve of US dollars, short-dated and cash deposits.

Price stability: Long-term vs short-term

The value of gold-backed stablecoins fluctuates depending on the market price of gold, which can experience short-term volatility but tends to appreciate over the long run. USD-backed stablecoins maintain a 1:1 peg to the dollar, ensuring more predictable short-term stability. Their value remains steady unless external factors, such as regulatory changes or mismanagement of reserves, impact the peg. 

Liquidity and adoption: Use of USD-backed in DeFi applications

USD-backed stablecoins are more liquid and widely accepted in the crypto ecosystem, including exchanges, payment systems and DeFi applications. They are frequently used for trading and lending. Moreover, many countries in Latin America, such as Bolivia, have adopted USDC for payments. Gold-backed stablecoins, while useful for preserving value, are less commonly integrated into DeFi protocols due to low liquidity concerns.  

Use cases: Value storage 

Gold-backed stablecoins serve as a hedge against inflation, appealing to investors seeking growth. USD-backed stablecoins are preferred by investors seeking stability and value storage. USD-backed stablecoins are used for everyday transactions, trading and financial services, thanks to instant liquidity and ease of use.

Regulatory considerations: Compliance

Gold-backed stablecoins and fiat-backed stablecoins differ in regulation due to their underlying assets. For instance, specific regulations such as the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act) and the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act have emerged in the US for USD-backed stablecoins. However, no specific regulations exist for gold-backed stablecoins as of March 31, 2025, though they are expected to adhere to the usual banking and financial regulations.

Can gold-backed stablecoins surpass USD-backed coins in adoption?

Two factors favoring gold-backed stablecoins are their inflation-resistant properties and long-term stability. As Bitcoin advocate Max Keiser points out, gold enjoys greater global trust than the US dollar, particularly among nations with strained relations with the US. 

But is this enough for gold-backed stablecoins to get ahead of its more celebrated competitor?

USD-backed stablecoins, often under scrutiny in the days of the Biden administration, are now enjoying the support of the US government headed by President Donald Trump. The current dispensation views USD-backed stablecoins as a potent tool to maintain the status of the US dollar as the world's reserve currency. While the Trump administration has been crypto-friendly since it took over, its support of the GENIUS Act and the STABLE Act, which await Congressional approval, is further testimony of this approach.

Treasury Secretary Scott Bessent has emphasized stablecoins as a strategic tool for sustaining the dollar’s reserve currency status. Federal Reserve Governor Christopher Waller has echoed this sentiment, supporting stablecoins as a means to uphold US dollar hegemony.

Still, countries including Russia, China and Iran, arch-rivals of the US, might prefer gold-backed stablecoins over USD-backed stablecoins because the bullion-powered coins may help them limit the influence of the US dollar. According to Keiser, China and Russia collectively hold around 50,000 tons of gold, more than officially reported. If true, this gold could be used to roll out gold-backed stablecoins.

If gold-backed stablecoins gain wider adoption, they could challenge the US government’s efforts to maintain dollar dominance through stablecoins. To that end, stablecoin issuer Tether introduced Alloy (aUSDT) in June 2024, a gold-backed digital asset tied to Tether Gold (XAUT), a token representing claims on physical gold. 

Gold-backed stablecoins resemble the gold-backed US dollar before 1971. That was the year when President Richard Nixon abolished the convertibility of the US dollar to gold. XAUT has enjoyed a 15.7% price increase year-to-date, suggesting the growth potential of the bullion-backed stablecoins.

While gold-backed stablecoins present a compelling alternative, the battle for dominance between gold and USD-pegged stablecoins remains ongoing, influenced by geopolitical factors, financial policies, and market demand.

Tyler Durden Tue, 04/22/2025 - 14:00

Buyers Strike Arrives: Foreign Demand For 2Y Treasury Auction Craters To 2 Year Low

For much of April, and certainly following the vomit-inducing surge in 10Y yields two weeks ago, the biggest question in the market has been whether China is dumping their roughly $1 trillion in treasuries. And while we won't know until June when the April TIC data hits (and even then the data is at best mixed), moments ago we found something just as important: the Chinese are certainly no longer rushing to buy US paper, something we learned following today's 2Y auction which saw a dramatic plunge in Indirect (i.e. foreign) demand.

Let's back up.

Today's $69 billion auction priced at a high yield of 3.795%, down from 3.984% last month and the lowest since last September. It also tailed the 3.789% When Issued by 0.6bps, this was the first tail since January and the biggest tail since October.

But while the small tail could be glossed over, the first sign of trouble was today's bid to cover which slumped from  2.66 to 2.52, the lowest since October, and below the six-auction average of 2.64.

But things really went off the rails when looking at the internals, where unlike the recent set of 3/10/30 auctions which saw Direct bids collapse, the Direct award in today's 2Y was solid, in fact at 30.1%, it was one of the highest on record. The problem is that the surge in Directs came at the expense of a plunge in Indirects, or foreign buyers, which tumbled to a two year low. As shown below, the April Indirect takedown was just 56.2%, the lowest since the depth of the bank bailout crisis in March 2023.

in other words, while Indirect demand was strong 2 weeks ago, it has since collapsed, and if drops another 10-20% lower, the Fed may have no choice but to restart QE to provide what it is explicitly supposed to do: be a Buyer of Last Resort backstop to the US treasury.

Finally, with surging Directs, and plunging Indirects, Dealers ended up holding on to 13.7%m above last month's 10.7%, and modestly above the recent average of 11.6% if hardly an outlier print.

Overall, this was a very mediocre - at best - auction, but it could have been far worse if Directs had not stepped in to fill the void left by the suddenly buyer's strike from Indirects, i.e., foreigners, i.e., China.

So keep a close eye on the week's remaining coupon auctions: unlike two weeks ago when all eyes were on the Directs, we are finally down to brass tacks, and keep a close eye on the only metric that matters: whether foreigners are finally done funding the trillions and trillions of US debt, leaving only the Fed's QE as an option.

Tyler Durden Tue, 04/22/2025 - 13:48

Goldman Finds First Solar "Well-Positioned" To Benefit From US Tariffs On Asian Panel Producers

With the Trump administration preparing to impose new tariffs on U.S. solar imports from four Southeast Asian nations, Goldman analysts see Arizona-based First Solar as the top beneficiary, calling it "the leading U.S. panel manufacturer best positioned to gain from escalating trade protections."

The U.S. Commerce Department announced the new tariffs on Monday, stemming from a year-long trade investigation. The investigation found that solar manufacturers in Cambodia, Vietnam, Malaysia, and Thailand benefited from government subsidies that dumped low-cost panels into the U.S. market, undercutting domestic producers and harming the American solar manufacturing industry. 

Cheap solar panels from Cambodia could face tariffs as high as 3,521%, mainly due to non-cooperation by solar manufacturers targeted in the U.S. investigation, which began under the Biden-Harris administration. Chinese manufacturer Jinko Solar's panels produced in Malaysia are set to be hit with a 41% tariff, while Trina Solar's products from Thailand face duties of 375%.

"This is a decisive victory for American manufacturing," said Tim Brightbill, partner at Wiley Rein and lead counsel for the coalition of solar companies that pursued the case, which Bloomberg quoted. 

Brightbill said the findings in the new report confirm "what we've long known: that Chinese-headquartered solar companies have been cheating the system, undercutting US companies and costing American workers their livelihoods." 

Goldman analysts Brian Lee, Nick Cash, and Tyler Bisset told clients that First Solar (FSLR) is the big "winner" here...

"Within our coverage of solar panel manufacturers, we continue to view FSLR as the main beneficiary from any incremental tariffs. As the leading solar manufacturer within the U.S., the company could be well positioned to raise ASPs," the analysts said. 

FSLR shares are up 7% in premarket trading. As of Monday's close, shares were -31% on the year and down more than 58% since peaking around $300 a share last June. 

Among other movers in the space: Sunnova Energy +5.6%, SolarEdge Technologies +3%, Array Technologies +1.7%, and Enphase Energy +1.2%.

Tyler Durden Tue, 04/22/2025 - 13:40

 

I had a great conversation with Eric Markowitz of The Big Think about HNTI. He focuses on all the right things:

“As Ritholtz puts it, “The book is ostensibly about investing. But if you strip it down to its most basic form, it’s about decision-making, judgment, and behavior.” He likens smart investing to participating in humanity’s progress — buying into the slow, compounding gains of innovation, from safer cars to better sneakers. But he also warns about the instincts that evolved to protect us — like our fear of uncertainty — which now work against us in the markets.”

There is a lot more — and its very different than most of the book media I do… Source:
The Barry Ritholtz Interview: “Smart is good. Smart and lucky is better”
Eric Markowitz The Long Game, April 15, 2025

The post The Big Think: “Smart is good. Smart and lucky is better” appeared first on The Big Picture.

Container Orders Plummet - Trade Deals Now Or Economic Depression Soon

Authored by Daniel Lacalle,

Global container booking volumes fell by 49% between the last week of March and the first week of April 2025, according to Freight Waves. Imports from China to the United States collapsed by 64%, with imports of apparel and textiles declining by a whopping 59% and 57%, respectively. The figures coming from shipping companies are worse than those seen during the Covid-19 crisis.

These alarming figures suggest that importers are unwilling to accept higher prices in the middle of a tariff war, that exporters cannot simply choose to move their products elsewhere easily, and that the excess capacity in many sectors is much larger than initially expected.

No one wants to accept the cost of tariffs, and this means that the only option for the economies with elevated productive overcapacity is to negotiate a trade deal, and quickly, or face an economic depression.

The mainstream view about tariffs was that United States consumers would pay the entire negative impact. This news suggests otherwise. The purchasing power of importers is higher than expected. 

The number of order cancellations is so large that ports in China have had to take emergency measures to address the challenges created by piles of unsold containers.

The negative impact is enormous on ports, as fees plummet, but we cannot forget the dramatic effect on producers with excess capacity. Many global exporters are going to face bankruptcy if no trade deal is reached due to insufficient working capital.

In the European Union, leaders are concerned that the trade war between the United States and China will bring a flood of cheap products from China that could endanger local producers and create a significant economic problem.

Many exporters are facing a harsh reality: They cannot sell their products if they don’t export them to the United States, and the importers are not going to accept higher prices due to tariffs.

The reason why exporters cannot pass the cost of tariffs to United States consumers is because most of the products they delivered to America were only attractive because they were exceedingly cheap. When prices rise, demand decreases significantly. The tariff war has shown that demand is not inelastic.

