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Saturday Night Quarterback says, For the week ahead expect…
Finally, maybe some hard data on how President Donald Trump’s tariffs are affecting the U.S. economy. At 8:30 New York time om Wednesday the Bureau of Economic Analysis is scheduled to release its first take on the GDP rate in the first quarter of 2025. Economists surveyed by the Wall Street Journal project the U.S. economic output rose at an annual rate of just 0.4% in the first quarter. That would be down from 2.4% in the last quarter of 2024 and the slowest growth since 2022. This will be the first hard data that might show the impact of President Trump’s tariff moves.
Not good: PepsiCo cuts its 2025 guidance as sales, tariffs kill the crunch
On Thursday, PepsiCo cut its full-year guidance outlook, citing a reduction in consumer spending as well as the impact of higher tariffs.
“Relative to where we were three months ago, we probably aren’t feeling as good about the consumer now,” Jamie Caulfield, PepsiCo CFO, told Wall Street analysts and investors on an earnings call Thursday morning.
Is the Powell Put back?
The S&P 500 gained more than 4% for this week. Some of that was the result of talk from the White House about possible tariff negotiations with China.As the week wore on, though, attention shifted from tariff talk to comments from Federal Reserve officials that seemed to suggest that the central bank might consider cutting interest rates as early as its June meeting if economic growth slowed. Yep, the Powell Put is back. In this scenario, bad earnings and bad economic news become good news because they push the Federal Reserve closer to cutting interest rates.
Economists say recession odds now a coin flip
First, the optimists among economists who believe the United States will dodge a Recession. And then the pessimists who say we’ll see the economy shrink in the first quarter of 2025. (First quarter GDP is scheduled to be reported on the morning of April 30.)
China denies trade talks with Trump
President Donald Trump said his administration is talking with China on trade. This came after Beijing denied the existence of negotiations on a deal and demanded the United States revoke all unilateral tariffs. “They had a meeting this morning,” Trump said Thursday during a meeting with Norway’s prime minister when a reporter asked about the Chinese statement. Pressed on which administration officials were involved in discussions, President Trump said, “it doesn’t matter who ‘they’ is. We may reveal it later, but they had meetings this morning, and we’ve been meeting with China.” Not so, Chinese Commerce Ministry spokesman He Yadong said Thursday.
Unilever and Nestle results say more pain is coming to a shopping cart near you
Unilever (UL) and Nestle (NSRGY) both posted better-than-expected sales in the first quarter. Because they were able to push prices higher to counter surging commodity costs.
That’s not good news for consumers or food-price inflation. Both companies said customers will have to take some of the pain as a global trade war and surging commodity prices lift their costs again.
Read the fine print on yesterday’s tariff “news”
Yesterday stocks rallied for a second day on “news” that President Donald Trump was considering plans to cut tariffs on China’s goods. The Wall Street Journal reported that under the proposals, the range could come down to between 50% to 65%–from the current 145%–as a result of a tiered approach that would see 35% levies on items not considered critical for national security and 100% on “national security” goods.“We’re going to have a fair deal with China,” President Trump told reporters on Wednesday. On Tuesday President Trump had said he’d be willing to “substantially” pare back his 145% tariffs on China. He turned down his aggressive rhetoric a day after meeting with executives from Walmart, Home Depot. and Target, who said import taxes could disrupt supply chains and raise the prices of goods., according to people familiar with the matter. I understand why stocks rallied on these reports. Investors and CEOs are all scared that these tariffs will reignite inflation and send the economy toward recession. The rally on these reports is a sign of how deeply worried financial markets are at this posibility. And how much markets want to believe in a change of course. But because of the intensity of that hope Wall Street and, especially, retail investors, are overlooking the “fine print” in these announcements.
Your grin of the day: Dinosaur meat is coming to a market near you
Cultivated dinosaur meat hits the market in food tech first
Market direction may be uncertain but volatility trend is clear: UP
Despite the rally on Tuesday and Wednesday, the S&P 500 Index is still down around 4% since April 2, the day President Donald Trump announced his tariff plans. Where do stocks go from here in the short term? Depends on the headlines on tariffs and the Federal Reserve, I’d say But the trend in volatility is clear. Stocks are swinging wildly day to day. Since April 2, the Standard & Poor’s 500 has posted five declines of more than 2% and two gains of more than 2% in just 14 sessions.
