March Hiring Slowed; Jobless Rate Held at 4.1% U.S. hiring slowed in March while the unemployment rate held at a 17-year low, hinting that a tight labor market is making it more difficult for some businesses to find workers. Payrolls rose 103,000, a sharp slowdown from the prior month’s gain.
- Employers added 103,000 jobs in March, compared with a revised 326,000 in February and below the 178,000 new jobs economists expected. Payroll growth in February and January was revised down by 50,000 on net, meaning monthly job gains have averaged a still-robust 202,000 over the past few months. Last month’s job creation was concentrated in the manufacturing, health care and mining industries, while retail employment dropped slightly.
- Average hourly earnings for private-sector workers rose to $26.82 in March from the previous month. The figure is 2.7% above the hourly wages workers saw in March last year, which is broadly in line with the moderate pace of wage gains so far this year.
Trump to Consider $100 Billion Increase in China Tariffs President Donald Trump threatened a major escalation in trade tensions with Beijing on Thursday, saying he was considering imposing tariffs on an additional $100 billion in imports from China.
(…) an escalation would be due to Beijing’s “unfair retaliation,” which could “harm our farmers and manufacturers.”
Mr. Trump also said he would instruct the Agriculture Secretary to put together a plan “to protect our farmers and agricultural interests,” but he provided no details. (…)
“The Chinese side will follow suit to the end, not hesitate to pay any price, resolutely counterattack and take new comprehensive measures in response,” a ministry statement said citing an unnamed spokesman. (…)
Should Beijing choose to match the U.S. tariffs on imports from China, now potentially totaling $150 billion, with Chinese tariffs on U.S. exports to China of $150 billion, that would more than cover all U.S. exports to China.
In 2017, the U.S. exported $130.4 billion in goods to Beijing. China, on the other hand, exported $505.6 billion of goods to the U.S. (…)
Mr. Lighthizer said U.S. industry would have time to comment on any additional tariff moves. The U.S. then has at least six months to levy the penalties.
Even as Mr. Trump tripled down on his threats against Beijing, he also offered something of an olive branch—a back-and-forth pattern that he has repeated over the past weeks. “The United States is still prepared to have discussions in further support of our commitment to achieving free, fair, and reciprocal trade,” he said in a statement. (…)
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Exclusive: U.S. willing to talk trade with China, no session set yet – official (Reuters) – The United States is willing to negotiate with China on trade, but only if talks are serious, as previous attempts produced little progress, a senior U.S. official told Reuters late on Thursday as trade tensions between the two nations escalated.
No formal negotiating sessions have been set, the official said. “There is ongoing communications with the Chinese on trade,” said the official, who requested anonymity to discuss the Trump administration’s trade strategy.
The official said Republican President Donald Trump, who has already sought $50 billion in new tariffs on China, will insist on “verifiable, enforceable and measurable deliverables” from China in any trade negotiations. (…)
The senior official said: “We’ve had a type of negotiation in different forums where China has made lots of different commitments that they haven’t followed through on.
“We don’t want to go down that path. But the president has been clear, the administration has been clear, we’re not trying to start a trade war. We’re simply trying to get fair and reciprocal treatments so we’re open to those conversations.”
The official said China had committed seven times to stopping forced technology transfers, a practice in which China allegedly seeks to obtain U.S. intellectual property (IP) through joint venture requirements, something that China denies.
“This president is not going to tolerate hollow commitments or refusal to change bad practices. And if the way that we effectuate that is through negotiations, that’s great,” the official said. (…)
- The White House strategy now is to tack on an additional $100 billion in new tariffs which would result in China simply running out of ‘retaliation capacity.’ (The Daily Shot)
Source: WSJ.com, h/t Paul Menestrier; Read full article
China Has the Cards to Call Trump’s Bluff(…) On paper, the U.S. may have the stronger hand. Still, any poker player knows that you don’t win by getting the best cards, but by knowing your opponent’s weaknesses. Beijing’s most powerful weapon — harming prominent companies to make President Trump lose face with the U.S. business community — has barely been touched so far in this conflict.
If the stakes get higher, China has some potent cards up its sleeve.
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US companies on edge over China tariff threat to supply Long list of components facing punitive levies could have damaging knock-on effects
(…) “We have 600 jobs at our Iowa factory as a result of being able to import products, and we have American production sold into global markets,” Mr Andringa says. “If the US goes ahead with a unilateral tariff, it is going to create global opportunities for companies in other countries to go after.” (…)
While politicians play their game of chickens, real business people must deal with the ensuing significant uncertainty. How? Many will likely wait and see before committing for major investments and initiatives. Simple business sense.
EARNINGS WATCH
We already have 23 companies in and 74% have exceeded expectations. Twelve of the 22 are in Consumer Discretionary (6/67%) and Consumer Staples (6/83%). Another 6 are in IT (83%) and 4 in Industrials (75%). Beat rates on revenues are similar. The surprise factor is a big +7.5% overall on EPS and +1.4% on revenues.
SENTIMENT WATCH
One Reason for Optimism: Bearish Investors
(…) As concerns about trade and tech stocks heat up, investors are at their most pessimistic in more than seven months, according to the American Association of Individual Investors’ most recent weekly sentiment survey, which measures participants’ outlook for the stock market over the next six months. In January, survey participants were at their most bullish since late 2010. (…)
Meanwhile, the National Association of Active Investment Managers Exposure Index, which tracks active money managers’ average exposure to U.S. equity markets, fell to 55.57 this week, down from an average of 71 in the first quarter of the year and roughly 63 since mid-2006. It was as high as 121 in December. (…)
Equity valuations remain elevated compared with their historical averages, but they have come down. The forward price-to-earnings ratio of the S&P 500 has fallen to 16.4—its lowest since November 2016—from as high as 18.6 in late January. The Stoxx Europe 600 and Japan’s Nikkei are also trading around their lowest forward PE since 2016. (…)
Bespoke has the charts:
Cashing In: Why Cash Should Be in Your Portfolio Again As volatility returns to the markets and interest rates rise, cash is turning out to be a safe asset
(…) But cash and near-cash products have three properties that ought to be appealing at the moment: a yield above inflation, a guaranteed value to cushion a portfolio and the firepower to buy back in after a dip. (…)
A bank deposit still pays next to nothing, but money-market funds are offering as much as 1.75%. Lend to high-quality companies for 30 days in the commercial paper market, and the yield of 2.4% is above inflation and more than the 1.95% dividend yield from the S&P 500. (…) Those who want the security of holding government paper have to lock up their money for just a year to beat the dividend yield on stocks, with the 1-year Treasury bill yielding 2%. (…)
History is against the holder of cash. Since 1900 stocks returned 6.5% annualized after inflation, bonds 2% and cash—using T-bills as a proxy—just 0.8%, according to London Business School academics Elroy Dimson, Paul Marsh and Mike Staunton in research forCredit Suisse . But cash has beaten both bonds and stocks over a decade several times, most recently in the stagflationary 10 years up to 1982. (…)
Trump taking ‘serious look’ at policy options on Amazon Aboard Air Force One U.S. President Donald Trump said on Thursday he would take a serious look at policies to address what he says are the unfair business advantages of online retailer Amazon.com Inc | Video
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Trump’s Criticism of Amazon: It’s Personal President’s attacks on e-commerce company stem from its CEO’s ownership of the Washington Post, which the American leader says writes unfair stories about him, say people close to the White House.