The collapse in container orders proves Menger’s imputation theory. Output prices determine factor prices, not the other way around.

The unsustainable state of global shipping will compel countries to expedite trade agreements with the United States, failing which they risk a cascade of economic collapses within their business structures.

The slump in container orders proves that United States importers are not going to accept any price, that excess capacity in the main retail sectors is enormous, and that there is no straightforward alternative for American consumers.

If you believed that other countries would hesitate to negotiate trade agreements with the United States, you need to reconsider.   The American consumer loves cheap products but does not want the same goods at twice the price.

The United States economy may suffer a contraction due to this sudden slump in imports, but the consequences are much larger for the exporter nations.

The outcome is not positive for any country, so there is only one choice to make: negotiate or lose. If countries fail to establish significant trade agreements with the United States in the near future, their retailers are likely to face a severe working capital crisis.

Tyler Durden Tue, 04/22/2025 - 13:20

Wells Fargo Analysts Say Amazon Paused Some Data Center Lease Commitments

First came China's "Deep Seek" moment at the start of the year. Then TD Cowen's Michael Elias told clients Microsoft was scaling back data center projects in the U.S. and Europe. Shortly after, Goldman Sachs pulled forward its peak data center forecast to this year. Now, Wells Fargo analysts report that Amazon has paused some data center lease negotiations for its cloud division.

"Over the weekend, we heard from several industry sources that Amazon Web Services (AWS) has paused a portion of its leasing discussions on the colocation side (particularly international ones)," Wells Fargo analysts wrote in a note on Monday, adding, "The positioning is similar to what we've heard recently from MSFT." 

The analysts noted that Amazon is not canceling signed deals. Instead, they're digesting recent aggressive lease-up deals. 

"It does appear like the hyperscalers (big cloud companies) are being more discerning with leasing large clusters of power, and tightening up pre-lease windows for capacity that (would) be delivered before the end of 2026," the analysts said, noting that Meta and Alphabet-owned Google remain active in data center leasing. 

Kevin Miller, Vice President of AWS Global Data Centers, downplayed the Wells Fargo report in a LinkedIn post, calling the move "routine capacity management" and stating that there have been no recent fundamental changes to Amazon's expansion plans.

After the unveiling of China's ultra-cheap DeepSeek rival to ChatGPT in January, TD Cowen's Michael Elias, a month later, first reported on Microsoft data center order cancellations - followed by a more recent note from the analyst that specified the big tech firm has 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 wrote in a note last month. 

Just a few weeks ago, Goldman's James Schneider, Michael Smith, and others revised their peak data center capacity forecasts forward to 2025 (from late 2026). 

As soon as the Deep Seek moment happened. We said this development will likely revise the forecast. 

And that's precisely what happened. 

The peak data center capacity forecast was issued in January. 

April's revision.

Meanwhile, Amazon CEO Andy Jassy recently told CNBC's Andrew Ross Sorkin that he did not forecast any cuts in data center construction. 

Tyler Durden Tue, 04/22/2025 - 13:00

Goldman Sachs economists put out a note this morning: When Will Growth Slow, and When Will We Know?

A few brief excerpts:

Most of the sequential inflation increases in the last trade war took place within 2-3 months of the tariffs’ implementation, and we expect spending growth to slow shortly after prices start rising.
...
[W]e expect to see continued softness in the survey data before the hard data start to weaken around mid-to-late summer. Our analysis cautions against dismissing the current deterioration in the survey data despite their recent record, and the evolution of the data in recent weeks is consistent with previous “event-driven” growth slowdowns. Still, it is too early to draw strong conclusions from the limited data we have so far, and we will continue to watch for indications of slower growth in the coming months.

It will take some time for tariffs and policy uncertainty to show up in the hard data. I think we will start seeing the impact of tariffs on inflation in the May or June reports (released in June and July).

We might see the impact earlier on New Home sales. New home sales are reported when the contract is signed, so the report tomorrow will be for contracts signed in March (prior to the April 2nd tariff shock).  But we might see policy and the stock market sell-off impacting April new home sales in the May report.

Nearly Half Of US Home-Sellers Are Offering Buyer Concessions

Authored by Chase Smith via The Epoch Times,

Nearly half of U.S. home sellers gave concessions to buyers in the first quarter of 2025, as rising housing costs, high interest rates, and a growing supply of homes have made buyers more cautious, according to a new report from Redfin.

The technology-driven real estate broker reported that 44.4 percent of home-sale transactions included a concession—such as funds for repairs, closing costs, or mortgage-rate buydowns—up from 39.3 percent a year ago and close to the record 45.1 percent seen in early 2023.

“When buyers have more options to choose from, it typically means they have more negotiating power,” the report stated. 

“Plus, Redfin agents report that many homes are overpriced, which often means they linger on the market, forcing sellers to offer concessions to find a buyer.”

The concessions reflect a shift in the housing market, which has become more favorable to buyers due to reduced demand and increased competition among sellers, the report stated. Listings have now reached a five-year high, giving buyers more options and leverage.

“Buyers used to ask for concessions to cover little things like repairs,” said Chaley McVay, a Redfin Premier real estate agent in Portland, Oregon.

“Now they’re negotiating concessions so they can afford to buy a home. A lot of sellers are offering money for mortgage-rate buydowns, and I recently had one seller cover seven months of HOA fees for the buyer.”

McVay noted that many sellers are concerned about their net proceeds, especially those who purchased at market peaks in 2021 and 2022 and may now face higher mortgage rates if buying again. Concessions can help close deals without reducing list prices, she said.

Seattle saw the highest increase in concessions among major U.S. metropolitan areas, with 71.3 percent of home sales including concessions—nearly double the 36.4 percent rate a year ago. 

Portland followed with a 63.9 percent rate, up more than 14 percentage points. Los Angeles, San Jose, and Houston also posted notable increases.

In contrast, New York City saw the sharpest decline, with just 5.5 percent of sellers providing concessions, down from 21.2 percent. 

Miami, San Antonio, Tampa, and Phoenix also saw declines, as sellers in these markets have already adjusted pricing expectations due to prolonged cooling trends.

In addition to concessions, some sellers are lowering their asking prices or accepting offers below the list price.

Redfin found that 21.5 percent of homes sold in the first quarter went for less than asking and included a concession, while nearly 10 percent had a concession, a price cut, and a final sale below the original list price.

Economic uncertainty appears to be weighing on prospective homeowners as well. Approximately 13 percent of pending home sales were canceled in March, equating to roughly 52,000 canceled transactions.

This marks the third-highest March cancellation rate since 2017, following a pandemic-driven peak in 2020.

Tyler Durden Tue, 04/22/2025 - 11:40

4 More Democrats Travel To El Salvador To Push For Alleged Wife Beater's Release

Authored by Rachel Acenas via The Epoch Times (emphasis ours),

Four more Democratic lawmakers have traveled to El Salvador to push for the release of Kilmar Abrego Garcia, the man at the center of a high-profile deportation by the Trump administration.

U.S. Rep. Maxwell Frost (D-Fla.) speaks during a press conference on the liberation of Salvadoran Kilmar Abrego Garcia in San Salvador, El Salvador, on April 21, 2025. Marvin Recinos/AFP via Getty Images

U.S. Reps. Yassamin Ansari (D-Ariz.), Maxine Dexter (D-Ore.), Robert Garcia (D-Calif.), and Maxwell Frost (D-Fla.) arrived in El Salvador on Sunday.

This comes after Sen. Chris Van Hollen (D-Md.) made the trip last week.

In a news conference Monday in El Salvador’s capital, the four representatives and Abrego Garcia’s lawyer said they were in El Salvador “demanding his safe return home.” The group said they hoped to continue to pressure authorities for his release, and that their petition to meet with Abrego Garcia was denied.

Frost said the representatives were in El Salvador to “build off the work” of Van Hollen and that they were inquiring about where Abrego Garcia was being held and under what conditions.

Chris Newman, a lawyer representing the deportee, added that his primary concern was Abrego Garcia’s access to counsel.

“We know nothing of Mr. Abrego Garcia’s whereabouts since the staged photo op on Thursday with Senator Van Hollen,” Newman said. “We demand to immediately know where he is and to have access to him.”

Chris Newman, lawyer of the Abrego Garcia family, speaks during a press conference on the liberation of Salvadoran Kilmar Abrego Garcia in San Salvador, El Salvador, on April 21, 2025. Marvin Recinos/AFP via Getty Images

The White House press office issued a statement Monday that said the past week “has shown Americans everything they need to know about Democrats’ priorities.”

The White House accused the representatives of “picking up their party’s mantle of prioritizing a deported illegal immigrant MS-13 gang member over the Americans they represent.”

MS-13 and other international criminal gangs were designated as terrorist organizations by the U.S. government earlier this year. Illegal immigrants who are suspected and confirmed members of such groups were prioritized for deportation by the Trump administration in March.

Van Hollen said he met with Abrego Garcia last week to check on his well-being on behalf of his family and to push for his release. The lawmaker was initially denied a visit with Abrego Garcia, but the Maryland senator was ultimately granted permission to talk with him and shared a photo of their meeting.

Sen. Chris Van Hollen (D-Md.) speaks with Kilmar Abrego Garcia (L) in a hotel restaurant in San Salvador, El Salvador, on April 17, 2025. Press Office Senator Van Hollen via AP

Van Hollen said he was the first lawmaker to visit El Salvador on this case and suggested there would be more.

Earlier this month, Reps. Garcia and Frost sent a letter to House Oversight Committee Chairman James Comer (R-Ky.) to request authorization for a congressional delegation to visit the maximum-security prison in Tecoluca where Abrego Garcia was held.

After Comer rejected their request, the lawmakers planned their own independent trip.

According to Comer, an official congressional delegation trip for this purpose would be a waste of taxpayer money.

“Your request to visit a foreign MS-13 gang member in El Salvador on taxpayer dollars ... has been denied,” the Oversight Committee wrote in a post on X sharing Comer’s response to the request.

“Please respect the money of the American people,” Comer said in his letter.

Earlier this month, the U.S. Supreme Court ordered the Trump administration to “facilitate” the return of Kilmar Armando Abrego Garcia to the United States from a Salvadoran prison. The Trump administration initially said it had made an “administrative error” in deporting him to his home country despite a 2019 order preventing his deportation there, where the court determined that he would face danger.

Lawyers for the federal government said in court last week that they don’t have the power to secure Abrego Garcia’s release because he is in the custody of a foreign country. El Salvador President Nayib Bukele has publicly stated that he has no intention of returning him.

