, citing the layoffs that would occur should Trump follow through on tariff threats, which he says would inevitably stymie growth. All eyes are on Trump this afternoon for a 4 pm Rose Garden address where he will likely announce sweeping tariffs against a list of nations. The market has so far reacted poorly to the prospect of a global trade war with U.S. equity markets falling from their all-time highs. The S&P 500 just finished its worst quarter since 2022 and is down -8.3% from its February high. Canada, due to its exposure the materials sector, i.e. gold, managed to finish the quarter positive. Stock futures and bond yields are lower, while gold flirts with its record high this morning.
China has restricted local companies from investing in the U.S., potentially giving Beijing more leverage in trade negotiations. The National Development and Reform Commission has instructed branches to halt registration and approval of new U.S. investments, though existing commitments remain unaffected. This move adds uncertainty for firms seeking to shift production abroad to bypass trade barriers and follows increased scrutiny of outbound investments amid capital outflows and yuan pressure. The decision comes ahead of Trump’s expected tariff announcement, heightening global trade tensions, with trading desks around the globe bracing for increased stock market volatility. Concerns are mounting that Trump’s trade policies could hurt corporate earnings and disrupt supply chains. Major firms like Goldman Sachs, JPMorgan, and Barclays warn that market uncertainty is a key risk, with some predicting the S&P 500 could drop below 5,500 or even 5,400 if tariffs are implemented.
Tough calls ahead for the ECB. Euro-area inflation eased to 2.2% in March, down from 2.3% in February, bringing it closer to the ECB’s 2% target. Services inflation moderated to 3.4%, and underlying price pressures slowed to 2.4%. The ECB is now considering whether to cut interest rates further, with some officials concerned about the inflationary impact of U.S. tariffs. However, there is disagreement within the bank, with some focusing on the potential hit to GDP rather than inflation. The outlook remains uncertain as the ECB awaits clearer economic signals, including the effects of increased military spending and infrastructure investment in Europe.
Speaking of stymieing growth, U.S. manufacturing contracted for the first time this year in March, with the ISM index dropping to 49 amid rising costs and tariff uncertainty. Prices paid for materials rose to their highest since June 2022, while orders, production, and employment declined. Businesses are stockpiling inventory ahead of expected trade restrictions, further disrupting supply chains. Seven industries, including wood and plastics, shrank, while nine, such as textiles and petroleum, grew. With cooling demand, manufacturers may struggle to pass higher costs to consumers, adding to economic uncertainty.
The picture was also not very rosy north of the border as Canadian manufacturing activity also contracted in March, with the PMI falling to 46.3, its lowest since December 2023, as escalating global trade tensions led to the steepest drop in new orders since the early days of the pandemic. U.S. tariffs on vehicles, steel, and aluminum hit Canadian exports, with the new orders index plunging to 42.3 and future output expectations at a record low. Inflationary pressures also rose, with input prices reaching their highest since August 2022, prompting concerns that the Bank of Canada may pause its rate-cutting plans at its April 16 meeting.
Record fili-busted. Sen. Cory Booker set a new record for the longest Senate speech in history, surpassing 24 hours and 18 minutes, as he condemned the current administration’s policies. Beginning Monday evening, the New Jersey Democrat vowed to disrupt Senate proceedings for as long as physically possible, citing concerns over tariffs, deportations, and federal workforce cuts. His remarks, streamed on TikTok, went viral, drawing widespread attention and questions (i.e. was he allowed to take a bathroom break?). While Booker remained standing without ever leaving the floor (he would have lost control of the senate floor if he did), he was intermittently joined by Democratic colleagues who offered support. His speech, which included letters from constituents and tributes to civil rights icon John Lewis, delayed Senate business, including a planned vote on a NATO ambassador nomination.
Diversion: It’s always important to read the rules
