This Morning’s Log Entry

The April jobs number was just released and it was definitely good: 263k new jobs (vs 190k expected), 3.6% unemployment rate (down .2% from March) and 3.2% average hourly earnings growth (same as March). However, average hours worked and the labor force participation both legged just a bit lower.

As I type, equity futures are pointing to an opening surge, sufficient (in terms of the S&P) to more than wipe out yesterday’s decline; although, it’ll have to accelerate notably during the day to make for a positive week. Oddly, however, bonds in the premarket (prices up, yields down), as well as the dollar (flat), are not confirming the stock market’s happy response. Hmm…. 

Speaking of yesterday, according to much of the financial press, the volatile session was largely inspired by a drop in oil prices. Yes, it definitely did a number on energy stocks, however, I can’t help but wonder if Trump’s tariff tweet (below) wasn’t the ultimate culprit. If it wasn’t, and if indeed the tweet expresses how he truly sees the economic impact of tariffs, my how it will become a culprit (resulting in market disruptions that’ll utterly dwarf yesterday’s intraday action) in the coming weeks/months.

“Congrats to @U_S_Steel for investing $1+ BILLION in America’s most INNOVATIVE steel mill. 232 Tariffs make Pennsylvania and USA more prosperous/secure by bringing Steel and Aluminum industries BACK. Tariffs are working. Pittsburgh is again The Steel City. USA Economy is BOOMING!”

Troublingly, the President’s penchant for tariffs is at odds with traditional Republican think. Here’s from Bloomberg yesterday:  emphasis mine…

“More than perhaps any other issue, trade is where Trump has broken with Republican free-market orthodoxy. GOP Senators used a Thursday meeting at the White House to voice their economic and political concerns with Trump’s steel and aluminum tariffs, the ongoing trade conflict with China and new tariffs the president has threatened to impose on auto imports.

The Republican senators, led by Finance Committee Chairman Chuck Grassley of Iowa, said they emphasized the urgency of approving Trump’s new North American trade deal, known as the USMCA, as well as the importance of removing existing tariffs and avoiding new ones. Grassley said he “urged President Trump to work with us get past the steel and aluminum tariffs issue so USMCA can become law.”

The appeal appears to have had little success, as Trump followed the meeting with a Twitter post declaring that “Tariffs are working” for Pennsylvania, one of the swing states that helped lead him to electoral victory in 2016.”


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