Last week we cautioned that the threat of a trade war could be skewing the latest data a bit positive:

“The currently very strong economic data (impressive job growth in the manufacturing sector reported in today’s employment report, for example) may be somewhat punctuated by some pulling forward of activity. I.e., there’s evidence that production ramped up recently in an effort to get business done ahead of looming tariffs. That increased production likely required a pickup in hiring (today’s report), which simply means that we’ll need to be watchful for more evidence of such, as it could explain what may turn out to be a greater future lull than we might’ve otherwise experienced as a result of newly implemented hurdles to trade.”

In today’s morning message, the team at Bespoke Investment Group echoed our concern:   emphasis mine…

“….when the Trump Administration
introduced new quotas and tariffs on washing
machines, imports surged in the months ahead of the
new tariffs, then crashed. While not all goods can
follow the same pattern (because of inventory
coverage by overseas suppliers, manufacturing times,
spoilage, etc), keep the “surge then crash” data in
mind when interpreting economic data with possible
implications for trade activity over the next several
months or so. That could be working in both
directions, too; last Friday’s smaller-than-forecast
trade balance is a good example.”