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Good morning. American actions continued their rally for several days yesterday, despite Beijing declaring Trade negotiations would not start as long as the United States has removed the so-called Donald Trump's “Liberation Day” prices. Hope is a difficult thing to eliminate. Send us an email: Robert.armstrong@ft.com And aiden.reiter@ft.com.
Markets since the “Liberation Day”
The markets are back where they were April 3, in the morning after President Donald Trump announced his “Liberation Day” prices. We may be back to the place where we started, but the journey was brutal, each movement of the market drawn by news from the White House:
It looks like a roller coaster, and it looked like investors. And whenever the markets fell, investors feared that there was worse to come. The VIX index, which uses the prices of the options to follow the volatility that investors expect in the coming month, have taken once more times than the markets drop. In this table, we have reversed the VIX, so the correlation with the S&P 500 is visible:
With each decline in the stomach, the market added to the bets that the federal reserve would be forced to come to the rescue. This graph shows the S&P 500 against the expectations of the term markets for the rate of federal funds at the end of 2025:
The most scary song could have been the massive sale in the 30 -year treasure obligation, visible to the left below. He read as a signal that the long-term responsibilities of the United States were suddenly suspicious. Long yields (which increase when prices drop) have remained close to their summits:
The message was taken up by a fall in the dollar to a multi -year hollow:
The actions that took it the most? The same people who were the strongest a few months ago. The performance of the magnificent seven technological actions compared to the market as a whole increased and fell with the index. Investors seem to sell everything that is liquid and abundant – the safest way to reduce the risk:
The most efficient actions? It's easy: consumption staples, the avatars of fear. Here, we have reversed the performance of the Staples sector to show how it was the mirror image of the market:
A market that responds violently to new politicians, and where prices reflect investors taken in a maniac cycle of hope and fear, is not durable. We cannot continue like this. One of the two things should happen. Either the White House provides mental health and the predicability of the policy, in which case the markets can stabilize at a relatively high level. Or the White House continues currently, in which case the markets will find a new level much lower than prices in years of volatility to come.
Bad difficult data have arrived
Expenditure on large tickets seem to slow down.
Start accommodation. Stocks are high, but prices have not lowered enough to eliminate the market. Housing departures and the completion of the accommodation drop. The use of construction has not yet dropped, but it is only a matter of time (graphic of SMBC Nikko Securities America):
The actions of the four largest manufacturers were on a six -month stable descent:
On the existing side at home, things are just as bad. Sales in March was 6% below February and down 2.4% compared to the previous year. Hopes for the usual spring sales rebound have been stifled.
Rick Palacios, analyst at John Burns Research and Consulting, notes the inadequacy of supply / demand:
There is currently no emergency in the accommodation. From the point of view of buyers, the “Fomo” component (fear of missing) of real estate, which is real and stimulates things, has completely evaporated from the market. From a statistical point of view, more supply is rolling in the system, but we have absolutely no more demand. Sales drag down, and there is a sweetness of pricing, and potentially more to come …
If it becomes clear that prices will continue to drop, there is a chain of impact on the Marguerites, where sales will slow down a lot …
It's not just accommodation. Preliminary orders for sustainable products – expensive items from home household appliances – increased by 9% in March. But the increase is misleading. Most of this gain comes from an increase in plane orders, which are lumpy. The report may also have been helped by companies in steel and aluminum prices. Without planes and tariff bypass, “it would probably have been a deeply negative data point,” according to Rosenberg Research.
A decline in large ticket purchases is a reliable signal of a slowdown in the economic cycle. Indeed, one could say that the will to withdraw on major things is the decisive difference between an expansion and a contraction (hence the notion This “housing is the economic cycle”.)
The Trump administration seems to be back on board the prices. A softening of the pricing policy would certainly help to avoid a slowdown. Meanwhile, uncertainty could be the killer.
(Reread))
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