FLASH PMIs

Eurozone output continues to rise as manufacturing returns to growth

The seasonally adjusted HCOB Flash Eurozone Composite PMI Output Index ticked up to 50.4 in March from 50.2 in February, signalling a third successive marginal monthly expansion in business activity across the euro area. Although only slight, the latest rise was the fastest since last August.

The overall increase in output reflected growth across both manufacturing and services. Service providers posted a rise in activity for the fourth month running, albeit with the pace of expansion easing to the weakest in this sequence. Meanwhile, manufacturing production returned to growth, rising for the first time in two years and to the greatest extent since May 2022.

Growth was sustained in Germany during March, in part thanks to a renewed expansion in manufacturing output. The overall rise was the fastest in ten months. On the other hand, business activity in France decreased for the seventh month running, albeit with the pace of contraction easing from that seen in February. Meanwhile, a further solid increase in output was recorded in the rest of the Eurozone, extending the current sequence of growth to 15 months.

While overall business activity rose for the third month running, companies continued to see new orders decline at the end of the opening quarter of the year. New business in the Eurozone has now fallen in each of the past ten months, with the pace of reduction little-changed since February. New orders were down across both manufacturing and services, although the drop in the former was the least marked in the current sequence of contraction that spans almost three years. New export orders also decreased. The pace of decline was unchanged from the previous month and the joint-weakest since May 2022

With output continuing to grow, Eurozone companies brought an end to a period of job shedding stretching back to August 2024. Staffing levels were broadly unchanged in March amid a faster rise in services employment and softer reduction in workforce numbers at manufacturers. The stable picture for employment overall was recorded despite further falls in staffing levels across the euro area’s two largest economies, Germany and France. The rest of the Eurozone posted a solid expansion in workforce numbers, and one that was the most pronounced since June last year.

With firms holding employment broadly steady in March, they were able to keep on top of workloads and deplete outstanding business. Backlogs of work have now decreased on a monthly basis throughout the past two years. The latest fall was solid and the fastest in four months

The rate of input cost inflation softened in March, ending a five-month sequence in which the pace of increase had quickened. The latest rise was the weakest since November last year and slower than the series average. The slowdown in inflation was centred on the service sector, although here the rise was still sharp. Manufacturing input costs increased at a relatively muted pace, but one that was the most marked since last August.

Selling prices also increased at a slower pace at the end of the first quarter, with the pace of inflation the weakest in the year-to-date. Services charge inflation eased, while manufacturing output prices increased for the first time in seven months. Germany posted a softer rise in charges during March, while rates of inflation in France and the rest of the Eurozone were unchanged from February

Signs of recovery in the euro area’s manufacturing sector led to a less pronounced scaling back of purchasing activity during March. The latest fall in input buying was solid, but the weakest since August 2022. Further reductions in stocks of both purchases and finished goods were registered. Meanwhile, suppliers’ delivery times shortened for the second month running and to the greatest extent in nine months

Business confidence dipped for the second successive month in March and remained subdued relative to the series average. Confidence regarding the 12-month outlook for business activity was the lowest since last November amid waning optimism in both manufacturing and services. French companies were pessimistic about the prospects for growth, but German firms were more bullish than in February. Strong confidence was again recorded in the rest of the euro area, albeit with sentiment easing from the previous survey period

Commenting on the flash PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:

“Just in time with the beginning of spring we may see the first green shoots in manufacturing. While we should not be carried away by a single data point, it is noteworthy that manufacturers expanded their output for the first time since March 2023. It’s also encouraging, that the index output has risen for three months straight. This is complemented by a much softer fall in new orders and employment.

One could pour some cold water on this development arguing that it’s the temporary tariff-related import boom from the US which has driven the improvement in manufacturing. However, given the will of Europe, to invest heavily in defense and infrastructure – in Germany a corresponding historical fiscal package has been approved only last week – hope for a more sustained recovery seems well founded.

“The price development in the services sector, which is very much under scrutiny of the ECB, will be well received by the doves of the monetary authority. Both input costs and selling prices are rising at a slower pace compared to recent months. Lower input cost inflation points to less pressure from wages which are a key ingredient of input costs in the labour intensive services sector.