Abrego Garcia was in the United States illegally and had a deportation order before the 2019 court order determined that he would face danger in El Salvador.

According to documents released by the U.S. Justice Department, two separate judges and the Prince George’s County Police Department had found that he was affiliated with the MS-13 gang based in part on “a past proven and reliable source” who said that Garcia was an “active member of MS-13 with the Westerns clique” with the rank of “Chequeo.” Garcia was also wearing clothing known to be affiliated with gang membership, according to the documents.

He was also questioned by the Tennessee Highway Patrol and suspected of being involved in human trafficking.

Documents released by DHS also reveal that Abrego Garcia's wife sought a restraining order for domestic violence a year before the traffic stop.

In May 2021, a document signed by a judge described allegations of a "violent encounter." The case was eventually dismissed when his wife, Jennifer Vasquez, failed to appear for a final court hearing in June 2021.

According to White House press secretary Karoline Leavitt, even if Abrego Garcia was returned to the United States, “he would immediately be deported again.”

The Associated Press contributed to this report.

From NTD News

Tyler Durden Tue, 04/22/2025 - 11:00

The post China’s Growth Leaves Trump’s MAGA USA in the Dust appeared first on CEPR.

Ukraine Finally Squeezed Out Of Kursk As Russian Army Retakes Key Monastery

Tass news agency is reporting that Moscow forces are poised to liberate the last village still held by Ukraine forces in the southwestern Kursk region. This final battle will bring 100% of Kursk oblast back under full Russian control.

"Our soldiers liberated the St. Nicholas Belogorsky Monastery in Gornal during fighting," a source was quoted in the report as saying. The operation which focused on regaining the 17th century monastery and its environs took "more than a week."

St Nicholas Belogorsky Monastery in Kursk. Source Michael Ovseychik/iStock/The Telegraph

"The resistance of the Ukrainian Armed Forces has been broken," the source was quoted further as saying, and alleged that the Ukrainian troops were using the monastery as a "military facility."

The remaining Ukrainian troops in Kursk appear to be squeezed and in the throes of their final effort to hold on to some Russian territory inside the border, as the liberated monastery is on the northeastern edge of Gornal and located less than 30 kilometers to the northeast of the city of Sumy inside Ukraine.

Russia’s Chief of the General Staff Valery Gerasimov informed President Vladimir Putin on Saturday that 99.5% of the Kursk region has been regained by Russian forces.

At the height of the cross-border offensive which began last August, Ukraine's military had seized just over 530 square miles, but regional reports now say that significant figure is down to less than just 20 square miles.

The operation to retake Kursk has clearly gained new impetus over the last several weeks, and likely Putin wants to achieve its full liberation in order to avoid negotiating an exchange of territory. What little leverage Zelensky had has now been effectively quashed. 

Konstantin Remchukov, the editor of the Nezavisimaya Gazeta newspaper, wrote Sunday that "As soon as the last 0.5% is liberated, then the troops can stop where this news finds them." And so these Russian troops can also be diverted to the main battlefield in eastern Ukraine, where Moscow forces also have the forward momentum.

Meanwhile in fresh Wednesday statements, Putin spokesman Dmitry Peskov made clear the Kremlin is no rush to push through a ceasefire deal. The conflict "cannot be expected to be resolved overnight," he said.

"We continue our contacts with the Americans through various channels. The issue of the [Ukrainian] settlement is extremely complex, of course, so it is hardly possible to set some hard deadlines and try to rush the resolution of the conflict into a shortened timeframe. This would be an exercise in futility," he told broadcaster VGTRK.

Above: Map showing close proximity of the monastery to the Ukrainian border.

"But the work [on settling the Ukrainian crisis] is indeed ongoing," Peskov stated. Zelensky has accused the Russians of not really being interested in peace, and has alleged it's just using negotiations to distract and make advances on the battlefield while trying to improve its reputation internationally. 

Tyler Durden Tue, 04/22/2025 - 10:40

DOJ Announces RICO Charges Against 27 Alleged Venezuelan Gang Members

Authored by Joseph Lord via The Epoch Times,

The Department of Justice (DOJ) on April 21 announced that 27 alleged members or affiliates of the Venezuelan gang Tren de Aragua (TdA) had been charged under legislation designed to bring down criminal enterprises.

The allegations against those charged included committing robberies and shootings, sex trafficking and organized prostitution of women brought into the United States illegally from Venezuela, robbing and extorting small businesses, and trafficking a drug called “tusi,” which contains ketamine, that the DOJ described as the gang’s “calling card” in a statement announcing the charges.

The indictments were filed against those suspected to be current members of TdA, which is designated a terrorist organization by the federal government, and members of “Anti-Tren,” a group the DOJ said is largely composed of past TdA members.

The DOJ said the case is part of “Operation Take Back America,” described as “a nationwide initiative that marshals the full resources of the Justice Department to repel the invasion of illegal immigration, achieve the total elimination of cartels and transnational criminal organizations, and protect our communities from the perpetrators of violent crime.”

The case fits into President Donald Trump’s broader hardline stance against gangs like TdA and MS-13.

Attorney General Pam Bondi also released a statement on the indictment, saying, “Tren de Aragua is not just a street gang—it is a highly structured terrorist organization that has destroyed American families with brutal violence, engaged in human trafficking, and spread deadly drugs through our communities.”

Bondi said that the indictments and arrests made in connection with the case spanned three states and that they’re poised to “devastate TdA’s infrastructure.”

The federal law being used to charge the more than two dozen individuals, the Racketeer Influenced and Corrupt Organizations Act (RICO), was introduced in the late 20th century as a measure to break up the mob. However, it’s broad enough to permit widespread application to any type of corrupt organization.

To convict under RICO, prosecutors must prove that one or more “enterprises”—meaning any organization dedicated to an end goal, whether corporate or criminal—engaged in a pattern of criminal behavior. Specific federal charges are eligible for prosecution under RICO, and any RICO case must involve at least two of those charges being committed within a 10-year period.

RICO is an indictment even hardened criminals have come to fear, as its specific mechanisms allow prosecutors to charge far more liberally, and with far harsher prison sentences, than in many other types of criminal proceedings.

To meet the law’s requirements of the definition of an “enterprise,” which must be dedicated to one or many end goals, the DOJ broadly defined the goal of TdA as “preserving and protecting the power and territory of TdA and its members and associates through acts involving murder, assault, robbery, other acts of violence, and threats of violence.”

Additionally, the DOJ said TdA sought to “[enrich] the members and associates of TdA” through sex trafficking young women into Peru and the United States, trafficking controlled substances,  and armed robbery.

Six of those affiliated with the mainline TdA were indicted.

The other 21 involved members of Anti-Tren, which operated in multiple New York City boroughs, including the Bronx and Queens, and in New Jersey, and elsewhere. The DOJ said its members are “almost exclusively” former TdA members who broke away.

The justification for the Anti-Tren indictments under RICO is identical to that given for TdA.

Xavier Donaldson, an attorney representing one of the defendants, declined to comment. Other lawyers listed on the court docket for defendants did not return inquiries.

The charges come amid an ongoing dispute between the United States, El Salvador, and Venezuela over the handling of Venezuelan nationals convicted and deported by the Trump administration.

Under a $6 million agreement between the United States and El Salvador, many of those deported have been housed at El Salvador’s CECOT prison.

Venezuela’s socialist regime, which currently detains several dissidents recognized internationally as political prisoners, claimed that deported Venezuelan gang members detained at CECOT were themselves political prisoners.

On April 20, Salvadoran President Nayib Bukele proposed a swap of all Venezuelans currently in Salvadoran custody in exchange for an identical number of Venezuela’s anti-regime political prisoners.

Venezuela has rejected the deal and called for the immediate and unconditional release of detained Venezuelans.

Tyler Durden Tue, 04/22/2025 - 10:20

Today, in the CalculatedRisk Real Estate Newsletter: NMHC on Apartments: Market conditions Tightened in Q1 pre-Tariffs

Excerpt:

From the NMHC: Apartment Market Sees Tighter Conditions, Rebounding Deal Flow and Improved Debt Financing in First Quarter

Changes in U.S. trade policy over the past two weeks have impacted global financial markets, causing stock prices to fall (and then partially recover) and long-term yields to increase amidst a retreat of capital from U.S. Treasuries.

This volatility had a noticeable effect on apartment market sentiment captured in the National Multifamily Housing Council’s (NMHC’s) latest Quarterly Survey of Apartment Market Conditions. More specifically, apartment executives who responded to this month’s survey after the announcement of tariffs on April 2nd—as opposed to the roughly half of respondents who responded in the days prior—were more likely to report worsening conditions for debt and equity financing as well as decreasing sales volume over the preceding three months.
...
• The Market Tightness Index came in at 52 this quarter – above the breakeven level of 50 for the first time since July 2022 – indicating tighter market conditions. This also appears to be the only index value that wat not meaningfully affected by market volatility this round (it makes sense that it would take longer to observe changes in the supply and demand for physical apartment space).

However, take this quarter’s survey results with a grain of salt. As economists at the NMHC mentioned, the negative impact of policy was probably not picked up in this quarter’s market tightness index.

There is much more in the article.

Ker-Powell! To The Liberal World Order

Authored by Michael Every via Rabobank,

President Trump just landed another comic-book punch on Fed Chair Powell: 

""Pre-emptive Cuts” in Interest Rates are being called for by many…. there can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW. Europe has already “lowered” seven times. Powell has always been “Too late”, except when it came to the Election period when he lowered in order to help Sleepy Joe Biden, later Kamala, get elected. How did that work out?”

To be honest, Trump is saying many of the same things that many of those covering the Fed in markets are too - just far less politely; and very inappropriately in the eyes of those same commentators… because they are allowed to criticize an independent central bank and take market positions to bend it to their will, but politicians are obviously not. 

That’s part of the Liberal World Order (LWO).

And how did that work out?

Pope Francis died on Easter Monday, his last speech after having met US Vice President Vance having stated: “How much contempt is stirred up at times towards the vulnerable, the marginalised, and migrants. I appeal to all those in positions of political responsibility in our world not to yield to the logic of fear which only leads to isolation from others, but rather to use the resources available to help the needy, to fight hunger and to encourage initiatives that promote development.” President Trump will attend the funeral in Rome, expected by April 27, then the world has another key election to focus on.