I’m taking advantage of today’s bounce to do some more selling
I just don’t see the upside here. Even companies that are announcing solid earnings beats are issuing cautious guidance. And as we can see from the example of UnitedHealth Group (UNH) when a stock misses this market doesn’t just take it out to the woodshed for punishment, but stands it up against the barn and shoots it.
Take these two no cost/low cost steps to protect your money–NOW
“You’re not paranoid if they’re really coming to get you” is good advice for the current insane financial market. I don’t think anyone should let his or her fears overwhelm them. It’s never good to make investment decisions in thrall to your emotions. But I don’t think this is the time to ignore your own fears that everything might be headed to hell in a hand basket. My own opinion is that the recent downtrend in the market will continue for a while and that selling will get worse before the trend turns. More than that, though, I’m worried that this selling will turn out to be more than the average Bear market downturn. The financial markets are showing signs of systemic stress of the sort that could turn a “normal” Bear market into a crisis. The key there, of course, is “could.” Odds of a recession have recently moved up to near 50%. Which means that there’s a 50% chance of no recession. The signs of systemic stress that I’ve noted belong to what I’d call “early warning maybes.” I wouldn’t ignore them but they aren’t a guarantee of disaster. So what to do?
Boeing takes a big hit from Trump tariffs
Last week China’s government asked Chinese airlines to pause purchases of aircraft-related equipment and parts from American companies like Boeing. China holds about 20% of the expected global demand for aircraft over the next two decades. President Donald Trump this month raised baseline tariffs on Chinese imports to 145%. In retaliation, China imposed a 125% tariff on US goods.
On Sunday a Boeing 737 Max jet intended for a China’s Xiamen Airlines landed back at the plane maker’s U.S. production hub. The plane was one of several 737 MAX jets–Boeing’s bestselling model–that had been waiting at Boeing’s Zhoushan completion centre for final work and delivery. Boeing’s order book had 130 planes scheduled for delivery to Chinese companies at the end of March for both commercial airlines and leasing firms, Airways Mag reports.
Did today’s stock tumble just save Powell’s job at the Fed?
The Standard & Poor’s 500 closed down 2.36% today and the Nasdaq Composite ended 2.55% lower. The consensus read–and mine too–is that the selling was driven by fears that President Donald Trump would move to oust Jerome Powell as head of the Federal Reserve before his term at the top of the Fed ends in 2026.. Today President Trump again called on the Fed to cut interest rates. On Truth Social Trump posted that he favors “preemptive cuts” to interest rates and called the Fed chairman a “loser.” An attempt to remove Powell before the end of his term would end up atbthe Supreme Court and would probably be ruled illegal. Probably. “The market doesn’t like the Fed’s independence being challenged,” Joe Saluzzi, co-manager of trading at Themis Trading told Bloomberg. “The market can at least make an attempt at predicting what an independent Fed will do. If their independence is challenged, then more erratic (unpredictable) decisions could be made. And the market does not like unpredictability.”
Saturday Night Quarterback says (on a Sunday), For the week ahead expect …
I expect more opinions and some additional data on when the Trump tariffs will hit U.S. and global economic growth. And how big the hit will be.
UnitedHealth badly misses revenue and earnings projections–drops 23%
UnitedHealth (UNH) fell 23.04% on Thursday after missing Wall Street estimates on both revenue and earnings. The company also revised downward its 2025 earnings per share guidance to a range of $26-$26.50 from an earlier projection of between $29.50-$30. The problem is the fast and extreme growth in Medicare Advantage, the version of Medicare run by private insurers that contract with Medicare. The federal government pays these insurers a fixed amount per enrollee to provide Medicare-covered benefits. More than half of eligible Medicare enrollees are now on an Advantage plan. In 2024, UnitedHealthcare boasted 9.4 million enrollees, or 29% of the total eligible population. By comparison, Humana (HUM) came in a distant second with 6 million, or about 18% of the population. CVS (CVS) reported 4.1 million, or 12%.
Last year was a bad one for the Medicare Advantage business.
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