Meanwhile, in manufacturing, price increases for both selling and purchasing remain moderate, helped along by declining energy costs. However, there are still plenty of risks on the ECB’s radar, like potential retaliation tariffs from the US, measures to curb goods coming from China, and higher food prices spurred by extreme weather. These factors, coupled with overall uncertainty, make some ECB members hesitant to cut rates too aggressively.

“Interestingly, Germany outperformed its key European trading partner France in March in both manufacturing output and services activity. Still, if we zoom out and look over the past two years, France’s industry has only contracted by about 1% since early 2023, while Germany’s has dropped by roughly 8%. In this respect, Germany has a lot of catching up potential.

“Business expectations are well below average in the services sector and at average in manufacturing, which is of small wonder given the challenges companies are faced with amid the challenges around tariffs, geopolitical tensions and uncertainties surrounding monetary policy.

There is some likelihood, that Europe seizes the opportunity and shows more unity with respect to reforms, defense spending, and completing the capital market union, to name a few things. This could send a clear message that Europe’s position as a key business hub is set to strengthen in the years ahead.”

Japan: Business activity declines for first time in five months

The March Flash PMI data indicated that Japanese firms had a disappointing end to Q1, with private sector business activity falling for the first time since last October.

Underlying data showed that this was partly due to a fresh fall in service sector activity, while manufacturing output declined at the quickest pace for a year.

The reduction in overall activity coincided with a slight drop in composite new business, with firms noting that strong inflationary pressure had dampened sales and made some customers hesitant to commit to orders.

Growth of new business slowed notably at services companies and fell solidly at goods producers. New export orders increased slightly at the composite level, however, as a strong rise at services companies offset a further drop in foreign demand for manufactured goods.

The survey also signalled that cost pressures remained elevated in March, with overall input costs rising sharply across both monitored sectors, leading to a solid rise in selling prices.

Strong inflation, coupled with concerns over labour shortages, an ageing population, subdued client spending and increased uncertainty over the international trade environment dampened optimism around the outlook. Notably, overall confidence regarding future business activity dipped to the lowest since August 2020 at the end of the first quarter.

The important U.S. flash PMI is out later today.

White House Narrows April 2 Tariffs Tariffs on industrial sectors like cars and microchips are no longer expected to be announced on that date

President Trump has declared his April 2 deadline to be “Liberation Day” for the U.S., when he will put in place so-called reciprocal tariffs that seek to equalize U.S. tariffs with the duties charged by trading partners, as well as tariffs on sectors like automobiles, pharmaceuticals and semiconductors he repeatedly said would be enacted on that day.

Those sector-specific tariffs, however, are now not likely to be announced on April 2, said an administration official, who said the White House is still planning to unveil the reciprocal tariff action on that day, though planning remains fluid. (…)

The focus of the reciprocal action now looks to be more targeted than originally thought, according to people with knowledge of the planning, though it will still hit countries that account for most of the U.S.’s imports.

The administration is now focusing on applying tariffs to about 15% of nations with persistent trade imbalances with the U.S.—a so-called “dirty 15,” as Treasury Secretary Scott Bessent put it last week. Those nations, which Bessent said account for most of the U.S.’s foreign trade, will be especially hard-hit with higher tariffs, said people with knowledge of the matter, though other nations could be given more modest tariffs as well. (…)

Nonetheless, the administration’s plan for April 2 could raise tariffs on the U.S.’s most significant trading partners to levels not seen in decades, and people with knowledge of the planning said that targeted nations can expect to receive significantly higher tariffs.

Trump’s team could make tariffs effective almost immediately on April 2 using the president’s emergency economic authority, said people familiar with the discussions, emphasizing that final decisions haven’t been made. That would be a shift from February, when a White House official said a report outlining reciprocal tariffs could be released that day but imposition would come later. (…)

Trump told oil executives last week during a meeting at the White House that he didn’t want to grant exceptions on tariffs, according to a person who attended the meeting, but said he would consider occasional ones.

When one attendee asked about steel and aluminum exemptions, Trump wouldn’t commit to any, this person said. When U.S. Trade Representative Jamieson Greer spoke to the oil executives, he said he wasn’t interested in doing exemptions because they felt like they granted too many in the first Trump administration. Commerce Secretary Howard Lutnick also told the oil-industry executives that he didn’t expect exemptions, the attendee said.