That’s as Canada’s and Australia’s white smoke looms as both sweat about the end of the LWO. In Oz, ridiculously, it’s still all about housing. Just as silly, Politico asks ‘Could Canada join the EU? Unlikely … but not impossible’ --as if ‘European’ in European Union doesn’t mean anything, and the US would just watch that happen without acting vs. it-- and as Canadian PM Carney says he wants to increase federal spending by 1% of GDP for the next four years to ‘Trump-proof’ the economy if he wins. As if that is possible either.

The chief of the World Economic Forum also just stood down with immediate effect – but there won’t be any election for his successor, just a search committee. That’s orderly, and perhaps worldly, but doesn’t seem very liberal.

Trump has posted about the justice system again, claiming there wasn’t any court action to stop population flows in one direction, but there is lots to stop it going the other way. We wait to see what the Supreme Court has to say about the Alien Enemies Act of 1798, but informed speculation is a ruling may say the government can deport people if it gives seven days’ notice.

Last week, the US Trade Representative released his final port fees for Chinese-built ships journeying to the US. We will publish a report on that later today but suffice to say while many players can avoid the worst of its impact, China can’t. On US-China trade war, it’s full steam ahead.

China is openly threatening repercussions for any country that strikes a trade deal with the US with negative implications for it, which any trade deal the US signs now must logically have. In short, it’s choose or be chosen time, as I’ve warned. So, what are *you* going to do? “Rate cuts?”

Underlining the sense of desperation evident in some intellectual circles, The Atlantic claims Hitler’s Terrible Tariffs “by seeking to “liberate” Germans from a globalized world order,…sent the national economy careening backwards”. The messaging is clear.

Yet that claim has no basis in historical fact: Hitler used lots of economic statecraft tools pre-WW2, but tariffs were not his primary vector.

Foreign Affairs, however, argues ‘The Global Trading System Was Already Broken… But There’s a Better Way to Fix It Than a Reckless Tariff Regime.’ 

Its suggestion is the US finds large like-minded economies who agree to run balanced trade together and builds a new system from there, rather than everyone shouting, “Because markets!” while ignoring their own and others’ mercantilism in a system that IS broken. 

Which some think *is* the US plan if you join the dots.

On which note, US Vice-President Vance was just invited to Indian PM Modi’s home; India placed a 12% tariff on Chinese steel; and the talk is of a “roadmap” to elevate US-India relations, making a mockery of the BRICS as an anti-US wall, and perhaps moving us closer to the foundation stone of a new global architecture. Indeed, it seems a race between India, Japan, and possibly Vietnam to strike the first deal with the US… and then face the wrath of China.

Conversely, French President Macron reportedly claims Europe is ready for the burden of the global reserve currency…. which in the current broken system means a much higher euro, a much larger trade deficit, much less industry and rearmament, and much more inequality. Unless Europe thinks it can have a global reserve currency while running balanced trade or trade surpluses… which sounds like the US plan everyone is now decrying, “because markets!”

I continue to argue Europe is in NO way ready, or willing, to take on that burden, and any market ‘favouritism’ towards the Euro is a gift it won’t want to accept once it sees the euro pro quo. Meanwhile, if Europe is the global future, why is the ECB and EU Commission so worried about the issuance and use of US dollar-backed stablecoins there? Capital flight?

Gold just hit another record nominal high at $3,445 before dipping slightly. While most are getting an eerie feeling about that, and some note US Treasury yields are rising as the US dollar is falling, muttering about Trump and “the end of US exceptionalism”, very few truly grasp that the global system, not just global trade, is collapsing – or being collapsed. That extends way beyond what we are seeing so far: and how well do you think smaller economies and powers will fare as it does vs. the US? Badly. In short, shorting the dollar comes up short when one thinks about it that way.  

Will the Spring IMF, World Bank, and G20 finance ministers’ meetings this week see a Mar-a-Lago Accord or just plain discord as everyone --including central banks-- realises they won’t be singing from the same hymn sheet, or with the same singers, much longer? Recall the collapse of central bank coordination, centred on gold, was a pivotal factor in the end of two previous Liberal World Orders in the early- then mid-20th century. As was geopolitics…

…as Russian President Putin signed a 20-year Strategic Partnership Agreement with Iran: after no Ukraine ceasefire or peace deal, that looks like no ‘Noxin’ (reverse Nixon) win for Trump on that front either.

Meanwhile, the Pentagon looks in chaos, with the White House saying it’s trying to reject Secretary of Defence Hegseth, who still has Trump’s backing. Don’t think this isn’t related to Iran, and who wants jaw-jaw vs war-war --and not necessarily the way you might think-- as Israel rehearses for a strike on Iran and Hezbollah, the latter still refusing to disarm as Lebanon’s government and the UN wishes, and instead attempting to entrench itself deeper.

So, yes, a lot going on: even more than President Trump saying something rude about Powell. More like a US Ker-Powell! to the entire Liberal World Order.

Week ahead

Today has the ECB survey of professional forecasters, to delight… professional forecasters of the ECB, Eurozone consumer confidence, and the ECB’s Lagarde on CNBC. There is also the Philly and Richmond Fed services surveys and the Fed’s Jefferson and Harker speaking.

Wednesday: has global services and manufacturing PMIs, UK public sector borrowing, and the ECB’s wage tracker, then the Fed’s Beige Book and US new home sales and building permits.

Thursday: it’s the German IFO survey, US durable goods, initial claims, and existing home sales.

Friday: sees UK and Canadian retail sales, and US Michigan consumer confidence.

Tyler Durden Tue, 04/22/2025 - 09:40

IMF Slashes Global GDP Forecasts, Warns Of Trade War Fallout For China, US

The International Monetary Fund slashed its growth forecast for 2025 and 2026, and said the latest escalation in the trade war risks saddling China and the US with losses that would only get worse after this year.

In its latest World Economic Outlook report published this morning, the IMF cut its 2025 global GDP forecast to 2.8%, and trimmed its 2026 GDP view to 3.0%. In January, the IMF predicted the world economy would expand 3.3% both this year and in 2026. The US saw the biggest growth cut, its GDP now expected to grow 1.8% and 1.7%, revised lower by 0.9% and 0.4%, respectively. The EU GDP was also trimmed but far less, to 0.8% and 1.2% in 2025 and 2026, down from 1.0% and 1.4% (expect a full-blown deflationary collapse in the old continent in a few months once China starts dumping all of its trinkets it can no longer sell in the US). 

As for China, the IMF now expect GDP to grow by just 4.0% in 2025 and 2026. The forecasts represent cuts of 0.6% and 0.5%, respectively, from the IMF’s previous predictions published in January, before Donald Trump reclaimed the presidency.

The China downgrades were made under a reference forecast based on information available as of April 4, only taking into account trade measures such as Trump’s initial 34% “reciprocal” tariffs on top of a fentanyl-related 20% tax, as well as China’s retaliation. Since then, Trump hiked new levies to a combined 145% on most Chinese goods, prompting Beijing to hit back with duties of 125% on the US.

In short, the question now is who falls into recession first and waves the trade war White Flag.

If the measures announced on April 5-14 were considered and assumed to be permanent, “the losses in China and the United States would become larger in 2026 and beyond,” the IMF said.

For China, the US tariffs imposed as of April 4 “offset the stronger carryover from 2024” — after a better-than-expected performance in the fourth quarter — and “fiscal expansion in the budget,” the IMF said, although despite repeated jawboning and declarations of imminent fiscal stimulus, Beijing has yet to roll out even one notable program that will boost the country's GDP.

"After enduring a prolonged and unprecedented series of shocks, the global economy appeared to have stabilized, with steady yet underwhelming growth rates. However, the landscape has changed as governments around the world reorder policy priorities and uncertainties have climbed to new highs. Forecasts for global growth have been revised markedly down compared with the January 2025 World Economic Outlook (WEO) Update, reflecting effective tariff rates to levels not seen in a century and a highly unpredictable environment. Global headline inflation is expected to decline at a slightly slower pace than what was expected in January", the IMF wrote in its semiannual report.

Appealing to a continuation of the globalist status quo, the IMF also said that "at this critical juncture, countries should work constructively to promote a stable and predictable trade environment and to facilitate international cooperation, while addressing policy gaps and structural imbalances at home. This will help secure both internal and external economic stability."

Good luck with that.

According to Bloomberg, the outlook now "is rife with uncertainty after Trump’s chaotic decision making resulted in an escalating cycle of retaliation with China" as effective tariff rates between the two countries are far above the 60% level many economists say will decimate bilateral trade. Sure enough, the IMF slashed it global trade volume forecast from 2.4% in 2024 to 1.9% and 2.0% in 2025 and 2026, a haircut of 0.3% and 0.4% respectively.

Tyler Durden Tue, 04/22/2025 - 09:20

Will The EU Join The Economic War Against China?

Authored by Conor Gallagher via NakedCapitalism.com,

As the US goes down the trade war route with China, it’s looking for others to join the party. There are numerous reasons to believe the entire project will go down in flames like the effort to isolate Russia.

What of its Project Ukraine partner in crime, the EU? Is it game for another ride at the imperial rodeo? On April 16 the Wall Street Journal reported some of the more unsurprising recent news: that the U.S. plans to use global tariff negotiations to isolate China. The Irish Times on the same day had the scoop that any Washington-Brussels deal over tariffs will likely involve an agreement for the bloc to fully join the US in the economic war against China, which the EU is open to, although it has some qualms about other aspects of the Trump team’s proposed terms:

They suggest that the overall US strategy is to decouple from China, and that any country who wishes to have a trade deal with the US will also have to distance itself from Beijing…

At present neither US beef nor chicken can gain entry to the EU market because of strict EU rules – something which has repeatedly been complained of by the Trump administration. But senior Irish and EU sources dismissed any chance that the EU would change its standards on, for example, hormone-treated beef and chlorine-washed chicken.

The EU is also standing firm —for now— on Washington’s demands it abandon its efforts to regulate American tech behemoths operating in Europe. There are not, however, strong objections to the demands on China.

The EU was already heading down this path anyway with its recent “de-risking” campaign. In 2023, Italy abandoned its lackluster participation in Beijing’s Belt and Road Initiative. Germany faces an internal battle over its China policy, but incoming Chancellor Friedrich Merz is among those with a more hawkish tone. Still, it’s more likely that he and his coalition will continue the untenable balance of political hostility toward Beijing while maintaining the economic relationship. That arrangement favors some of Germany’s biggest companies, which continue to make significant amounts of money in China. Meanwhile, the US, European Atlanticists, and workers will push for a tougher policy. In the end, it could be decided by market developments in China. Should Germany’s Big Three auto companies continue on the path to irrelevance in the Chinese market and be overtaken by Chinese companies elsewhere, that would drive Berlin to embrace a more confrontational policy.

