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.
Today, Monday April 28, I’m selling my last two Call Options on the VIX, the CBOE S&P 500 Volatility Index. Not because we’re done with volatility. No way. I expect lots more volatility in the weeks and months ahead. And I expect to put this trade on again. But because these two options expire on May 21
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
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.
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.
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.
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.
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.
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.
Today’s Quick Pick is Amazon.com (AMZN)–despite the current tariff panic. While the stock is down due to the broad market sell-off and concerns over tariffs impacting its supply chain, I believe Amazon’s size and logistical power will help it mitigate these challenges. The company can pressure suppliers, adjust pricing algorithms, and shift sourcing to keep costs lower than competitors, potentially gaining an edge as inflation rises. Though these advantages may not be evident in the upcoming April earnings report, I expect Amazon to emerge stronger in the long term, making it a compelling buy once the market shifts from indiscriminate selling to evaluating winners and losers.
Just days after Nvidia and otherrchip stocks rallied on news that thee Trump Administration would pause tariffs on chips and electronic goods, the White House has informed the company it would require a special license for exports of its H20 chips. The H20 chips were designed especially for the Chinese market in an effort to comply with U.S. restrictions on chip exports to China. No licenses for shipments into China have ever been granted, given the US government’s concern that the chips could be used to build AI supercomputers in the country, so the new rules are effectively a ban.
Shares of Nvidia closed down 6.87% today, April 16
President Donald Trump is pressing ahead with plans to impose tariffs on semiconductor and pharmaceutical imports. Notices Monday in the Federal Register said the Commerce Department would investigate the impact on U.S. national security of “imports of semiconductors and semiconductor manufacturing equipment” as well as “pharmaceuticals and pharmaceutical ingredients, including finished drug products.”