A White House official disputed that description of the meeting, saying tariffs didn’t come up. (…)

Companies are also just desperate for clarity. One Fortune 500 CEO said April 2 can’t get here fast enough.

Trump previously gave automakers a temporary reprieve from tariffs on Canada and Mexico, before pausing those levies more broadly for all products that comply with the USMCA trade agreement. But on Friday, he lamented that people had criticized him for backing down, and hinted that his approach to tariffs could shift in the coming days and weeks.

Once you give exemptions for one company, “you have to do that for all,” Trump said, adding that “the word flexibility is an important word. Sometimes there’s flexibility, there’ll be flexibility.”

• “April 2nd is going to be liberation day for America. We’ve been ripped off by every country in the world, friend and foe,” Trump said in the Oval Office Friday.
• “I think markets need to change their expectations, because it’s not everybody that cheats us on trade, it’s just a few countries and those countries are going to be seeing some tariffs.” (Kevin Hassett, Trump’s National Economic Council director)
• “it’s roughly 15% of countries that are the worst offenders.” (Treasury Secretary Scott Bessent)

Bloomberg’s comprehensive chart of U.S. tariffs imposed, threatened & suspended:

• Carmakers rush to ship vehicles to US ahead of new round of April tariffs Carmakers rush to ship vehicles to US ahead of new round of April tariffs Vessels have been directed to Asia and Europe to carry ‘thousands’ more cars to America than usual

Dealing With Social Security Is Heading From Bad to Worse The agency that administers benefits is cutting staff and restricting services as part of a Department of Government Efficiency review

The federal agency that administers Social Security benefits is facing a customer-service mess.

The Social Security Administration is cutting staff, restricting what recipients can do over the phone and closing some local field offices that help people in person. The number of retirees claiming benefits has risen in recent years as baby boomers age.

Few federal agencies reach as far into Americans’ lives as the Social Security Administration, which delivers a monthly check to some 70 million people. Many fear that the changes, part of President Trump’s push to overhaul the federal government through the Department of Government Efficiency, are eroding confidence in the nearly 90-year-old program.

Agency officials have acknowledged that because of a planned reduction in services over the phone, there will be longer wait and processing times. An estimated 75,000 to 85,000 additional visitors a week could show up at local field offices, according to an internal memo sent by Doris Diaz, the acting deputy commissioner for operations. (…)

Social Security has a reputation as the “third rail“ of American politics, a benefit to which elected officials make cuts at the risk of their own re-election. President Trump has vowed not to cut benefits. But he and DOGE’s leader, Elon Musk, have made unfounded claims of widespread fraud in the program. (…)

• ‘Real America’ Won’t Mind If They Miss a Social Security Check—Lutnick

Only a “fraudster” would care if they miss a Social Security check, Commerce Secretary Howard Lutnick said in a new interview this week.

Lutnick discussed how he believes Americans would respond to going a month without a Social Security check during an interview on the podcast All-In with Chamath, Jason, Sacks & Friedberg.

During the appearance, Lutnick said the average American, using his mother-in-law as an example, would not complain about not receiving their checks for a month but that someone who was hacking the system would do so.

“Let’s say Social Security didn’t send out their checks this months. My mother-in-law is 94, she wouldn’t call up and complain. She just wouldn’t. She would think something got messed up and she’d get it next month,” he said. “A fraudster always makes the loudest noise, screaming, yelling and complaining.”

Lutnick said the “easiest way to find a fraudster is to stop payments and listen” for “whoever screams.” Most recipients trust the government and would understand if they didn’t receive the check, he said.

BTW: More than 70 million Americans receive Social Security checks, including most people over age 65, people with permanent disabilities and survivors of deceased workers. Many of the program’s recipients depend on the checks as their sole source of income.

EARNINGS WATCH

With all the uncertainty on prices, demand and margins, analysts are getting more cautious, but only cautiously. Growth rates are being ratcheted down by assumed lower margins while estimated revenue growth rates are maintained.