At the EU level, Ursula von der Leyen and many others are fully aboard the derisking train.

EU member states added new instruments to Ursula’s toolbox during her first five-year term, such as the Foreign Subsidies Regulation, International Procurement Instrument, an Anti-Coercion Instrument, the Corporate Sustainability Due Diligence Directive, the EU Critical Raw Materials Act, and the NZIA (Net-Zero Industry Act), which aims for the EU to process 40 percent of the strategic raw materials it uses by 2030. Taken together, they mean Ursula can do serious damage to trade with China if she convinces herself —or Washington does— it’s the best course of action.

The EU is making noise about cozying up to China as a counterweight to the Trump’s hardball negotiation tactics, but we’ve seen this before, and it’s best to wait and see. The EU bigwigs are not going to Beijing until late July, and both Washington and Brussels aim to iron out a deal before then ahead of the end of Trump’s 90-day tariffs pause. That reprieve was announced on April 9, which means a deadline of July 8.

Say the EU more fully commits to this path of “de-risking” from China. What will it mean for the bloc? And what knock on effect will it have on the US, which has increasingly been the recipient of transshipped Chinese goods through the EU?

In an August paper from the Peterson Institute for International Economics Mary E. Lovely and Jing Yan lay this out in detail. Aptly titled, “While the US and China decouple, the EU and China deepen trade dependencies,” the following chart tells a big chunk of the story:

What does this mean? Here’s the Conversable Economist to decipher:

In short, these patterns seem to suggest that imports not coming from China to the US economy are, in a substantial way, ending up in the EU economy instead. This pattern suggest that if the goal of US trade policy is to reduce China’s footprint in the global economy, it is unlikely to do so.

Well, unless Washington can get Brussels to once again shoot itself in the foot. What is the EU importing from China? Gone are the days when it mostly consisted of textiles, shoes, and furniture. They are now pharmaceutical ingredients, chemicals, critical raw materials, and machinery.

Disrupting that trade would be another death blow to European industry. As a recent report for the European Commission notes:

Member States with more industry-oriented economies typically exhibit higher exposure to Chinese imports. This is the case for Member States such as the Czech Republic’s (33% of total Czech extra-EU imports originate in China), Romania, Poland, Slovenia, Slovakia and Germany, underlining the important role of China as source of inputs for EU industry.

There would likely be product shortages as China is the main source of the EU’s “strategic product dependencies.” It is the primary source of 64 such products out of a total of 204 identified by the EU.

The report for the European Commission notes:

For some specific products, the EU’s import concentration on China is at very high levels of 90% and more (e.g. certain pharmaceuticals,chemicals, raw materials). Together, the wide scope in the nature and type of dependencies (“where to start?”) and deep levels of reliance on China in specific cases (“how to diversify?”) underline the complexity of de-risking import dependencies from China.

Indeed, the EU is completely reliant on China for magnesium, which is used in aerospace, automotive, electronics, and other industries for components like aircraft parts, car frames, mobile phone housings. Problem is that over 94% of the world’s magnesium export production now comes from Chinese producers. Russia makes up a big chunk of the rest. Oops.

And before Beijing threw in the towel on its zero-Covid policy, it was leading to shortages in the EU of medicines, ranging from children’s fever reducers to eye drops and antibiotics. About 80 percent of active pharmaceutical ingredients used in Europe and about 40 percent of finished medicines sold in Europe come from China or India. The EU joining the economic war against China could see a return to those days of shortages:

[China] is a major producer of older unbranded medicines that are routinely used in hospitals. Antibiotics, for example, have become increasingly outsourced to Asia, with China dominating. The country has cornered the market for the key ingredients that go into making penicillin. China also is a key exporter in other categories such as blood pressure drugs or painkillers.

Naturally, the EU plan to fix this involved “reviving investment and boosting access to affordable drugs,” as well as requiring companies to hold bigger stocks of medicines deemed essential, but did nothing to fix the underlying problem, and that pretty well sums up the story across various industries. The problem is that neoliberal motivations planted the seeds of China’s dominance today (and good for Beijing for handling those gifts responsibly).  Now Western officials say they want the jobs and industry back, and in a sense they do. China has moved too far up the value chain and is no longer under their thumb. But that does not mean industrial manufacturing that left will be making a return to Detroit and Dusseldorf, Toledo and Turin.

That’s because it is not possible to simultaneously embrace neoliberalism while pursuing an industrial policy, and that’s not the goal anyways. Instead, the very same forces that shipped Western industry East are exploiting anger over those lost jobs and living standards and directing it toward China for “stealing.” And all the big money thinks it can get supply chains up and running via “friend shoring” that excludes China and runs seamlessly from other polluted slave labor centers to their garden doors.

Why would the EU be up for another economic shootout at the US’ side?

Aside from the oft-cited reasons of its misleadership class, racial motivations, and power delusions, the US does remain the most important economic partner for the bloc — just not for essential items:

At an aggregate level, the US is still the EU’s main economic partner as of today (Figure 4).8 Only for imports of goods, China stands out as more important for the EU in relative terms than the US. In other dimensions (goods exports, services imports and exports as well as inward and outward FDI), the EU-US relation is significantly more intense. A similar picture exists from the perspective of the US, with the EU as a more important economic partner across all dimensions considered.

Prior to her humiliating 2023 trip to Beijing, von der Leyen elaborated on her “de-risking” strategy in a speech on EU-China relations at the Mercator Institute for China Studies and the European Policy Centre. Here’s a key excerpt:

The starting point for this is having a clear-eyed picture on what the risks are. That means recognising how China’s economic and security ambitions have shifted. But it also means taking a critical look at our own resilience and dependencies, in particular within our industrial and defence base. This can only be based on stress-testing our relationship to see where the greatest threats lie concerning our resilience, long-term prosperity and security. This will allow us to develop our economic de-risking strategy across four pillars. The first one is: making our own economy and industry more competitive and resilient.

About that stress-testing. It’s strange that the trans-Atlantic relationship is never put to the same test as with Moscow and Beijing.

A Risky Bluff

At first glance it would appear that like in the case of Project Ukraine the EU would be due to suffer much more than the US in a coordinated economic war against Beijing due to Europe’s heavier reliance on China.

That might not be the case however. That’s because while the US might simply be masking its reliance on Beijing. The Mercator Institute for China Studies:

EU dependencies have since 2016 further concentrated on China, while US have diversified away – likely in part a consequence of the Trump Administration’s hawkish approach to China after entering office in 2016 and the start of trade measures in 2018. The US has seen its trade dependencies on Vietnam and Mexico increase, but they, in turn, have become more dependent on imports from China. This raises the question in how an increase in indirect dependencies could undercut the benefits of any decrease in direct dependencies.

And if Washington hopes for its economic war to succeed, it needs —and is actively pursuing as the above-mentioned WSJ article shows— other countries to join it against Beijing.

That’s when potential shortages could really start to bite (depending on China’s response). Here’s another chart from the Peterson Institute for International Economics:

And again from the Conversable Economist:

Indeed, given that imports often pass through the production process in several countries on their way to a final product, it’s plausible that some Chinese exports are going to Mexico and the EU, being incorporated into other products, and then ending up as US imports.

Let’s use the example of pharmaceuticals. US imports from the EU have exploded in recent years:

The US trade deficit with the EU in pharmaceuticals (NAICS definition, US data) is $120b -- also 4x the deficit in autos ...

And it clearly exploded around the time of the Tax Cuts and Jobs Act (the Trump-Ryan tax reform)

2/3 pic.twitter.com/nYEJ5rqPyL

— Brad Setser (@Brad_Setser) April 15, 2025

And we now have Trump threatening the EU with tariffs — including on pharmaceuticals — in order to get Brussels to engage in economic war against Beijing. If the EU acquiesces — or if it doesn’t and Trump follows through with his threats — Americans could end up paying even more exceptional prices for drugs. Here’s why:

Data from 2021 show that approximately 95 percent of vitamin B1 and its derivatives imported into the EU came from China. Over 96 percent of the heterocyclic compounds with an unfused pyrazole ring, APIs used in many antibiotics, are also imported by the EU from China. An even higher dependency can be found for chloramphenicol and its derivatives, reaching over 98 percent. Chloramphenicol is a key substance for a wide-spectrum antibiotic used for severe infections that cannot be treated with other antibiotics.

Moreover, even when the active ingredients or the final drugs are manufactured in Western countries or in India, production often depends on imports of raw materials from China. For example, India imports about 70 percent of APIs from China, including those necessary for the production of antibiotics, paracetamol and drugs for diabetes and cardiovascular diseases. In fact, compared to India, China is able to produce APIs 20-30 percent cheaper, depending on the product, thanks to the availability of cheap raw materials. In addition to the production of the APIs, China is also a key supplier of excipients, meaning substances that improve, for example, the absorption, taste or physical properties of the drug.

Roberta Pizzocaro, president of Olon, a Milan-based company that makes around 300 different pharmaceutical ingredients that go into finished drugs, tells Politico the following:

Many pharmaceutical ingredients are now only produced in Asia and some exclusively in China, said Pizzocaro. She said that her company could last “some time” on existing stocks, but it wouldn’t be long before shortages started to bite.

Perhaps it isn’t wise for nations to be so reliant on one country for so much of the pharmaceutical supply chain? The fact the EU does not have fallback options would seem to rule out launching a trade war, but to believe common sense will carry the day would require ignoring all the self destruction the leadership class repeatedly inflicts on its own citizens.

Tyler Durden Tue, 04/22/2025 - 09:00

Stealth Bomber Costs Sink Northrop Grumman Shares Most In Years

Northrop Grumman shares plunged in premarket trading—much like the U.S. MQ-9 drones downed by Iran-backed Houthis—after the aerospace and defense contractor posted dismal first-quarter results and slashed its 2025 earnings forecast.

Northrop posted a profit of $481 million, or $3.32 per share, for the first quarter, down from $944 million, or $6.32 per share, in the same quarter one year ago. The staggering 47% per share profit drop was primarily due to loss provisions tied to the first production batch of B-21 stealth bombers. 

Northrop explained more in an earnings release:

During the first quarter of 2025, we recognized a pre-tax loss of $477 million ($397 million after-tax or $2.74 per diluted share) across the five low-rate initial production (LRIP) options on the B-21 program at Aeronautics Systems. The loss largely relates to higher manufacturing costs primarily resulting from a process change made by the company to enable an accelerated production ramp, as well as increases in the projected cost and quantity of general procurement materials.

