Daily Newsletter 5/2/25
The U.S. Bureau of Labor Statistics announced this morning that the economy added 177,000 jobs in April, exceeding the 133,000 gain predicted by economists.
The unemployment rate, based on a separate survey, remained steady at 4.2%
While widespread layoffs have not yet materialized from 145% tariffs on China and volatile trade policies, hiring slowdowns are becoming evident in manufacturing and logistics sectors. Companies in manufacturing and logistics are adopting flexible strategies and technological solutions to navigate hiring slowdowns and labor
shortages.
Q1 GDP contracted -0.3% amid rising import costs, while April’s job gains failed to offset slowing productivity. This could be interpreted as a stagflation signal.
Stagflation is an economic condition characterized by three simultaneous phenomena:
Stagnant economic growth (slow or negative GDP expansion).
High unemployment.
Rising inflation (persistently increasing prices).
It defies traditional economic theories, such as the Phillips Curve, which posits an inverse relationship between inflation and unemployment.
Stagflation is particularly perilous in high-debt economies, as rate hikes to curb inflation can trigger debt crises. The United States is currently classified as a high-debt country, with its federal debt at historically elevated levels relative to GDP and ongoing projections for further increases.
Recessions are painful but manageable with stimulus. Stagflation creates a policy trap where traditional tools backfire, prolonging economic misery.
Since the U.S. government lacks sufficient fiscal flexibility, both scenarios pose equally severe threats.
Given that the jobs report is the first piece of “hard data” released since Trump's inauguration, it carries significant weight. Hard data refers to objective, measurable, and verifiable information derived from quantifiable metrics or direct measurements of economic activity, transactions, or outputs. It is used to assess concrete trends and performance.
Recent developments offer the first credible opening for dialogue between U.S. and China since the latest tariff escalations. However, both sides remain entrenched, with China demanding unilateral U.S. concessions and Trump seeking a "rebalanced" trade relationship. Failure to progress could trigger irreversible supply chain shifts and global recession risks.
OUR TRADES
Due to heightened market volatility, we have prioritized tactical trading over our usual strategy employed in stable conditions. We anticipate continuing this approach until market trends become more predictable.
We currently hold multiple positions initiated around earnings announcements and are positioning our portfolio ahead of next week's Federal Reserve policy decision.
Please note that throughout the trading day, we issue signals from our tactical portfolio pool. However, we do not provide daily signal for the stocks held in our medium- and long-term investment portfolio, nor do we generate signals for those positions. Therefore, our daily newsletter primarily focuses on our tactical portfolio.
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