Analysts have kept 2025 revenues essentially unchanged between Feb.14 (lower bar) and now. How they are factoring in tariffs, known or unknown, and demand is a crucial unknown when most economists are reducing their GDP growth forecasts. Is higher inflation merely offsetting weaker real revenues?

We know that more than 50% of U.S. households are struggling. Will the other half keep spending merrily given the rising uncertainty(ies) and weakening wealth effect?

For now, bottom up EPS are still seen rising 10.7% in 2025 to $269.91 from their current trailing $245.39.

Investors Who Were All In on U.S. Stocks Are Starting to Look Elsewhere American exceptionalism was this year’s big trade. Now some are hedging their bets.

(…) Just two months after JPMorgan Chase declared American exceptionalism “the broad and dominant” investing theme of 2025, ordinary investors across the world are looking elsewhere. Instead of riding the wave of U.S. outperformance, they are parsing the potential implications of tariff wars and major shifts in U.S. foreign policy. And for much of this volatile stretch, markets in China and Europe outpaced expectations. (…)

Trump’s America-first agenda will force European businesses to become more aggressive. (…)

In the first two months of the year, investors added more than $2 billion more than they pulled from U.S.-based exchange-traded funds that invest predominantly in European stocks, according to Morningstar. That marks a sharp reversal from the second half of 2024, when over $8.5 billion leaked from those same funds. Meanwhile, the pace of flows into U.S. equity ETFs was slower in the first two months of 2025 than in the last two months of 2024.

So far this year, the S&P 500 lost 3.6%, while the Europe Stoxx 600 gained 8.3%. (…)

Some worry that keeping all of their eggs in an American basket might no longer be the way to go. (…)

Markets around the world are trading at near-record discounts to the U.S.; the price-to-corporate-earnings ratio of companies in the Stoxx Europe 600 over the past year is around 18.7, while it is 24.6 for the S&P 500, according to Dow Jones Market Data. The Hang Seng Index’s ratio is less than 13. (…)

“You’ve got 27 countries in the EU,” he said. “You’ve got 27 different cultures and languages and retirement ages. I think the U.S. will always outperform Europe. But during certain periods, like right now, we’re going to see little pockets of opportunity.”

TECHNICALS WATCH

The S&P 500 index is below its 200-day average (and over 50% of constituents below their respective 200dma). Paul Tudor Jones has been attributed as saying: “Nothing good happens below the 200-day moving average.” (Callum Thomas)

But the 200dma (5749) is still risin… though both the 50dma and the 100dma (5933) are declining.

Source:  MarketCharts

The S&P 500 is now down 1.5% below its 200-day moving average. In the past, corrections were often associated with 5%-10% declines below this average. Bear markets tended to bottom when the index was more than 20% below its 200-dma. (ed Yardeni)

• The 13/34-Week Exponential Moving Average must be watched:

Source: Stockcharts.com (via Steve Blumenthal)

Recession or not?

Source:  The Daily Shot

Cheap or not?

Do these matter or not?

Source: Financial Times

• With New Decree, Trump Seeks to Cow the Legal Profession A presidential memorandum aimed at lawyers everywhere struck a menacing tone.

The memorandum directs the heads of the Justice and Homeland Security Departments to “seek sanctions against attorneys and law firms who engage in frivolous, unreasonable and vexatious litigation against the United States” or in matters that come before federal agencies. (…)

Mr. Trump’s memo “attacks the very foundations of our legal system by threatening and intimidating litigants who aim to hold our government accountable to the law and the Constitution.” (…)

Since being sworn into office he has targeted three firms, but the new memo seems to threaten similar punishment for any lawyer or firm who raises his ire. (…)

Trump’s attacks on law firms, and Paul Weiss’s decision to cut a deal rather than fight it out in court, have sent shock waves through the legal community. The sweeping nature of the president’s latest demand comes as he has also stepped up his public attacks on judges and the very notion that the courts can tell him what to do or not do.