Sales for the quarter slid about 7% to $9.47 billion, missing the Bloomberg consensus projection of $9.93 billion. 

Here's a snapshot of Northrop's weaker-than-expected results across most divisions, with a significant miss on EPS, free cash flow, and aeronautics margins... 

EPS: $3.32 vs. $6.32 last year; missed estimate of $6.28

Revenue: $9.47B, down 6.6% y/y; missed estimate of $9.93B

Free Cash Flow: -$1.82B; well below estimate of -$599.3M

CapEx: $256M, down 5.2% y/y; missed estimate of $310.7M

Backlog: $92.8B

Segment Performance:

• Sales: $2.81B, down 5.2% y/y; missed $3.12B estimate

• Operating Loss: -$183M vs. $297M profit y/y; estimate was +$300.1M

Defense Systems:

• Sales: $1.81B, up 28% y/y; slightly missed $1.86B estimate

• Operating Income: $179M, +1.1% y/y; in line with $180.4M estimate

Mission Systems:

• Sales: $2.81B, up 5.6% y/y; beat $2.77B estimate

• Operating Income: $361M, down 4.5% y/y; missed $398M estimate

Space Systems:

• Sales: $2.57B, down 30% y/y; missed $2.71B estimate

• Operating Income: $283M, down 15% y/y; missed $293.5M estimate

Management also attributed the sales miss to a "previously disclosed wind-down of work on certain Space Systems programs," adding, "These decreases were partially offset by higher sales at Mission Systems and Defense Systems." 

For the full year, Northrop reduced its outlook for operating income from a previous forecast but kept revenue guidance: 

• Adjusted EPS forecast: Cut to $24.95–$25.35 from $27.85–$28.25; below Bloomberg consensus of $28.12

• Revenue forecast: Maintained at $42.00–$42.50 billion; in line with estimate of $42.32 billion

In premarket trading, Northrop shares plunged as much as 10%. If losses extend into the cash session, it would mark the stock's worst day since the early days of the Covid. Should losses exceed -10.15%, it would be the steepest single-day drop since October 10, 2008, when shares fell 13.45%.

Goldman's Noah Poponak, Anthony Valentini, and Connor Dessert provided clients with their first take on the earnings report:

Bottom Line: NOC 1Q25 results are below consensus. The company recorded a $(477)mn pre-tax loss in Aeronautics for the five LRIP options on the B-21 program. Total company segment EBIT excluding that charge is still below consensus. The company reiterated 2025 revenue guidance, and reiterated free cash, while reducing segment EBIT and EPS.

Details: 1Q25 fully adjusted EPS of $6.06 compares to FactSet consensus at $6.26 and our $6.53. Reported EPS is $3.32. Fully adjusted segment EBIT of $1.05bn is 3% below consensus. Revenue of $9.5bn is 5% below consensus with a slight beat in MS, but all other segments missed by MSD%+. The adjusted segment operating margin of 11.0% is 10bps below our estimate and 20bps below consensus. All segments beat on margin except Mission Systems, which missed by 160bps. NOC updated its 2025 guidance, including revenue of $42.0-$42.5bn (reiterated, vs. consensus at $42.3bn), segment operating income of $4.20-$4.35bn ($4.65-$4.80bn prior, vs. consensus at $4.82bn), EPS of $24.95-$25.35 ($27.85-$28.25 prior, vs. consensus at $28.11), and free cash flow of $2.85-$3.25bn (reiterated, vs. consensus at $3.10bn).

Our $527 12-month price target is based on a target relative (S&P 500) CY25E P/E of 1.1X. Key risks include (1) Geopolitics, (2) DoD spending priorities, (3) capital deployment, and (4) margins.

Despite the earnings miss and guidance cut, CEO Kathy Warden stated in a press release, "Global demand for our products remains strong, which is reflected in our record first quarter backlog, and we are making significant progress on our key programs." 

*  *  *

Top products last week at ZeroHedge Store:

- ZeroHedge Waxed Canvas Hat

- ZeroHedge Shirt

- IQ Biologix Astaxanthin (extremely potent anti-inflammatory)

- ZeroHedge Multitool

- Anza SWAT Micarta Blued (made in the USA)

Tyler Durden Tue, 04/22/2025 - 08:40

Futures Rebound On Trade Deal Optimism, Gold Hits Another Record

US equity futures are higher, attempting to pare back some of the sharp losses from Monday's prior session and extending yesterday’s late day buying where the S&P found support at the 5,100 level; according to JPM, there is some optimism around a trade deal with either Japan or India and a deal is a likely milestone for stocks to finally bottom. As of 8:00am ET, S&P and Nasdaq futures are are up 0.8%, off session highs of 1.3%, with Mag 7 and Semis all higher with TSLA earnings after the close. This week 25% of the S&P reports with implied vols among the highest since peak-COVID. Chinese tech names are reportedly considering US listings despite "market ructions", via Bloomberg citing sources; Walnut Coding, CloudSky, Zaihui & Zhonghe said to be considering IPOs in the US. The yield curve is twisting flatter and USD seeing a bid following 4 days of losses. The commodity space is mostly higher led by Energy but gold remains the top story as it set a new ATH rising above $3500 before easing back. The macro data focus is on regional Fed activity indicators (Philly non-mfg and Richmond Fed at 8:30am/10:00am ET), but the more impactful data is tomorrow’s Flash PMI prints. We also get a slew of Fed speakers (see below) alongside numerous heavyweight earnings including Tesla.

In premarket trading, Magnificent 7 stocks are rising (Tesla +0.7%, Alphabet +0.7%, Nvidia +0.92%, Amazon +0.99%, Apple +0.82%, Microsoft +0.7%, Meta +0.6%). Solar stocks gain after the US set new duties as high as 3,521% on solar imports from four Southeast Asian countries (First Solar +5.8%, Sunnova Energy +1.2%, SolarEdge Technologies +3%, Array Technologies +1.9%, Enphase Energy +2.3%). 3M (MMM) climbs 3% after the company stood by its full-year financial guidance while acknowledging new risks from the unfolding trade war. Here are some other notable premarket movers:

• Appian (APPN) rises 2% after hiring Srdjan Tanjga as CFO. Tanjga is leaving MongoDB to take the job.
• Calix (CALX) soars 14% after the computer services company reported quarterly results that beat expectations and provided an outlook that is above the analyst consensus estimate.
• CoreWeave (CRWV) rises 2% as Jefferies and Barclays initiate the software company at overweight, citing AI compute reliability and first mover advantage.
• Danaher (DHR) climbs 3% after the life-sciences firm reported quarterly profit that beat estimates.
• Halliburton (HAL) falls 4% after the energy and engineering services company reported adjusted earnings per share and revenue for the first quarter that fell year over year.
• Kimberly-Clark (KMB) slips 2% after the consumer-products company reported quarterly organic sales that disappointed and said the company faces about $300 million in incremental costs in 2025 due to tariffs.
• Northrop Grumman (NOC) falls 8% after the defense contractor cut its adjusted earnings per share guidance for the full year.
• StoneCo (STNE) rises 3% as Citi upgrades the the fintech to buy on its progress toward becoming a small bank from a payment firm.
• Synchrony Financial (SYF) rises 3% after the financial services firm reaffirmed its net revenue forecast for the full year.
• Verizon Communications Inc. (VZ) declines 3% after posting a larger-than-expected decline in mobile-phone subscribers in the first quarter, the result of heavy competition and less spending by government agencies.
• Zions Bancorp (ZION) falls 3.8% after first-quarter earnings missed the average analyst estimate. Analysts note that current economic uncertainty is weighing on the company’s outlook.

While S&P futures have managed a rebound contracts added 0.9%, the conversation on Wall Street still focuses on the implications of any White House effort to replace Powell. Concerns that Trump may be preparing to fire Powell have added to unease for traders already grappling with the turmoil unleashed by the president’s tariff onslaught. Trump’s policies and his broadsides against the Fed have forced a reappraisal of the dollar and Treasuries as havens in times of stress, although the collapse in the dollar has been as large as when the Fed launched QE, so if Powell will not ease, Trump will get his hit to the dollar using other means.

“With increasing rhetoric from the administration admonishing the Fed to cut rates and the markets entertaining intensifying discussions about the possibility of replacing the Fed chair, we don’t expect a rush back into the market from abroad,” John Velis, a strategist at Bank of New York Mellon, said of US bonds. “The haven status of such assets is increasingly in question.” 

Attention later Tuesday will shift to Tesla, which reports first-quarter earnings after the market close; its stock has dropped about 44% this year as the massive post-eleciton rally has fully unwound. Elon Musk’s role in the federal government has contributed to a global sales slump.

In Europe, the Stoxx 600 index dropped as traders returned from the Easter break. Novo Nordisk A/S slumped almost 10% on concern it faces tougher competition from Eli Lilly & Co.’s experimental weight loss pill. Here are the biggest movers Tuesday:

• Precious metals and mining stocks advance as concerns over the US economy and President Donald Trump’s criticism of the Federal Reserve sent gold to a record above $3,500 an ounce
• L’Oreal shares gain as much as 2.6% after the cosmetics maker’s like for like sales growth exceeded expectations. Analysts pointed to a strong performance in the beauty company’s Chinese market
• Pernod Ricard shares rise as much as 3% after being upgraded by Barclays, with analysts arguing risk is skewing to the upside, particularly in the company’s key Chinese growth market
• OVH Groupe shares rise as much as 11%, hitting their highest in over two years, after being upgraded by analysts at Stifel, who argue the cloud computing company is facing no clear headwinds
• Biotage gains as much as 58% after private equity firm KKRa made a take-private offer for Swedish life sciences group for 11.6 billion kronor ($1.2 billion), a 60% premium versus last week’s close
• Novo Nordisk shares fall as much as 9.8% in their first day of trading since Wednesday after the release of strong data from a rival obesity pill developed by US peer Eli Lilly
• Orsted falls as much as 9.6% after being downgraded to underperform at Bank of America. The broker cites a surge in US regulatory uncertainty facing the Danish wind energy firm’s offshore projects
• Equinor shares fall as much as 3.1% after RBC downgraded shares to underperform from sector perform, and the Norwegian energy group halted the construction of its US offshore wind farm Empire Wind
• DCC shares drop as much as 1.5%, giving up initial gains, after agreeing to sell its healthcare division to funds advised by Investindustrial Advisors at an enterprise value of £1.05 billion
• Aryzta drops as much as 4.9% on Tuesday, snapping a run of six straight daily gains that had last week driven the stock to its highest since Oct. 2018, after reporting first-quarter results

Earlier in the session, Asian stocks were steady as traders await outcomes of US tariff negotiations with key trading partners, while fresh concerns about the independence of the Federal Reserve also kept a lid on sentiment. The MSCI Asia Pacific Index swung in a narrow range. Taiwan’s benchmark fell more than 1% while Indonesia and Singapore led gainers. Key gauges in Hong Kong climbed, while Australia’s was little changed as trading resumed  following a four-day weekend. Asian stocks overall have held up well relative to big losses in New York, with market watchers increasingly discussing the waning dominance of the US exceptionalism trade. 

