Daily Newsletter 4/17/25
Good morning.
The economic conflict between the United States and China is significantly more intricate than trade talks with other countries. The exceptionally high mutual tariffs—145% imposed by the U.S. and 125% by China—are so damaging to both economies that they create strong pressure for a rapid resolution or a substantial reduction in tariffs, even as negotiations continue.
We believe that implementing a broad 10% tariff will ultimately be counterproductive and generate significantly less revenue than the projected $600 billion.
Additionally, supply chains will be forced to adapt quickly, likely causing disruptions due to insufficient adjustment time. This will put pressure on profit margins, lead to consumer resistance, and, given the regressive nature of the tariff, slow overall economic growth.
An economic slowdown will actually cause the deficit to rise, as tariffs and spending cuts alone won’t be enough to offset the impact. As a result, the deficit is likely to increase rather than decrease.
ECB
The European Central Bank (ECB) cut its key interest rates by 25 basis points. responding to heightened global tariff tensions that have fueled widespread uncertainty and increased concerns about economic growth prospects in the eurozone.
European markets declined as investors awaited the European Central Bank’s latest monetary policy announcement. By 12:55 p.m. London time, the Stoxx 600 index had dropped 0.5%, with all sectors retreating except for oil and gas, which showed gains.
The initial jobless claims data for the United States was released thiw morning, by the U.S. Department of Labor at 8:30 AM EST.
Initial Jobless Claims (for week ending April 12): A key indicator for labor market health, showing 215,000 new claims, below expectations. A decline of 9,000 compared to the revised figure from the previous week.
Continuing Jobless Claims: 1.885 million. An increase of 41,000 compared to the revised level of the previous week.
The key U.S. housing data released this morning, is the Monthly New Residential Construction report for March 2025. This report was jointly released by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD) at 8:30 AM EST.
Building Permits (March): 1.482 million, with a slight monthly decline of 1%.
Housing Starts (March): Reported at 1.324 million, up 11.2% month-over-month, signaling strength in the construction sector.
The Philadelphia Fed Manufacturing Index was released today, by the Federal Reserve Bank of Philadelphia.It rose to 12.5, indicating improved regional manufacturing activity.
Today’s releases should be interpreted in this context: compare the figure to recent trends and consensus expectations, and watch for sustained movements rather than overreacting to a single data point.
This earnings season is especially important, as the performance and guidance from a few leading companies will likely shape whether the U.S. market continues its upward momentum or if worries about the broader economy and policy risks become the main focus. We are closely monitoring other earnings releases today, with particular attention on TSM, UNH, NFLX, SCHW, BX, TFX and STT.
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