The executive branch “should neither fear nor punish those who challenge it and should not be the arbiter of what is frivolous — there are protections in place to address that,” Ms. Gupta said. (…)

Mr. Trump’s Friday night memo, titled “Preventing Abuses of the Legal System and the Federal Court,” complains that lawyers have long engaged in unethical conduct in opposing him, or opposing deportations. The memo also suggests that the Trump administration will make disciplinary referrals against lawyers who pursue cases without merit “particularly in cases that implicate national security, homeland security, public safety, or election integrity.” (…)

• FCC’s Carr Threatens to Block M&A for Companies With DEI Using merger reviews as a way to stop companies from pursuing DEI initiatives is a new tactic

The US Federal Communications Commission is prepared to block mergers and acquisition proposals from companies that promote “invidious” DEI policies, according to chairman Brendan Carr. (…)

In addition to considering a company’s hiring practices, Carr said the commission may evaluate other aspects of its business, including supplier diversity efforts and programming choices. (…)

ECONOMY WATCH

In the week ending March 15, the advance figure for seasonally adjusted initial claims was 223,000, an increase of 2,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 220,000 to 221,000. The 4-week moving average was 227,000, an increase of 750 from the previous week’s revised average. The previous week’s average was revised up by 250 from 226,000 to 226,250.

As shown before, there is a mini seasonality in the seasonally adjusted claims. Nothing to write home about just yet, but the 4-w m.a. is up 7.2% YoY and is up 4.2% from its mid-March 2023 level.

In the past 2 years, total employment growth (black) slowed from +3.2% YoY to +1.2%, only held positive by education, health care and government employment. In the past 12 months, private employment growth edged back into positive territory but education, health care and government employment has been slowing rapidly, from +4.0% to +2.7%.

From the latest S&P Global US Business Outlook, a tri-annual survey of manufacturers and service providers that was conducted February 10-26, before the latest round of tariff changes were due into effect in early March.

• Many survey respondents are concerned that tariffs will lead to higher prices and could disrupt supply chains.
• Amid concerns that the application of tariffs will raise prices and lead to supply constraints, a greater proportion of firms are expecting an increase in their non-staff costs. The respective net balance rose to +29% in February, up from +26% and its highest level since October 2022.
• US companies anticipate raising their output prices to a firmer degree when compared to last October. The output prices net balance rose to +34%, up from +26% and a one-year high. Again, it was manufacturers (+46%) that anticipated the greater rate of inflation when compared to service providers (+32%).
• Considering these various price trends, the outlook for profitability was little changed in February. The respective net balance for profits came in at +18%, compared to +17% last October. That is well below the series average and points to subdued profitability growth in the year ahead.
• On business investment, US companies are somewhat downbeat when assessing the outlook for capital expenditure, with a net balance of +4% down sharply since last October’s +12% and an eight-year low.

The Philly Fed Manufacturing Survey declined from 18.1 to 12.5 in March, its second consecutive decrease. Importantly, the new orders index fell 13 points to 8.7. Yet, the employment index increased from 5.3 to 19.7, its highest reading since October 2022.

The prices paid index increased 8 points to 48.3, its fourth consecutive increase and highest reading since July 2022.

Looking ahead over the next three months, 64% of the firms expect the impact of uncertainty to worsen over the next three months, and 44% expect supply chain impacts to worsen.

The share of firms expecting higher total capital spending this year (23%) slightly exceeded the share expecting lower spending (20%), and 57% expect spending to be the same. When this question was last asked in October, over 51% of the firms had expected higher spending, 21% had expected lower spending, and 27% had expected the same spending for 2025 relative to 2024.

The diffusion index for future general activity fell 22 points to 5.6 in March, its lowest reading since January 2024.

The future new orders index dropped 31 points to 2.3, its lowest reading since May 2023.

US Existing-Home Sales Top Estimates, Rebound From Bad Weather

Sales of previously owned homes in the US unexpectedly bounced back in February, spurred by a greater supply of houses and improved weather heading into the crucial spring period.

Contract closings increased 4.2% to an annualized rate of 4.26 million in February, according to National Association of Realtors figures released Thursday. The figure exceeded all estimates in a Bloomberg survey of economists.

The supply of previously owned homes jumped 17% from a year ago to 1.24 million, the most for any February since 2020. Even so, the median sales price increased 3.8% from a year ago to $398,400 — a record for the month — extending a run of year-over-year price gains dating back to mid-2023.

