More signs of stress in the high-yield (aka junk) bond market

More signs of stress in the high-yield (aka junk) bond market

Risky corporate-debt markets–what you and I call the junk bond market–have room to drop further due to to damage from the tariff war.“We’re likely to see spreads widen from here as we see further deterioration in risk assets and in overall credit quality,” Mitch Garfin, BlackRock’s co-head of leveraged finance, told Bloomberg.

Tech stocks face high earnings hurdle

Tech stocks face high earnings hurdle

This week’s quarterly earnings reports from Microsoft (MSFT), Apple (AAPL), Meta Platforms (META) and Amazon.com (AMZN) face high earnings expectations from Wall Street analysts. Analysts expect the Magnificent Seven-—which also includes Alphabet (GOOG), Tesla (TSLA) and Nvidia (MVDA)-—to deliver an average of 15% earnings growth in 2025. That expectation has barely budged since the start of March despite the uncertainty of the Trump tariffs. The four megacaps reporting this week collectively have a nearly 20% weighting in the Standard & Poor’s 500.

Shein, online Chinese retail giant, raises U.S. health and beauty prices by 51%

Shein, online Chinese retail giant, raises U.S. health and beauty prices by 51%

Fast-fashion giant Shein Group raised U.S. prices of its health and beauty products by 51% or more. E-commerce shopping platforms like Shein and Temu face a 120% tariff on many of their products due to the U.S. government’s decision to end the “de minimis” exemption for small packages from mainland China and Hong Kong. Exporters in recent years had capitalized on the exemption, which allowed goods valued at under $800 to enter the U.S. without tariffs or customs duties. Washington will also increase the per-postal-item fee on goods entering after May 2 to $100 and even higher after June 1

Tariffs could mean some empty shelves in U.S. as early as May

Tariffs could mean some empty shelves in U.S. as early as May

President Donald Trump’s tariffs on goods from China have disrupted trans-Pacific supply chains. In the three weeks since the tariffs took effect, ocean-container bookings from China to the U.S. are down by more than 60%, Ryan Petersen, founder and CEO of Flexport, a global shipping company, told the Washington Post. Cargo carriers that bring Asian goods to the Port of Los Angeles, the nation’s main Pacific gateway, have canceled 20 port calls next month, more than three times as many as last month, according to port data. The consequence will be “empty shelves in U.S. stores in a few weeks and covid-like shortages for consumers and for firms using Chinese products as intermediate goods,” Torsten Slok, chief economist for Apollo Global Management, told the Post. “Significant” layoffs in trucking, logistics and retail are likely as soon as May, Slok said.

Saturday Night Quarterback says, For the week ahead expect…

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.

More signs of stress in the high-yield (aka junk) bond market

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.

China denies trade talks with Trump

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 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.