In currencies, the Bloomberg Dollar Spot Index is little changed. The yen is the best performing G-10 currency, rising 0.3% against the greenback although couldn’t sustain an earlier break past 140. “Market volatility though is driving some haven flow into the yen,” said Shoki Omori, chief desk strategist at Mizuho Securities Co. in Tokyo. “Reports the BOJ sees little need to change their stance on rate hikes are also aiding sentiment in the currency, while denting the dollar.” 

In rates, treasuries are mixed with underperformance seen in shorter-dated maturities, pushing US two-year yields up 3 bps to 3.79% while long-dated tenors have plied narrow ranges, flattening 2s10s curve by nearly 4bp, 5s30s by more than 2bp. German yields fall across the curve with two-year borrowing costs touching the lowest since 2022. The gilt curve steepens with 2s10s widening nearly 5bps. The Treasury auction cycle begins with $69 billion 2-year at 1pm New York time and includes $70 billion 5-year and $44 billion 7-year sales Wednesday and Thursday. WI 2-year yield near 3.78% is about 11bp richer than March auction, which stopped through by 0.3bp. 

In commodities, oil prices advanced, with WTI climbing 1.4% to $64 a barrel. Bitcoin rises 1.3% and above $88,000. Spot gold earlier hit $3,500 for the first time before paring gains to around $3,460. 

Looking at today's calendar, we get the April Philadelphia Fed non-manufacturing activity (8:30am) and Richmond Fed manufacturing index (10am). Fed speaker slate includes Jefferson (9am), Harker (9:30am), Kashkari (1:40pm), Barkin (2:30pm) and Kugler (6pm)

Market Snapshot

• S&P 500 mini +1%
• Nasdaq 100 mini +1%
• Russell 2000 mini +1%
• Stoxx Europe 600 -0.3%
• DAX -0.2%
• CAC 40 -0.4%
• 10-year Treasury yield +1 basis point at 4.42%
• VIX -1.7 points at 32.17
• Bloomberg Dollar Index little changed at 1216.69
• euro -0.1% at $1.1498
• WTI crude +1.5% at $64.05/barrel
• Top Overnight News
• The Trump administration intends to press India to give online retailers such as Amazon and Walmart full access to its $125bn ecommerce market, as part of a trade deal being negotiated under the threat of increased tariffs. FT
• Talks between the US and Thailand over the Trump administration’s tariff plans were postponed after Washington asked the Southeast Asian nation to address “issues” related to trade, officials said. BBG
• WSJ's Timiraos writes "Trump Is Laying the Groundwork to Blame Powell for Any Downturn" and is signalling he will blame the Fed for any economic weakness resulting from his trade war if it doesn't cut rates soon.
• US Securities and Exchange Commission announced Paul Atkins was sworn in as chairman
• Senior House Republican, Frank Lucas, defends Powell and Fed independence amid Trump attacks. Axios
• Chinese trade held up in April despite Trump’s tariffs, data showed, as Trump spared many electronics and paused levies against most countries. BBG
• China’s curbs on shipments of critical metals to the US are already having a visible effect, with exports of the minerals plunging and shipments of several critical items halting entirely in March, customs data shows. SCMP
• A Japanese delegation will deliver a letter from PM Shigeru Ishiba to Xi Jinping this week, as Tokyo strives to avoid China-US crossfire. BBG
• When Japanese Finance Minister Katsunobu Kato meets his U.S. counterpart Scott Bessent in Washington this week, the yen is shaping up to be a major topic of discussion, though sources say Tokyo will push back against any request to boost its currency. RTRS
• The BOE’s Megan Greene said US tariffs may be more of an disinflationary risk to the UK than inflationary. BBG
• India’s Prime Minister Narendra Modi and U.S. Vice President JD Vance on Monday hailed the “significant” progress made in trade talks between the two sides during Vance’s visit to India. CNBC

Tariffs/Trade

• US Commerce Department finalized dumping duties ranging from 6.1% to 271.28% on solar cells imported from Cambodia, Malaysia, Thailand and Vietnam.
• US Trade Representative's statement confirmed that USTR Greer and India's Ministry of Commerce and Industry have finalised terms of reference to lay down a roadmap for negotiations on reciprocal trade and stated that India's constructive engagement so far has been welcomed.
• South Korea's Acting President Han said he expects South Korea-US trade talks this week to pave the way towards a mutually beneficial solution.
• Reuters reports that "Japan sees little scope for grand deal on yen in talks with US" at this week's Washington meeting of Finance Ministers. Sources report that Japan will push back against any request to boost its currency. Japan reportedly sees little scope for direct action i.e. FX intervention or an immediate BoJ hike, via Reuters citing sources. The meeting is likely to focus, from a Japanese perspective, on getting further insight into Washington's intentions.

A more detailed look at global markets courtesy of Newquawk

APAC stocks traded mixed with most indices rangebound despite the sell-off on Wall St where stocks and the dollar were pressured after President Trump renewed his criticism against Fed Chair Powell. ASX 200 was little changed as strength in mining stocks and gold producers were offset by losses in tech, energy and healthcare, while price action was also hampered by the absence of any key data. Nikkei 225 struggled for direction and swung between gains and losses in relatively contained parameters amid a choppy currency and slightly higher Japanese yields. Hang Seng and Shanghai Comp conformed to the mixed picture with the Hong Kong benchmark marginally pressured on return from the Easter weekend, while the mainland was kept afloat amid earnings and positive EV-related updates.

Top Asian News

• Japanese Finance Minister Kato said finance authorities are to ask banks to help support financing at small companies affected by US tariffs, while he is arranging to hold a meeting with US Treasury Secretary Bessent and plans to discuss forex issues.
• Japan Keidanren Business Federation Chief Tokura says wants FX to stabilise as much as possible; rapid FX fluctuations are not desirable for the economy, in response to a question on USD/JPY moving below 140.00.

European bourses (STOXX 600 -0.6%) opened mostly and modestly lower and have traded sideways throughout the morning thus far. Sentiment in Europe today is fairly gloomy, playing catch-up to the hefty losses seen in the US on Monday (reminder: Europe was shut on account of Easter Monday). European sectors hold a negative bias, in-fitting with the risk tone. Real Estate takes the top spot, benefiting from the  relatively lower yield environment (in Europe). Insurance follows closely behind, with both Helvetia and Baloise jumping around 4% after the pair announced a merger of equals to form a leading European insurance group. Healthcare has been weighed on today by significant pressure in Novo Nordisk (-8%), hit as traders digest the latest obesity-pill updates from rival Eli Lilly.

Top European News

• BoE's Greene says market pricing for BoE rate cuts has been moving around a lot but not all of it is to do with the UK. Aware of rise in inflation expectations, but risks are to both sides. US tariffs represent more of a disinflationary risk than an inflationary one for the UK. Wage growth remains "pretty high", the labour force survey has been volatile and has its own collection issues.
• ECB Survey of Professional Forecasters; 2025 and 2026 inflation forecasts raised, growth lowered.
• German government lowers growth forecasts to 0.0% for 2025 and ~1% for 2026 (Including the US base tariff of ten percent as well as on steel, aluminium and cars), according to Handelsblatt's Olk.

FX

• DXY is flat with the USD showing a differing performance vs. peers (stronger vs. EUR and CHF, weaker vs. JPY). Monday was a notable down day for the USD after another outburst from US President Trump, attempting to strong arm Fed Chair Powell into lowering rates and speculation over whether he will attempt to remove him before his term expires next year. Today's calendar is lacking in US data but heavy in speakers with Fed’s Jefferson, Harker, Kashkari, Kugler & Barkin all due on deck.
• EUR/USD is a touch lower but holding above 1.15 after early USD buying knocked the pair from its overnight peak at 1.1547. This comes after the pair hit a multi-year high on Monday at 1.1574. On the trade front, there has been little in the way of updates since last week's reporting that the EU expects tariffs to remain given a lack of progress in trade discussions. As it stands, despite today's reprieve for the USD, the EUR still remains a liquid alternative to the USD should investors continue to shun US assets.
• JPY is top of the G10 leaderboard as the currency continues to benefit from its safe-haven appeal with USD/JPY briefly slipping below the 140 mark earlier in the session for the first time since September 2024. JPY is also underpinned by hopes over upcoming talks between the US and Japanese administrations. That being said, a Reuters sources piece noted that Japan will push back against any request to boost its currency. This prompted a slight pick up in USD/JPY after failing to sustain a move below 140. From a policy perspective in Japan, source reporting suggests that the BoJ is likely to keep its rate-hike signal intact at its meeting next week despite Trump tariff risks.
• GBP is flat vs. the USD with UK-specific newsflow on the light side. In an interview on Bloomberg TV, MPC member Greene remarked that the main issue from the trade war is whether the main impact will be on demand or the supply side; whether the main factors will be on demand or the supply side. Greene added that wage growth remains "pretty high", however, the labour force survey has been volatile and has its own collection issues. BoE's Breeden is due later in the day.
• Antipodeans are both now steady vs. the USD after initially kicking the session off on the front foot. Upside was trimmed alongside a pick up in the USD in quiet newsflow. Overnight, AUD/USD hit a fresh YTD peak at 0.6439 before returning back to within Monday's 0.6369-0.6437 range.
• PBoC set USD/CNY mid-point at 7.2074 vs exp. 7.2925 (Prev. 7.2055).