Wolf Richter has a better analysis …

Sales of existing homes – single-family houses, townhouses, condos, and co-ops – that closed in February fell by 5.2% from the abysmally low levels a year ago to 257,000 deals, not seasonally adjusted, down by 27% from February 2022 when home sales began their free-fall after prices had spiked to ridiculous levels, thereby crushing demand.

The blue lines connect the Februarys.

… but he should have taken into account that 2024 was a leap year. On a per day basis, existing home sales were down 1.8% YoY.

Anyway, why should we care. The housing market is still totally depressed as Ed Yardeni illustrates. Note the recent decline in pending sales.

Bank of Canada unveils new playbook as Trump’s tariff threats create mayhem

The Bank of Canada is adjusting how it conducts monetary policy to navigate the massive uncertainty caused by U.S. President Donald Trump’s erratic tariff threats, Governor Tiff Macklem said Thursday.

In a speech in Calgary, Mr. Macklem said the central bank will focus on minimizing risks when setting interest rates, rather than trying to figure out an optimal path for monetary policy based on muddy economic forecasts.

“If we were to guess where the economy is heading and make policy to optimize that outcome, we’d risk getting it wrong. Our actions could be ineffective or even make the outcome worse,” Mr. Macklem said, noting that U.S. tariff policy is in flux and the effect of a trade war on inflation and economic growth in Canada remains highly uncertain.

“We need to set policy that minimizes the risk. That means being less forward-looking than normal until the situation is clearer. And it may mean acting quickly when things crystallize. We need to be flexible and adaptable,” he said. (…)

“We know that some prices will rise when the tariffs hit – that’s not something monetary policy can stop. What monetary policy can – and must – do is prevent those initial, direct price increases from spreading,” Mr. Macklem said. “Simply put, we need to make sure that a tariff problem doesn’t become an inflation problem.”

The U.S. President’s aggressive use of tariffs has created a “new economic crisis” for Canada, Mr. Macklem told the audience at an event hosted by Calgary Economic Development. However, it’s far from clear how the trade war with the U.S. will play out. (…)

This back-and-forth and pervasive uncertainty means it’s almost impossible to do economic forecasting, Mr. Macklem said. “It’s very hard for any of us on Governing Council to have high conviction about the most likely outcome. Several outcomes can all look plausible.” (…)

But if high and broad-based tariffs are applied and remain in place for an extended period of time, “that could very well lead to a recession,” Mr. Macklem said in a press conference after the speech. (…)

“The more inflationary the impact, the less scope monetary policy has to support the economy. Instead, it needs to put more focus on anchoring inflation expectations, which risk drifting up when inflation rises more and more quickly,” Mr. Macklem said. (…)

“An environment where the Bank of Canada is going to put more weight on realized data and less weight on forward-looking impacts from trade policy is an unambiguously hawkish shift in the current context,” Andrew Kelvin, head of Canadian and global rates strategy at Toronto-Dominion Bank wrote in a note to clients following the speech.

“Ultimately, we believe that the damage wrought by trade disruptions will warrant additional easing this year, and we are going to continue to hold our 2 per cent terminal rate forecast for July. Certainly though, between the February CPI data, the March BoC interest-rate announcement, and today’s speech, the odds of a pause somewhere along the way to 2 per cent does seem to be rising,” Mr. Kelvin said. (…)

Wednesday, reviving the infamous pandemic transitory team, Jay Powell told us that the FOMC will be more attentive to downside risks to growth versus upside risks to inflation. While the BoC will be less forward-looking, i.e. more data dependent, the Fed will be looking through a “transitory” spike in inflation due to higher tariffs.

The Fed, and Trump team, are hoping that consumers will also see through “transitory inflation” and keep spending. They may actually get stagflation. Good luck with that.

I have previously documented the McKinley tariff period (Fear). In 2016, the Cato Institute, using Alan Reynolds 1979 article about the Great Crash, chronicled the Smoot-Hawley tariff era. Things are far more complex than many think. History does rhyme…

Many scholars have long agreed that the Smoot-Hawley tariff had disastrous economic effects, but most of them have felt that it could not have caused the stock market collapse of October 1929, since the tariff was not signed into law until the following June. Today we know that market participants do not wait for a major law to pass, but instead try to anticipate whether or not it will pass and what its effects will be.

