Fear! Tariff Fears Are Spooking Markets (China Is Acting Childish)

Markets are ranked by fear about tariffs. Particularly since China is acting like a child.

Bond vs equity fear

Bond volatility has shot up higher, but remains “muted” compared to the VIX move.

Source: Refinitiv

FX vs equity fear

FX volatility has shot up higher as well, but is pale in comparison to the VIX move.

Source: Refinitiv

Credit “crunched”

Credit protection has surged during the “chaos”. Chart shows the US and the European versions.

Source: Refinitiv

Equity vs credit protection

VIX vs CDX IG.

Source: Refinitiv

Europe as well

V2X vs iTraxx main.

Source: Refinitiv

Correlation – the upside crash

Implied correlations showing a lot of “fear” as pretty much everything has been treated as if it were the “same” during the crash.

Source: Refinitiv

Massive

Intraday range was huge during yesterday’s session, but close to close very modest. Imagine trading short gamma….and hedging the extremes.

Source: GS

The Yuan is having a volatile day.

Fear!

US Payrolls Unexpectedly Soar To 228K (Federal Government Employment Lost 4K Jobs)

Most people are focused on the Great Reset in Global Trade, caused by Obama/Biden/Schumer/Pelosi letting US trading partners getting away with massive disparate tariffs against the US. Now that Trump is trying to level the playing field, we will see short-term losses in the stock market. But the jobs report for March shows that Trump’s economic policies are working.

The March jobs report ended up being far stronger than expected, as the US added a whopping 228K jobs, the highest since December and more than double the 117K in February (revised lower from 151K).

The better news? Federal government employment declined by 4,000 in March, following a loss of 11,000 jobs in February.

Soothe Me? Q1 GDP Now At -2.8% As 10Y Treasury Yield Falls To 4.157% (Recession Jitters?)

Soothe me? As we move further away from Sleepy Joe’s horrid economic policies, we should see an improvement in GDP from the current Atlanta Fed GDP Now Q1 Forecast of -2.8%.

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2025 is -2.8 percent on March 28, down from -1.8 percent on March 26.

The alternative model forecast, which adjusts for imports and exports of gold as described here, is -0.5 percent. After recent releases from the US Census Bureau and the US Bureau of Economic Analysis, the nowcast of the contribution of net exports to first-quarter real GDP growth declined from -3.95 percentage points to -4.79 percentage points in the standard model and from -1.92 percentage points to -2.53 percentage points in the alternative model.

The US Treasury 10Y yield has fallen to 4.157% as recession fears mount.

Simply Unaffordable! Multifamily Serious Delinquencies Soar To Highest Since 2000 (Home Prices UP 37% Under Biden, Rents UP 25%)

Housing and rental properties are simply unaffordable.

Freddie Mac Serious Delinquency Rate on Multifamily (Apartment) loans soared to highest rate since 2000. Since it is as of January 31, 2025, you can’t blame this on Donald Trump (although I am sure they will try).

Of course, home prices and rents soared under Biden. Home prices rose 37% under Biden and rents rose 25%. Simply unaffordable.

And The Fed will keep on printing money!

Credit has been deteriorating.

Won’t Get Fooled Again? New Homes For Sale Hits 500k (Glut), Existing Homes Inventory At 1.24 Million

Apparently, we DID get fooled again. In February, there were 500,000 new homes for sale.

While new home inventory hit 500k, existing home inventory rose to 1.24 million homes.

Cause? Home prices are too damn high. Thanks to Powell and The Fed.

Mortgage originations have dwindled under Biden/Harris.

Jerome Powell and the Blackhearts.

Existing-Home Sales Increased to 4.26 million SAAR in February, But Down 1.16% YoY (M2 Money Printing Isn’t Helping)

Existing-home sales rose in February, according to the National Association of REALTORS®. For both monthly and year-over-year sales, two major U.S. regions experienced growth, one region remained stable and the other registered a decline.

Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – progressed 4.2% from January to a seasonally adjusted annual rate of 4.26 million in February. Year-over-year, sales slid 1.2% (down from 4.31 million in February 2024).

But Fed M2 Money printing isn’t helping existing home sales of a YoY basis!

The Empire Strikes Out! NY’s Empire State Activity Survey Drops To -19.30 (Biden Hangover)

The Imperial March from Star Wars should have been the theme for Bidenomics, the top-down government-directed economy (mainly to political donors). It will take a while for the economy to recover from its addiction to Federal government spending.

Speaking of The Empire, the New York Fed’s Empire State business activity survey declined to -19.30. Would Jerome Powell and The Fed have cut rates had they known about the Empire activity survey yesterday?

Emperor Palpatine. Aka, 10% Joe.

Keep On Printing! Mortgage Applications Decreased 6.2 Percent From Previous Week

Keep on printing!

Mortgage applications decreased 6.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 14, 2025.

The Market Composite Index, a measure of mortgage loan application volume, decreased 6.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 6 percent compared with the previous week. The seasonally adjusted Purchase Index increased 0.1 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 6 percent higher than the same week one year ago.

The Refinance Index decreased 13 percent from the previous week and was 70 percent higher than the same week one year ago.

Mortgage rates increased for the first time in nine weeks, with the 30-year fixed rate rising to 6.72 percent. This increase in rates led to a decrease in refinance volume. However, purchase application volume inched up to its highest level in six weeks, led by a 3 percent increase in FHA purchase applications. Overall, purchase application volume is up 6 percent compared to last year at this time. Growing inventories of homes on the market and steadier mortgage rates are supporting homebuying activity thus far this spring.

Keep on printing!

Eggs And Money? Eggs Prices Plummet For 3rd Straight Week As M2 Money Velocity Rises

New USDA data reveals a third consecutive week of price declines at supermarkets.

But the media is always willing to blame Trump for anything, including eggs prices.

Velocity of M2 Money is back to where is was when Trump left office the first time.

Eggs versus M2 Money.

Riding the Trump wave of economic optimism!

Keep On Printing? Inflation Slows To 2.82% As Powell Keeps On Printing

Keep on printing?

According to the Bureau of Labor Statistics (BLS), inflation is slowing (mercifully) to 2.82% in February.

Core inflation checked in at 3.1% YoY.

Let’s see if Powell and The Federal Reserve keep on printing!