Fixed Income

• USTs are still digesting the remarks from Trump on Fed Chair Powell and interest rates. Commentary which sparked marked steepening on Monday as short-end yields were weighed on by the prospect of cuts while the long-end picked up on the prospect of this sparking more inflation down the line. As it stands, the curve is unwinding that action a little and is slightly flatter today but still in close proximity to the steepest points seen on Monday i.e. 2s10s around 63bps vs Monday’s 55-66bps range. USTs are softer on the session, at the low-end of a 110-18 to 110-27+ band. A 2-year auction is due later, with focus also on a slew of Fed speakers.
• Modest two-way action in Bunds today, with catalysts light thus far. No reaction to the latest ECB SPF that featured an increase to the inflation and cut to the growth views of respondents; a point which may well be reflected in the IMF forecasts this afternoon. Holding at the top-end of a 131.46-83 band on return from the long weekend and while Bunds are outperforming USTs, it is only modest with the German benchmark essentially unchanged. Ahead, a 2027 Schatz auction with appearances from ECB's Lagarde and Knot also scheduled.
• Gilts opened lower by just under 30 ticks before paring essentially all of the move to print a 92.40 high, just five ticks shy of Friday’s close. However, this proved short lived with the benchmark coming under gradual but notable pressure and entered the appearance from BoE’s Greene at a 92.02 base. Greene highlighted two-way risks to inflation being present though some modest pressure in Gilts, to a 91.96 trough, came as she highlighted wage growth remains “pretty high” and she is keeping an eye on the rise in inflation expectations.

Crude

• Crude futures extend on the rebound from the prior day's trough despite the European rebound in the Dollar and overall quiet news flow thus far. Desks pin the recent losses in the complex to US tariff uncertainty, risk aversion from Trump pressuring the Fed Chair, and telegraphed progress regarding US-Iran nuclear talks. WTI resides in a USD 62.72-63.43/bbl range with its Brent counterpart in a USD 66.54-67.25/bbl parameter.
• Spot gold extended on its rally and printed a fresh record high at USD 3,500/oz at the time of writing, with gains in the yellow metal facilitated by the recent fall in the Dollar coupled with ongoing uncertainty on the US tariff policy and geopolitics. Add to that, the issue of US central bank independence after US President Trump upped the pressure on Fed Chair Powell to ease monetary policy. Spot gold currently resides in a USD 3,3412.34-3,500.20/oz range.
• Mostly firmer trade across base metals amid the recent fall in the Dollar and resilience in the red metal's largest buyer. 3M LME copper resides in a USD 9,254.03-9,333.05/t.

Geopolitics

• Kremlin spokesman Peskov said Russian President Putin's comments on Monday that it was possible to discuss the issue of not striking the civilian targets, including bilaterally, he had negotiations and discussions with the Ukrainian side in mind.
• Iranian Foreign Minister will visit China on April 23rd, according to the Chinese Foreign Ministry.

US Event Calendar

• 10:00 am: Apr Richmond Fed Manufact. Index, est. -6.5, prior -4

Central Bankers

• 9:00 am: Fed’s Jefferson Speaks at Economic Mobility Summit
• 9:30 am: Fed’s Harker Speaks at Economic Mobility Summit
• 1:40 pm: Fed’s Kashkari Speaks in Moderated Discussion
• 2:30 pm: Fed’s Barkin Speaks in Fireside Chat
• 6:00 pm: Fed’s Kugler Speaks on Monetary Policy Transmission

DB's Jim Reid concludes the overnight wrap

Welcome back to all those in Europe that enjoyed the long Easter weekend. While most European markets were closed on Monday, the main market theme has been renewed pressure across US assets, with the S&P 500 falling -2.36%, 30yr Treasury yields rising +10.4bps to 4.90% and the dollar falling to a new 3-year low, while gold extended its YTD gain to over +30%.

The broad sell-off was triggered by rising concerns over Fed independence as President Trump became increasingly critical of Fed Chair Powell. The White House rhetoric had initially escalated after Powell’s hawkish-leaning speech that exacerbated the market sell-off last Wednesday. But while markets digested President Trump’s initial post that “Powell’s termination cannot come fast enough” last Thursday relatively well, ongoing criticism saw renewed pressure on US assets on Monday. In a post yesterday President Trump suggested it was time for “preemptive cuts”, claiming that “there is virtually No Inflation” and that the economy risks slowing unless Powell, whom President Trump referred to as “Mr. Too Late”, lowers interest rates. This post followed the National Economic Council Director Kevin Hassett saying on Friday that the Trump team was studying whether he could remove Powell.

While potential risks to Fed independence had already generated headlines in recent weeks, yesterday’s market moves were the clearest sign yet of investor anxiety over the topic. Powell, whose term as Chair expires in May 2026, reiterated last week that the Fed’s independence “is a matter of law,” and that “we’re not removable except for cause.” Other Fed officials have also warned against curtailing the central bank’s independence, including Chicago Fed President Goolsbee yesterday. Note that while the Fed Chair has significant influence over the FOMC, monetary policy actions are taken by a majority vote so removing Powell could lead to increased pushback from other members against pressure on the Fed to deliver easier policy. And with the latest rise in yields being driven mostly by real rates rather than breakevens, the market reaction is arguably more about broader investor concerns that less credible US policy-making may erode the exorbitant privilege that has allowed the US to run high twin deficits than it is about the specific risk of political influence over the Fed's rates policy.

Tariffs also stayed in the headlines, with President Trump commenting yesterday that “Tariffs are going well, everybody wants to negotiate”, but with there being little definitive progress. Some positive headlines came out of US Vice President Vance’s visit to India, with the White House touting “significant progress in the negotiations”. Over in Japan, Prime Minister Ishiba said “If Japan concedes everything, we won’t be able to secure our national interest” ahead of an expected second round of talks with the US. Mexico’s President Sheinbaum said there was no agreement yet with the US, with talks ongoing ahead of a May 3 deadline for tariffs on auto parts. And earlier on Monday, China’s Ministry of Commerce warned other countries in talks with the US against “reaching a deal at the expense of China’s interests”, with no signs so far of a substantial engagement between the US and China.

This backdrop saw the S&P 500 (-2.36%) post a broad-based decline on Monday with all 24 of its industry groups lower on the day and the equal-weighted version of the index down by -2.04%. Cyclical stocks underperformed, with the Mag-7 down -3.23% led by a -5.75% decline for Tesla ahead of its earnings release this evening. And a -2.55% decline for the NASDAQ saw it move back into bear market territory, with the index down -21% from its recent peak. The VIX volatility index rose +4.17pts to 33.82 and other risk assets also struggled, with US HY credit spreads +14bps wider at 412bps.
In a pattern of bonds being an increasingly poor hedge for equities, long-term Treasuries saw a renewed sell-off. 10yr yields moved +8.6bps higher to 4.41% and 30yr yields rose +10.4bps to 4.90%, their highest since January. This rise was driven by real yields, with the 10yr real yield up +9.4bps to 2.18%. By contrast, 2yr yields fell -3.5bps to 3.765% as the amount of Fed rate cuts priced by December rose +6.1bps to 93bps. These moves translated into a sharp steepening of the yield curve, with the 2s10s and 2s30s slopes reaching their steepest levels since January 2022, shortly before the Fed started its post-Covid hiking cycle.

In FX, the dollar index (-0.96%) yesterday closed at its lowest level in over three years. The dollar index is now down -5.69% since the start of April and on course for its weakest month since 2009. The dollar lost ground against all G10 currencies on Monday, with the euro rising to 1.1515, its highest level since November 2021, while the Swiss franc (+1.08%) was the strongest performing G10 currency. The flight to perceived safe havens also saw gold (+2.92%) post its 22nd all-time high since the start of the year, extending its YTD advance to +30.46%. Overnight, gold prices edged up another +0.81% higher to $3,452/oz.

In the energy space, the risk-off mood, concerns about the US-China trade war and constructive weekend headlines on indirect US-Iran talks put new downward pressure on oil prices. Brent crude fell -2.50% to $66.26/bbl, reversing about half of its +4.94% rise last week.

Asian equity markets are struggling to gain traction this morning after yesterday’s meltdown on Wall Street. In Japan, the Nikkei (-0.35%) is slightly lower after falling by -1.30% on Monday. In China, the Hang Seng (-0.03%) and the CSI (+0.03%) are little changed, while the Shanghai Composite (+0.31%) and Korea's KOSPI (+0.15%) are seeing minor gains reversing initial losses. Outside of Asia, US equity futures are seeing a modest recovery, with those on the S&P 500 and the NASDAQ around +0.35% higher. 10yr Treasury yields (+0.5bps) are marginally higher following yesterday's sell-off, with the dollar (-0.15%) again moving lower overnight. In Europe, STOXX 50 futures are trading -0.47% lower this morning after Monday’s holiday, which follows rebounds of +3.09% for the STOXX 50 and +4.03% for the STOXX 600 last week.

Over in Asia, our strategists published an insightful report yesterday laying out the case for a stronger RMB. They see the risk-reward weighted to a move lower in USD/CNH over the summer months, with the cost-benefit analysis for China’s policy not favouring a weaponization of the RMB.

Looking forward to the rest of this week, the data highlight will be the April flash PMIs on Wednesday, with the impact of US tariffs in focus. European manufacturing PMIs have been recovering in recent months but remain in contractionary territory, while in the US the index was only slightly above 50 (50.2) last month. Investors will also be watching the PMIs for evidence of supply disruptions and price pressures from tariffs, with US manufacturing PMI price indices having risen to 2-year highs in March.

Other notable economic indicators out this week include March durable goods orders and housing market data in the US. Our US economists see durable goods orders (Thursday) growth at +1.0% MoM (+1.0% in February), pointing to a strong start to the year for capex prior to the major tariff announcements. The Fed will also release its Beige Book on Wednesday. In Europe, other sentiment releases include the Ifo survey in Germany (Thursday) as well as consumer confidence indicators in the UK (Friday), Eurozone (Tuesday) and France (Thursday).

Elsewhere, global policy-makers are gathering in Washington for the IMF/World Bank spring meetings. As part of that, the IMF will be releasing its latest economic forecasts later today, and G20 finance ministers and central bank governors will also be meeting on Wednesday and Thursday. And there will be plenty of Fedspeak, including Jefferson, Harker, Kashkari, Barkin and Kugler today.

We will also be entering the peak of the earnings season. Two of the Mag-7 will be reporting with Tesla after market close today and Alphabet on Thursday, while other tech reports include Intel, IBM and ServiceNow. Results from consumer groups including P&G and PepsiCo may get extra attention given the recent softening in US consumer sentiment, while in Europe names to watch include SAP and Dassault Systemes. See the full weekly calendar below.

Tyler Durden Tue, 04/22/2025 - 08:28