Consider the following sequence of events:

The Smoot-Hawley tariff passes the House on May 28, 1929. Stock prices in New York (1926=100) drop from 196 in March to 191 in June. On June 19, Republicans on the Senate Finance Committee meet to rewrite the bill. Hoping for improvement, the market rallies, but industrial production peaks in July, and dips very slightly through September. Stocks rise to 216 by September, hit­ting their peak on the third of the month. The full Senate Finance Committee goes to work on the tariff the following day, moving it to the Senate floor later in the month.

On October 21, the Senate rejects, 64 to 10, a move to limit tariff increases to agriculture. “A weakening of the Democratic-Progressive Coalition was evidenced on October 23,” notes the Commercial and Financial Chronicle. In this first test vote, 16 members of the anti-tariff coalition switch sides and vote to double the tariff on calcium carbide from Canada.

Stocks collapse in the last hour of trading; the following morning is christened Black Thursday.

On October 28, a delegation of senators appeals to President Hoover to help push a tariff bill through quickly (which he does on the 31st). The Chronicle headlines news about broker loans on the same day: “Recall of Foreign Money Grows Heavier-All Europe Withdrawing Capital.” The following day is stalemate. Stocks begin to rally after November 14, rising steadily from 145 in November to 171 in April. Industrial production stops falling and hovers around the December level through March.

On March 24, 1930, the Senate passes the Smoot-Hawley tariff, 222 to 153. Debate now centers on whether or not President Hoover will veto. Still, stocks drop 11 points, to 160, in May. On June 17, 1930, despite the vigorous protests of a thousand economists, Hoover signs the bill into law, noting that it fulfills a campaign promise he had made, and stocks drop to 140 in July.

The Commercial and Financial Chronicle dated June 21, 1930 led off with the major events of the week –“the signing by the President of the Smoot-Hawley tariff bill” and “a renewed violent collapse of the stock market.”

Without ever quite linking the two events, the Chronicle did observe that “if the foreigner cannot sell his goods to us he cannot obtain the wherewithal to buy our goods.” Other sections noted that international stocks were particularly hard hit, that 35 nations had vigorously protested the tariff and threatened retaliation, and that Canada and other nations had already hiked their own tariffs “in view of the likelihood of such legislation in the United States.”

It may be hard to realize how international trade could have so much impact on the domestic economy. For years, in explaining income movements in the Thirties, attention has instead been focused on federal spending and deficits. Yet on the face of it, trade was far more important: exports fell from $7 billion in 1929 to $2.5 billion in 1932; federal spending was only $2.6 billion in 1929 and $3.2 billion in 1932. In 1929, exports accounted for nearly seven percent of our national production, and a much larger share of the production of goods (as opposed to services). Trade also accounted for 15 to 17 percent of farm income in 1926–29, and farm exports were slashed to a third of their 1929 level by 1933.

Even these numbers, however, understate the significance of trade. Critical portions of the U.S. production process can be crippled by a high tax on imported materials. Other key industries are heavily dependent on exports. Disruptions in trade patterns then ripple throughout the economy. A tariff on linseed oil hurt the U.S. paint industry, a tariff on tungsten hurt steel, a tariff on casein hurt paper, a tariff on mica hurt electrical equipment, and so on.

Over eight hundred things used in making automobiles were taxed by Smoot-Hawley. There were five hundred U.S. plants employing sixty thousand people to make cheap clothing out of imported wool rags; the tariff on wool rags rose by 140 per cent.

Foreign countries were flattened by higher U.S. tariffs on things like olive oil (Italy), sugar and cigars (Cuba), silk (Japan), wheat and butter (Canada). The impoverishment of foreign producers reduced their purchases of, say, U.S. cotton, thus bankrupting both farmers and the farmers’ banks.

It should be obvious that an effective limit on imports also reduces exports. Without the dollars obtained by selling here, foreign countries could not afford to buy our goods (or to repay their debts).

From 1929 to 1932, U.S. imports from Germany fell by $181 million; U.S. exports to Germany fell by $277 million. Americans also had little use for foreign currency, since foreign goods were subject to prohibitive tariffs, so the dollar was artificially costly in terms of other currencies. That too depressed our exports, which turned out to be particularly devastating to farmers-the group that was supposed to benefit from the tariffs.

There had already been some damage done (particularly to farm exports) by the tariff legislation of 1921 and 1922. As Princeton historian Arthur Link points out, however, “its only important changes were increased protection for aluminum, chemical products, and agricultural commodities.” Smoot-Hawley broadened the list to include 3,218 items (including sauerkraut), and 887 tariffs were sharply in­creased, on everything from Brazil nuts to strychnine. Clocks had faced a tariff of 45 percent; Smoot-Hawley raised that to 55 percent, plus up to $4.50 apiece. Tariffs on corn, butter, and unimproved wools were roughly doubled. A shrinking list of tariff-free goods no longer included “junk,” though leeches and skeletons were still exempt. (…)

A number of seemingly separate explanations of the Great Crash fit together quite well once the importance of anticipated tariffs is acknowledged. Charles Kindleberger, in Manias, Panics, and Crashes, describes some structural collapse in the financial system: “Lending on import, for example, seems to have come to a complete stop.” But refusal to finance imports makes perfect sense if lenders were correctly anticipating steep tariffs ahead. There were early cancellations of import orders in 1929 that likewise reflected rational expectations, and import prices were among the first to fall. (…)

The market suffered continual policy assaults after 1930. In early April of 1932, the Commercial and Financial Chronicle reports “the market fell into a complete collapse . . . owing to the approval by the House of Representatives of an increased tax on stock sales.”

The Dow bottomed on July 8, when (as the Chronicle of the following day reported) there had been some good news –the Tariff Commission had trimmed 18 tariffs, and a House subcommittee was looking into ways to cut taxes by eliminating duplication with states.

On Tuesday, September 19, candidate Roosevelt called the tariff “the road to ruin” and pledged to negotiate reductions in tariffs as soon as he took office. The following Saturday, the Chronicle was astounded that the “market again sharply reversed its course, and on Wednesday prices suddenly surged upward in a most sensational fashion.”

MAXIMUM TRANSPARENCY

Via the NYT:

The Trump administration scrambled to minimize fallout on Thursday after exposing personal information, including Social Security numbers, of hundreds of congressional staff members, intelligence researchers and even an ambassador when releasing files pertaining to the death of President John F. Kennedy.

The exposure of personal details, as well as long-guarded secrets about Cold War spycraft, came as a result of the National Archives uploading 64,000 pages of documents related — some very tangentially — to Kennedy’s 1963 assassination.

White House officials acknowledged on Thursday that it was only after the papers were made public that they began combing through them for exposed details.

Normally, personal information like names, Social Security numbers and home addresses are scrubbed from declassified files.

Mr. Trump’s eagerness to make the files public without redactions, fulfilling a promise he has made since his first campaign, caused the private information to be exposed.

“President Trump delivered on his promise of maximum transparency,” Karoline Leavitt, the White House press secretary, said in an email.

His national security team was stunned and forced to scramble after the president announced on Monday that he would release the Kennedy documents with only 24 hours’ notice.

Tulsi Gabbard, the director of National Intelligence, championed the untouched pages. “President Trump is ushering in a new era of maximum transparency,” she wrote in an X post on Tuesday, adding, “Promises made, promises kept.”

A former lawyer for the Trump campaign, Joseph diGenova, 80, was among the people whose personal data was revealed to the public, according to The Washington Post. “It’s absolutely outrageous,” Mr. diGenova, a frequent and ardent supporter of the president, told the newspaper, adding, “It’s like a first-grade, elementary-level rule of security to redact things like that.”

The same Karoline Leavitt said on March 11: “Tariffs are a tax cut for the American people”

During a White House press briefing on March 11, 2025, Press Secretary Karoline Leavitt stated that “Tariffs are a tax cut for the American people”. This statement came during a tense exchange with Associated Press reporter Josh Boak, who challenged her characterization of tariffs.

When Boak questioned her understanding of tariffs, saying “I’m sorry, have you ever paid a tariff? Because I have. They don’t get charged on foreign companies. They get charged on the importers,” Leavitt responded by calling his question “insulting” and said she regretted giving a question to the Associated Press.

I am sure she does…